Process architecture - Part I

CRICOS No. 00213J

a university for the worldrealR 1

A/Prof. Marcello La RosaBPM Discipline

Queensland University of Technology

IAB203 – Business Process ModellingWeek 9, 28 Apr 2015

Process Identification

Process identification

Conformance and performance insights

Conformance and performance insights

Processmonitoring and

controlling

Executable processmodel

Executable processmodel

Processimplementation To-be process

model

To-be process model

Processanalysis

As-is processmodel

As-is processmodel

Process discovery

Process architectureProcess architecture

Processredesign

Insights onweaknesses and

their impact

Insights onweaknesses and

their impact

3

What?1. Identify an organization’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

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

PrioritizedProcess

Portfolio

Process enumeration

There is no “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

• Order-to-cash

• Lead-to-quote

• Quote-to-order

• …

Example: enumerationWholesaler

• Staff recruitment

• Staff induction

• Staff probation

• Policies update

• …• Supplies replenishment

• Operational resources replenishment

• …

• Demand forecasting

• Logistics planning

• …

• Strategy development

• …

• Suppliers planning

• Suppliers acquisition

• …

Process architecture

Components of a process architecture

Core Processes

Management

Processes

Supplie

rs / P

art

ners

Custo

mers

/ Sta

keho

lders

Support Processes

After Michael Porter (1985)

Core vs support processes (Porter)

Core, support and management 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

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 processesWholesaler

StrategicManagement

WarehouseManagement

SuppliersManagement

LogisticsManagement


FinanceIndirect

procurementIT HR

Core processes

Support processes

Wholesaler

Example: process architecture

DemandManagement

SalesDirect

procurementDistribution

ServiceMarketing

Process group

StrategicManagement

CorporateDevelopment

InvestorRelations

Risk Assessment & Management

MarketDevelopment


Marketing & Sales

UnderwritingManagement

PolicyServicing

ClaimsManagement

Payments Collection and Disbursement

Assets Management

Finance/Treasury

Legal/Audit

Reinsurance IT HR

Core processes

Support processes

Insurance company



CoreProcesses

SupportProcesses

ManagementProcesses

Australian water supplier

Example: process architectureBroadcasting company

Process scoping

Processes are interdependent insights into interrelations required• Specialization: general – special product/service

• Horizontal: upstream – downstream processes and their value chains

• Vertical: main processes – sub-processes

Process architecture

Scoping a process

Key scoping 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

Guidelines to identify horizontal 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

Guidelines to identify horizontal 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

• Chain of core 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

businessprocess

orderrelation

Example: value chainWholesalerCore processes

Building up a value 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)

Building up a value chain (for core processes)Example: Producer

Stockedproducts:

MTOproducts:

ETOproducts:

Specializatio

ns

After Paul Harmon, 2014

Example: value chains for service provider

ServiceDeliverSalesMarketDesign

Systems Integration

Outsourcing

Network Services

Enterprise Server Technology

IT service provider

After Paul Harmon, 2014

Support processes

HR:

Accounting:


Suppliersmanagement:

Riskmanagement:

Example: value chain of non-core processes

StrategicManagement

WarehouseManagement

SuppliersManagement

LogisticsManagement


Procure-to-Service

FinanceIndirect

procurementIT HR

Core processes

Support processes

Wholesaler

Example: process architecture & value chains

DemandManagement

Groupsprocesses/

value chains

Collapsedvaluechain

SalesDirect

procurementDistribution

ServiceMarketing

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 Solutions2.11

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

Expandedprocess group

• Process stakeholders and 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

• 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

• 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

CoreProcesses

Support/ManagementProcesses

Claims handling process

Example Stakeholder-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

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)