Process Governance - Building Business Capability · Process Governance Practical Implementation – Making Process Governance Work - For Real! Tom Einar Nyberg Head of BPM Capgemini

Process Governance Practical Implementation – Making Process Governance Work - For Real!

Tom Einar Nyberg Head of BPM Capgemini Norway

2 Copyright ©2014 Capgemini. All Rights Reserved

Presentation Title | Date

Agenda

§  The market we operate in

§  Why Process Goverance

§  Process Governance Model

§  Process ownership, roles & team Set-Up

§  Pracitical evaluation & improvement Regime

§  BPM Center of Excellence - & Services

§  DO’s and DON’T’s for implementation



Our market and the environement we operate in is increasingly demanding – and requires constant improvement and development

Cost & Effectiveness

Control & Compliance

Changing markets

Customer Experience

The need for change and continous

improvement

This is the “new normal” – there is no going back !



We need to focus on what we do every day – and at the same time we need to drive improvement to satisfy the «tomorrows» customers

Daily excelence in execution Continous improvement

VS

Our customers do not have an “Off-season” – which means that this needs to happen in parallell

Roles & Responsiblity



Ownership / Captal Organisasjon Ledelsesprosesser Ressources

External factors

Principle: The organization should be seen as a value creating system. We need to constantly adopt the system to the external environment

Custom

ers

Government

Labour market

R&D

Personnel

Material

Economic

Products / Services

Products / Services Suppliers

Technology

Visjon, misjon, strategi

Budsjett, mål, og handlingsplaner

Styring og oppfølging

Kjerneprosesser

Støtteprosesser

Krav og retningslinjer

HR, Innkjøp, Økonomi

Administrasjon, Juridisk,

Kommunikasjon

Driftsnære leveranser

Infrastruktur, utstyr og IT

Produksjon Markedsorientering og produktutvikling Salg og distribusjon Service og

oppfølging

Board

Partners Competitors

Deliverables

Society

Market

Orders

Market

Governance

Profit

Laws and requirement Trends Expectation

Agreement Competition

Personnel Material Technology

ORGANIZATION SEEN AS A VALUE

CREATING SYSTEM



Ownership / Captal Organization

Ressources

External factors

Custom

ers

Government

Labour market

R&D

Personnel

Material

Economic

Products / Services

Products / Services Suppliers

Technology

Board

Partners Competitors

Deliverables

Society

Market

Orders

Market

Governance

Profit

Laws and requirement Trends Expectation

Agreement Competition

Personnel Material Technology

Management processes

Vision, mision, strategy

Budget, goals and action plans

Control and monitoring

Core processes

Supporting processes

Requirements and rules

HR, Purchasing, Finance

Administration, Legal,

Communication

Production support

Infrastruktur, Equipement and IT

Production Market orientatation

and product development

Sales and distribution Customer service

The processes forms the «interconnected network» in the system The processes «aggregate» value across functions in the organization and creates value as the products and services are delivered to external customers.



Improvement and development of the system must happen continouisly in the organization and must produce new actions for improvement

Do §  Measure process

performance according to defined targets

§  Analysis of discovered discrepancies, improvement proposals and proactive risk control

Act §  Process oriented

governance §  Manage performance gaps

according to defined/new business targets

§  Initiate and prioritize business process improvement initiatives

Do §  Implement planned

process changes §  Change management

communication & training §  Provide operational

process governance

Plan §  Define objectives and

targets to support strategy §  Manage and design

business process changes §  (re)define business

processes ang governing documentation

§  re(define) business rules

Plan – Do – Check – Act §  improvement of business value

§  The phases reflects the main elements that must be controlled in order to manage critical processes

§  The iterative cycle drives improvement and performance towards strategic goals

§  Establish defined services in order to execute each phase, including roles and responsibilities, critical to ensure implementation

§  The method can be applied to all organisations, irrespective of size and industry



Limited time and internal focus – we have no time to make things permanently better - we will handle that once «things calm down…»

«Firefighting» in the organization creates

heroes

Prevention helps avoid crisis and problems

«Superman» vs «The Preventer» ?

Culutural influence ?

Different “mental-modes” in the organization – how to work with both sides in parallell ?



Unit 4 Unit 1 Unit 2 Unit 3

The line organization is focused on resources, daily operations and execution. The process dimension should be improvement oriented.

Process 2

•  Goals, results and budgets control •  Organizational responsibliity, authority, managemnet •  Owns resources with responsiblity for daily execution •  Meets customers in their daily operations – and tries to

satifsfy their current needs •  Must secure competence, quipment and support so they

can operate as planned

Process 3

Process 4

Results: Resources & Operations

Process 1

•  Which goals and performance targets triggers the need for improvement ìnitaitives ?

•  What is «good enough» based on current result acheivement, but also moving forward in this market ?

•  How do we develop compared to our competitors, technology, cusotmers and the market – and is this process important in order to provide an competivie advantage ?

Value delivered: Evaluation & Improvement

Process dimension Line organization



Unit 4 Unit 1 Unit 2 Unit 3

Process goverance works in «tandem» with the line organization – improving and developing processes, before «handing them back»

Proc

esse

s Process 1

Every day is a «new race» and a chance to either win or loose a customer

Process 2

Process 3

We develop to meet future customer needs and requirements - so that we can be «on top of the

podium» for the next race and season

Intervention: improvement and development

Feedback from the customers and the line organization

Improved design delivered back the organization

Daily execution

Line organization



Reporting vs Evaluation – often missing «Call to action» Problem: The regime becomes «self-sustianing» – and grows un-checked – without increasing value

Pitfalls •  Over-reporting •  Internally and adminisration focus •  Dedline for reporting is the «end-of-the-seqence» •  Often missing «call-to-action» •  Performance vs Status information

Pitfalls •  Too «Qualitative» and unstructured •  Reactive – triggered by complaints» •  Unfocused – missing strategic priorities •  Unclear tolerance levels and action plans •  Missing external perspective

Reporting & Evaluation must provide ACTIONS – or the time is WASTED

Evaluation Reporting

Results that are currently achieved during daily operations of the organization– Focus on status and correction

Externally oriented towards the future and the organization as a system– How to change and improve



The governance model must be clear and consise on several key elements in order to support the process effort.

§  The organization as a whole must be evaluated in terms of systemic value creation §  Relevant roles must defined with clear allocation, accountability, responsibility §  Processes must be delegated to a process sponsor and owner. §  Processes must be evaluated in accordance with requirements determined by the owner §  Clear accountability and responsibily for daily exection, performance results, budgets and resources §  Clear accountability and responsibily for design, improvement, standardization, learning of processes §  Evaluation model with clear structure, but also flexibility: Frequiency, scoring model, identification and

implementation of improvment actions §  Top-down improvement vs Bottom-up improvement ? §  Funding model for improvement actions – line organization vs process §  Supportive services available to the process owners

The governance model should EVOLVE as the organization EVOLVES



Typical roles that you have to define in the governance model (with a sample set of possible authority and responsibility)

Process co-ordinator

§  Responsible for coordinating process evaluation in accordance with requirements from the owner

§  Responsible for driving improvement actions. Can prioritize and initiate improvement, but must acquire funding approval for actions. Funding can be or pre-allocated or obtained from line organization on case-by-case basis

§  Defines process improvement team (where relevant)

§  Participates in process improvement team §  Represents line organization – and daily “hands-on”

experience §  Helps to evaluate process and identify actions for

improvement §  May be assigned responsibility for improvement

actions

Process owner

§  Overall responsibility for the process and its goals §  Typically high-level executive §  Determines frequency of evaluation and assigns

coordinator §  Accountable: Ensure that the process satisfies all

external / internal regulations and other requirements §  Accountable: Process design, governing

documentation and other material

Team member

Governance Support

& Monitoring

§  Resources that support the process governance effort §  Typically part of a central group (CoE support) §  Can facilitate process evaluation and improvement §  Supports several improvement teams §  May also monitor process owners / coordinator and

make sure that they perform evaluation and drive progress on improvement actions

Line organization – Approval

entity

§  Management group, division leadership, or similar entity in the line organization

§  Provides strategic priorities, goals and direction §  Approval authority, disposes funds etc. related to

process improvement

Line organization

– Process responsible

§  Responsible for implementing the process in their unit – as described by governing material

§  Provides resources, training, equipment and guidance to local employees so that the process can be executed as designed

§  Especially important in “multi-site” corporation



Sample: The improvement team must follow a evaluation cycle. Actions are processed continously during the period

1. Evaluation Period 2. Evaluation Period

PR-1 EV-1 AF-1 PR-2 EV-2 AF-2

PR: Preperation EV: Evluation AF: Action follow-up

Preperation • Prepraration with process owner

• Revise strategic goals and priorities

• Status of actions before evaluation

• Coordiante and plan evaluation 1

Evaluation • Verity goals and parameters

• Team evluation of process using scorecard and evalaution methdology

•  Identify actions for improvment

• Assign responsibiilty

Action follow-up • Check-point in order to make sure that actions make gorosess

•  IMPORTANT NOTE – actions are worked on continously during the period

Preperation • Short preperation and confirm current goals and status

• Run-trhough of actions

• Plan execution of evalution 2

Evalution • Veriy evaluation •  Identify actions for improvment

• Assign responsibiilty

Action follow-up • Check-point in order to make sure that actions make gorosess

•  IMPORTANT NOTE – actions are worked on continously during the period

Actions Actions

Make sure that the improvement team has practical tools to support the cycle



Evaluation must look at both «future» and «past» performace for the process. It must be both proactive and intervention base – and deliver ACTIONS !

Risks §  What is the probability of failure occurring when executing this

process in the future ? §  Are there any new hazards related to process exection ? §  Do we see increased risk due to internal changes ? §  Do critical activities have necessary controls in place ? §  Have we defied clear internfaces and cooridnation with

external parties ?

Steering §  Is our current process documentation at an appropriate level? §  Do we have all legal and business requirements under control ? §  Is the process implemented correctly in the organization ? §  Are employees properly trained and confident in process execution ?

§  Can we control and manage execution in the organisation ? §  Do we have best practises established and shared ?

Incidents §  Is there a trend in incidents occurring related

to the execution of this process §  Are there root-causes from incidents that indicate the process is either

not well designed, or lacking control over execution. §  Do we have any audit findings that related to the process ? §  Which improvement ideas have been proposed ?

Measurement §  What are the strategic areas that our processes are working

towards ? §  How is the current performance level compared to the line

organisations tolerance specification ? §  Do we have clear performance parameters and data available to

monitor performance ? §  Do we follow up on a balanced set of external and internal

dimensions ?

Actions



Actions for improvement needs to be considered in an cross-functional context that drives enterprise performance

Manufacturing department view Sales department view

§  Problem: Drop in customer satisfactions

§  Desired results §  Order cycle time of 1 day

§  Current results §  Order cycle time of 9 days

§  Order fulfillment process

§  Problem: Inaccurate & late order forms

§  Desired reesults: §  Zero incomplete order forms §  100% acccurate order forms §  Orders submitted daily

§  Current results

§  Between 1-10 incomplet order forms §  83% accurate orders §  Orders submitted weekly

§  Problem: Loss of market share

§  Desired results §  Market share of 80%+

§  Current results §  Market share of 66%

Marketing department view

Sales director VP of Supply chain Vice President of Marketing

It’s a problem with the order cycle variation – I am starting a SixSigma initiative

There is a marketing problem – I am going to hire some consultants

Activity level

Process level

End-to-end Enterprise level

It’s a problem with the order forms – I am going to create a new IT system

Improvement actions are often sub-optimized. They are iniated - although they are not looking at the complete picture. Can deliver «short-term» local improvment, in individual siloes – but they are not systemetic improvement for the entire organization

Adopted from Gaery Rumler –

Initiativ 1 Initiativ 2 Initiativ 3



Performance gaps have to been seen in context with strategic importance

§  Performance data for processes must be seen in the context of delivering on strategic goals, KPIs and operational execution

§  The strategic impact rates how important the outcome of the process is in relation to strategic operationalisation

§  The process performance gap in delivering business outcomes is termed its effectiveness This rates how good the process is in delivering its product and services – its ”hit-rate” for customer needs

§  Process efficiency relates to the amount of resources consumed to deliver this outcome.

§  The strategic impact and outcome gap needs to evaluated together in order to priortise processes for business process improvement

§  The priority will determine which processes will receive support and allocated resources, time, and money

Evaluation of process performance

Stra

tegi

c im

porta

nce

Performance gap Low High

Low

H

igh

Strategisk importance vs Performance gap

Target quadrant

Performance -‐ Process 1




P1

Selection and priorities for improvement

P2

P3

P4

P1

P4

P3

P2



Strategic KPIs sets «results» for the organization. Process performance tells you about «performance» availabe to achieve these results.

KPI, PPI, measures

Definition / Formula

PPI Performance

Measure 1

Measure 2

KPI Result / Delivery

Defined

Information

Måles vha

Data source

Organization

KPI = Key Performance Indicator Organization strategic target in their market – example: Nr of new employees hired per year This tells you what kind of results are being acheived by execution current procesesses in that market

Process

PPI = Process Performance Indicator Parameters linked to the execution of the process in the organization, example: Time spent on the recruitment cycle for an employee This tells you the peformance you have on your process. A process with the same performance can secure different results in different markets



The performance dimensions that are being evaluation must be linked to a balanced set of stakeholders – both internal and external

Performance dimension

Time

Cost

Quality

Capacity

Effeciency

Total volum that the process can handle §  Number of total transactions processesd §  Flow capacity – number of orders handled I parallel

Satisiaction of customer requirements §  Customer satisfaction §  Error rate between actual result and specification

Resources consumed by the process §  Dollars spent during process execution §  Costs related to re-work

Time consumed by the process §  End-to-end processin time form start to delivery §  Delivery time vs planned time

Internal efficiency for producing the results §  Resource comsuption / Transaction §  % of time wasted on waiting

The measures that are chosen must help predict future performance for the organization



Top-Down: Actions for process improvement Sample: Strategic actions are allocated (where relevant) to process improvement teams

Strategic scorecard Strategy map

Strategic plan and strategy map defined

Action plan & budget

Process teams performs

necessary improvements

Process coordinates

reports status & performance

Strategic scorecard

Scorecard for follow-up allocated and strategic

initatives identified

Allocation of budget for improvement actions by

scorecard owner

Result and performance follow-up based on strategic KPIs on scorecard

Process owner is allocated budget and starts actions

Proc

esse

s

Line

org

anis

atio

n

Actions related to processes Results



Bottom-Up: Actions for process improvement Sample: Prosess teams propose improvement based on employee feedback and learning from operations

Action plan & budget

Process team performes necessary

improvement

Process coordinator

reports on results

Allocation of budget for improvment is done by line

organisation

Team suggests actions to improve process execution

Proc

ess

Line organisation

Employee learning from daily operations

Process owner allocates budget

and approves actions

Sugg

este

d ac

tions

for

impr

ovem

ent

Funding to perform

improvem

ent Process owner must approve action and possibly acquire additional budget from line organisation (dependant on required funding levels )



In order to support the process governance implementation BPM CoE services are relevant

Technologies Complementary Services Main Services

MP01 Strategy Translation into Processes

MP02 BPM Demands Identification & Analysis

MP03 BPM Services Development Planning

MP06 BPM Results Evaluation

MP07 Culture Dissemination

CS01 Lean & Six Sigma Oriented Improvement CS02 Reference Models

Implementation CS03 Systems Specification

CS04 Process Automation

CS05 Business Rules Management

CS06 Process Auditing CS07 Risk and Internal

Control Management CS08 Competencies

Management CS09 Management of Improvement Projects

CS10 Process Cost Management

MS01 Process Architecture Maintenance

MS02 Process Modeling (AS-IS)

MS03 Process Improvement (TO-BE)

MS04 Process Documentation

MS05 Process Change Management

MS06 Process Performance Management

MS07 Process Management Training &

Education MS08 Process

Compliance MS09 Process Maturity

Management MS10 Process

Benchmarking & Innovation

T01 Process Modeling & EA Tools T02 SOA T03 BAM T04 ECM T05 BI

SP01 Administration of Models Repository

SP02 Administration of BPM Roles & Responsibilities

SP03 Administration of BPM Services Portfolio

SP04 Administration of BPM Human Resources

SP05 Administration of BPM Budget

Management Services

Support Services



As the organizations process maturity improves – the governance model must evolve and adapt.

Strengthen control

Standardise execution

Systematic performance improvement

Best-in-class reference

Governance model

Level1: Initial §  Processes are executed inconsistently and sometimes ad-hoc §  The organisationdoes not offer stable support for the processes §  Services often function – but they og beyond the planned time and budget §  Tendency to promice more that the organisation can deliver – and deviates from process during crisis

Level 2: Managed §  Processes are defined, understood and described in standards, procedures and tools §  Execution of processes have different controls across locations §  Process adherence is controlled on an ad-hoc basis and information rarely shared

Level 3: Defined §  Best-practises processes are actively used as sources of learning to standardise

processes across locations §  Initial use of measurement and control to ensure that deliverable requirement are being

met

Nivå 4: Managed §  Process performance is measured proactively - . target achievement

is analysed and controlled §  Standard processes are extensively used across locations and

benchmarked with external sources

Level 5: Optimised §  Proactive and continuous improvement provides

innovative solutions to achieve strategic targets



Summary: DO’s and DONT’s for practical implemenation

§  Establish the governance model early – and have it approved at the highest level §  Define a model that will ACTUALLY work for your organization (not a theoretical one) §  Make sure the model can evolve over time as the organization becomes more mature §  Dont «push» the effort by instituting advanced governance – if the organization is not ready §  Have very clear definitions on authority and responsiblity – you WILL be asked about this MANY times §  Focus on ACTIONS – its the improvement that creates value §  Make sure you have a defined mechanism for funding your improvement ACTIONS §  Differentiate processes based on their strategic importance and improvement potential §  Be pragmatic and flexible in terms of how solve praticalities §  Intergrate the process work into the organization, don’t create a «SHADOW GOVERNANCE» §  Limit administrative reporting – you already have a line organization that does enough of that §  Support the process team with a central coordination function (CoE or similar)

Documents

Process Governance - Building Business Capability · Process Governance Practical Implementation – Making Process Governance Work - For Real! Tom Einar Nyberg Head of BPM Capgemini