Questions - Case Study (Please do see the comments as the whole case study material couldn't be put in one text)

1. Discuss the request for Approval (RFA) process issues in modern busines. The reason to appear, major drawbacks etc (Theoretical).

2. Write and explain what, in your oppinion, are main elements in new automated RFA approach discussed in the text. Draw a MindMap.

3. Propose New Additional elements for new RFA system that are missed for better efficiency using your conceptual skills. Domains of faster process automation discovered by Audi will help you to succeed.

Executive Summary / Abstract

At a certain point of business maturity, companies find it necessary to increase productivity and efficiency in order to stay ahead of industry standards. Audi Japan KK, importer of Audi vehicles and subsidiary of Audi AG, discovered that to reach operational efficiency it was necessary to gain more control and visibility over its core management and administrative processes. To fulfill this objective, the financial department decided to develop a BPM initiative within the organization that would revolutionize the operations of Audi Japan KK.

A year ago, Audi Japan KK decided to begin the automation of several of their core back-end administrative processes within the financial department; processes that were found to be too manual and paper-based, which made them inefficient and difficult to manage.

Audi Japan KK has a SAP system put in place to manage their financial operations and Bizagi was selected as the complementary BPM solution for process automation. They were also clear about getting a solution that was easy-to use, painless to implement and would automate everyday processes. The objective was to increase transparency and quality, and reducing reliance on paper-based trails and processes. This solution also needed to be replicable in other company departments and Audi subsidiaries around the world.

Overview

The BPM initiative at Audi Japan KK was conceived in the financial department, where processes were paper-based, executed manually and inefficiently managed. Processes included delicate and high level Requests for Approvals for a certain activity or spending purpose. Processes like this one would need to be approved by the President of the company whose availability is limited, and certainly, manual processes are not the best option to act quickly and flexibly.

The Request for Approval (RFA) process was the first one to be automated at Audi Japan KK. The process covers the requests of almost 20 departments and divisions within the organization which are frequently requesting funds for different purposes and initiatives. A single request could often need more than 5 approvals from other supporting divisions and even from the sales department. Depending on the amount requested, the process needs different levels of approval. For smaller quantities it goes through the involved departments and divisions and finalizes with the approval of the Financial Controller. For larger quantities the request needs to be additionally approved by the Financial Director and the President of the company.

There is a short version of the Request for Approval process (Management RFA) which has also been automated, this is similar to the previous process but between top management and controller only (no departments involved).

Between these two processes the system is used by almost 100 users, however this number will certainly increase as the company is now launching to production 6 more processes this month: Overseas Trip approval, Domestic Trip approval, Personnel change approval, Purchase Order creation, Request for Payment (equivalent to accounts payable) and Budget Control Administration.

Tangible results and benefits were noticed immediately after the automated RFA processes were set to production. Implementation was very quick and Audi Japan KK was impressed by the ease-of-use of the selected BPM tool. They were able to experience significant results such as increased transparency and quality of the RFA process, reduction in process cycle times, increased operational efficiency, better workload distribution and improved budget control.

One of the major challenges was to really understand what BPM was all about, and to start moving the BPM initiative from the financial department towards senior management in order to be adopted as a new organizational culture and innovative best practice across the organization.

Business Context

For Audi Japan KK the whole idea of automating processes was an innovation. Audi Japan KK started with the evaluation of BPM tools and found Bizagi BPM Suite to be an appropriate option for its ease-of-use, flexibility and self-training options. Finding out that with Bizagi it was very easy to model and diagram processes and then easily move them to execution, was a motivation for initiating the change program.

On the other hand, believing and seeing that fast results could actually be achieved was also a key motivator to start acting and showing others the benefits and results obtained in a very short period of time. Audi Japan KK was impressed by the capabilities, features and flexibility of the software. It was definitely a good practice to start with a quick win process while learning more about BPM and Bizagi. Starting small but with a good example of how to achieve faster results was an efficient way to get the interest of potential stakeholders within the organization and to trigger more activities around the BPM initiative.

Audi Japan KK also wanted to ensure that they could have a roadmap to further their support for business processes across departments and the business itself.

The Key Innovations

Business

The automated processes are all internal processes engaging many other departments and divisions within the organization. For anyone involved in a RFA process, whether a requester or an approver, the workflow of the process is now clearer, people are much more prepared in advance with the necessary documentation before the process even starts and approvals can easily be done through a web page. This is an important achievement in terms of efficiency and process quality and transparency.

Depending on the information entered by the requester through a simple web interface the process itself decides the path that needs to be followed and the level of approval needed. Managers and executives at Audi Japan KK are constantly on business travel, so it was important to create a way in which they could do approvals via an internet application, avoiding the delays and miscommunication that could arise from approvals over the phone or email. Approvals are done on time now as approvers receive a notification from the sys-tem and they are able take an action anywhere, anytime, all they need is an internet connection. For the financial department, this traduces to increased control and visibility over the process, and optimized management of tasks and activities related to budget control, archiving and filing.

Audi Japan KK believes that this BPM initiative has changed their fundamental business structure and put them in a position where it will not limit their growth and will certainly revolutionize the operations of Audi Japan KK. It is important for companies to understand the value that business process management can bring in terms of clarity of processes, efficiency and reducing the volume of paperwork.

Process

The RFA process was a manual and paper-based process which relied on approvals made over the phone or email. Approvals were not easily done due to approvers business traveling and it was more of a people chasing the people process which leads to lack of quality and inefficiency. Approvals over the phone or email can be easily back dated affecting people's jobs and activity performance. Inefficiencies were experienced within the financial department where it was not possible to manage budget and transactions with the sufficient level of control and visibility.

After the RFA automation the scenario changed for all stakeholders, including requesters, approvers and employees from the financial department. New requests are done in a much easier manner and through a web portal, the system then activates the approval processes and sub processes.

The system can decide by itself whether to involve or not certain approvers or pre-approval sub processes depending on the type and amount of the request. Notifications are sent to sales people and managers for required approvals and notifications are sent to requesters when their request is denied. Requests are then flagged and processed immediately; allowing requests to be handled on time as they arise.

The system now also allows maintaining additional information like annotations and attached documentation that can be used by requesters to support their request or by approvers to make a decision on the approval. When requests are approved, a PDF is generated with the approval in local language (Japanese) for easier classification and archiving. This complements the activities performed by their ERP (SAP) system.

The process architecture was defined by the financial department at Audi Japan KK, acting as the principal stakeholder of the processes to be automated, and ac-cording to their requirements for process compliance. It involved the creation of forms and documents, assigning roles, creating rules and mapping individual processes, all done with ease and speed. Process models were reviewed by Bizagi consultants for better quality models and advice on best practices for potential reutilization of the system in other Audi departments and subsidiaries worldwide.

The automated RFA process at Audi Japan KK could be easily reproduced or adapted as needed by other organizations, even in other industries. Audi Japan KK has recently included to the system another 6 processes (Overseas Trip approval, Domestic Trip approval, Personnel change approval, Purchase Order creation, Request for Payment (equivalent to accounts payable) and Budget Control Administration) and will potentially include processes with dealers and retail in the near future reaching approximately 400 users nation-wide.

Organization

At an organizational level, the key innovation was to actually start speaking the BPM language. The financial department is now a model to follow by other departments within Audi Japan KK. All levels of the organization are now aware of what they have done and can testify on the benefits and positive impact that process automation and BPM brings for the business and the employees.

Employees at the financial department are now more efficient and productive, they need to handle less paperwork, approvals are archived in a more organized manner and they have more control and visibility over their operation, which also leads to increased compliance with company and auditory policies. The RFA process is more transparent and people are also making a lot more effort to follow and meet the process standards.

Due to the improved budget management and control (which is now done almost in real time), the financial department was able to save time on administrative tasks and reallocate headcounts into more valuable jobs and distribute workload more efficiently.

As with any other new initiative that involves organizational change, it has taken a little time for people to adopt the new way of working, however, as the implementation and set to production of the first processes was done very quickly and results were observed immediately, it was much easier to engage other actors and stakeholders. Audi Japan KK knows that growth is inevitable, and with it, new ways to increase efficiency and to stay ahead of the business need to be implemented.

Benefits

The main focus of the automation of the RFA process was achieving transparency and quality. For this reason, other associated benefits have been obtained too, but quantitative metrics are not available at this moment. Most of the benefits observed are related to faster decision making, improved process control and visibility, better budget control and efficiency within the financial department at Audi Japan KK.

Cost Savings

For certain, there have been cost savings as a result of the automation of the RFA process. These are related to the reduction of paper-work and administrative tasks, the reallocation of headcounts into more valued jobs and the better distribution of resources and time. The RFA process experienced a significant reduction in average cycle time during the first months in production. After Japans earthquake in March it has been really hard to measure real cycle times as the business was affected by external and out of control factors. However, as business in the country has become more stabilized, these new average cycle times will for certain be achieved again. Also with the implementation of the Management RFA process (the short version of the RFA process) unnecessary approvals and waiting times have been avoided for certain requests, resulting in reduced cycle times for high level requests.

Increased Revenues

Audi Japan KK has probably observed indirect increases in revenue due to the reduction of manual activities, improved efficiency and the reallocation of work and resources in the financial department. However, it is not really measurable, due to the type and focus of the project.

Productivity Improvements

Productivity and efficiency rates have increased among employees in the financial department. The reduction of paperwork, manual-based processes and unnecessary delays for approval requests have contributed to a much better performance and control of their operation. They have also been able to save time in administrative tasks such as archiving and filing which lead to optimized distribution of workload and responsibilities.

Documentation is better classified and organized, making it easier to find and track past records and approvals when required by auditors or senior management.