MPM701 Business Process Management
Trimester 1, 2017
Marks: 40% of Unit Assessment
To successfully complete this assignment you will demonstrate that you can provide clear written advice, and appropriate recommendations for change, to a business owner, utilising business process management (BPM). Your advice will offer the business owner several reasons for adopting a business process management approach, in particular
? an explanation of the current business processes and why they should be redesigned,
? a proposed redesign solution,
? any special considerations that need to be taken into account to deliver the proposed solution successfully; and
? succinct recommendations.
In providing your advice to the business owner you will take into account various perspectives and circumstances encompassing the business.
Business processes permeate all aspects of business and it is arguable that if a business is not adopting a business process management approach to realise its strategies, and its subsequent goals and objectives, then the business may reduce its chances of success - even its very survival. By taking a business process management approach, organisations can improve their chances of succeeding in their quests for sustained competitive advantages through greater efficiencies, quality, innovation and customer responsiveness.
In, what is now a highly competitive, global, interconnected and uncertain business environment, there has never been a better time to draw on the advantages offered by applying the BPM discipline to any business or organisation anywhere.
Overview of Enterprise Airways Pty Ltd
Enterprise Airways is a Victorian regional airline providing passenger and freight services to several major towns. It has operated for seven years and is based at Melbourne Airport. Enterprise Airways offers daily services to Albury, Echuca, Mildura, Portland, Ballarat, Sale and Lakes Entrance. Its current fleet comprises three twin engined aircraft each capable of carrying 15 passengers and freight. The airline has plans to expand its operations, when economically viable, to Mount Gambier in South Australia and Orange in New South Wales. However this will require more aircraft, flight and cabin crews as well as access to airport services and passenger and freight handling organisations. The board of directors recognises that a return to incremental and consistent profitability is a pre-requisite for expansion so is demanding to see an improvement in the airline’s financial performance.
Amanda Chamberfield has just been appointed by the Board as the new CEO. She has been charged with the responsibility of returning the airline to profitability within 12 months. She wants you to conduct a review of the airline and its operations and to recommend a solution to the most urgent problem confronting the firm.
Amanda commissioned an overview of the airline and its operations in preparation for a full scale investigation and recommended solution to its precarious financial position.
Details of the overview prepared by the airline departmental managers, is as follows:
Reservations - Adam Peters
Passenger bookings can only be made at travel agents. Each time an agent takes a booking for an Enterprise Airways flight, the agent sends a reservation booking order to Adam in the form of an email. Adam then forwards the email to Andrew in Accounting, Samantha in Catering, Barry in Scheduling and Betty in Sales and Marketing.
Over the past 12 months, there have been a number of complaints from customers about bookings, citing incorrect fees being debited from accounts and flight details not being properly communicated to passengers.
Catering – Samantha Prendergast
Depending on the time of day and flight duration, passengers departing Melbourne Airport may be served either a small refreshment or a limited meal. These are obtained by Enterprise Airways from an independent commercial catering service. Orders are placed with the catering service on an adhoc basis (this would normally be two days prior to the flight departing). Samantha places these orders via telephone, writes them down on a pad and then aggregates all orders together and sends an email to the catering company with a copy sent to Andrew in accounting. This can cause late departures of flights resulting in complaints from passengers, particularly at the very busy Melbourne airport. Also, due to the absence of catering services in some regional centres, it is not always possible to provide refreshments on services travelling to Melbourne. This has caused friction between the airline and its passengers at times, leading to a negative impact on its reputation.
Accounting – Andrew Count
Andrew is a very busy man and receives a huge amount of information from across the organisation on a daily basis. This information is either in the form of emails or paper-based invoices. He is often confused by the constant inflow of information received sporadically from the reservations, catering and sales and marketing departments. As a result, Andrew is highly stressed and regularly takes sick leave to cope.
All suppliers to the airline are requested to submit invoices directly to Andrew at the head office in Melbourne. However some suppliers, particularly in regional centres, occasionally deliver paper invoices to an airline representative at the local airport. The representative takes a photocopy of the invoice and sends the original to Andrew via post. This causes delays in the processing of these invoices. As a result, the airline cash flow can be adversely affected (when invoices have to be paid unexpectedly) and this in turn may result in significant discrepancies in monthly financial statements.
Scheduling – Barry Timeout
Because of the limited number of aircraft available, it is critical that flights adhere to their scheduled arrival and departure times. Therefore, appropriate scheduling of flights is very important to the efficient operations of the airline. Barry is also responsible for resource allocation in the company which includes maintenance and communication of rosters and hiring/firing of staff.
Barry receives details of passenger bookings from Adam in reservations. Based on this information, Barry schedules flights as appropriate and then forwards flight details to Samantha in catering and Percival in maintenance to ensure that all flights are able to depart on time.
The past 12 months has seen a significant increase in delayed flights which has resulted in a number of disgruntled customers switching to other airlines. This has directly impacted revenue and profitability. Barry is also seeing a worrying trend emerge where some long term staff are taking an increasing number of sick days which is making staff rostering very difficult.
Maintenance – Percival Hawkins
In line with Civil Aviation Safety Authority (CASA) regulations, commercial passenger aircraft are required to undergo specified services on set dates. If an aircraft does not undergo scheduled maintenance on those dates it cannot be used, thus causing problems to the airline in maintaining scheduled flights. Enterprise Airlines relies on external contractors to perform these services and if the contractor is unable to meet the schedule, the aircraft involved will be taken off-line, causing problems in maintaining published flight schedules. Details relating to aircraft maintenance are kept in a binder in Percival’s office (in no particular order) and is only referred to if there is a problem with aircraft performance.
Percival reports directly to Barry in the scheduling department.
Sales and Marketing – Betty Sellers
As a smaller, regional airline, Enterprise Airways has been happy to grow the business through adhoc advertising (radio and print). As explained above, because of the dispersed nature of the airline’s ports of call, the sales department (which also takes airline bookings over the phone) occasionally experiences problems in receiving bookings and ensuring appropriate seat allocations.
After a booking has been taken over the phone, Bette sends details of the booking to Andrew via email. Bette is not sure what Andrew does with this information and assumes everything is fine unless Andrew queries the booking.
From a marketing perspective, distribution of information about the timetable, promotions and relations with travel agents outside the metropolitan area can be difficult.
Some of the department managers believe that a comprehensive marketing and sales strategy, backed by targeted campaigns, is essential if the airline is to overcome its declining performance.
Enterprise Airways does not have a formal IT department and responsibility for the IT function is jointly shared by each of the managers. If a major IT issue arises, the managers arrange an informal meeting to discuss the best way forward. The ‘minutes’ of these meetings are hand written and filed in a binder which is kept in Andrew’s office.
Head Office and Melbourne Airport offices are equipped with IT facilities. However because the airline relies on third parties as representatives in regional centres the level of IT sophistication is poor. In most instances, communications are slow, thereby causing problems in efficient management of flights and passenger bookings. Occasionally information about numbers of passengers, seating allocations, freight loadings, etc. may not be available when required causing potential delays in services. The company has been reluctant to explore potential technological solutions due to the expense associated with research, purchasing costs and implementation.
The business experienced strong growth in its first few years and this enabled it to grow quickly. In 2014 things started to change. Sales were down and profits reduced (see profit table below). This decline continued through 2015, 2016 and 2017. Amanda has heard through the grapevine that some of the larger airlines are planning to offer flights in the regional centres in direct competition with Enterprise Airlines and she is very concerned about the impact of increased competition on the airlines’ deteriorating financial position.
2011 2012 2013 2014 2015 2016 2017
Revenue $m 20 24 28 38 32 20 16
Expenses $m 15 17 18 23 22 22 23
Profit $m 5 7 10 15 10 (2) (7)
Amanda believes that excellent customer service is the key to differentiating Enterprise Airways from its competitors whilst ensuring a viable and sustainable presence in the airline industry.
After a series of workshops and discussions, it became clear to Amanda that her department managers had lost sight of what the airline was trying to achieve and that if something is not done quickly, receivership is imminent.
Amanda calls you in as her BPM Consultants to help make sense of the current organisational approach and to provide some preliminary advice about redesigning processes so that the current downward trend in performance can be reversed. She gives you the transcript of the review and provides you with some Balance Sheet items (to help you to form a view of the firm’s position to invest in change). No other information is available to you to develop a solution.
Balance Sheet Items (summarised as at June 2017) $
Cash at Bank (based on latest statement found on floor) 1,000,000
Other Assets (including land, buildings, equipment and vehicles (straight line depreciation), investments, patents, trademarks and goodwill. 1,638,000
Accounts Receivable 385,000
Other Liabilities (including bank loans, venture capital) 515,000
Loan expiry and review date 30 April, 2018
Task: Preliminary Business Report (40 marks)
Your task is to prepare a preliminary business report for Amanda. Amanda has an in-house style which she expects for business reports, so the main body of your report must be structured using the following headings. A brief about what each section of the report must address is also provided. If you believe that there is insufficient information on which to carry out your analysis, you may make reasonable assumptions however, these must be clearly stated.
BPM and Strategy
? Introduce Amanda to Business Process Management by stating in plain terms what it actually is how it can help the business and why a BPM approach should be adopted by the airline.
? In describing the benefits of BPM to Amanda, ensure that you briefly highlight how BPM connects to business strategy (internal and external perspectives), positioning, structure and value propositions. Briefly describe the meaning of value chains and how using BPM, in conjunction with this concept, can assist Amanda to improve the business.
? Amanda is aware that there are a number of problems within the company and whilst she is happy for you to briefly describe these, she would like you to concentrate your efforts on the problem which you determine to be the most urgent. Failure to clearly identify the most urgent problem will result in a loss of five marks. In relation to this problem, Amanda would like you to identify the causes of the problem, the problem and the consequences of the problem; refer to the capabilities gap and the performance gap here if relevant
? Show the current ‘As Is’ process using Bizagi Modeler software
? Identify any process flow problems and/or day to day management problems; output and input problems; and problems with controls and enablers; develop a project scoping diagram to illustrate the problem which you have identified
? Clearly articulate the strategy that you believe Amanda should be following and provide a justification for your view.
? Advise Amanda what it means to develop a ‘business process architecture’ and how it can add value to the company.
? Bridge the identified gap, revealed in the previous section, by describing a ‘To Be’ process; what will the ‘To Be’ process do, or not do, when the change project is rolled out
? Support your ‘To Be’ process with a BPMN process flow diagram using Bizagi Modeler software
? Are there any key aspects in your proposed solution that you should clearly describe to Amanda, for example: SOA; ERP; Master Data; Core, Support and Management processes; alignment issues; etc?
? Based on the information provided in your proposed solution you must also include a fully annotated organisational structure.
Large BPM driven organisational changes can be extremely valuable, they are also complex undertakings impacting the organisation, its people and its use of modern technologies.
? Identify and briefly describe significant considerations that might impact Enterprise Airways Pty Ltd’, both during the redesign development stage and upon the implementation of your proposed solution. Some considerations might pertain to the costs of bridging the gap (time, effort, money, etc.), risks, opportunity costs, politics, etc.
? You are to specifically address any upstream or downstream implications (within or outside the organization) of the solution you have proposed, citing why these implications are important.
? Provide Amanda with a succinct list of recommendations to conclude your report
Written Assignment Administrative Details
You may include a brief executive summary, table of contents and brief appendices. Do not include extensive appendices – this is a preliminary report – extensive appendices may result in a reduction of marks. Use the section headings above to structure the main body of your report (you should not need sub-headings). Amanda will not read the report if it does not use the above headings in the body of your report.
Amanda wants to see a reasonable use of references. While textbook references can be used, Amanda would prefer that you use industry research reports, case studies and any other industrybased evidence which can justify why the organisation should implement your proposed BPM solution.
You do not need to specify a particular commercial solution (such as SAP or another enterprise system), although you may specify commercial solutions to help you to clarify and support your proposed solution recommendations.
The report must be no longer than 2,000 words (approximately 4 to 5 pages of words, but by including diagrams and any other graphics or figures it will be considerably longer. Words in diagrams such as the Gap Model, Project Scoping Diagram and As-Is and To-Be process diagrams will not be included in the word count provided they are used to explain necessary steps and highlight critical information. If paragraphs of text are included in these diagrams, they will be included in the word count. Words in tables are included in the word count of the main body of your report.
Note that the 2,000 word count does not include your cover page, your executive summary, your reference list or your appendices.
Note also that 10% of the total available marks for the assignment may be deducted from your final assignment mark for every 100 words that exceed the 2000 word limit. For example, assignments of 2300 words (not including cover page, executive summary reference list or appendices) may receive a penalty deduction of 30% of the total available marks for the assignment. Please do not exceed the word limit for the assignment.
It is strongly recommended that the process to produce your report be an iterative one, with interim reports and drafts produced early so that you and your partners can reflect on progress and refine the work as necessary. You might be asked in your seminars to present a brief update about the progress of your report. This is a major unit assignment, get started early as the trimester moves very quickly.
Business Report (40 marks)
Your report will be assessed using the marking criteria shown below:
Marking Criteria Mark
BPM and Strategy 15
Problem Analysis 20
Proposed Solution 20
Solution Considerations 15
Overall Quality of the Report
? Spelling and Grammar
? Quality and use of References 20
Total 100 (will be converted to a mark out of 40)