Systemic approach towards enterprise functional decomposition
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Kudryavtsev, D., & Grigoriev, L. (2011). Systemic approach towards enterprise functional decomposition. The proceedings of the Workshop “Convergence of Business Architecture, Business Process ...

Kudryavtsev, D., & Grigoriev, L. (2011). Systemic approach towards enterprise functional decomposition. The proceedings of the Workshop “Convergence of Business Architecture, Business Process Architecture, Enterprise Architecture and Service Oriented Architecture” within the 13-th IEEE Conference on Commerce and Enterprise Computing (CEC), September 5-7, 2011, Luxemborg. P. 310-317.

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Systemic approach towards enterprise functional decomposition Presentation Transcript

  • 1. Systemic Approach Towards Enterprise Functional Decomposition Dmitry Kudryavtsev, Lev Grigoriev 20 11 Workshop “Convergence of Business Architecture, Business Process Architecture, Enterprise Architecture and Service Oriented Architecture”
  • 2. About the company
    • BUSINESS ENGINEERING GROUP SPb
    • Consulting
    • Organizational design, strategic management, business process improvement and re-engineering, enterprise architecture management, quality management
    • Products
    • ORG-MASTER® line of software products for organizational design and analysis
    • GOV-MASTER ® software for public organizations design and analysis
    • Seminars and Trainings
    • Business engineering School, School of business analysts, Business ideology school
    • Research
    • Models and methods of organizational design, enterprise engineering and modeling
    • History: management consulting, enterprise modeling software and trainings since 1997
    • Customers: large and medium-sized CIS business and public organizations
  • 3. Outline
    • What is “enterprise functional decomposition”?
    • Requirements for the decomposition
    • Currently available models and methods
    • The suggested framework
      • terminology,
      • main principles,
      • process / method.
    • IT support
    • Implementation
    • Framework benefits
  • 4. What is “enterprise functional decomposition”?
  • 5. What is “enterprise functional decomposition”?
    • “ Functional decomposition identifies the high-level functions of an organization or proposed solution and then breaks down those processes into sub-processes and activities. This can be done as part of a systems development or business process analysis project. The goal is to break functions down into smaller pieces to allow for analysis of the detail processes and to ensure coverage of all significant processes” - A Guide to Business Analysis Body of Knowledge, 2006
    • “ Functional decomposition – a technique for mastering the complexity of the function of a system. The effect of applying the technique is that a functional model of a (sub)system is replaced by a set of functional models? Also called functional subsystems, and vice versa. Where functional model is a black-box model of a concrete system and function is the set of services the concrete system is able to provide” - Jan Dietz, “Enteprise Ontology Theory and Methodology,” 2006.
  • 6. Functional decomposition role in enterprise engineering Purpose Structure Principles and rules IT-architecture, Technical architecture, People, Organizational structure Mission, Vision, Goals, Strategies, CSF, KPI Value chain, functions, business processes, activities Functional decomposition Function
  • 7. Requirements for the decomposition System engineering driven Business practice driven Completeness and Necessity (“Do right things”), Correct understanding of semantics (e.g. what does “maintenance management” mean?) Consistency (e.g. avoid overlapping activities…)
    • Support for management best practice:
    • Widely-used reference models,
    • Methodologies (TQM, VBM…).
    • Regulatory compliance (ISO, SOX…)
  • 8. Requirements for the decomposition
    • In more technological form:
    • Activities follow its’ purposes - alignment with the enterprise intentional model (for completeness check, prioritizing),
    • Reuse of the proven and shared normative models or knowledge (reference models, patterns, etc),
    • Consistency of principles within functional decomposition,
    • Value-based management harmonization,
    • ISO 9004:2009 harmonization.
  • 9. ISO 9004:2009 harmonization
  • 10. Value-based management harmonization
  • 11. Currently available models and methods
    • Reusable elements for enterprise functional decomposition
    • APQC Process Classification Framework, SCOR, ITIL, CBM…
    • Lifecycle models
    • = starter kit and building blocks,
    • require supplementary method
    • B. Methods for enterprise functional decomposition
    • Goal-oriented ( Kavakli and Loucopoulos)
    • Beer’s Viable System Model (VSM) based
    • Normative model driven (e.g. Barros)
    • Need to be integrated and extended.
  • 12. The framework: terminology
    • Functional system – purposeful system, which consists of activity elements and has the following features:
    • purpose as the main system-forming factor,
    • self-regulating – it includes a management component/activity elements,
    • hierarchy – it consists of other functional systems,
    • isomorphism – all the functional systems have a similar structure.
    • where:
    • Activity element – any element of enterprise activities description, e. g. process, action, functional area.
    • Purpore - high level, overall goal of a system. The role of an object within superior system.
  • 13. The framework: main principles Strategy & Policy Design & Improvement Operational planning Measure-ment, Analysis, Control Management Enabling systems Value creation Functional system’s pattern Natural resources Finance People in the organization Infrastructure Environment Knowledge Information technologies
  • 14. The framework: main principles
  • 15. Alignment of functional system pattern with purposes and goals Stakeholder’s concerns Goals of the functional system Goals of value creation elements Goals of managerial and enabling behavior help achieve help achieve provide Purposes Functional system
  • 16. All the pattern components are harmonized with ISO 9004:2009
  • 17. Value-based management (VBM) harmonization Functional system Corporate level Business level Functional area level Features Corporate system Business system (Functional area-level) Functional system Beneficiary Shareholders, Investors Customer Superior system, Internal client Purpose area (value type) Corporate value Customer value + Profit Value for superior system, Value for internal clients Key performance indicators Economic Value Added (EVA), Value Creation Index (VCI) EBITDA, Return-on-Assets (ROA), Free Cash Flow (FCF) Depend on the functional area. Value creation elements Business system, Corporate governance, Environmental health, safety and social responsibility management. Inbound Logistics, Operations, Outbound Logistics, Marketing & Sales, Service. Depend on functional area.
  • 18. Corporate system pattern Legend:
  • 19. Business system Legend:
  • 20. (Functional area-level) Functional system Legend:
  • 21. Pattern-based enterprise functional decomposition Corporate system Business system Functional systems Functional subsystem Business- lines Corporate strategy / goals Business strategies / goals Functional strategies / goals
  • 22. The framework: process
    • Identify functional systems and subsystems within business system
    • Identify functional systems and subsystems within corporate system
    • Identify subsystems and processes
  • 23. The framework: process
    • Identify functional systems and subsystems within business system
      • 1.1. Describe customer-oriented value chain/stream in terms of interacting functional systems,
        • Usage of existing reference models (VRM, SCOR, APQC), lifecycle models and patterns.
      • 1.2. Identify groups of managerial processes,
      • 1.3. Identify enabling functional systems.
    • Identify functional systems and subsystems within corporate system
      • 2.1. Describe corporate-level value chain/stream
    • Specify and/or fine-tune corporate system pattern
      • 2.2. Identify groups of managerial processes
      • 2.3. Identify enabling functional systems
    • Identify subsystems and processes
      • 3.1. Describe value creating subsystems or processes within functional systems
    • Usage of generic (e.g. APQC) and domain-specific reference models (e.g. ITIL), lifecycle models.
      • 3.2. Generate operational planning processes for value-creating components of functional systems
      • 3.3. Choose and customize the required processes from Design & improvement, Strategy & Policy and Paradigm groups of processes for functional systems.
      • 3.4. Identify managerial processes for business system,
      • 3.5. Identify managerial processes for corporate system.
  • 24. IT support - The ORG-Master business architecture engineering tool Ontology-based enterprise model editor Ontology-based enterprise model Reporting and query module Documents Diagrams ORG-MASTER ® Modeling process wizard Integration wizard Diagram editor Query results Semi - structured data OWL
  • 25. Knowledge Process Creation and Acquisition Formalization Distribution Use Knowledge acquisition forms Analytical reports Structured Administrative documents Y Query answering Internal Representation Structured Administrative documents Х Local knowledge acquisition organizational models The ORG-Master business architecture engineering tool Ontology-based organizational model
  • 26. Knowledge Process Creation and Acquisition Formalization Distribution Use Text X Tables Y Text Y Graphics Y Internal Representation Tables X Graphics X Pseudo-Graphics The ORG-Master business architecture engineering tool Ontology-based organizational model
  • 27. Implementation
    • Ilim Group, Koryazhma Branch,
    • Omskiy Repair plant ( RMZ Gazprom Neft-Omsk Refinery LLC ),
    • CottonClub
    • + current clients
  • 28. Implementation example
    • Ilim Group, Koryazhma Branch
    Problem: Equipment reliability drop Breakdowns happened often   unplanned equipment downtime increased
  • 29. Implementation example
    • Solution - maintenance system reengineering project:
    • Develop maintenance system concept, strategy and measures;
    • Redesign organizational structure,
    • Identify maintenance processes and raise their maturity,
    • Optimize the key maintenance processes;
    • Information system improvement;
    • Formalize and enhance key maintenance operations;
    • Develop organizational documentation.
    Maintenance system functional decomposition
  • 30. Implementation example
    • Maintenance system functional decomposition helped
    • to clarify responsibilities during organizational structure redesign,
    • to identify maintenance processes and check their list for completeness,
    • to deploy functional strategy.
    • Functional system pattern
    • provided consistent description of different systems,
    • helped to embed planning and improvement activities in every functional system and to make mid-level managers responsible for these activities.
  • 31. Implementation example
    • Overall effects of the maintenance system reengineering project:
    • 40 percent decrease in the unplanned equipment downtime;
    • Increased manageability and performance;
    • Repair times reduced;
    • Increased equipment reliability.
  • 32. Framework benefits (1/3) Recursive decomposition using single activities pattern Similar structure of activities at different level of detail and in different functional areas Causal links between activity elements (in addition to hierarchy) Rapid management maturity growth Ease communications between managers Reuse of company’s internal knowledge Corporate standards Better organizational design
  • 33. Framework benefits (2/3) Purposeful decomposition “ Do right things” Realize strategy quicker with less resources Clear priorities in decision-making Set causal links between activity elements
  • 34. Framework benefits (3/3) ISO 9004:2009 Harmonization Reuse managerial best-practice Guarantee for sustainable growth Ease the certification process VBM Harmonization Better satisfy key stakeholders Corporate value growth
  • 35. The END Questions? 20 11 [email_address] , [email_address]