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  • 1. Business Process Management for Enterprises Ing. Antonio Caforio Centro Cultura Innovativa d’Impresa Università del Salento antonio.caforio@unisalento.it
  • 2. Business Motivation Ends What an enterprise wants to be Vision “Be the premier software services provider for SMEs” End Goal “20% increase in market share in the next 3 years”
  • 3. Business Motivation Means What an enterprise has decided to do in order to achieve an End Mission Mean Strategy
  • 4. What is Mission  A Mission should consist of  An action (i.e “provide”, “make”, “deliver”, …)  A product or service (i.e. “aircraft engine components”, “pizza”, …)  A market or customer segment (i.e. “airlines”, “city-wide customers”, …) Mission makes operative Vision A Mission or a Value Proposition “Provide pizza of good quality quickly at home to all customers in the neighbourhood”
  • 5. What is Strategy A Strategy is an approach accepted and pursued by an enterprise to achieve its goals, given the environmental constraints and risks Strategy directs efforts towards Goal
  • 6. What is Strategy “The essence of strategy is choosing to perform the activities differently than rivals do” M. Porter
  • 7. What is Strategy “The essence of strategy is choosing to perform the activities differently than rivals do” M. Porter Southwest Airlines Activity Map Taken from : M. E. Porter; “What is Strategy?”; Harvard Business Review, Nov-Dec 1996
  • 8. Strategy Types Porter’s Competitive Strategies Cost Leadership • Ryanair • Eurospin Differentiation • Apple • 3M Niche Specialization
  • 9. What is Goal A Goal is a statement about a future state or condition of the enterprise that is desirable to be achieved through appropriate Means Strategy directs efforts towards Goal
  • 10. How to define Goals  The Balanced Scorecard (BSC) Approach “If we succeed, how will we look to our shareholders?” Financial Perspective Customer Perspective “To achieve our vision, how must we look to our customers?” Ritaglia e disponi “To satisfy our customers, which processes must we excel at?” Internal Perspective Learning & Growth Perspective “To achieve our vision, how must our organization learn and improve?”
  • 11. How to define Goals  BSC Dimensions • Productivity Strategy • Revenue Growth Strategy Financial Perspective Customer Perspective Ritaglia e disponi Internal Perspective Learning & Growth Perspective
  • 12. How to define Goals  BSC Dimensions • Productivity Strategy • Revenue Growth Strategy Financial Perspective Customer Perspective Ritaglia e disponi Internal Perspective Learning & Growth Perspective • Customer satisfaction • Customer retention • Customer acquisition • Customer profitability • Market share • Account share
  • 13. How to define Goals  BSC Dimensions • Productivity Strategy • Revenue Growth Strategy Financial Perspective Customer Perspective Ritaglia e disponi • Operations management processes • Customer management processes • Innovation processes • Regulatory and social processes Internal Perspective Learning & Growth Perspective • Customer satisfaction • Customer retention • Customer acquisition • Customer profitability • Market share • Account share
  • 14. How to define Goals  BSC Dimensions • Productivity Strategy • Revenue Growth Strategy Financial Perspective Customer Perspective Ritaglia e disponi • Operations management processes • Customer management processes • Innovation processes • Regulatory and social processes Internal Perspective Learning & Growth Perspective • Customer satisfaction • Customer retention • Customer acquisition • Customer profitability • Market share • Account share • Human Capital • Information Capital • Organizational Capital
  • 15. Value Proposition and Goals  Strategy Types and the BSC Customer Perspective Source: R. S. Kaplan, D. P. Norton; “Strategy Maps: Converting Intangible Assets into Tangible Outcomes”; Harvard Business Press, 2004
  • 16. Strategy Maps Source: R. S. Kaplan, D. P. Norton; “Strategy Maps: Converting Intangible Assets into Tangible Outcomes”; Harvard Business Press, 2004
  • 17. Strategy Maps  Low Cost Airline Example Source: R. S. Kaplan, D. P. Norton; “Strategy Maps: Converting Intangible Assets into Tangible Outcomes”; Harvard Business Press, 2004
  • 18. The path from Vision and Mission Vision Strategy Map Mission Strategy Balanced Scorecard
  • 19. … Means towards Ends Mission Vision End Mean Strategy Goal
  • 20. … Means towards Ends Mission Vision End Mean Strategy realized by Business Processes Goal
  • 21. What is a Process “a sequence of steps performed for a given purpose” (IEEE) “the logical organization of people, materials, energy, equipment, and procedures into work activities designed to produce a specified end result” (Pall, Quality Process Management, 1987) “a structured, measured set of activities designed to produce a specific output for a particular customer or market. It implies a strong emphasis on how work is done within an organization, in contrast to a product focus’s emphasis on what. A process is thus a specific ordering of work activities across time and space, with a beginning and an end, and clearly defined inputs and outputs: a structure for action. ... Taking a process approach implies adopting the customer’s point of view. Processes are the structure by which an organization does what is necessary to produce value for its customers” (Davenport ,1993) “a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer” (Hammer & Champy’s ,1993)
  • 22. Types of Processes Management Processes Develop Strategy Evaluate Enterprise Performance Maintain Policies Core Processes Support Processes Develop New Products Develop HR Manage Orders Manufacture Products Develop IT Systems Deliver Products Maintain Facilities
  • 23. The Value Chain Concept A Value Chain is a comprehensive collection of all of the activities that are performed to design, produce, market, deliver, and support a product line. Management Processes Value Chain Administer Contracts Manage Programs Ensure Customer Satisfaction Core Processes Create New Products Produce Products Deliver Products Support Processes Provide HR Provide Information Systems & Services Manage Facilities
  • 24. Process Architecture A Process Architecture is a hierarchical decomposition of the processes that are contained in a value chain. Value Chain VC Level 1 Business Process 1 Business Process 2 Business Process 3 Business Process 4 Level 2 Process 3.1 Process 3.2 Process 4.1 Level 3 SubProcess 3.2.1 SubProcess 3.2.2 SubProcess 3.2.3 Process 4.2
  • 25. How to create a Process Architecture KPIs Value Chain VC Level 1 Business Process 1 Business Process 2 Business Process 3 Business Process 4 Level 2 Process 3.1 Process 3.2 Process 4.1 Level 3 SubProcess 3.2.1 SubProcess 3.2.2 Process 4.2 SubProcess 3.2.3 Reference Frameworks
  • 26. Reference Process Architecture An Example from Standards: APQC (www.apqc.org)
  • 27. Building Process Architectures  x.0 Category x.x Process Group •x.x.x Process •x.x.x.x Activity
  • 28. Building Process Architectures 2.0 Develop and Manage Products and Services • 2.2 Develop products and services • 2.2.1 Design, build, and evaluate products and services • 2.2.1.1 Assign resources to product/service project •… • 2.2.1.3 Develop product/service design specifications •… • 2.2.1.6 Build prototypes •… • 2.2.2 Test market for new or revised products and services • 2.2.3 Prepare for production 3.0 Market and Sell Products and Services • 3.1 Understand markets, customers, and capabilities • 3.1.1 Perform customer and market intelligence analysis • 3.1.1.1 Conduct customer and market research •… • 3.1.2 Evaluate and prioritize market opportunities • 3.2 Develop marketing strategy • 3.3 Develop sales strategy • 3.4 Develop and manage marketing plans • 3.5 Develop and manage sales plans 4.0 Deliver Products and Services • 4.1 Plan for and acquire necessary resources (SCP) • 4.2 Procure materials and services • 4.3 Produce / Manufacture / Deliver product • 4.3.1 Schedule production • 4.3.2 Produce product •… 10.0 Manage Environmental Health and Safety (EHS) • 10.1 Determine environmental health and safety impacts • 10.2 Develop and execute EHS program • 10.3 Train and educate employees • 10.4 Monitor and manage EHS management program • 10.5 Ensure compliance with regulations •…
  • 29. Building Process Architectures  2.0 Develop and Manage Products and Services 2.2 Develop products and services 3.0 Market and Sell Products and Services 4.0 Deliver Products and Services • 2.2.1 Design, build, and evaluate products and services • 2.2.1.1 Assign resources to product/service project •… • 2.2.1.3 Develop product/service design specifications •… • 2.2.1.6 Build prototypes •… • 2.2.2 Test market for new or revised products and services • 2.2.3 Prepare for production • 3.1 Understand markets, customers, and capabilities • 3.1.1 Perform customer and market intelligence analysis • 3.1.1.1 Conduct customer and market research •… • 3.1.2 Evaluate and prioritize market opportunities • 3.2 Develop marketing strategy • 3.3 Develop sales strategy • 3.4 Develop and manage marketing plans • 3.5 Develop and manage sales plans • 4.1 Plan for and acquire necessary resources (SCP) • 4.2 Procure materials and services • 4.3 Produce / Manufacture / Deliver product • 4.3.1 Schedule production • 4.3.1.1 Generate line level plan • 4.3.1.2 Generate detailed schedule • 4.3.1.3 Schedule production orders and create lots • 4.3.1.4 Release production orders and create lots • 4.3.2 Produce product •… Operations Management Processes Internal Perspective Customer Management Processes Innovation Processes 10.0 Manage Environmental Health and Safety (EHS) • 10.1 Determine environmental health and safety impacts • 10.2 Develop and execute EHS program • 10.3 Train and educate employees • 10.4 Monitor and manage EHS management program • 10.5 Ensure compliance with regulations (11184) •… Regulatory and Social Processes
  • 30. Building Process Architectures Learning and Growth Perspective Human Capital Information Capital Organization Capital
  • 31. Process Performance Measures  Process performance are measured through Key Performance Indicators (KPI) Efficiency Productivity Quality Percentage of Rejects Service Delivery on-time  Process perfomance are measured against a Service Level  Service Level Agreement (SLA)
  • 32. Process Performance Measures Key Performance Indicators (KPI)  External KPI – Throughput time, waiting time, service level Poor performances cause loss of money!!!  Internal KPI – Rate of resource utilization, number of cases, cost of resources Good performances can be expensive!!!
  • 33. PPM from frameworks APQC Framework Process Name Metric 2.1 Manage product and service portfolio  Total cost to generate new product/service ideas per $1,000 revenue  Total R&D cost per business entity employee for the current reporting period 2.2 Develop products and services  Average time-to-market in days for new product/service development projects  Number of FTEs who develop and manage products and services per $1 billion revenue SCOR Framework Performance Attribute Level 1 Metric Supply Chain Delivery Reliability Delivery Performance Perfect Order Fulfillment Supply Chain Responsiveness Order Fulfilllment Lead Times Supply Chain Costs Cost of Goods Sold Total SC Management Costs
  • 34. Key Performance Indicators  Auto Transportation example Type KPI Metric Trucks Utilization Hours Utilized / Hours Available Routing Efficiency KMs with load / KMs travelled Efficiency … Wrong Delivery Wrong Deliveries / Total Deliveries Damages Total number of damages Quality … Delivery Time Average DT Delivery on time Pct Dot Service
  • 35. Process Management Plan Work     Monitor & Control Work     Gather Information Monitor Processes Develop Forecasts Take Preventive/Corrective Actions Execute Work Set Goals Establish Process Define Plans, Resources Determine Budget  Use Inputs to Produce Outputs
  • 36. Processes and the Organizational Chart Management Engineering Production Marketing Sales Value Chain Develop New Product Sell Product Build Product Source: P. Harmon; “Business Process Change: A Guide for Business Managers and BPM and Six Sigma Professionals”; MK Press, 2007
  • 37. Quality Standards UNI EN ISO 9001:2008 Principles of Quality Management  Customer orientation  Leadership  Personnel Involvement  Process Orientation  Systemic approach to management  Continuous improvement  Facts-based Decisions  Beneficial interrelationships with suppliers
  • 38. Quality Standards UNI EN ISO 9001:2008 Process Classification Primary Processes Secondary Processes Information Flow Management Responsibility Measures, Analysis and Improvement Resource Management input Product Realization output Information Flow Product Customer Satisfaction Customer Requirements Continuous improvement of the QMS
  • 39. References  APQC.org; “APQC Process Classification Framework 6”, http://www.apqc.org/process-classification-framework - last accessed on October 2013  G. Bracchi, C. Francalanci, G. Motta; “Sistemi informativi e aziende in rete”; McGraw Hill Italia, 2001  M. E. Porter; “Competitive Advantage: Creating and Sustaining Superior Performances”; The Free Press,1985  M. E. Porter; “What is Strategy?”; Harvard Business Review, Nov-Dec 1996  R. S. Kaplan, D. P. Norton; “Strategy Maps: Converting Intangible Assets into Tangible Outcomes”; Harvard Business Press, 2004  P. Harmon; “Business Process Change: A Guide for Business Managers and BPM and Six Sigma Professionals”; MK Press, 2007  Supply Chain Council; “SCOR Reference Framework”, http://supplychain.org/scor - last accessed on October 2013  OMG Specification; “Business Motivation Model”; 2010  UNI EN ISO 9011:2008, International Standards Organization

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