More Related Content Similar to 20090901 London Enterprise Session V3 Colour (20) 20090901 London Enterprise Session V3 Colour1. What is a Business Process
Architecture & Why Is It
Important?
Roger T. Burlton, Dir Of Consulting Services
T Dir.
rburlton@bptrendsassociates.com
Paul Harmon, Chief Methodologist
pharmon@bptrends.com
BPTrends Associates www.bptrends.com
©2009 BPTrends Associates. All Rights Reserved
2. Notice of Confidentiality
All materials you are given in this class are copyrighted
by BPTrends Associates.
The materials must not be copied, duplicated, or
reproduced in any manner, or transmitted to others
without the written consent of BPTrends Associates.
BPTrends Associates may be contacted at
88 Waban Park, Newton, MA 02458 USA
info@bptrendsassociates.com
+1 617 964 4753
2
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3. Session Description
This seminar will look at corporate efforts to create Business
Process Architectures, the uses of process architectures, the
tools
t l and techniques available t f ilit t process
dt h i il bl to facilitate
architecture development, and the pitfalls to avoid. It will
consider business process architectures in a comprehensive
manner and include consideration of enterprise process
modeling, KPIs and the alignment of processes with
strategic goals and enterprise capabilities. Process
governance and the role of a BPM Center of Excellence will
also be introduced.
It is based on the BPTrends Associates BPM methodology
gy
which enables the concepts described.
3
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4. Facilitators Reference Materials
Roger Burlton’s
Business Process Management
www.amazon.com
www.amazon.co.uk
www.amazon.ca
Paul Harmon’s
Business Process Change
2nd Ed.
4
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5. Business Process Architecture Agenda
1. Some Process Principles
2. Understand Enterprise Context
p
3. Model Enterprise Processes
4. Define Performance Measures
5. Establish Process Governance
6. Align Enterprise Capabilities
7. Prioritize and Manage Change
8. Conclusion
5
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7. What Do People Think BPM Means?
BPTrends Survey: 2007. 274 Responses from throughout world.
7
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8. The Focus of Process-Centric Enterprises
For Enterprises with Multiple Lines of Business
p p
8
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9. BPM is Widely Applicable Way of
Managing Performance and Change
Versatility = able to do many things with your
BPM, EA,
capabilities SOA cover
Adaptability = able to renew your capabilities quickly all 3
Our Future To
Challenges Rapid Change
will be here Dynamic Invention
and Variation
Products
& Services
To
Stable Business as
B i Continuous
C ti
Usual Improvement
Most Improvement
Techniques do not Kaizen and Lean
question the Stable Dynamic from Toyota, Six
Product or Service Sigma from
Capabilities Motorola
Develop environments that assume & enable variation and change
9
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10. Enterprise Performance Requires Strategic Alignment
of Capabilities & Traceability of Decisions
Business Strategic
Intent Performance
Drivers Results
Business /
Stakeholder
Strategy
Business
Strategy
St t
Org/HR Information
Strategy Architecture
Business
Process
Architecture
Technology Other
Architecture Strategies
Program of Change
Migration Project
Capability
p y Strategy Portfolio
Architecture
10
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10
12. Different Perspectives on a Business Process
A process is a repeatable series of activities performed to produce
a result of value for one or more stakeholders.
• S
Scoping (E
i (Event) Vi
t) View:
– Is initiated and terminated by one or more business
events.
• Relationship View:
– Delivers outcomes of value to relevant stakeholders of
the process
process.
– Always connects to other processes in a value chain (our
own or other stakeholders’).
Business P
B i Processes are enterprise assets and must b managed as such.
t i t d t be d h
12
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13. Different Perspectives on a Business Process
• Processing View:
–Transforms inputs into outputs, according to policies
and rules employing reusable resources
resources.
• Performance View:
–Has performance indicators for which measurable
Has
objectives can be set and actual performance
evaluated.
• Functional / O ga
u ct o a Organizational View:
at o a e
–Contains activities requiring a set of functional
competencies often found in disparate organizational
units.
units
Business Processes are enterprise assets and must be managed as such
such.
13
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14. Business Processes as Aligner of Capabilities
Local Resturant
Finance &
Marketing & Sales Operations Transporation Legal Sevices
Administration
Information Faciliticies
Customer Service Logistics
Systems Management
Catering Accounts Human
Banquet Services Receivable Resources
Delivery
Accounts Payable Food Preparation
Purchasing
Credit
Organization
BPM: the discipline that Business
improves measurable business Business
process performance through Performance
ongoing optimization of
enterprise-wide processes and Processes
their capabilities.
Facilities
14
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15. What is a Business Process Architecture
There’s no broad agreement on this term. Here’s our
definition. A Business Process Architecture (BPA)
• is a set of models and documents that provide
information about the organization’s business processes
• consists of models and documents that describe the
organization s
organization’s processes and the various relationships
among them.
• describes the relationship of the processes to the
organization s
organization’s strategic intent and stakeholders
stakeholders.
• defines how the processes are measured
• describes how the processes are aligned to other
p g
organizational resources, including Business Rules, IT
assets and Human Resources.
15
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18. Undertake Enterprise Level Process Work to Support
Ongoing Management Goals
18
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19. A Quick Evaluation of Your Enterprise BPM Gap
19
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22. Strategic Intent: Mission, Vision, Goals,
Objectives
• Organizations use different names for the concepts – but
most have some description of what they are trying to
accomplish
• The organization strategic intent is usually defined by an
executive committee
• It is key to process work that we align our processes to our
organization’s intent
• In most cases this primarily involves examining documents
that already exist
• In some cases you may find documents that are vague or
ases o ma do ments a e ag e o
that don’t cover everything you will need to drive your
process architecture work
22
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24. Understanding an Organization
• Mission: We aim to produce something of value* for customers.
• Vision: We want to produce something of value for customers in
some way better than we do now
• Goal: We want to break our vision into a set of more definitive
accomplishments to support our Vision
• Objective: We want to be able to set a measurable target to
evaluate our attainment of our goals
• Key Performance Indicator: We want to establish the
performance indicator that lets us monitor our progress towards
our objective
* V l i determined by customers
Value is d i db
24
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28. Analyze Each Stakeholder Relationship
Understand or Determine what does the successful future
look like at the end of the planning horizon:
• The Goals for future of Value Creation (Stakeholder
Expectations)
• The Measurement Indicators of success (KPIs) for
( )
each Relationship Type
• The Objectives (Target Levels) for performance
Improvement during the Planning Timeframe
p g g
• Those Capabilities that must be in place and Critical
Success Factors that must be addressed to attain the
Stakeholder value goals, expectations and KPI targets
g , p g
• Together these are Evaluation Criteria for Business,
Process, Technology and Human Change
28
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29. Workshop
You have been asked to take on responsibility for the entire
‘Santa’s North Pole’ enterprise process architecture.
• What are 3 external drivers and pressures today?
• Set a planning horizon for change
• Briefly discuss the business strategic intent
• Identify 10 main stakeholders of the business?
• Identify for 1 of the stakeholders
– 2 future expectations you want them to have
– 2 KPIs and target levels you want to achieve
– 2 Critical Success Factors that must be satisfied
• Guidelines
– Make up your situation
– There are no thinking constraints
– Have fun
29
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32. Some Process Architecture Principles
• The Architecture is built from the perspective of a clear
“Organization in Focus” (OIF)
• E
Everything coming i
hi i into the OIF must come from at l
h f least
one external stakeholder and be received by at least one
process
• E
Everything l
thi leaving th OIF must go to at l
i the t t t least one
t
external stakeholder and be produced by at least one
process
• Internally a chain of processes move stakeholder
relationships through a lifecycle of state changes - from
unawareness through termination
• Internally a chain of processes move OIF assets through a
lifecycle of state changes - from conception through
retirement
32 32
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33. The Role of Value Chains, Value Streams and
Processes
• Value Chain: A complete set of value streams and their
processes that an organization performs to produce a complete
set of value added outputs for its external customers.
t f l dd d t t f it t l t
– eg: Core Customer Value Chain
• Value Stream: A subset of the value chain that supports the
delivery of a specific product service or result that contributes
product,
to customer value.
– eg: Acquire Customer Value Stream, Provide Insurance
Solutions Value Stream
• Process: A set of activities that transforms process inputs into
defined outputs to contribute towards the value stream’s goals
and objectives.
– eg: Identify and Qualify Needs, Secure the Business
Needs
33
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34. An Organization Diagram with Three Value
Streams (High Level Processes)
34
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35. As We Drill Down We Keep Expanding the
Effort Involved
Level 1 Level 2
Process Process
Value Chain
Level 1 Level 2
Process Process
Level 1 Level 2
Organization Value Chain
Process Process
Level 1 Level 2
Process Process
Value Chain
Level 1 Level 2
Process Process
1 Organization
g 3 Value Chains 3x5 = 15 Level 15x5 = 65 Level 2
1 Processes Processes
35
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36. Core, Management and Support Processes
36
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37. Business Process Frameworks
• A Business Process or Reference Framework is a template
that prescribes a set of high level processes and measures that
stereotypical companies use with those processes
• A company can use a BP Framework to quickly define an initial
cut at parts of a Business Process Architecture
• You would not expect a framework to be implementable “off the
shelf” to cover an entire enterprise in all it does
• Several different professional g
p groups are working on BP
p g
Frameworks.
– Generic Enterprise Models
– Industry Specific Models
Industry-Specific
– Domain-Specific Models
– Process Lifecycle and Value Chain Models
37
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38. Some Business Process (or OR) Frameworks
• Generic Enterprise Models intended to describe organizations of all
types in all sectors.
– APQC’s Process Classification Framework
APQC s
• Industry-Specific Models aiming to describe an industry in whole.
– ACORD Insurance Framework (Being developed)
– TeleManagement Forum’s eTOM
• Domain-Specific Models geared towards particular functions within
the organization and the processes within them
– OCG’s ITIL (Info. Tech. Infrastructure Library)
– ISACA’s COBIT (Control OBjectives for IT)
• Process Lifecycle and Value Chain Models to examine all work in a
connected process chain across and within enterprises.
– Supply Chain Council’s SCOR
– Canada Government (Treasury Board Secretariat) GSRM
(Governments Strategic Reference Model)
38
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40. ITIL Framework
40
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41. SCOR Example: Level 2 Processes
Supply
Chain
Plan
Source Make Deliver
Return
41
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42. SCOR Example: Level 3 Processes in Source ETO
Product
• Each of the Level 2 processes comes in one of three “stereotypes;”
• Off-the-Shelf
• Made to Order
• Engineered to Order.
Order
• In the example above, Source describes an Engineered to Order Source
process.
• There are few variations in the Level 3 process, no matter which
stereotype is involved.
42
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43. Process Decomposition Diagram for VRM*
* Value Chain Group’s Value Reference Model: Only Core Processes
43
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44. Some Frameworks Provide Measures, Benchmarks
Priorities: SCOR Example
44
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45. Business Process Semantics:
Rules for Naming a Process
Strict Naming Non–verb structures disallowed:
Structure: NO stand alone nouns or gerunds:
Anything that ends in
A process is …ing
described by an …tion
active verb-noun …ent
structure. …al
Verbs to be wary of:
The intended Anything that is lazy and not clearly result
purpose of the focused
manage
process must be in
handle
the name of the process
process. do
45 45
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46. The Process Architecture must
Support Relationship Lifecycles
All Stakeholder Relationships go through a progression from
unawareness through termination
What relationships do we
have to manage?
46
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47. The Process Architecture must Support
Asset and Capability Lifecycles
All assets and capabilities go through a progression from
concept identification through retirement
What things do we have
to manage?
47
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48. Financial Services Example
Core
Define Manage Improve &
Govern the EDC Strategic External
Develop
Policies
Transform the Ensure
Compliance
value chain
Business Intent Relationships Business
in
Manage the Understand Design Develop Plan & Manage
corporate
Markets & Products Business
Core Business Customers & Services Strategy
Operations
context
Create Identify and Develop Monitor &
Awareness & Develop the Secure the
Core Customer Interest
Qualify Value
Solution Business
Administer
Needs Proposition
Value Chain Solution
Acquire Customer
Provide Insurance Solutions
Value
Provide Financing Solutions
Streams
Provide Bonding Solutions
P id B di S l ti
Customer Provide Advisory Services
Customer
Manage
Manage Customer Relationships
Assets
Manage Partner Relationships
Optimize Financial Assets
Enable the Provide
Provide
Manage
Financial
Provide Manage Manage
Facilities & Legal Human
Business
B i Supplies
IT Services Resources
Services
Knowledge
Relationships
(Budget)
48
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49. Sample IT Level 1 and 2 Processes
49
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50. Group Workshop
• Looking back on the frameworks mentioned, identify the
types that may work for Santa’s business.
• Identify the processes in lifecycle of the child
• Identify the processes in the lifecycle of a gift
• Identify some Management and Support Processes of
the North Pole?
• Guidelines
– Verbs please
– 5-10 core processes
– 16 20 total processes
16-20
50
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53. From Strategic and External to Internal
Performance Measures as we Decompose
• Strategic and External Measures tell us about the results
achieved by the value chains or business processes in delivery
to stakeholders
• Internal Measures tell us about the results achieved by
contributing processes, sub-processes or activities
53
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54. Ensuring Traceability of Process Measures up
and down Process Levels
Organizational
Financial Customer Measures
Measures Measures
Internal Learning &
Process Growth
Measures Measures
Value Chain
Financial Customer Measures
Measures Measures
The goals and measures of
Internal Learning
any given Level Process Process
Measures
& Growth
Measures
should be a subset of their Level 1
higher level goals and Financial Customer
Process
Measures
Measures
M Measures
M
measures
Internal Learning
Process & Growth
Measures Measures
54
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55. A Balanced Scorecard With Goals and Measures
55
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56. Knowledge of Stakeholder Goals Drives Process Goals
and KPIs
Products and Services
1 Original Documents
2 Copies Financial Customer
3 Payments
4 Paper and Ink
5 Invoices Goal - KPI 3 Goal - KPI 5
6 Copy Machines
7 Licenses
8 Taxes Process Learning
9 Jobs
10 Time / Experience
Goal - KPI 9 Goal - KPI 12
56
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59. Governance vs. Management
• Governance and Management are NOT the
same thing.
• Governance is concerned with goals,
principles and structures that define who can
make what decisions, frameworks, policies,
decisions frameworks policies
rules, and processes that define or constrain
day-to-day management activities.
• Management responds to daily circumstances
and performance by taking daily actions.
Managers should be guided or constrained by
established governance documentation.
59
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60. Organizational Governance Structures
CEO
VP Finance VP IT SVP Divisons SVP SVP
Manufacturing Sales & Marketing
VP Asian VP US
Name SV Europe SV Americas VP EMEA VP Sales
Manufacturing Manufacturing
Title
• At the organization level, we h
h l l have people who are clearly
l h l l
in charge and responsible for functional performance
• As we develop our process architecture we will need to
determine who will be responsible for the results achieved
by the value chain, value streams and composite processes
60
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61. A Typical Functional Organization
CEO
Sales
S l Manufacturing
M f t i Delivery
D li
Department Department Department
VP VP VP
Sales Manufacturing Delivery
Manf. Supervisor
Delivery
Sales Supervisor (Operational
Process Manager) Supervisor
• Who is responsible for
cross functional
Sell Manufacture Deliver
performance and the
advocacy for cross
functional change?
61
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62. Determine Who Will Govern Each Value Chain
62
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63. How is Power & Responsibility Allocated?
Sales
Department
• Who has the budget?
VP • Who has bonuses?
Sales
• Who evaluates the
Day-to-Day Manager?
o? ty
Tw ili
e ib
es ns
Th po
• Who cont ols support
controls s ppo t
n es
Plan
Pl & Monitor
M it &
ee R
et r &
Organize Control
B we
functions? (e.g. IT
w
ed o
id P
iv is
D w
budget)
o
H
Widget Process
Plan & Organize
Value Chain Day-to-Day
Day to Day
Manager Process Manager
Monitor & Control
Plan & Monitor & • It’s the formal division
of power &
Organize Control
Sell responsibility that
p y
define BPM governance
Widget Value Chain
policies
63
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64. Aligning Process Measures & Process Manager
Performance Evaluation Scorecards
Organizational
A process scorecard Financial Customer Measures
Measures Measures
system automatically
generates a
Internal
performance Process
Learning &
Growth
evaluation system for Measures Measures
process managers
Value Chain
Measures
Financial Customer
Measures Measures
Financial Customer
Measures Measures
Internal Learning
Process & Growth
Measures Measures
Internal Learning
Process & Growth
Measures Measures
Value Chain Manager’s
Manager s
Scorecard
64
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65. Governance Purpose & Scope
Process governance aims to ensure we are good at:
Aligning Processes with Strategic Intent
Controlling Process Performance
Improving and Adapting Processes
Sustaining the Benefits of Process Change
g g
Scope of Process Governance:
Design the Business Process Architecture and business processes
Define and oversee the process Performance Management
Framework
Define and oversee the process Change Management Framework
Note: These are intertwined and feed one another
65
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66. Governance : How many ROLES are needed and Who will
perform them?
develop &
manage Govern all
Governance governance processes
framework
design & Improve and adapt a process
Stewardship improve
process
performance &
process approach improvement
i t
Day to day & guidance feedback
Management
Execute and control a process
specific customer conduct
specific customer
with specific need instance of
with specific solution
process
Day to day enabling resources
Leadership feedback on
(human, technical, infrastructural)
effectiveness
of enablers
provide
Support enablers
66
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67. Case in Point: Financial Services Firm
Roles and Reporting
Roles can rec r at m ltiple levels:
recur multiple le els:
Executive
Value Chain
Value Stream
Process
Coordinator
C i Steward
Legend:
Manager
Focus = Change Management
Focus = Performance
Management
Lead Focus = Both Change and Performance
Management
Mechanisms to elaborate on decisions,
synchronize activities, and report on
performance
f
Accountability relationship
Collaborative relationship 67
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70. Enterprise Complexity Requires a More
Elegant Architectural Model*
g
Strategy Stakeholders
Opportunities Value Chains
Principles Mission Goals Constraints
Objectives
Weaknesses Vision Threats
Values Requirements
Strengths
Organizations Products
Processes
Events Methodologies
Services
Triggers Functions Procedures
Skills
Workflow
Responsibilities Business Rules
Roles
Risks
Financial Assets People Projects
Jobs Budget
Objects Time
Facilities Data Information
Tax
Legal Cost
Locations Knowledge
Tools Models
Applications Systems
Databases Middleware Use Cases
Hardware
From
To
• TOGAF Framework
70
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71. Align Processes with Human Resources
Organization
For example: Align
competencies required b
t i i d by
the processes that require
them Value Chain
Level 1 Level 1 Level 1 Level 1 Level 1
Process Process Process Process Process
Market Product Product Problem
Sales
Research Engineering
g g g
Configuration Solving
g
71
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72. Align Processes with Business Rules
For example: Align
processes with policies and
ith li i d
Business Rules that are
used in the processes
72
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74. Align Processes with SOA Services
MDA/BPMN
Business MDA/BPDM
Processes MDA/SBVR
ebXML
BPEL
Interfaces defined by business processes
y p
MDA/XMI
Business
Services MDA/UML
Interfaces defined by enterprise semantics and requirements WSDL
XML
Integration UDDI
IS IS IS IS IS IS IS SOAP
Services
TCP /IP
MDA/J 2EE
MDA/Eclipse
Operational
Resources Servers Servers
Data Data Data Data
Mainframes
Mainframes
Figure After a BPTrends Column by Mike Rosen, Jan. 2006
74
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77. Using a Pain-Gain Matrix for Prioritization
1. Identify Processes 2. Identify Stakeholders
you want to prioritize who are interested in the
Processes
Process Gain Worksheet
Process Pain Worksheet
Process 10
Weighting
Process 1
Process 2
Process 3
Process 4
Process 5
Process 6
Process 7
Process 8
Process 9
Process 10
Weighting
Process 1
Process 2
Process 3
Process 4
Process 5
Process 6
Process 7
Process 8
Process 9
Stakeholders :
Stakeholders :
1.
1.
2.
2.
3.
3.
4.
4.
5.
5.
6.
6.
7.
7.
8.
8.
9.
9.
Combined Gain:
Combined Pain:
Process Gain Ranking :
3. Determine how much
Copyright © 2008. BPTrends Associates. All Rights Reserved. Process Pain Ranking :
Copyright © 2008. BPTrends Associates. All Rights Reserved.
each Stakeholder 4.
4 Determine how much each
potentially gains from Stakeholder is frustrated by
each process Pain-Gain Matrix each process
Highest
Amount 1
of Pain
2
mproved ?
3
5.
5 Create a matrix that 4
PAIN - How much the process can be im
5
locates each process so 6
7
Processes it
you can identify the 8
9
would be best
processes that are most 10
11
to focus on
value and also frustrate Least
Amount
of Pain
12
12 11 10 9 8 7 6 5 4 3 2 1
stakeholders the most Copyright © 2008. BPTrends Associates. All Rights Reserved.
Smallest
Possible GAIN
GAIN - Contribution to Strategic Intent Largest
Possible GAIN
77
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78. Alternate Process Migration Strategy (Triage2)
Performance Competent Best Practice World Class
Gap Commodity Competitive Differentiation
pain
B 1
1/3 3
i Large
g
A3
5 Performance
g Gap
e
15 4
s
t 16 8
14
Moderate
1/3
G B3 B2 Performance
a
p 12 6 13 Gap
R
a 2 7
n 9 10
No/ Little
1/3
k C3 C2 C1
i Performance
n 11 Gap
G
g
gain Inherent
1/3 1/3 1/3 Value
Greatest Value Potential to Business Strategy and Performance
78 78
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79. Scope of the Support Group(s)?
Govern Provide Capability Provide Consulting
Governance Support CoE CoE CoE
Enterprise Process Governance CoE CoE
Office or CPO
Process Process Governance CoE CoE
Office or CPO
Technology
T h l Process Governance CoE or IT Function? CoE or IT Function?
Implementation Office or CPO
Human Implementation Process Governance CoE or HR Function? CoE or HR Function?
Office or CPO
Operations Process Governance Day to day Process Day to day Process
Office or CPO Manager Manager
79
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81. Documentation Required for Each Value
Chain, Value Stream and Process
Events
Opening
Closing
Description
Relevant Stakeholders
R l t St k h ld
Process Goals
Other Relevant Processes
Process Responsible Parties
Governance
Stewardship
Management
KPIs
Indicator with Unit of Measure
Current Performance
Target Performance
Value Added Rank
Performance Gap
IGOEs
Inputs
Guides
Outputs
Enablers
• Sub level Activities
Sub Processes (next level)
81
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82. Finishing Your Enterprise Architecture
• We have described a general methodology for creating
the elements needed to organize and manage processes
at the enterprise level
• In fact, however, we have only been able to
approximate the work you will need to do to actually
implement the enterprise methodology
• Having explored the elements of the methodology, you
will need a plan to actually implement it and we want
it,
to provide some suggestions as to how you might
approach it
82
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83. Maintain Process Architecture
• The first issue to face, after initially creating a process
architecture, is how to maintain it
• A good process architecture is a valuable corporate
asset
• Every day that passes will introduce changes in the
e y a oduce c a ges e
architecture
• Most days will also generate information that could be
captured to enrich your architecture. Every process
architecture
redesign project, for example, will produce updated and
more detailed information about specific processes that
make up the architecture
• You need a standard, systematic process that gathers
information about changes and enhancements and uses
them to update the company architecture
p p y
83
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84. Maturity: What Level Do We Want to Reach?
And By When?
Processes Teams Level 5.
Continuously Processes
Improve Processes Continuously
Improved
Processes are Level 4.
Measured and Processes Are
Managed Managed
g
Systematically
S t ti ll
Processes are Level 3.
Organized and
Redesigned at the
Most Processes + Measurement &
Organized
BS&T Level Governance
Processes are
Improved at the Level 2.
Work Group or Some Organized
Departmental Level Processes
+ Architecture Map & KPIs
Level 1.
No Organized Cultures
Processes of Heros
84
Copyright © 2009 BPTrends Associates. All Rights Reserved.
85. Process Architecture :
It's inevitable - just a matter of time
• Process is the b t choice t translate Strategic
P i th best h i to t l t St t i
Intent into Capability.
It’s what we do to get what we want.
g
• All capabilities must be aligned with the
processes and strategies.
1
We have to have a clear language and common
target
• We must have frameworks that manage and
govern our assets.
We have to invest in and do the right things
85
Copyright © 2009 BPTrends Associates. All Rights Reserved.