Cost-Aware Workflow Systems Support for Cost Mining and Cost Reporting

However, there is a lack of integrationbetween WFMSs and management accounting, resulting in process mining not being able pro-to support cost reporting for management accounting purpose

Queensland University of Technology Faculty of Science and Technology

IT28 Bachelor of Information Technology (Honors)

Honors Thesis

Cost-Aware Workflow Systems:

Support for Cost Mining and

Cost Reporting

Wei Zhe Low (Keith)

Principal Supervisor: Dr Moe Thandar Wynn

Reviewer: Prof Arthur ter Hofstede Reviewer: Prof Colin Fidge

Queensland University of Technology, November 2011

Cost-aware Workflow Systems: Support for Cost Mining and Cost Reporting

Organizations nowadays face stronger and more aggressive competition Not only dothey need to operate seamlessly, a low operational cost must also be ensured to maintaintheir competitive advantage The ability to monitor the overall cost of business opera-tions closely and effectively, and then make necessary changes to their operations quickly,

is highly desirable for any organization In order to do this, organizations enable businessautomation by making use of workflow management systems (WFMS) Process mining

is used to mine the data models generated by a WFMS to gain insight into business cesses Management accounting techniques are used to capture business operation coststhat will be used to generate reports internal to the organization, where it can facilitatemanagers to make informed business decisions However, there is a lack of integrationbetween WFMSs and management accounting, resulting in process mining not being able

pro-to support cost reporting for management accounting purposes

This research aims to enable cost reporting by incorporating cost-related informationinto process mining This work improves upon the data model generated from the WFMS

in accordance with literature review findings, and subsequently proposes an architecture

to enable management accounting report generation via a process mining tool ProM Thisthesis presents a first implementation result by generating various types of managementaccounting cost reports The findings will enable process mining to be cost-aware, thuspromoting more accurate and near real-time cost analytics of organizations

First of all, I owe my deepest gratitude to my supervisor, Dr Moe Wynn for her patience,guidance and support throughout the course of this Honors research Her encouragementand unwavering faith greatly motivates me to do my very best for this research I amalso very grateful towards Dr Michael Adams, Dr Chun Ouyang, and Prof Arthur terHofstede who had supported me and my research in many ways Their valuable academicteachings and technical guidance were a big help for me to improve my work

I would like to acknowledge Wiebe for his facilitation in the early stage of my search His guidance and support in establishing my research environment have provedvery fruitful by saving a lot of time and energy I would also like to extend my gratitudetowards my friends and colleagues within the BPM group Their support and compan-ionship have made my moments within the BPM group more interesting and enjoyable

re-It is my pleasure to thank the professors, lecturers, and counselors that helped megain more knowledge about conducting research and writing a thesis Thanks to them, Ihave seen the other side of research-based academic, which is very different from what Iused to experience back during college and university times I would also like to thank themembers of the ProM forum for their help Their constructive comments and technicalsupport have significantly sped up the progress of my research

Last but not least, I would like to thank my family for their love and support Theirwillingness to spend a huge amount of money without a second thought to ensure that Ireceive the best possible education abroad has, and always will, touch my heart I alsogreatly appreciate my friends, both in Brisbane and back in Malaysia, who were very un-derstanding and continuously provided encouragement during the period of my research

I offer my regards and blessings to all of those that I forgot to mention, who supported

me in any respect during the completion of the project This thesis would not have beenpossible if not for the support of a wonderful group of people I sincerely appreciate allthe assistance and experience that I have gained this year

Wei Zhe Low (Keith)

November 2011

1.1 Research Problem 2

1.2 Research Objectives 4

1.3 Research Scope 4

1.4 Research Approach 5

1.5 Significance of Study 6

1.6 Limitations of Study 7

1.7 Research Outcomes 7

1.8 Thesis Outline 8

2 Literature Review 9 2.1 Business Process Management 10

2.1.1 BPM Lifecycle 10

2.1.2 Process Modeling Languages 11

2.1.3 Workflow Analysis 12

2.1.4 Workflow Patterns 14

2.1.5 Modeling Tools 14

2.2 Management Accounting 15

2.2.1 Costing Levels Continuum Maturity Model 16

2.2.2 Management Accounting Techniques 17

2.2.3 Reporting Requirements 17

2.3 Process Mining 20

2.3.1 Event Log 21

2.3.2 Process Mining Tool 21

2.3.3 Cost-Annotated Event Log 21

2.4 Conclusion 22

3 Solution Approach 24

3.1 Resource Cost Conceptualization 24

3.2 Cost Reporting Format 34

3.3 Functional Requirements 37

3.4 Technical Requirements 38

3.5 Cost Reporting Architecture in ProM 39

4 Solution Implementation 41 4.1 Test Case Example 41

4.2 Cost Report Creation 43

4.3 Graphical Cost Reports 45

4.4 Tabular Report Output 50

4.4.1 Pilot Work 50

4.4.2 Customized Resource Cost Report 51

4.4.3 Filtered Resource Cost Report 52

4.4.4 Resource Idle Capacity Cost Report 54

4.5 Future Enhancements 55

5 Conclusion 57 5.1 Deliverables 58

5.2 Future Work 59

Bibliography 61 A Cost-Annotated Event Log 65 B Data Model Schema 66 B.1 Organizational Model Schema 66

B.2 Cost Model Schema 70

List of Figures

1.1 General cost mining architecture (adapted from Nauta’s thesis [14]) 4

2.1 The four phases of the BPM lifecycle [4] 11

2.2 IFAC Costing Continuum’s Levels of Maturity [11] 16

2.3 The allocation of resource costs to activities [23] 18

2.4 An example of an ABC cost report where activity costs are assigned to individual products [23] 18

2.5 An example of a TDABC cost report that calculates the cost based on the time consumed to perform an activity [12] 18

2.6 Original costs that were committed by the organization [23] 19

2.7 Cost of the activities that were utilized [23] 19

2.8 An example of a RCA idle resource cost report calculated based on the committed cost and the allocated (utilized) cost [23] 19

3.1 Object-Role Modeling of resource cost elements 26

3.2 The relationship between different organizational entities [22] 27

3.3 An example of how resource class types are used in the cost model 28

3.4 An example of how resource unit cost rates are used in the cost model 29

3.5 An example of how resource capacities are used in the cost model 31

3.6 The schema based on the organizational model from YAWL [22] 32

3.7 An example of resource cost driver with multiple resource costs 34

3.8 Schema of a resource cost driver 34

3.9 An example of the most commonly used graphical report outputs 35

3.10 An example of management accounting tabular cost report [40] 36

3.11 An example of resource consumption cost report 36

3.12 An example of resource idle capacity cost report 36

3.13 Detailed cost mining and cost reporting architecture 40

4.1 A BPMN diagram of a phone repair process 42

4.2 The resource perspective of the telephone repair company 43

4.3 ProM plug-ins’ input and output screen 45

4.4 An example of how graphical cost reports are displayed in ProM 46

4.5 Resource cost report in a 2D pie chart 47

4.6 Resource cost report in a 3D pie chart 47

4.7 Resource cost report in a 2D bar chart 48

4.8 Resource cost report in a 3D bar chart 48

4.9 Resource cost report in a waterfall chart 49

4.10 Resource cost report per trace in a multiple bar chart 49

4.11 A tabular resource cost report 51

4.12 A tabular resource cost per trace cost report 51

4.13 An example screenshot of a customized resource cost report 52

4.16 An example screenshot of a resource cost report where no filter parameter

List of Tables

3.1 An example of the resource class types 28

3.2 An example of resource cost types and their respective cost rates 29

3.3 An example of resource capacity 30

3.4 An example of resource cost drivers for individual resource 31

3.5 An example of resource cost drivers with multiple resources 33

3.6 An example of cost type, capacity unit, and the cost of the resource cost driver 33

Chapter 1

Introduction

This Honors thesis is the result of a dissertation submission done within a larger search initiative of Cost-Aware Business Process Management (Cost-Aware BPM) withinQueensland University of Technology (QUT) This research initiative looks at the gapbetween the business process management (BPM), the process mining, and the manage-ment accounting disciplines How information provided by the organization can be minedfor cost information, and how cost information will be used to generate cost reports thatconform with the principles of management accounting are the main objectives of thisstudy

re-Organizations strive hard to maintain their competitive advantage and increase theirprofits in an ever changing business environment In order to accomplish these goals,organizations make use of BPM techniques, particularly process modeling and processautomation, to model and automate their business processes [24, 34] The modeling andautomation of an organization’s business processes are accomplished using workflow man-agement systems (WFMS) They greatly increase a business operation’s efficiency Anevent log provides a historical record of processes that were executed by a WFMS [27].The event log then can be used to enhance the capability and effectiveness of businessprocess automation through process mining [19, 27]

Process mining discovers, monitors and improves processes by extracting knowledgefrom event logs [27] An event log is a data store where a process log is written con-taining all information on the actual execution of tasks [22] Analysis of an event logallows organizations to acquire process-related information such as tasks, resources, andtimeframe Apart from the event logs, data models such as the workflow specificationsand the organizational model can be used to enrich the results of process mining [19].Process mining is enabled through software that mines and extracts relevant informa-tion from the provided data models and presents the results to facilitate organizations tomake informed decisions Afterwards, simulation tools make use of the mined results tosimulate possible process improvement scenarios [19]

In terms of management accounting, operational costs of an organization’s businessprocesses, such as fixed, variable, and overhead costs, are captured for reporting pur-poses [16] Management accounting is intended to be used only by managers within anorganization to make informed business decisions It is not intended for external report-ing There are three management accounting techniques that are available currently,

namely Activity-Based Costing (ABC) [3], Time-Driven Activity-Based Costing ABC) [23] and Resource Consumption Accounting (RCA) [40] Activity-Based Costing(ABC) identifies the activities in an organization, and assigns product costs to each ofthem [3] Time-Driven Activity-Based Costing (TDABC) calculates the time-based costfor each activity The final cost of a product or service is calculated based on the activitiesand how much time was spent to create a product or provide a service [11] ResourceConsumption Accounting (RCA) is concerned with the cost consumption of a resource

(TD-in an organization, where the product or service cost is calculated based on the resourceutilization cost [40] A detailed understanding of how an organization operates and thecosts they incur is essential for this research

A workflow management system (WFMS) provides automation support for the ness operations in an organization whereas management accounting is concerned withanalyzing business operation costs Any changes made to a business process can poten-tially result in a change in its operational costs It will then be reflected in managementaccounting reports These cost reports created by management accountants will be used

busi-to make operational decisions, which can then trigger a change in an executable businessprocess Hence, a close link between the business process management discipline and themanagement accounting discipline is apparent and desirable However, most WFMSs donot log cost information, which results in process mining not being able to support costmining and cost reporting Management accounting techniques and systems also do notmake adequate use of input data from workflow systems during their cost report gener-ation Hence, this research initiative aims to establish a stronger link between WFMSsand management accounting

This research scopes itself within the breadth of cost mining and cost reporting, wheremanagement accounting principles are taken into consideration This work conducts a lit-erature review on the involved disciplines and identifies what extra information is needed,and proposes how cost mining and cost reporting can be supported An architecture isproposed to enable cost report generation through cost mining, where a first implementa-tion result will be presented by generating various types of management accounting costreports

This chapter first states the research problem in Section 1.1 Then, Section 1.2 statesthe research objectives Section 1.3 and Section 1.4 define the scope and the approachtaken in this research The significance and limitations of this study are explained inSection 1.5 and Section 1.6 respectively Finally, the research outcomes are described inSection 1.7, and the overall outline for this thesis is listed in Section 1.8

From the point-of-view of a WFMS, most of them do not support sophisticated costinganalysis While only handling process-related information such as executed tasks, taskdurations, and involved resources, the cost information is not being taken into account.Therefore, there is little or no logging of cost information in the event logs generated

by a WFMS Considering that process mining mines the event log to gain insights intobusiness processes [27], no cost-related information can be extracted due to the lack of cost

information in event logs For management accounting, current management accountingtechniques and systems also do not make adequate use of input data from workflowsystems during their decision making Thus, managers only make decisions based onthe cost information that is provided by the management accounting systems withoutconsidering the business’s workflow automation point-of-view Knowledge of workflowautomation would provide an objective view of factors contributing to cost Based on thelack of integration between these viewpoints, the following research questions have beendeveloped.

and reporting requirements) that cost reports must conform with?

Different organizations make use of different management accounting techniques forinternal reporting Each of these techniques focuses on different cost aspects of the orga-nization’s business operations What are the requirements to generate cost reports thatfit these principles? Is there a specific reporting format that requires certain informationfor each of the techniques? The literature review addresses these research questions bylooking at the data requirements, as well as the reporting format of different managementaccounting techniques

that restrains the support for cost mining and cost reporting? How can existing data els be enriched to enable cost mining and cost reporting?

mod-Since most WFMSs do not cater for the logging of cost data, there is a lack of related information in the data models provided by a WFMS After the managementaccounting requirements have been identified in the literature review, analysis is done tocheck whether those requirements can be fulfilled by the existing data models Identifyingwhether there are missing pieces of information is also one of the aims of this research.The solution approach elaborates on the absent information required by managementaccounting, and further explains how existing data model can be extended to incorporatethe extra information

that are compliant with management accounting principles?

Another important part of this study is determining how management accounting costreports can be generated This will make use of the data model that was extended withthe extra information required by management accountants Also, it will be beneficial ifdifferent reporting genres and formats can be generated in order to maximize the targetaudience or users This research addresses how process mining supports the generation

of a wide variety of reports that accommodate personnel from different organizationalhierarchy or different organizations A cost mining and cost reporting architecture hasbeen designed and implemented

1.2 Research Objectives

This work proposes a novel approach to enable and enhance support for cost mining andcost reporting that complies with management accounting principles The data mod-els provided by WFMSs will be incorporated with necessary cost-related information,enabling cost mining to be performed on those data models The first implementationresult will be presented by generating various types of management accounting cost re-ports The findings will enable process mining to be cost-aware, promoting cost analysessuch as cost mining and cost reporting of business operations

In order to achieve this, there are a number of research objectives:

1 To identify the main requirements to generate a management accounting reportusing data from a WFMS

2 To extend the data models with cost-related information

3 To develop a cost mining and cost reporting architecture

4 To demonstrate a proof-of-concept implementation by generating management counting cost reports using data available from a WFMS

This research allows cost mining and management accounting cost reporting support for

a WFMS, where the primary focus is on cost reporting Figure 1.1 illustrates the overallcost mining architecture

Create Cost Reports

Cost-Annotated Event Log

Organizational Model

Cost Model

Management Accountant

cost drivers, cost functions and the reporting template are provided by a managementaccountant As existing event logs do not contain any cost information, they need to

be annotated with cost elements such as cost type, cost amount, and many more Inorder to do this, the creation of a cost model is required A cost model is a combina-tion of static information from the process model, the organizational model, and the costamounts (calculated by making use of the cost drivers and cost functions) associated withtasks that can be executed [14] By making use of the cost model, the event log can beannotated with cost elements, where the completed tasks were embedded with process

or resource costs associated with it The event log is enhanced by computing the cost ofexecuted tasks using the cost model, resulting in a cost-annotated event log [14]

The cost model and the cost-annotated event log used in this research are acquiredfrom Nauta’s work [14] For this research, the existing cost model and organizationalmodel are extended with the required cost-related data identified from the literaturereview By mining cost-annotated event logs, various genres of graphical reports werecreated Also, by employing the extended cost model and organizational model, alongwith the cost-annotated event log, tabular reports that comply with the managementaccounting principles were generated To further customize or format a tabular reportaccording to an organization’s needs, report templates that can be applied to create areport output format that the user desires are proposed

The total duration for this Honors research project is one year, and it has been dividedinto five stages

under-standing of business process management, process mining, and management accountingliterature is required for this research As current WFMSs do not incorporate costing el-ements, resulting in process mining not being able to support cost mining, this literaturereview aims to identify the cost information requirements by comparing and contrastingthe current process mining and reporting ability with the typical management accountingreports The functional requirements, the technical requirements, and the developmenttool for this research were identified, and a cost mining and cost reporting architecturewas proposed

Anal-ysis was performed on the cost-annotated event log to understand its properties The

imple-mentation enabled familiarization with the research’s development environment Theunderstanding gained from the cost-annotated event log study was put to the test byimplementing a graphical report generation plug-in Different genres of graphical re-ports such as 2D and 3D pie charts, bar charts, waterfall charts, and many more, wereimplemented as a result of this pilot work

1 http://www.processmining.org/

Stage 3 - Design and Proof-of-Concept Implementation For this stage, a costmining and cost reporting architecture was proposed and implemented Utilizing theknowledge from the literature review, the cost model and the organizational model wereextended with essential management accounting cost information The proposed archi-tecture was implemented using the process mining tool ProM After that, the first im-plementation result, which is the generation of various management accounting reports,were demonstrated using a number of ProM plug-ins.

system tests and evaluations were carried out This is to ensure the quality of the researchoutcome and its effectiveness Appropriate changes and enhancements were made to theresearch artifact as deemed necessary

implementation work was consolidated The knowledge acquired and insights gainedabout this research area were documented into this thesis

Currently, there has been little or no integration of cost aspects into WFMSs and processmining environments This research has enabled process mining to mine cost variables,which consequently allows the generation of cost reports where mined costing results weredisplayed in a meaningful manner Considering that this research emphasizes manage-ment accounting, the research outcomes provide a means of generating cost reports thatadhere to the principles of management accounting Organizations that are already mak-ing use of, or planning to adopt management accounting reporting can freely make use

of process mining to generate management accounting reports and other process-relatedreports

Generating reports from different viewpoints is also an important consideration forthis study Cost reports that were generated from the process or resource point-of-viewenable users to analyze and understand business operation costs from different perspec-tives From the process’s viewpoint, users can identify which task of the process consumesthe highest cost or the most time From the resource viewpoint, users can identify whichresource was fully utilized (or underutilized) or the cost incurred in resource consumption

By illustrating these different viewpoints of cost reports, organizations can make betterdecisions based on the correlation of different perspectives in their business operations

This study also strives to make sure that the cost reporting functions cater for a widerange of users The generation of graphical and tabular reports enables users to pickthe one that suits their needs Depending on the granularity of the reporting details,personnel from different organizational hierarchy levels can be accommodated to viewthe relevant cost data Given that there is no one standardized format for managementaccounting reports, organizations have the option to customize it by providing their ownreporting template This widens the capacity as this research outcome caters for thereporting differences across various organizations

Hence, the outcome of this study is a first step towards enhanced support for costmining and cost reporting within a WFMS environment, where the cost reports generatedcomply with management accounting principles By catering for different viewpoints and

a wide range of audience (for example, BPM professionals, management accountants,managers), the cost reports generated also cater for decision making requirements fromthe management accounting discipline

This research addresses the area of cost reporting within a WFMS environment only.Only the data that are relevant for cost reporting are considered, such as the cost model,organizational model, and cost-annotated event log Other areas such as cost model cre-ation and log annotation (refer to Figure 1.1) are out of scope In addition, this researchdoes not look into the field of cost prediction and cost simulation, hence, predicting andsimulating how changes in business decisions will affect the operational cost is not withinthe scope of this research This study only focuses on process-related costs This includesprocessing costs and production costs such as fixed, variable, and overhead costs, but notexternal costs such as environmental costs This research also scopes itself within themanagement accounting field Other accounting techniques such as cost accounting arenot catered for in this research A detailed evaluation of the proposed architecture in thecontext of a particular organization is left as future work

In Section 1.2, four objectives were identified: to identify the management accountingreport requirements, to extend the data models, to develop a cost mining and cost report-ing architecture, and to demonstrate the result by generating cost reports The outcomes

of this research align and reflect these objectives

topics that are relevant for this research such as WFMS, business process management,process mining, and management accounting Since there is a lack of integration betweenWFMS and management accounting, the data models provided by a WFMS lack cost-related information This results in process mining not being able to mine cost variablesand to support decent cost reporting The outcome of this literature review identifies themissing pieces of information, which are used to extend the data models provided by aWFMS

models were extended with the necessary cost information Data models were extendedwith cost-related elements, so that cost mining could be performed The extended datamodels include the cost model (named resource cost driver in this research), which docu-ments resource-related information, and the organizational model, where it was extendedwith capacity-related information for the resources

archi-tecture was built by taking into consideration the required input and the desired output

The functional and technical requirements were also taken into consideration, determiningthe development environment to be used, which is in this case, the process mining frame-work, ProM The architecture takes in the required inputs (such as the cost-annotatedevent log, the cost model, the organizational model, and the report template), minesand extracts the cost-related data, and presents them in cost reports that conform withmanagement accounting requirements.

imple-mentation via the illustration of cost reports Cost reports that are of a different genreand are customizable were generated All of the reports align with the management ac-counting principles, which focus on cost information such as cost categorization and idleresource costs The result exhibits not only both graphical (for example, 2D and 3D piecharts, bar charts, and waterfall charts) and tabular reports, but also report outlooks thatare customizable, filterable, and group-able according to the needs of the user The costreports not only cater for both managerial and technical personnel from different organi-zation across the organizational hierarchy, but also cater for a wide range of organizationsthat have different reporting formats

Chapter 2 presents the preliminary knowledge and identifies the knowledge gap betweenWFMS, process mining, and management accounting Chapter 3 designs an architecturethat enables cost mining and cost reporting support Then, Chapter 4 presents the archi-tecture proposed in Chapter 3, along with the outcome of the implementation Finally,Chapter 5 discusses the research outcomes and future work

Chapter 2

Literature Review

In this era of business exploitation, business organizations are facing stronger and moreaggressive competition As the proportion of overhead costs rise, organizations strive tomaintain competition by ensuring that their operational costs remain low The ability tomonitor the overall cost of business operations closely and effectively, and then make nec-essary changes to their operations quickly is highly desirable for any organization Thus,business organizations make use of business process management (BPM) to support theirbusiness processes [33] Workflow management systems (WFMS) facilitate this by provid-ing generic software packages in order to manage and automate business processes [24, 34]

Process mining enables businesses to acquire information on the process flow, sumed time frame, and resource utilization through the analysis of event logs [27] Thiscan be done by extracting information from the event log, the workflow specification andthe organizational model from the workflow model [19] Whenever there is a fundamen-tal change in the business process or resource utilization, simulations can be done on theevent log to predict the outcome [19] Process mining extracts the relevant data from aprocess flow and provides insights about the current business operation Subsequently,simulation on the extracted data provides a “fast-forward” snapshot on how businessdecisions or changes may impact the overall output of the organization [19]

con-Management accounting [3, 2, 11, 23, 40] is an important area in this research too

as it captures essential cost variables [16] in the business process of an organization.Management accounting not only measures production costs, but also overhead costssuch as administration and involved facilities [3] These costs were all aggregated andassigned directly to a product or service, enabling organizations to increase the accuracy

of their product or service costs A detailed understanding of how the business operatesand the costs they incur will enable organizations to make informed decisions towardtheir cost management The three management accounting techniques, Activity-BasedCosting (ABC) [3], Time-Driven Activity-Based Costing (TDABC) [23], and ResourceConsumption Accounting (RCA) [40], are discussed in this chapter

Currently, in terms of workflow support for management accounting decisions, there

is a big gap between WFMS and management accounting As this area is relativelynew, there are not many studies that were conducted Most WFMSs do not supportsophisticated costing analysis as the cost factor is not directly taken into account in theirsystem The lack of cost elements in the WFMS resulted in event logs containing little

or no cost-related information, which consequently limits the support for cost miningand cost reporting There is also a lack of management accounting literature concerningthis interdisciplinary field For this research, focus is on the organization’s cost element,especially resource costs, in order to enable support for cost mining and cost reporting.

Section 2.1 in this literature review looks into the BPM discipline and elaborates on theproperties of WFMS Section 2.2 explores different management accounting techniquesand identifies the reporting requirements from each of them Section 2.3 introduces pro-cess mining and elaborates on the related process mining work for this research Finally,Section 2.4 concludes this literature review, providing a justification for this research’sinitiation

In order to maintain their competitiveness, organizations need to constantly come upwith new strategies or new products and services rapidly BPM is used to support busi-ness processes using methods, techniques, and software to design, enact, control, andanalyze operational processes involving humans, organizations, applications, documents,and other sources of information [33] Workflow Management Systems (WFMS) sup-port this by modeling the organization’s processes in order to support business processautomation [24, 34] This can further increase the effectiveness and efficiency of theirbusiness process A WFMS is defined as a generic software system that is driven byexplicit process designs to enact and manage operational business processes [33] Theusage of WFMS brings a number of advantages [4]:

• Provide means for easier communication between different parties of different skillsdue to the use of explicit or visual process models

• Model-driven rather than code-driven, allowing the business processes to be alteredwithout recoding the whole system

• Allows business process automation, which will increase the efficiency and ness of the organization’s business process

effective-2.1.1 BPM Lifecycle

BPM goes through a typical development lifecycle to come up with a WFMS [33, 4] Asshown in Figure 2.1, the BPM lifecycle has four iterative phases, which are the designphase, the implementation phase, the enactment phase, and the diagnosis phase [33, 4].During the design phase, the processes are designed based on the requirements analysisfor the business operations, resulting in the creation of process models In the imple-mentation phase, the process models created are implemented into operational processessupported by a software system After the implementation phase, the process enactmentphase starts The processes were executed using the WFMS In the diagnosis phase, theexecuted processes were analyzed to identify any existing problems or to improve theexecution, which iterates back to the design phase

The top half of the lifecycle emphasizes process diagnosis and (re)design; hence it isfacilitated by business process modeling tools The bottom half of the lifecycle focuses

Figure 2.1: The four phases of the BPM lifecycle [4].

on the implementation and execution of the business processes; thus, it is facilitated byWFMSs The project management tools support this whole lifecycle as design, imple-mentation, enactment, and diagnosis is an ongoing and iterative project

2.1.2 Process Modeling Languages

There are many methods that were proposed to model workflows, among them arethe Business Process Modeling Notation (BPMN) [42, 43], Event-driven Process Chains(EPCs) [4], Petri Nets [13, 24, 34], Workflow Nets [34], and YAWL Nets [28, 31, 22]

Business Process Modeling Notation (BPMN) is a graphical representation for ping business processes in a business process model [41] Its goal is to support BPM

map-by providing notations that are readily understandable map-by all business and technicalusers [41] It is currently the most common modeling language that is used by businessusers BPMN defines a Business Process Diagram, where a flowcharting technique isused to create graphical model representation of business process operations [41] Thelatest version of the notation is known as BPMN 2.0 [15] There are four basic categories

of graphical elements [15] Flow objects represent the flow of the business processes,which are the activities that the organization perform, the events that happen during thecourse of a business process, and the gateway (divergence and convergence of activitiescontrolled by AND, OR, or XOR logical operators) The Connecting objects connectthe flow objects to create a basic backbone structure of a business process Swimlanesorganize activities into categories to illustrate the difference in functional capabilities orresponsibilities of the resource that executes the work Lastly, artifacts represent theadditional items or artifacts for a specific modeling situation

EPC is another common modeling language where flowcharts were used to modelbusiness processes [4] It provides the flexibility to allow parallel and alternative processexecution with the usage of logical operators such as AND, OR, and XOR [4] EPCcan be easily understood, thus making it a widely accepted modeling language It is

customization [4] There are three core nodes in EPC [4] Functions represent executedactivities in the business process where the transformations from an initial state to aresulting state are described Events describe the circumstances that executed functionsresulted in, whereas connectors associate the functions and events by connecting them

1 http://www.sap.com/australia/index.epx

Another modeling language is Petri Nets [13] Classical Petri Nets were first duced by Carl Adam Petri [17] in his PhD thesis Petri Nets are a graphical and math-ematical modeling language applicable to many systems [13] A Petri Net is a directedbipartite graph that consists of places and transitions which are connected by directedarcs [13] A place may contain one or more tokens, where they play an important role

intro-in the concept of transition enablintro-ing and firintro-ing A transition is considered enabled if thenumber of tokens in any precedent place is equal or more than the required number oftokens for the transition Only a transition that is enabled can be fired Transition firing

is the event of consuming token(s) from the precedent input place and adding token(s)

to the output places

Although Petri Nets are powerful [25], there are several shortcomings in the method

In order to eliminate them, the Petri Net method was improved with three extensions,which are the color extension, the time extension, and the hierarchical extension [34].The extended Petri Nets are referred to as High-level Petri Nets [34] A Petri Net isnot capable of distinguishing between different tokens, thus, the color extension enables

a High-level Petri Net to distinguish between tokens that represent different things [34].The time extension allows tokens to receive timestamp values along with other values,which indicates the availability of the token according to a predefined time For thehierarchical extension, a new element represented by a double-bordered square, which iscalled process, is created It represents a sub-process, where a number of related activitiescan be grouped together and mapped under it, thus reduces the complexity of the PetriNet

Workflow Nets (WF-Nets) are Petri Nets with a number of additional restrictions [29].WF-Net is introduced to model business process in a more structural and computerizedway A WF-Net is a Petri Net with two extra places, which are the input place (with noincoming arcs) and output place (with no outgoing arcs) All tasks must be on a pathbetween the input and output place [22] Also, all tokens fired from the input place musteventually end at the output place Besides, syntactical sugaring (illustrations added onthe graphical elements) were introduced for the four transition elements, which are theAND-splits, AND-joins, XOR-splits, and XOR-joins

YAWL Nets were created to address a few shortcomings [31] of the WF-Nets [29]

A YAWL Net is a type of Extended Workflow Nets (EWF-Nets) with support for tiple instances, advanced synchronization, and cancellation patterns [28, 22, 31] TheYAWL language is a Petri Net inspired language with its own independent semantics andstructural restrictions It introduced elements such as composite tasks, OR-splits, andOR-joins in its syntax A YAWL Net also allows direct linkage of arcs between transitionsinstead of connecting between places and transitions [22]

mul-2.1.3 Workflow Analysis

There are a number of methods that can be used to analyze Petri Net-based modelinglanguages’ behavioral properties [13, 37] In the Reachability property, “a place A is con-sidered reachable from place B if there is an existing firing sequence between them” [13]

In the Boundedness property, “a Petri Net is considered k-bounded if the number of kens in a place does not exceed the value of k” [13] “A Petri Net is considered safe if thevalue of k is 1-bounded” [13] For the Liveness property, “a Petri Net is considered live ifthere is always a further firing sequence after a place had been reached” [13], for example,

to-no deadlocks in the Petri Net In the Reversibility property, “a Petri Net is considered asreversible if the initial state can always be returned to” [13] In the Coverability property,

“a place in a Petri Net is considered coverable if it can be enabled for at least once” [13]

In the Persistence property, “a Petri Net is considered persistent if, for any two enabledtransitions, the firing of one transition does not affect the other transition, which will still

be enabled” [13] The analysis of these properties can also be applied to Petri Net-basedworkflow languages

Just as Petri Nets’ behavioral properties can be analyzed, a workflow model can beanalyzed using various means too [13, 24, 26, 34, 44, 35] To analyze a Workflow Net’sreachability, the Reachability Graph can be generated for the model A ReachabilityGraph shows every possible state that the workflow model can be in (for example, everypossible mapping of the tokens in their corresponding places) This can be used to iden-tify workflow model properties such as Boundedness, Safeness, Deadlocks, and others [13]

The most well-known way of analyzing a WF-Net’s structure is by analyzing itssoundness (correctness) property [45] For classical soundness, a workflow net is said

to be sound, if and only if, it fulfills the following three requirements:

• Option to complete - all executed instances of the net must ultimately terminate

• Proper completion - there must be exactly one token at the end condition, andthere must not be any other tokens left in the net at the time of termination

• No dead transitions - all transitions can be executed in a case

Not all workflow nets can satisfy the classical soundness property Thus, a number

of more relaxed measurements were defined [35] There is a total of eight different types

of soundness [35] The remaining soundness notions are k-soundness, weak soundness,up-to-k soundness, generalized soundness, relaxed soundness, lazy soundness, and easysoundness The soundness of the workflow system can be verified by a variety of meth-ods, which are the Coverability Graph, Invariants, and Reduction Rules [37, 44] More indepth details of these approaches are explained elsewhere [29, 37, 35]

Apart from the workflow’s reachability and structural analysis, its performance ysis is also a concern A workflow model’s performance can be analyzed using variousmeans The three common techniques are the Markovian analysis, queuing theory, andsimulation [37, 34] Quantitative aspects such as case completion times, processed caseper time unit, staff utilization rate, and case completion rate can be identified and an-alyzed [34] For the simulation process, this information can be utilized for operationaldecision support in workflow systems [19]

anal-Capacity planning is another form of workflow analysis that analyzes and plans thecapacity (resources) of an organization [34] Staff allocation needs to be taken into ac-count when modeling a workflow The capacity requirements of an organization are used

to plan an organization’s resource allocation, which covers aspects such as what resources

of which type, and the period that they are needed Proper capacity planning can ensureresource utilization and optimize an organization’s output

In short, workflow modeling languages with formal semantics such as Petri Nets,Workflow Nets, and YAWL Nets can be used to model an organization’s executablebusiness process flow The correctness of a workflow model can be analyzed to gaininsight about the business process, and ultimately be used to enhance an organization’sperformance

2.1.4 Workflow Patterns

The Workflow Patterns initiative started with the endeavor to identify and provide aconceptual basis for the business process modeling area [32, 22] It identifies the genericpatterns that consistently reoccur in process models Workflow patterns facilitate mod-elers by providing a guide to model and evaluate process models It is divided into threedistinct perspectives, which are Control Flow Patterns [32, 22], Data Patterns [32, 22],and Resource Patterns [32, 20, 21]

The control flow patterns describe the various flow patterns of control between ious tasks, which all together describe a business process [22] There are eight differentclasses of patterns categorized under this category, which are branching, synchroniza-tion, repetition, multiple instance, concurrency, cancellation and completion, trigger,and termination [32, 22] The data patterns describe the language that defines and man-ages data resources during the business process execution [22] There are four differentclasses of patterns categorized under this category, which are data visibility, data in-teraction, data transfer, and data-based routing The resource patterns describe howwork is being allocated to the resources, and how it is being managed through comple-tion [20, 21, 22] There are seven patterns that describe the various means of resourceinvolvement in a business process, which are creation, push, pull, detour, auto-start, vis-ibility, and multiple-resource The identified workflow patterns can be used to determinethe correctness of a flow for a process It can also be used to assess the suitability of theapplication of different patterns And finally, it also can be a foundation for modelinglanguage or tool development

var-2.1.5 Modeling Tools

Process modeling is enabled through software Various modeling tools can be used to

provides a platform for process modeling It supports a variety of modeling languages,which includes BPMN 2.0 and EPC Apart from process modeling, Signavio allows users

to generate simple cost reports such as process cost and resource consumption analyses.Being an on-line process editor, Signavio provides easy access for users from differentgeographical areas to participate in the process modeling process WoPeD (Workflow

Workflow Nets [5] This is a simple software tool for modeling, analyzing, and simulating

2 http://www.signavio.com/en.html

3 http://www.woped.org/

process models It also provides an interface to allow the mapping of resources in aprocess WoPeD also supports various analysis techniques, such as capacity planning,

open-source business process automation software environment that can be used to model andautomate YAWL Nets [31, 28, 1] YAWL is able to handle more complex data, enablesweb service integration, and provides a more powerful integration with organizationalresources [28, 22, 31] It also provides various analysis methods such as soundness [44]

As described by the International Federation of Accountants (IFAC), management counting makes use of accounting information of an organization to provide managers withinsights to understand how their business is going, and assist them in making strategicmanagement decisions [10, 11] Costing is the accounting term that embraces businessprocesses and expresses them in monetary terms [10] It contributes to an understanding

ac-of how effectively and efficiently prac-ofits and values are being created from the input intotheir business processes [10]

It is important to understand the different cost types used in management accountingand their characteristics There are two types of operational cost that had been identified

by White [40] The term fixed cost describes the cost that does not change over a period

of time It also does not affect the output level of an organization Hence, the cost will beconsumed whether or not an organization produces any output Variable cost describesthe cost that is related to the production or output of an organization If the productionlevel increases in an organization, the variable cost increases as well, and the same goes

in vice versa

Apart from the cost types, three resource (human or non-human) capacity types wereidentified [40] The productive capacity describes a resource that is working or productive,delivering the service or product that it is supposed to Non-productive capacity describes

a resource that is not able to work or produce something It may undergo maintenance

or training, or is on vacation, etc Finally, the idle capacity describes a resource that isnot utilized due to the lack of work or an agreed break from work

In terms of management accounting, cost control is an important task The costcontrol cycle can be described in four activities, which are cost estimation, productionmonitoring, cost calculation and evaluation, and cost modeling [2] Cost estimation firstgenerates the cost estimates based on the customer requirements or potential orders, incorrelation with the existing cost model Then, the production monitoring cycle collectsall relevant information during the production cycle After that, the actual cost cal-culation and evaluation are done based on the data collected from the previous cycle.Lastly, the cost models are generated based on the cost information and cost evaluationgathered A continuous cost modeling and improvement is being done through this costcontrol cycle

4 http://www.yawlfoundation.org/

2.2.1 Costing Levels Continuum Maturity Model

The Costing Levels Continuum Maturity Model describes the twelve levels of accountingmaturity and how the accounting maturity levels are being applied [11] Each level upthe continuum expands on the previous level, which enables retainment, modification, orremoval of the previous level’s aspects The lower levels of management accounting focus

on the organization’s historical information, such as expense tracking, consumption rates,and cost reporting This is described in the first eight levels of the continuum, which areLevel 1 - Blind, Level 2 - Process Visibility, Level 3 - Partial Output Visibility (ExternalSupport), Level 4 - Full Output Visibility (Internal and External Support), Level 5 - Im-proving Output Information with Approximate Accuracy, Level 6 - Improved Treatment

of Indirect Costs, Level 7 - Customer Demand Sensitive, and Level 8 - Unused ity Awareness (Fig 2.2) In contrast with the lower levels, higher levels of managementaccounting focus on the future endeavor of the organization, such as demand-driven plan-ning and capacity sensitivity This is described in the last four levels of the continuum,which are Level 9 - Activity-based Resource Planning (ABRP), Level 10 - Time-drivenActivity-based Costing (TDABC), Level 11 - Resource Consumption Accounting (RCA),and Level 12 - Simulation (Fig 2.2) As the organization’s costing capability improves,more comprehensive costing techniques can be performed, which in turn benefits theorganization

Capac-Figure 2.2: IFAC Costing Continuum’s Levels of Maturity [11]

2.2.2 Management Accounting Techniques

As stated by IFAC in Figure 2.2, there are three main techniques of management ing, specifically Activity-Based Costing (ABC) [3], Time-Driven Activity-Based Costing(TDABC) [23], and Resource Consumption Accounting (RCA) [40] [11]

account-The ABC technique is among the first management accounting costing techniquesthat surfaced [3] ABC first identifies an organization’s activities Then, ABC tries tomeasure the resource involvement in activities and their respective operation costs Fromthe measurement results, the cost per activity is calculated and assigned to individualactivities Finally, the activities that are involved in producing a product or service areidentified, and based on the cost per activity calculated previously, the cost per product

or service is calculated and assigned to the product [3] This can reduce the level ofcost distortion in an organization, especially when most organizations had transformedfrom a direct-line manufacturer to a multi-line manufacturer and service provider, whichcomplicates the costing activity However, the ABC technique has several downsides It

is costly for an organization to maintain and update the ABC’s costing information due

to the information needing to be updated with every change in activity or resource [12].Also, the idle capacity of resources is not taken into consideration [23]

The TDABC technique is a variant of Activity-Based Costing (ABC) Instead of tivity pools, it uses quantity-based resource activity cost drivers in the model [23] As thename of this costing technique suggests, all measurements are in time units Time-basedcost for each activity is calculated, and the final cost is calculated based on the timerequired to finish that activity [11] Then, the difference between the calculated cost andactual cost is identified as idle resource cost Although the TDABC technique requires

ac-a lot of effort to mac-aintac-ain its costing informac-ation, its collac-aborac-ation with Enterprise source Planning (ERP) system makes the information updating activity less tedious [12]

Re-The RCA technique is created based on both the ABC and the German costing modelGrenzplankostenrechnung (GPK) [40] RCA promotes integration with ERP systems toovercome the complexity issue [23] RCA is proposed as a comprehensive accountingtechnique that allows resource costs to be assigned directly to products It does this bycalculating the fixed and proportional cost for resources and resource pools using thecost type concept It maps the resource-to-resource or activity-to-resource relationships

in cost models, providing an understanding that is essential to reflect resource costs [11].The unused resource capacities and their designated costs are calculated as idle resources.RCA is a relatively new technique and is regarded as among the mature costing tech-niquew by IFAC [11] In this research, we explore the data requirements specified in allthree management accounting techniques

2.2.3 Reporting Requirements

Each management accounting technique looks at different aspects of cost in the zation The principles of the various management accounting techniques are different,resulting in different requirements and different outputs for the cost reports There isalso no one standard for management accounting cost reports Organizations that makeuse of management accounting are free to generate the report output that they prefer

organi-without conforming to one generic format.

For the ABC technique, the fixed, variable, and overhead costs are all taken intoconsideration The different types of cost (resource costs and activity costs) identify thecost drivers, where the total costs are calculated and assigned to activities or productcategories Subsequently, the total costs are further calculated and assigned to individualproducts or services Figure 2.3 and Figure 2.4 illustrate examples of ABC cost reporting.Figure 2.3 demonstrates the allocation of resource costs to activities, where the activitycosts were then allocated to the products in Figure 2.4 The ABC cost reports illustratehow much an individual product or service costs, and what types of cost breakdown theproduct or service consist of [3]

Figure 2.3: The allocation of resource costs to activities [23]

Figure 2.4: An example of an ABC cost report where activity costs are assigned toindividual products [23]

Although similar to ABC, TDABC works in a different way TDABC technique tifies the fixed, variable, and overhead costs too, but instead of assigning the cost toindividual products or services, the costs are assigned to a time frame instead, for ex-ample, cost per minute Then, the cost per unit was calculated based on how long theproduct or service took to be completed Figure 2.5 shows an example of TDABC costreporting The types of activity, the activity time frame required to develop a product

iden-or to deliver a service, and the total utilized activity time frame are calculated [12] Thetotal cost is then calculated based on the activity costs that have been identified before.Again, the individual product or service cost can be calculated by dividing the total cost

by the total number of products or services

Figure 2.5: An example of a TDABC cost report that calculates the cost based on thetime consumed to perform an activity [12]

The RCA technique emphasizes the resource perspective The costs are calculatedbased on the resources that are utilized in the business process The RCA techniquealso looks at the resources that are underutilized where costs are attributed according totime that the resource is idle [40] Figure 2.6 first illustrates an example of costs that

an organization committed for production Then, the costs of the utilized resources werecalculated and presented in Figure 2.7 Lastly, the idle resource cost is calculated based

on the committed costs and the utilized resource costs, as illustrated in the example RCAreport in Figure 2.8

Figure 2.6: Original costs that were committed by the organization [23]

Figure 2.7: Cost of the activities that were utilized [23]

Figure 2.8: An example of a RCA idle resource cost report calculated based on thecommitted cost and the allocated (utilized) cost [23]

Referring to the management accounting cost report examples, it is obvious that thecost-related information is essential Different cost types such as fixed cost, variable cost,and overhead cost, are necessary in order to enable more comprehensive and accurate costanalytics Besides, the cost rates for different activities or resources are important to-wards the creation of cost drivers Furthermore, time or capacity-related information (forexample, duration to execute an activity, utilized resources, and maximum allocated re-source capacity), is important for utilization-based cost reports such as idle resource cost

Management accounting techniques make use of cost information to provide a moredetailed understanding of how the organization operates and the costs they incur Again,this enables managers to make informed business decisions to improve their organization’sprofit However, management accounting techniques and systems do not make adequateuse of input data from WFMSs during their cost report generation This setback obstructsorganizations from maintaining or increasing their cost report’s accuracy

iden-A process has four perspectives [27] The process perspective, also known as trol flow perspective, focuses on mining the activity flow of a business process [18, 30].Information regarding the business process, such as the dependencies between activitiescan be mined However, there are two factors that cause troubles to mine in the processperspective [30] The completeness of the event log is an issue The mined event logsmay not be complete because not every process paths will be executed or be present inthe event logs Some process paths may have a lower probability of execution, resulting

con-in an con-incomplete event log Secondly, the event log may contacon-in noise Parts of the eventlog may contain incomplete or incorrect information, due to human or technical errors

It may also be susceptible to exceptions A decision by a human to execute the taskmanually without going through the system will also result in incomplete event logs

The organizational perspective is concerned with the resources that execute ties [18, 30, 27] The resource that executes an activity can be identified from the eventlogs The relationship between resources, such as the transfer or delegation of tasks, canalso be known through mining of the organizational perspective The relationship be-tween resources can be determined by using two methods [30] The betweenness methodranks the resources based on the number of tasks that pass through them The subcon-tracting method shows the number of times that a task was delegated to another resource

activi-The case perspective is concerned with the properties of cases that were executed bythe business process instead of the process flow or its executing resources [30, 27] Mininginformation can be used to determine the answers to various analysis questions such asthe percentage of improvement since a strategy was first applied, or how can the amount

of money involved affect the probability of the task being executed immediately Insightsinto this information can provide information on how a case’s attributes affect its flow orperformance

The time or performance perspective deals with the frequency of an activity, and thetime it takes for an activity to finish [18, 27] WFMSs keep track of time by recordingtimestamps of the activities in the event logs, such as the scheduled time, start time, andend time The frequency of execution of an activity is also recorded in order to determinequalitative inquiries such as bottlenecks and staff under-utilization

In order to apply process mining techniques, the use of an event log is of utmost portance [19, 36] Along with the event log, the workflow specification and organizationalmodel can be acquired from the WFMS [19] All these three information can be fed intothe process mining tool to perform various types of analysis and simulations With this,insights in the business process can be acquired, and decisions can be made towards the

im-business plan.

2.3.1 Event Log

An event log is a data store where a process log is written containing all information

on the actual execution of tasks [22] Event logs are essential for process mining Byusing process mining techniques, a complete history of the process can be reconstructed

by mining the event log [22] Information such as task events (offer, start, complete), thepassed data, the task duration, and many more can be extracted from the event log

Event logs occur in many areas including business operations, event monitoring, search result logging and many more Since a variety of systems make use of event logs,

re-it can take on different forms or versions Hence, a standardized event log is required.Extensible Event Stream (XES) is an XML-based standard for event logs that provides agenerally-acknowledged format for event logs [6] The XES standard has been designed

in such a way that it is simple, flexible, extensible, and expressive enough to produce ageneric event log for all kinds of usage [6] XES strives to be a generic event log standard

An XES Extension (XESEXT) defines a set of attributes on any level of the XES loghierarchy, providing points of reference for interpreting these attributes [6] In terms ofextensibility, XES can be further extended by defining external extensions, which allowdevelopers to customize or extend the XES standard for their own needs

2.3.2 Process Mining Tool

ProM is a process mining tool that enables business processes to be mined for analysispurposes [36, 30, 19, 38, 27] ProM receives the input of event logs in the ExtensibleEvent Stream (XES) or the Mining Extensible Markup Language (MXML) formats inorder to perform various analyses ProM is a generic open-source and pluggable frame-work [36, 38, 27], where organizations or developers can make use of this software for free.Furthermore, its pluggable environment allows developers to extend its functionalities bydeveloping ProM plug-ins [36, 38, 27] ProM is still an ongoing and active development;thus, the software support for ProM is almost guaranteed, providing assurances for orga-nizations or developers that are planning to adopt this process mining tool Currently,ProM has numerous plug-ins available for use in order to mine the different perspectives

as described

ProM plug-ins are categorized into five types [27] The mining plug-ins provide userswith various mining languages and capabilities The export plug-ins enable users togenerate their finished work into different types of outputs or formats The import plug-ins enable users to open their intended work from various kinds of formats The analysisplug-ins allow users to implement a variety of analysis techniques onto the mined result.Lastly, the conversion plug-ins convert the data from one format to another

2.3.3 Cost-Annotated Event Log

Event logs contain information about the process itself and resources that are involved inexecuting the tasks However, task and resource-related costs are not incorporated intothe event log, rendering a process mining tool unable to extract costing information In

order to incorporate costing elements into the event log, a cost model is required A costmodel is a combination of static information from the process model, the organizationalmodel, and the cost information associated with possible tasks that can be executed [14].Cost information can be further segregated into details such as cost types, cost currency,and the cost amount (calculated by making use of the cost drivers and cost functions).

By making use of the cost model, the event log can be annotated with costing elements.The event log is enhanced by computing the cost of the executed tasks using the costmodel [14] This results in a cost-annotated event log

A cost-annotated event log is an event log that is annotated with cost-related mation, such as cost types, cost currency, and cost amount [14] Completed events in theevent log are annotated with the cost amount and currency, along with the type of costthat is associated with that amount The cost-annotated event log that was generatedconforms with the XES standard A Cost XES extension was developed to cater for thecost elements in the cost-annotated event log

infor-This successfully incorporated cost elements into the event log, enabling task andresource-related cost information to be extracted and analyzed using process miningtechniques This is a first step towards enabling WFMS to be cost-aware, which supportscost mining and cost reporting Despite this improvement, it is still not sufficient togenerate a management accounting-style report Hence, this study focuses on the identi-fication of information necessary to generate management accounting cost reports fromthe cost-annotated event logs

A WFMSs provides a means to model and automate business processes, increasing the ficiency of an organization By mining the organization’s business process, one can gain abetter insight into the process, providing an opportunity for process improvement Fromthe literature review, it is clear that even though there is maturity in WFMS, there is still

ef-a lef-ack of collef-aboref-ation with the ef-accounting discipline, especief-ally for those orgef-anizef-ationsthat make use of management accounting The cost perspective in WFMSs is still under-developed Existing WFMSs provide little support towards a thorough analysis of processand resource costs Due to the lack of costing elements in the WFMS, organizations areunable to mine their business processes for cost-related information, preventing organi-zations to improve their business process from the costing point-of-view Furthermore,management accounting techniques and systems do not make adequate use of input datafrom workflow systems during their decision making Considering that process miningmines the event log to gain insights into the business process [27], little or no cost-relatedinformation can be extracted due to the lack of cost information in the event logs

From Nauta’s previous work [14], an event log has successfully been annotated withcost elements and simple cost reports have been generated based on the cost-annotatedevent log, initiating a first step towards cost-aware workflow systems However, the costreports generated only demonstrate simple cost calculations from a process point-of-view.Cost reports from a resource point-of-view, where the organizational entities are takeninto account, are not available Besides, the generated cost reports do not conform to

management accounting principles With the realization of these shortcomings, research

in this area is needed

This research proposes a novel approach to enable process mining support for costmining and cost reporting This research makes use of the costing variable in the in-formation technology sense for mining, and the accounting point-of-view has been takeninto account during the generation of cost reports Based on the findings, this workproposes a cost mining and cost reporting architecture together with a proof-of-conceptimplementation to support sophisticated cost analysis based on cost-annotated event logs

Chapter 3

Solution Approach

As mentioned in both Chapter 1 and Chapter 2, there is a lack of collaboration betweenthe fields of WFM, process mining, and management accounting, where the focus of thisresearch is to enable cost mining and cost reporting that adheres to management account-ing principles This work is built upon Nauta’s master thesis [14], the cost elements such

as cost amount, currency, and cost types, were incorporated into the event log, resulting

in a cost-annotated event log The current process mining reporting facility only minesand displays process execution-related result It is still not at the level that could enablesophisticated cost calculations that incorporate other organization-related information,such as resource capacity and department cost summaries This is why this research aims

to identify the required reporting information which conforms with the requirements fromthe management accounting discipline This research also examines how management ac-counting report information such as the resource capacity and idle resource costs can beidentified and incorporated to generate enriched cost reports

In this chapter, Section 3.1 discusses essential but missing management accountinginformation, and how the information can be extended into the existing cost model andorganizational model In Section 3.2, different reporting formats are discussed Then,the functional and technical requirements to achieve this desired result are analyzed

in Section 3.3 and Section 3.4 An architecture is proposed to illustrate the researchimplementation in Section 3.5

This research focuses on enhancing the reporting capability of process mining to porate management accounting characteristics Due to the nature of this research, theresearch outcomes must be compliant with management accounting principles Man-agement accounting makes use of an organization’s internal accounting information toprovide managers with insights on how well their business is doing, which in turn assiststhem in making strategic business decisions [10, 11]

incor-There are three different management accounting techniques Activity-Based Costing(ABC) identifies the activities in an organization, and assigns the product costs to each ofthem [3] With this, the total amount of the activity cost can be divided and traced back

to individual products [3] Time-Driven Activity-Based Costing (TDABC) is a variant ofABC Instead of activity pools, it uses quantity-based resource activity cost drivers in the

model [23] Time-based cost for each activity is calculated, and the final cost is calculatedbased on the time required to finish that activity [11] Resource Consumption Accounting(RCA) is concerned with the cost consumption of a resource in an organization It mapsthe resource-to-resource or activity-to-resource relationships in cost models, providing

an understanding that is essential to reflect resource costs [11] The main characteristic

of the RCA technique is that it recognizes the idle resource capacity in cost models byreflecting them in their management accounting reports, providing organization insightsinto how to improve them

In Nauta’s thesis [14], it was shown that the incorporation of cost elements into a ness process event log results in a cost-annotated event log However, from the literaturereview, we have identified that there are two important elements in terms of resourceinformation that are missing from the existing data models provided by a WFMS Man-agement accounting emphasizes cost from a resource point-of-view, whereas existing datamodels and process mining techniques focus more on the process point-of-view, for exam-ple, process execution cost Besides, although the resource utilization time frame can beseen in the event log, there is no way to determine the underutilization or over-utilization

busi-of the resource, in this case, named as idle resource capacity, due to the lack busi-of the source’s maximum working capacity

re-Hence, a data model that documents cost from a resource point of view, and a datamodel that holds the maximum resource capacity is needed to realize this research Theuse of cost-annotated event logs and several other data models in process mining canenable the calculation of individual product cost, idle resource cost, and several other

cost-annotated event log, which is essential for cost mining, the other data models that willfurther enrich the cost reports are discussed

Conceptualization Design and Mapping

The way that organizations assign tasks to resources can be simple or complex It can

be as simple as assigning a task to an employee, or as complex as assigning a task tothe whole department, which may consist of many employees or non-human resources.Organizations may also choose to pay each of their employees a salary, or a departmentalpayment allocation Therefore, there is a need for a data model that documents thesedata to support single or multiple resource cost assignments The data model must becapable of storing single or multiple resources, which consist of a variety of class types.The data model must also store the corresponding cost types and the monetary value

of the resource cost Last but not least, the data model must also include the capacityinformation to enable resource underutilization calculations

To better visualize and analyze the required information, a data model for cost hadbeen proposed because the data perspective is stable and provides a formal foundationfor which operations can be defined [8] The Object-Role Modeling (ORM) version 2

is chosen to model these data ORM is a conceptual modeling method that pictures abusiness domain in terms of objects playing roles [9] It provides graphical and textuallanguages for verbalizing and querying information as well as various design and transfor-mation procedures [9] ORM 2 is regarded as an expressive and intuitive data modeling

language [7], which facilitates the conceptual modeling task.

has

has

is of … type associate

Team, Position, Capability} Resource

Money

Value has

has

Capacity Unit

Duration (.time unit)

Resource Cost Driver

(.id)

costs

has unlimited capacity

name has

[Ref: Resource Cost]

[Ref: Resource Class Type]

[Ref: Resource

Cost Driver]

Cost Type (.name)

Currency (.Code)

Value

< has

has a maximum capacity within a

[Ref: Resource Capacity]

RCD description has

has

Duration Type

{Assigned, Allocated, Busy}

[Ref: Resource Duration]

Figure 3.1: Object-Role Modeling of resource cost elements

Figure 3.1 illustrates the ORM model for the Resource Cost Driver (RCD) The datamapped on this model revolves around the resource point-of-view A RCD has a nameand a description In addition, a RCD records five key pieces of information: 1) the costrate, 2) the cost type (e.g., fixed, variable, or overhead cost), 3) the associated resources(which could be made up of different resource classes), 4) the capacity unit associatedwith the driver (e.g., hour, liter), and 5) the duration type for the cost driver Based onthe model, extensions to two existing data models will be proposed, which are the RCDand the Organizational Model The resource class type (“Ref: Resource Class Type” inFigure 3.1) and the resource cost (“Ref: Cost Type and Money” in Figure 3.1) will beincorporated into the RCD, whereas the resource capacity (“Ref: Capacity” in Figure 3.1)will be incorporated into the organizational model

Resource Class Type

Organizations structure their resources into various categories of organizational ings An organization may categorize their resources into elements such as:

group-• Resource - Any physical (human resource) or virtual (non-human resource) entity

of limited availability (capacity) that is consumed to gain benefit from it

• Role - A set of connected behaviors, rights and obligations as conceptualized byactors in a social situation

• Team - A group of people or resources that work on a common purpose, for example,departments

• Position - A status of a person in an organization

• Capability - The specialized ability or skill to perform a task