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Process architecture - Part I
The document focuses on business process modeling and identification, emphasizing the importance of understanding an organization's processes to maximize the value of BPM projects. It outlines steps for process identification and prioritization, as well as the components of process architecture including core, support, and management processes. Additionally, it covers scoping processes and provides guidelines for modeling value chains within organizations.
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Process architecture - Part I
- 1. CRICOS No. 00213J auniversity for the worldreal R 1 A/Prof. Marcello La Rosa BPM Discipline Queensland University ofTechnology IAB203 – Business Process Modelling Week 9, 28 Apr 2015
- 2. Process Identification Process identification Conformance and performanceinsights Conformance and performance insights Process monitoring and controlling Executable process model Executable process model Process implementation To-be process model To-be process model Process analysis As-is process model As-is process model Process discovery Process architectureProcess architecture Process redesign Insights on weaknesses and their impact Insights on weaknesses and their impact 3
- 3. What? 1. Identify anorganization’s business processes 2. Prioritize their management based on certain criteria Why? 1. Understand the organization 2. Maximize value of BPM projects How long? Processes change over time (“dynamics of time”) • identification should be exploratory and iterative • improvement opportunities are time-constrained Process identification
- 4. 1. Designation step •Enumerate main processes • Determine process scope 2. Prioritization step (aka Process selection) Prioritize processes based on: • Importance • Health • Feasibility Process identification steps After Davenport (1993) Process Architecture Prioritized Process Portfolio
- 5. Process enumeration There isno “number fits all” - it really depends on organization’s domain and size Rule of thumb: 10-20 processes Trade-off: • ensuring process scope is manageable, since… • process scope determines potential impact
- 6. • Order-to-cash • Lead-to-quote •Quote-to-order • … Example: enumeration Wholesaler • Staff recruitment • Staff induction • Staff probation • Policies update • … • Supplies replenishment • Operational resources replenishment • … • Demand forecasting • Logistics planning • … • Strategy development • … • Suppliers planning • Suppliers acquisition • …
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- 8. Components of aprocess architecture Core Processes Management Processes Suppliers/Partners Customers/Stakeholders Support Processes After Michael Porter (1985)
- 9. Core vs supportprocesses (Porter)
- 10. Core, support andmanagement processes After Michael Porter (1985) • Strategic and Planning • Budgeting • Compliance and Risk management • Investors, Suppliers and Partners management Management processes • Design and Development • Manufacturing • Marketing and Sales • Delivery and After-sale • Direct procurement Core processes • Indirect procurement • Human Resources • Information Technology • Accounting, Financial and Legal Support processes
- 11. Core processes • Sales(lead-to-quote, quote-to-order, order-to-cash) • Direct procurement (supplies replenishment) • … Support processes • Indirect procurement (parts replenishment, operational resources replenishment…) • HR (policies update, recruitment, induction, probation…) • … Management processes • Suppliers management (suppliers planning, suppliers acquisition…) • Logistics management (logistics planning, logistics controlling…) • … Example: core, support and management processes Wholesaler
- 12. Strategic Management Warehouse Management Suppliers Management Logistics Management Management processes Finance Indirect procurement IT HR Coreprocesses Support processes Wholesaler Example: process architecture Demand Management Sales Direct procurement Distribution ServiceMarketing Process group
- 13. Strategic Management Corporate Development Investor Relations Risk Assessment &Management Market Development Management processes Marketing & Sales Underwriting Management Policy Servicing Claims Management Payments Collection and Disbursement Assets Management Finance/ Treasury Legal/ Audit Reinsurance IT HR Core processes Support processes Insurance company Example: process architecture
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- 16. Process scoping Processes areinterdependent insights into interrelations required • Specialization: general – special product/service • Horizontal: upstream – downstream processes and their value chains • Vertical: main processes – sub-processes Process architecture
- 17. Scoping a process Keyscoping questions: 1. When does a given process instance start? 2. When do we consider a process completed? 3. What key objects does the process manipulates? 4. Who participates in the process? 5. Who owns the process? A well-scoped process: • Has a clear start, clear end (input, output) • Has a clear, coherent set of “main objects” and “participants” • Has a clear owner
- 18. Guidelines to identifyhorizontal boundaries 1. Change of key business object in the process 2. Change of multiplicity of main business object 3. Change in frequency/time 4. Change in intermediate outcome/resolution/objective
- 19. Guidelines to identifyhorizontal boundaries (cont’ed) 1. Core processes • From an input to an outcome that generates value • Decompose by identifying intermediate outcomes 2. Support processes • From a need to a resolution • Decompose by identifying intermediate resolutions 3. Management processes • To control other processes • Decompose by identifying intermediate objectives
- 20. • Chain ofcore processes an organization performs to deliver value to customers and stakeholders • More generally, a mechanism to group high-level business processes according to an order relation (can be applied to core, support and management processes) Value chain modeling Procure-to-service business process order relation
- 21. Example: value chain Wholesaler Coreprocesses
- 22. Building up avalue chain (for core processes) Think around three main steps: • Imagine it (design new product/service) • Build it (source, assemble, deliver product/service) • Sell it (market, sell, service product/service)
- 23. Building up avalue chain (for core processes) Example: Producer Stocked products: MTO products: ETO products: Specializations After Paul Harmon, 2014
- 24. Example: value chainsfor service provider ServiceDeliverSalesMarketDesign Systems Integration Outsourcing Network Services Enterprise Server Technology IT service provider After Paul Harmon, 2014
- 25. Support processes HR: Accounting: Management processes Suppliers management: Risk management: Example:value chain of non-core processes
- 26. Strategic Management Warehouse Management Suppliers Management Logistics Management Management processes Procure-to-Service Finance Indirect procurement IT HR Coreprocesses Support processes Wholesaler Example: process architecture & value chains Demand Management Groups processes/ value chains Collapsed value chain Sales Direct procurement Distribution ServiceMarketing
- 27. Alternative: process architecture– groups Management processes 1.1 Plan the Business 1.2 Govern the Business 1.3 (Re)design Processes 1.5 Change the Business 1.4 Develop Methods & Standards Manage Firm 2.1 Optimize Stakeholder Relationships 2.2 Develop Service Offerings 2.3 Raise Awareness of Services 2.12 Evaluate Client Solution Delivery Relate to Clients 2.4 Plan Delivery of Service to Service Corp. 2.5 Gain Initiative Commitment 2.13 Adjust Portfolio Optimize Portfolio 2.6 Deliver Infrastructure Solutions 2.7 Deliver Business System Solutions 2.8 Provide Professional Services Deliver Solutions 2.9 Operate Infrastructure & Business Systems 2.10 Retire Solutions 2.11 Support Users Optimize Solutions Core processes 3.1 Provide Expert Advice & Knowledge 3.2 Provide HR Capabilities 3.3 Provide IT Tools 3.5 Obtain Financial Services 3.4 Acquire Goods & Services Support Firm 3.6 Provide Working Facilities Support processes Consultancy Firm Expanded process group
- 28. • Process stakeholdersand objectives, e.g. via a Stakeholder- Objectives Matrix • Process context, e.g. via a SIPOC (Suppliers, Inputs, Process, Output, Customers) Diagram • Process guides and enablers, e.g. via an IGEO (Input/Guides/Enablers/Outputs) Diagram Process architecture: further process attributes
- 29. • Process owner,responsible for the effective and efficient operation of the process being modeled • Primary process participants, i.e. those who are directly involved in the execution of the process under analysis, e.g. customers and internal staff • Secondary process participants, i.e. those who are directly involved in the execution of the preceding or succeeding processes Identify process stakeholders
- 30. • Primary (hard)process objectives • Time, cost, quality • Compliance, agility… • Secondary process objectives • To purchase goods, to hire new staff members • Accompany with appropriate process metrics • Let involved stakeholders define their priorities Identify process objectives Core Processes Support/ Management Processes
- 31. Claims handling process ExampleStakeholder-Objectives matrix Primary stakeholders Objectives Customer Maximize policy value, Smooth experience Process owner Minimize process costs Claims handler Minimize idle times Stakeholder pairs Conflicting objectives Shared objectives Customer, Process owner Policy value vs process costs Process owner, Claims handler Process costs and idle time Customer, Claims handler Smooth experience and lower idle times
- 32. References Required • M. Dumas,M. La Rosa, J. Mendling, H.A. Reijers, “Fundamentals of Business Process Management”, Springer, 2013, Chapter 2 Recommended • T.H. Davenport, “Process Innovation: Reengineering Work Through Information Technology”, Harvard Business School Press, 1993 • M. Hammer, J. Champy, “Reengineering the Corporation: A Manifesto for Business Revolution”, HarperCollins, 1993 • M.E. Porter, “Competitive Advantage: Creating and Sustaining Superior Performance”, Free Press, 1985 • P. Harmon, Business Process Change, Morgan Kaufmann, 2014 (3rd edition) • M. Rosemann, “Process Portfolio Management”, BPTrends, April 2006 • R. Dijkman, I. Vanderfeesten, H.A. Reijers, “The road to a business process architecture: an overview of approaches and their use”. BETA Working Paper Series, WP 350. Eindhoven University of Technology, Eindhoven (2011) Web-sites • http://www.value-chain.org (Value Reference Model) • http://www.mindtools.com/pages/article/newSTR_66.htm (more on value chains) • http://www.apqc.org/process-classification-framework (APQC PCF website)