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What is a Business Process
Architecture & Why Is It
Important?

Roger T. Burlton, Dir Of Consulting Services
      T           Dir.
rburlton@bptrendsassociates.com

Paul Harmon, Chief Methodologist
pharmon@bptrends.com
BPTrends Associates    www.bptrends.com
                                    ©2009 BPTrends Associates. All Rights Reserved
Notice of Confidentiality

All materials you are given in this class are copyrighted
by BPTrends Associates.
The materials must not be copied, duplicated, or
reproduced in any manner, or transmitted to others
without the written consent of BPTrends Associates.
BPTrends Associates may be contacted at
88 Waban Park, Newton, MA 02458 USA
info@bptrendsassociates.com
+1 617 964 4753




                                                                            2
               Copyright © 2009 BPTrends Associates. All Rights Reserved.
Session Description

This seminar will look at corporate efforts to create Business
Process Architectures, the uses of process architectures, the
tools
t l and techniques available t f ilit t process
        dt h i            il bl to facilitate
architecture development, and the pitfalls to avoid. It will
consider business process architectures in a comprehensive
manner and include consideration of enterprise process
modeling, KPIs and the alignment of processes with
strategic goals and enterprise capabilities. Process
governance and the role of a BPM Center of Excellence will
also be introduced.

It is based on the BPTrends Associates BPM methodology
                                                    gy
which enables the concepts described.




                                                                            3
               Copyright © 2009 BPTrends Associates. All Rights Reserved.
Facilitators Reference Materials

                            Roger Burlton’s
                            Business Process Management




                          www.amazon.com
                          www.amazon.co.uk
                           www.amazon.ca




                 Paul Harmon’s
     Business Process Change
                       2nd Ed.

                                                                         4
            Copyright © 2009 BPTrends Associates. All Rights Reserved.
Business Process Architecture Agenda

1. Some Process Principles
2. Understand Enterprise Context
                   p
3. Model Enterprise Processes
4. Define Performance Measures
5. Establish Process Governance
6. Align Enterprise Capabilities
7. Prioritize and Manage Change
8. Conclusion




                                                                          5
             Copyright © 2009 BPTrends Associates. All Rights Reserved.
Section 1
S ti
Some Process Principles




                   ©2009 BPTrends Associates. All Rights Reserved
What Do People Think BPM Means?




         BPTrends Survey: 2007. 274 Responses from throughout world.
                                                                        7
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The Focus of Process-Centric Enterprises




   For Enterprises with Multiple Lines of Business
            p                p

                                                                          8
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BPM is Widely Applicable Way of
    Managing Performance and Change
 Versatility = able to do many things with your
                                                                                        BPM, EA,
 capabilities                                                                           SOA cover
 Adaptability = able to renew your capabilities quickly                                   all 3

Our Future                                                 To
Challenges                           Rapid Change
will be here         Dynamic                                                Invention
                                     and Variation
         Products
        & Services
                                                                                       To
                      Stable           Business as
                                       B i                                Continuous
                                                                          C ti
                                         Usual                           Improvement

Most Improvement
Techniques do not                                                                           Kaizen and Lean
   question the                             Stable                          Dynamic         from Toyota, Six
Product or Service                                                                             Sigma from
                                                          Capabilities                          Motorola

           Develop environments that assume & enable variation and change
                                                                                                      9
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Enterprise Performance Requires Strategic Alignment
     of Capabilities & Traceability of Decisions


       Business     Strategic
                     Intent            Performance
        Drivers                          Results


                   Business /
                  Stakeholder
                    Strategy
     Business
     Strategy
     St t

                                Org/HR        Information
                                Strategy      Architecture

                                       Business
                                        Process
                                      Architecture


                            Technology            Other
                            Architecture        Strategies
                                                                         Program of Change


                                                             Migration                Project
                    Capability
                      p      y                               Strategy                Portfolio
                    Architecture
10
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                                                                                                 10
SEI’s Capability Maturity Model (CMMI)




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Different Perspectives on a Business Process

A process is a repeatable series of activities performed to produce
         a result of value for one or more stakeholders.

• S
  Scoping (E
      i   (Event) Vi
               t) View:

  – Is initiated and terminated by one or more business
  events.
• Relationship View:

  – Delivers outcomes of value to relevant stakeholders of
  the process
      process.
  – Always connects to other processes in a value chain (our
  own or other stakeholders’).




 Business P
 B i      Processes are enterprise assets and must b managed as such.
                          t    i       t    d    t be      d       h

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Different Perspectives on a Business Process

• Processing View:

     –Transforms inputs into outputs, according to policies
     and rules employing reusable resources
                                  resources.
• Performance View:

     –Has performance indicators for which measurable
      Has
     objectives can be set and actual performance
     evaluated.
• Functional / O ga
   u ct o a    Organizational View:
                      at o a    e

     –Contains activities requiring a set of functional
     competencies often found in disparate organizational
     units.
     units



 Business Processes are enterprise assets and must be managed as such
                                                                 such.

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                Copyright © 2009 BPTrends Associates. All Rights Reserved.
Business Processes as Aligner of Capabilities
                                                                                                                Local Resturant




                                                                                        Finance &
                                                         Marketing & Sales                                       Operations               Transporation              Legal Sevices
                                                                                      Administration




                                                                                                 Information               Faciliticies
                                                                  Customer Service                                                                    Logistics
                                                                                                   Systems                Management




                                                                       Catering                   Accounts                   Human
                                                                  Banquet Services               Receivable                Resources


                                                                                                                                                          Delivery



                                                                                            Accounts Payable           Food Preparation




                                                                                                 Purchasing




                                                                                                       Credit




                                                                                     Organization




BPM: the discipline that                                                                Business

improves measurable business                                                          Business
process performance through                                                          Performance

ongoing optimization of
enterprise-wide processes and                                                         Processes

their capabilities.

                                                                                            Facilities




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                       Copyright © 2009 BPTrends Associates. All Rights Reserved.
What is a Business Process Architecture

There’s no broad agreement on this term. Here’s our
  definition. A Business Process Architecture (BPA)
• is a set of models and documents that provide
  information about the organization’s business processes
• consists of models and documents that describe the
  organization s
  organization’s processes and the various relationships
  among them.
• describes the relationship of the processes to the
  organization s
  organization’s strategic intent and stakeholders
                                      stakeholders.
• defines how the processes are measured
• describes how the processes are aligned to other
                     p                g
  organizational resources, including Business Rules, IT
  assets and Human Resources.



                                                                            15
               Copyright © 2009 BPTrends Associates. All Rights Reserved.
The BPTrends Associates Pyramid




                                                                       16
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The BPTrends Associates BPM Methodology




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Undertake Enterprise Level Process Work to Support
Ongoing Management Goals




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A Quick Evaluation of Your Enterprise BPM Gap




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Section 2
S ti
Understand Enterprise Context




                   ©2009 BPTrends Associates. All Rights Reserved
Architecture Development Activities




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Strategic Intent: Mission, Vision, Goals,
Objectives

• Organizations use different names for the concepts – but
  most have some description of what they are trying to
  accomplish

• The organization strategic intent is usually defined by an
  executive committee

• It is key to process work that we align our processes to our
  organization’s intent

• In most cases this primarily involves examining documents
  that already exist

• In some cases you may find documents that are vague or
            ases o ma          do ments         a e ag e o
  that don’t cover everything you will need to drive your
  process architecture work


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A Basic Organizational Vocabulary




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Understanding an Organization




• Mission: We aim to produce something of value* for customers.

• Vision: We want to produce something of value for customers in
  some way better than we do now

• Goal: We want to break our vision into a set of more definitive
  accomplishments to support our Vision

• Objective: We want to be able to set a measurable target to
  evaluate our attainment of our goals

• Key Performance Indicator: We want to establish the
  performance indicator that lets us monitor our progress towards
  our objective
                         * V l i determined by customers
                           Value is d  i db
                                                                               24
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Define Organization Boundaries




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Define Organization Value Chains                                     (Lines of
Business)




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Define Stakeholders for Value Chains




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Analyze Each Stakeholder Relationship

 Understand or Determine what does the successful future
 look like at the end of the planning horizon:

  • The Goals for future of Value Creation (Stakeholder
    Expectations)
  • The Measurement Indicators of success (KPIs) for
                                          (    )
    each Relationship Type
  • The Objectives (Target Levels) for performance
    Improvement during the Planning Timeframe
      p              g             g
  • Those Capabilities that must be in place and Critical
    Success Factors that must be addressed to attain the
    Stakeholder value goals, expectations and KPI targets
                      g    ,   p                     g
  • Together these are Evaluation Criteria for Business,
    Process, Technology and Human Change


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              Copyright © 2009 BPTrends Associates. All Rights Reserved.
Workshop
You have been asked to take on responsibility for the entire
‘Santa’s North Pole’ enterprise process architecture.
•   What are 3 external drivers and pressures today?
•   Set a planning horizon for change
•   Briefly discuss the business strategic intent
•   Identify 10 main stakeholders of the business?
•   Identify for 1 of the stakeholders

     –   2 future expectations you want them to have
     –   2 KPIs and target levels you want to achieve
     –   2 Critical Success Factors that must be satisfied
•   Guidelines
     –   Make up your situation
     –   There are no thinking constraints
     –   Have fun




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                       Copyright © 2009 BPTrends Associates. All Rights Reserved.
Section 3
S ti
Model Enterprise Processes




                   ©2009 BPTrends Associates. All Rights Reserved
Architecture Development Activities




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           Copyright © 2009 BPTrends Associates. All Rights Reserved.
Some Process Architecture Principles

     • The Architecture is built from the perspective of a clear
       “Organization in Focus” (OIF)
     • E
       Everything coming i
             hi       i   into the OIF must come from at l
                                h                f        least
       one external stakeholder and be received by at least one
       process
     • E
       Everything l
            thi    leaving th OIF must go to at l
                       i   the        t   t   t least one
                                                    t
       external stakeholder and be produced by at least one
       process
     • Internally a chain of processes move stakeholder
       relationships through a lifecycle of state changes - from
       unawareness through termination
     • Internally a chain of processes move OIF assets through a
       lifecycle of state changes - from conception through
       retirement


32                                                                               32
                    Copyright © 2009 BPTrends Associates. All Rights Reserved.
The Role of Value Chains, Value Streams and
Processes




• Value Chain: A complete set of value streams and their
  processes that an organization performs to produce a complete
  set of value added outputs for its external customers.
    t f    l    dd d   t t f it        t    l    t
      –    eg: Core Customer Value Chain
• Value Stream: A subset of the value chain that supports the
  delivery of a specific product service or result that contributes
                         product,
  to customer value.
      –    eg: Acquire Customer Value Stream, Provide Insurance
           Solutions Value Stream
• Process: A set of activities that transforms process inputs into
  defined outputs to contribute towards the value stream’s goals
  and objectives.
      –    eg: Identify and Qualify Needs, Secure the Business
                                    Needs

                                                                              33
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An Organization Diagram with Three Value
Streams (High Level Processes)




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As We Drill Down We Keep Expanding the
 Effort Involved
                                                        Level 1                   Level 2
                                                        Process                   Process

                       Value Chain

                                                        Level 1                   Level 2
                                                        Process                   Process



                                                        Level 1                   Level 2
 Organization          Value Chain
                                                        Process                   Process



                                                        Level 1                   Level 2
                                                        Process                   Process

                       Value Chain

                                                        Level 1                   Level 2
                                                        Process                   Process

1 Organization
    g                3 Value Chains                 3x5 = 15 Level            15x5 = 65 Level 2
                                                     1 Processes                 Processes

                                                                                            35
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Core, Management and Support Processes




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Business Process Frameworks

• A Business Process or Reference Framework is a template
  that prescribes a set of high level processes and measures that
  stereotypical companies use with those processes

• A company can use a BP Framework to quickly define an initial
  cut at parts of a Business Process Architecture

• You would not expect a framework to be implementable “off the
  shelf” to cover an entire enterprise in all it does

• Several different professional g
                    p            groups are working on BP
                                     p            g
  Frameworks.
   – Generic Enterprise Models
   – Industry Specific Models
     Industry-Specific
   – Domain-Specific Models
   – Process Lifecycle and Value Chain Models


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Some Business Process (or OR) Frameworks

•   Generic Enterprise Models intended to describe organizations of all
    types in all sectors.

     – APQC’s Process Classification Framework
       APQC s
•   Industry-Specific Models aiming to describe an industry in whole.

     – ACORD Insurance Framework (Being developed)
     – TeleManagement Forum’s eTOM
•   Domain-Specific Models geared towards particular functions within
    the organization and the processes within them

     – OCG’s ITIL (Info. Tech. Infrastructure Library)
     – ISACA’s COBIT (Control OBjectives for IT)
•   Process Lifecycle and Value Chain Models to examine all work in a
    connected process chain across and within enterprises.

     – Supply Chain Council’s SCOR
     – Canada Government (Treasury Board Secretariat) GSRM
       (Governments Strategic Reference Model)
                                                                                38
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APQC’s Process Classification Framework




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ITIL Framework




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SCOR Example: Level 2 Processes

                               Supply
                               Chain


    Plan


     Source              Make                    Deliver



                                                                    Return

                                                                             41
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SCOR Example: Level 3 Processes in Source ETO
Product




• Each of the Level 2 processes comes in one of three “stereotypes;”
     • Off-the-Shelf
     • Made to Order
     • Engineered to Order.
                      Order
• In the example above, Source describes an Engineered to Order Source
  process.
• There are few variations in the Level 3 process, no matter which
  stereotype is involved.
                                                                               42
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Process Decomposition Diagram for VRM*




      * Value Chain Group’s Value Reference Model: Only Core Processes
                                                                          43
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Some Frameworks Provide Measures, Benchmarks
Priorities: SCOR Example




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Business Process Semantics:
          Rules for Naming a Process

     Strict Naming                Non–verb structures disallowed:
     Structure:                   NO stand alone nouns or gerunds:
                                            Anything that ends in
     A process is                              …ing
     described by an                           …tion
     active verb-noun                          …ent
     structure.                                …al


                                   Verbs to be wary of:
     The intended                        Anything that is lazy and not clearly result
     purpose of the                     focused
                                                manage
     process must be in
                                                handle
     the name of the                            process
     process.                                   do




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The Process Architecture must
  Support Relationship Lifecycles
All Stakeholder Relationships go through a progression from
    unawareness through termination




                                     What relationships do we
                                        have to manage?

                                                                                46
                   Copyright © 2009 BPTrends Associates. All Rights Reserved.
The Process Architecture must Support
  Asset and Capability Lifecycles

All assets and capabilities go through a progression from
    concept identification through retirement




                                             What things do we have
                                                  to manage?

                                                                                47
                   Copyright © 2009 BPTrends Associates. All Rights Reserved.
Financial Services Example
                                                                                                                                                Core
                             Define               Manage                                 Improve &
           Govern the      EDC Strategic          External
                                                                     Develop
                                                                     Policies
                                                                                       Transform the           Ensure
                                                                                                             Compliance
                                                                                                                                             value chain
           Business           Intent            Relationships                             Business

                                                                                                                                                  in
           Manage the       Understand            Design             Develop          Plan & Manage
                                                                                                                                              corporate
                            Markets &             Products           Business
           Core Business    Customers            & Services          Strategy
                                                                                        Operations
                                                                                                                                               context
                              Create            Identify and         Develop                                                 Monitor &
                           Awareness &                                                 Develop the            Secure the
           Core Customer     Interest
                                                  Qualify             Value
                                                                                       Solution            Business
                                                                                                                            Administer
                                                   Needs        Proposition
           Value Chain                                                                                                     Solution


                                       Acquire Customer



                                                                                         Provide Insurance Solutions
                 Value
                                                                                          Provide Financing Solutions
                 Streams
                                                                                         Provide Bonding Solutions
                                                                                         P   id B di S l ti

Customer                                                                                 Provide Advisory Services
                                                                                                                                           Customer



           Manage
                                                                     Manage Customer Relationships
           Assets
                                                                      Manage Partner Relationships


                                                                     Optimize Financial Assets




           Enable the        Provide
                                                   Provide
                                                                     Manage
                                                                     Financial
                                                                                           Provide              Manage       Manage
                            Facilities &                                                    Legal                            Human
           Business
           B i               Supplies
                                                 IT Services        Resources
                                                                                           Services
                                                                                                               Knowledge
                                                                                                                           Relationships
                                                                     (Budget)




                                                                                                                                                      48
                                Copyright © 2009 BPTrends Associates. All Rights Reserved.
Sample IT Level 1 and 2 Processes




                                                                       49
          Copyright © 2009 BPTrends Associates. All Rights Reserved.
Group Workshop

• Looking back on the frameworks mentioned, identify the
  types that may work for Santa’s business.
• Identify the processes in lifecycle of the child
• Identify the processes in the lifecycle of a gift
• Identify some Management and Support Processes of
  the North Pole?
• Guidelines
   – Verbs please
   – 5-10 core processes
   – 16 20 total processes
     16-20




                                                                               50
                  Copyright © 2009 BPTrends Associates. All Rights Reserved.
Section 4
S ti
Define Performance Measures




                  ©2009 BPTrends Associates. All Rights Reserved
Architecture Development Activities




                                                                        52
           Copyright © 2009 BPTrends Associates. All Rights Reserved.
From Strategic and External to Internal
Performance Measures as we Decompose




• Strategic and External Measures tell us about the results
  achieved by the value chains or business processes in delivery
  to stakeholders

• Internal Measures tell us about the results achieved by
  contributing processes, sub-processes or activities


                                                                              53
                 Copyright © 2009 BPTrends Associates. All Rights Reserved.
Ensuring Traceability of Process Measures up
and down Process Levels
                                             Organizational
                    Financial   Customer     Measures
                    Measures    Measures



                     Internal   Learning &
                    Process      Growth
                    Measures    Measures


                                                                     Value Chain
                                              Financial   Customer   Measures
                                              Measures    Measures


The goals and measures of
                                               Internal   Learning
any given Level Process                       Process
                                              Measures
                                                          & Growth
                                                          Measures

should be a subset of their                                                                  Level 1
higher level goals and                                                Financial   Customer
                                                                                             Process
                                                                                             Measures
                                                                      Measures
                                                                      M           Measures
                                                                                  M
measures
                                                                       Internal   Learning
                                                                      Process     & Growth
                                                                      Measures    Measures



                                                                                             54
              Copyright © 2009 BPTrends Associates. All Rights Reserved.
A Balanced Scorecard With Goals and Measures




                                                                        55
           Copyright © 2009 BPTrends Associates. All Rights Reserved.
Knowledge of Stakeholder Goals Drives Process Goals
     and KPIs




Products and Services

 1 Original Documents
 2 Copies                                                          Financial         Customer
 3 Payments
 4 Paper and Ink
 5 Invoices                                                        Goal - KPI 3      Goal - KPI 5
 6 Copy Machines
 7 Licenses
 8 Taxes                                                           Process           Learning
 9 Jobs
10 Time / Experience
                                                                   Goal - KPI 9      Goal - KPI 12




                                                                                                     56
                        Copyright © 2009 BPTrends Associates. All Rights Reserved.
Section 5
S ti
Establish Process Governance




                   ©2009 BPTrends Associates. All Rights Reserved
Architecture Development Activities




                                                                        58
           Copyright © 2009 BPTrends Associates. All Rights Reserved.
Governance vs. Management

• Governance and Management are NOT the
  same thing.
• Governance is concerned with goals,
  principles and structures that define who can
  make what decisions, frameworks, policies,
              decisions frameworks policies
  rules, and processes that define or constrain
  day-to-day management activities.
• Management responds to daily circumstances
  and performance by taking daily actions.
  Managers should be guided or constrained by
  established governance documentation.


                                                                         59
            Copyright © 2009 BPTrends Associates. All Rights Reserved.
Organizational Governance Structures


                                                   CEO




VP Finance   VP IT                  SVP Divisons                                SVP                           SVP
                                                                             Manufacturing              Sales & Marketing



                                                                     VP Asian             VP US
             Name     SV Europe      SV Americas         VP EMEA                                            VP Sales
                                                                    Manufacturing       Manufacturing
              Title




   • At the organization level, we h
         h               l   l     have people who are clearly
                                             l   h      l   l
     in charge and responsible for functional performance

   • As we develop our process architecture we will need to
     determine who will be responsible for the results achieved
     by the value chain, value streams and composite processes


                                                                                                            60
                      Copyright © 2009 BPTrends Associates. All Rights Reserved.
A Typical Functional Organization

                          CEO




     Sales
     S l             Manufacturing
                     M   f t i               Delivery
                                             D li
   Department         Department            Department


        VP               VP                     VP
       Sales         Manufacturing            Delivery




                    Manf. Supervisor
                                             Delivery
 Sales Supervisor      (Operational
                    Process Manager)        Supervisor



                                                                  • Who is responsible for
                                                                    cross functional
      Sell           Manufacture              Deliver
                                                                    performance and the
                                                                    advocacy for cross
                                                                    functional change?




                                                                                        61
                      Copyright © 2009 BPTrends Associates. All Rights Reserved.
Determine Who Will Govern Each Value Chain




                                                                         62
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How is Power & Responsibility Allocated?


                                                    Sales
                                                  Department
                                                                              • Who has the budget?
                                                       VP                     • Who has bonuses?
                                                      Sales
                                                                              • Who evaluates the
                                                                                Day-to-Day Manager?

                                         o? ty
                                       Tw ili
                                      e ib
                                    es ns
                                  Th po
                                                                              • Who cont ols support
                                                                                     controls s ppo t
                                 n es
                                              Plan
                                              Pl &            Monitor
                                                              M it &
                               ee R
                            et r &




                                             Organize          Control
                           B we




                                                                                functions? (e.g. IT
                              w
                         ed o
                       id P
                     iv is
                    D w




                                                                                budget)
                       o
                      H




 Widget Process


                        Plan & Organize
      Value Chain                                   Day-to-Day
                                                    Day to Day
       Manager                                   Process Manager
                     Monitor & Control
                                            Plan &                Monitor &   • It’s the formal division
                                                                                of power &
                                           Organize                Control


                                                        Sell                    responsibility that
                                                                                    p        y
                                                                                define BPM governance
                                 Widget Value Chain
                                                                                policies



                                                                                                  63
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Aligning Process Measures & Process Manager
Performance Evaluation Scorecards

                                                                 Organizational
A process scorecard                   Financial     Customer     Measures
                                      Measures      Measures
system automatically
generates a
                                       Internal
performance                           Process
                                                    Learning &
                                                     Growth
evaluation system for                 Measures      Measures

process managers
                                                                                             Value Chain
                                                                                             Measures
                                                                   Financial      Customer
                                                                   Measures       Measures

                         Financial    Customer
                         Measures     Measures
                                                                    Internal      Learning
                                                                   Process        & Growth
                                                                   Measures       Measures
                          Internal    Learning
                         Process      & Growth
                         Measures     Measures


                        Value Chain Manager’s
                                    Manager s
                        Scorecard

                                                                                              64
                Copyright © 2009 BPTrends Associates. All Rights Reserved.
Governance Purpose & Scope


Process governance aims to ensure we are good at:
 Aligning Processes with Strategic Intent
 Controlling Process Performance
 Improving and Adapting Processes
 Sustaining the Benefits of Process Change
            g                            g

Scope of Process Governance:
 Design the Business Process Architecture and business processes
 Define and oversee the process Performance Management
   Framework
 Define and oversee the process Change Management Framework

Note: These are intertwined and feed one another




                                                                                65
                   Copyright © 2009 BPTrends Associates. All Rights Reserved.
Governance :                 How many ROLES are needed and Who will
perform them?

                                                 develop &
                                                  manage                                    Govern all
    Governance                                  governance                                  processes
                                                framework



                                                 design &               Improve and adapt a process
    Stewardship                                  improve
                                                 process

                                                                        performance &
                                             process approach             improvement
                                                                          i          t
      Day to day                                & guidance                    feedback
     Management
                                                                     Execute and control a process

        specific customer                         conduct
                                                                               specific customer
        with specific need                      instance of
                                                                              with specific solution
                                                  process



     Day to day                             enabling resources
     Leadership                                                              feedback on
                                      (human, technical, infrastructural)
                                                                            effectiveness
                                                                              of enablers



                                                  provide
     Support                                      enablers




                                                                                                         66
                      Copyright © 2009 BPTrends Associates. All Rights Reserved.
Case in Point: Financial Services Firm
  Roles and Reporting




                                                     Roles can rec r at m ltiple levels:
                                                               recur multiple le els:
              Executive
                                                                  Value Chain
                                                                   Value Stream
                                                                       Process
Coordinator
C    i                             Steward

                                                             Legend:
              Manager
                                                               Focus = Change Management
                                                                    Focus = Performance
                                                                       Management

                Lead                                      Focus = Both Change and Performance
                                                                      Management

                                                             Mechanisms to elaborate on decisions,
                                                             synchronize activities, and report on
                                                                        performance
                                                                           f
                                                                 Accountability relationship
                                                                 Collaborative relationship 67
                 Copyright © 2009 BPTrends Associates. All Rights Reserved.
Section 6
S ti
Align Enterprise Capabilities




                     ©2009 BPTrends Associates. All Rights Reserved
Architecture Development Activities




                                                                        69
           Copyright © 2009 BPTrends Associates. All Rights Reserved.
Enterprise Complexity Requires a More
       Elegant Architectural Model*
          g
                                               Strategy                   Stakeholders
                 Opportunities                                                               Value Chains

    Principles                   Mission            Goals                         Constraints
                                                               Objectives
                     Weaknesses                Vision                                             Threats
      Values                                                                Requirements
                                                           Strengths
                    Organizations                                           Products
                                           Processes
            Events                                                                     Methodologies
                                    Services
                  Triggers                         Functions           Procedures
                                  Skills
                                                                                     Workflow
                     Responsibilities                          Business Rules
                                                Roles
                                                                                                    Risks
 Financial Assets                                         People         Projects
                                        Jobs                                             Budget
                       Objects                                              Time
    Facilities                         Data            Information
                                                                                       Tax
                        Legal                                            Cost
      Locations                                     Knowledge
                        Tools                                                          Models
                                      Applications                 Systems

                             Databases                  Middleware              Use Cases

                    Hardware

                                                        From
                                                                                                            To

• TOGAF Framework

                                                                                                                     70
                                                        Copyright © 2009 BPTrends Associates. All Rights Reserved.
Align Processes with Human Resources

                                                   Organization
For example: Align
competencies required b
       t    i        i d by
the processes that require
them                                               Value Chain




                    Level 1          Level 1         Level 1          Level 1       Level 1
                    Process          Process         Process          Process       Process




                     Market                           Product         Product       Problem
                                      Sales
                    Research                        Engineering
                                                      g       g          g
                                                                    Configuration   Solving
                                                                                          g


                                                                                          71
                Copyright © 2009 BPTrends Associates. All Rights Reserved.
Align Processes with Business Rules


For example: Align
processes with policies and
            ith  li i     d
Business Rules that are
used in the processes




                                                                              72
                 Copyright © 2009 BPTrends Associates. All Rights Reserved.
Align Processes with Applications




                                                                        73
           Copyright © 2009 BPTrends Associates. All Rights Reserved.
Align Processes with SOA Services

                                                                                                                MDA/BPMN

  Business                                                                                                      MDA/BPDM
  Processes                                                                                                     MDA/SBVR

                                                                                                                ebXML
                                                                                                                BPEL
                                 Interfaces defined by business processes
                                                     y          p
                                                                                                                MDA/XMI
  Business
   Services                                                                                                     MDA/UML

                    Interfaces defined by enterprise semantics and requirements                                 WSDL
                                                                                                                XML
Integration                                                                                                             UDDI
                 IS              IS          IS            IS        IS          IS          IS                 SOAP
    Services
                                                                                                                TCP /IP

                                                                                                                MDA/J 2EE
                                                                                                                MDA/Eclipse
Operational
 Resources                                Servers                  Servers
                                  Data              Data    Data                               Data
               Mainframes
                                                                                Mainframes


                                                      Figure After a BPTrends Column by Mike Rosen, Jan. 2006
                                                                                                                    74
                            Copyright © 2009 BPTrends Associates. All Rights Reserved.
Section 7
S ti
Prioritize and Manage Change




                     ©2009 BPTrends Associates. All Rights Reserved
The BPTrends Associates BPM Methodology




                                                                       76
          Copyright © 2009 BPTrends Associates. All Rights Reserved.
Using a Pain-Gain Matrix for Prioritization
                              1. Identify Processes                                                                                                                                                                                                                                                             2. Identify Stakeholders
                              you want to prioritize                                                                                                                                                                                                                                                            who are interested in the
                                                                                                                                                                                                                                                                                                                       Processes

                                                                                      Process Gain Worksheet
                                                                                                                                                                                                                                                                                                                                                                                      Process Pain Worksheet




                                                                                                                                                                                                                                    Process 10
                                                  Weighting

                                                              Process 1




                                                                          Process 2




                                                                                         Process 3




                                                                                                     Process 4




                                                                                                                 Process 5




                                                                                                                                                                     Process 6




                                                                                                                                                                                   Process 7




                                                                                                                                                                                                  Process 8




                                                                                                                                                                                                                   Process 9




                                                                                                                                                                                                                                                                                                                                                                                                                                                                             Process 10
                                                                                                                                                                                                                                                                                                                                                  Weighting

                                                                                                                                                                                                                                                                                                                                                              Process 1



                                                                                                                                                                                                                                                                                                                                                                          Process 2




                                                                                                                                                                                                                                                                                                                                                                                         Process 3




                                                                                                                                                                                                                                                                                                                                                                                                     Process 4



                                                                                                                                                                                                                                                                                                                                                                                                                 Process 5




                                                                                                                                                                                                                                                                                                                                                                                                                             Process 6



                                                                                                                                                                                                                                                                                                                                                                                                                                         Process 7




                                                                                                                                                                                                                                                                                                                                                                                                                                                     Process 8



                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Process 9
            Stakeholders :
                                                                                                                                                                                                                                                                                                   Stakeholders :
            1.

                                                                                                                                                                                                                                                                                                   1.
            2.

                                                                                                                                                                                                                                                                                                   2.
            3.
                                                                                                                                                                                                                                                                                                   3.
            4.
                                                                                                                                                                                                                                                                                                   4.
            5.

                                                                                                                                                                                                                                                                                                   5.
            6.

                                                                                                                                                                                                                                                                                                   6.
            7.

                                                                                                                                                                                                                                                                                                   7.
            8.
                                                                                                                                                                                                                                                                                                   8.
            9.

                                                                                                                                                                                                                                                                                                   9.
            Combined Gain:

                                                                                                                                                                                                                                                                                                   Combined Pain:
            Process Gain Ranking :



    3. Determine how much
            Copyright © 2008. BPTrends Associates. All Rights Reserved.                                                                                                                                                                                                                            Process Pain Ranking :

                                                                                                                                                                                                                                                                                                   Copyright © 2008. BPTrends Associates. All Rights Reserved.




       each Stakeholder                                                                                                                                                                                                                                                                                               4.
                                                                                                                                                                                                                                                                                                                      4 Determine how much each
     potentially gains from                                                                                                                                                                                                                                                                                            Stakeholder is frustrated by
         each process                                                                                                                                                                                                                                  Pain-Gain Matrix                                                      each process
                                                                                                                                 Highest
                                                                                                                                 Amount                                           1
                                                                                                                                 of Pain
                                                                                                                                                                                  2
                                                                                                                                                                      mproved ?




                                                                                                                                                                                  3


   5.
   5 Create a matrix that                                                                                                                                                         4
                                                                                                                                  PAIN - How much the process can be im




                                                                                                                                                                                  5


  locates each process so                                                                                                                                                         6

                                                                                                                                                                                  7
                                                                                                                                                                                                                                                                                                                                                                                       Processes it
     you can identify the                                                                                                                                                         8

                                                                                                                                                                                  9
                                                                                                                                                                                                                                                                                                                                                                                      would be best
  processes that are most                                                                                                                                                         10

                                                                                                                                                                                  11
                                                                                                                                                                                                                                                                                                                                                                                       to focus on
   value and also frustrate                                                                                                      Least
                                                                                                                                 Amount
                                                                                                                                 of Pain
                                                                                                                                                                                  12

                                                                                                                                                                                                12            11               10                9         8       7        6        5         4    3             2            1


    stakeholders the most                                                                                                    Copyright © 2008. BPTrends Associates. All Rights Reserved.
                                                                                                                                                                                                 Smallest
                                                                                                                                                                                               Possible GAIN
                                                                                                                                                                                                                                                     GAIN - Contribution to Strategic Intent                      Largest
                                                                                                                                                                                                                                                                                                               Possible GAIN




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          77
                                                                    Copyright © 2009 BPTrends Associates. All Rights Reserved.
Alternate Process Migration Strategy (Triage2)
     Performance             Competent             Best Practice          World Class
             Gap             Commodity             Competitive            Differentiation

                   pain
             B                                                                        1
                   1/3                                                       3
             i                                                                               Large
             g
                                   A3
                                                                 5                           Performance
             g                                                                               Gap
             e
                                        15                                            4
             s
             t                                         16                        8
                                                                     14
                                                                                             Moderate
                   1/3
             G                     B3                       B2                               Performance
             a
             p                          12         6                             13          Gap

             R
             a                                         2                    7
             n                 9         10
                                                                                             No/ Little
                   1/3
             k                     C3                       C2                   C1
             i                                                                               Performance
             n                     11                                                        Gap
                                                                                             G
             g

                                                                                            gain       Inherent
                                        1/3                 1/3                  1/3                   Value


                         Greatest Value Potential to Business Strategy and Performance
78                                                                                                         78
                            Copyright © 2009 BPTrends Associates. All Rights Reserved.
Scope of the Support Group(s)?

                        Govern                         Provide Capability           Provide Consulting

Governance Support      CoE                            CoE                          CoE


Enterprise              Process Governance             CoE                          CoE
                        Office or CPO


Process                 Process Governance             CoE                          CoE
                        Office or CPO


Technology
T h l                   Process Governance             CoE or IT Function?          CoE or IT Function?
Implementation          Office or CPO


Human Implementation    Process Governance             CoE or HR Function?          CoE or HR Function?
                        Office or CPO


Operations              Process Governance             Day to day Process           Day to day Process
                        Office or CPO                  Manager                      Manager


                                                                                                 79
                       Copyright © 2009 BPTrends Associates. All Rights Reserved.
Section 8
S ti
Conclusions




              ©2009 BPTrends Associates. All Rights Reserved
Documentation Required for Each Value
Chain, Value Stream and Process
     Events
              Opening
              Closing
     Description
     Relevant Stakeholders
      R l    t St k h ld
     Process Goals
     Other Relevant Processes
     Process Responsible Parties
              Governance
              Stewardship
              Management
     KPIs
              Indicator with Unit of Measure
              Current Performance
              Target Performance
     Value Added Rank
     Performance Gap
     IGOEs
              Inputs
              Guides
              Outputs
              Enablers
  •   Sub level Activities
             Sub Processes (next level)

                                                                                       81
                          Copyright © 2009 BPTrends Associates. All Rights Reserved.
Finishing Your Enterprise Architecture

• We have described a general methodology for creating
  the elements needed to organize and manage processes
  at the enterprise level

• In fact, however, we have only been able to
  approximate the work you will need to do to actually
  implement the enterprise methodology

• Having explored the elements of the methodology, you
  will need a plan to actually implement it and we want
                                         it,
  to provide some suggestions as to how you might
  approach it




                                                                           82
              Copyright © 2009 BPTrends Associates. All Rights Reserved.
Maintain Process Architecture

• The first issue to face, after initially creating a process
  architecture, is how to maintain it
• A good process architecture is a valuable corporate
  asset
• Every day that passes will introduce changes in the
    e y        a                 oduce c a ges      e
  architecture
• Most days will also generate information that could be
  captured to enrich your architecture. Every process
                           architecture
  redesign project, for example, will produce updated and
  more detailed information about specific processes that
  make up the architecture
• You need a standard, systematic process that gathers
  information about changes and enhancements and uses
  them to update the company architecture
            p            p y

                                                                             83
                Copyright © 2009 BPTrends Associates. All Rights Reserved.
Maturity:                    What Level Do We Want to Reach?
                                                     And By When?


                                                         Processes Teams          Level 5.
                                                             Continuously        Processes
                                                        Improve Processes       Continuously
                                                                                 Improved

                                          Processes are        Level 4.
                                          Measured and      Processes Are
                                              Managed         Managed
                                                                   g
                                          Systematically
                                          S t     ti ll

                        Processes are       Level 3.
                       Organized and
                     Redesigned at the
                                         Most Processes                                 + Measurement &
                                           Organized
                      BS&T Level                                                        Governance
    Processes are
   Improved at the        Level 2.
    Work Group or      Some Organized
Departmental Level       Processes
                                                                     + Architecture Map & KPIs
       Level 1.
     No Organized        Cultures
      Processes          of Heros




                                                                                                     84
                                Copyright © 2009 BPTrends Associates. All Rights Reserved.
Process Architecture :
                                 It's inevitable - just a matter of time




•   Process is the b t choice t translate Strategic
    P         i th best h i to t     l t St t i
    Intent into Capability.

     It’s what we do to get what we want.
                        g
•   All capabilities must be aligned with the
    processes and strategies.
                                                                                   1
     We have to have a clear language and common
      target
•   We must have frameworks that manage and
    govern our assets.
     We have to invest in and do the right things

                                                                                   85
                      Copyright © 2009 BPTrends Associates. All Rights Reserved.

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20090901 London Enterprise Session V3 Colour

  • 1. What is a Business Process Architecture & Why Is It Important? Roger T. Burlton, Dir Of Consulting Services T Dir. rburlton@bptrendsassociates.com Paul Harmon, Chief Methodologist pharmon@bptrends.com BPTrends Associates www.bptrends.com ©2009 BPTrends Associates. All Rights Reserved
  • 2. Notice of Confidentiality All materials you are given in this class are copyrighted by BPTrends Associates. The materials must not be copied, duplicated, or reproduced in any manner, or transmitted to others without the written consent of BPTrends Associates. BPTrends Associates may be contacted at 88 Waban Park, Newton, MA 02458 USA info@bptrendsassociates.com +1 617 964 4753 2 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 3. Session Description This seminar will look at corporate efforts to create Business Process Architectures, the uses of process architectures, the tools t l and techniques available t f ilit t process dt h i il bl to facilitate architecture development, and the pitfalls to avoid. It will consider business process architectures in a comprehensive manner and include consideration of enterprise process modeling, KPIs and the alignment of processes with strategic goals and enterprise capabilities. Process governance and the role of a BPM Center of Excellence will also be introduced. It is based on the BPTrends Associates BPM methodology gy which enables the concepts described. 3 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 4. Facilitators Reference Materials Roger Burlton’s Business Process Management www.amazon.com www.amazon.co.uk www.amazon.ca Paul Harmon’s Business Process Change 2nd Ed. 4 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 5. Business Process Architecture Agenda 1. Some Process Principles 2. Understand Enterprise Context p 3. Model Enterprise Processes 4. Define Performance Measures 5. Establish Process Governance 6. Align Enterprise Capabilities 7. Prioritize and Manage Change 8. Conclusion 5 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 6. Section 1 S ti Some Process Principles ©2009 BPTrends Associates. All Rights Reserved
  • 7. What Do People Think BPM Means? BPTrends Survey: 2007. 274 Responses from throughout world. 7 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 8. The Focus of Process-Centric Enterprises For Enterprises with Multiple Lines of Business p p 8 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 9. BPM is Widely Applicable Way of Managing Performance and Change Versatility = able to do many things with your BPM, EA, capabilities SOA cover Adaptability = able to renew your capabilities quickly all 3 Our Future To Challenges Rapid Change will be here Dynamic Invention and Variation Products & Services To Stable Business as B i Continuous C ti Usual Improvement Most Improvement Techniques do not Kaizen and Lean question the Stable Dynamic from Toyota, Six Product or Service Sigma from Capabilities Motorola Develop environments that assume & enable variation and change 9 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 10. Enterprise Performance Requires Strategic Alignment of Capabilities & Traceability of Decisions Business Strategic Intent Performance Drivers Results Business / Stakeholder Strategy Business Strategy St t Org/HR Information Strategy Architecture Business Process Architecture Technology Other Architecture Strategies Program of Change Migration Project Capability p y Strategy Portfolio Architecture 10 Copyright © 2009 BPTrends Associates. All Rights Reserved. 10
  • 11. SEI’s Capability Maturity Model (CMMI) 11 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 12. Different Perspectives on a Business Process A process is a repeatable series of activities performed to produce a result of value for one or more stakeholders. • S Scoping (E i (Event) Vi t) View: – Is initiated and terminated by one or more business events. • Relationship View: – Delivers outcomes of value to relevant stakeholders of the process process. – Always connects to other processes in a value chain (our own or other stakeholders’). Business P B i Processes are enterprise assets and must b managed as such. t i t d t be d h 12 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 13. Different Perspectives on a Business Process • Processing View: –Transforms inputs into outputs, according to policies and rules employing reusable resources resources. • Performance View: –Has performance indicators for which measurable Has objectives can be set and actual performance evaluated. • Functional / O ga u ct o a Organizational View: at o a e –Contains activities requiring a set of functional competencies often found in disparate organizational units. units Business Processes are enterprise assets and must be managed as such such. 13 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 14. Business Processes as Aligner of Capabilities Local Resturant Finance & Marketing & Sales Operations Transporation Legal Sevices Administration Information Faciliticies Customer Service Logistics Systems Management Catering Accounts Human Banquet Services Receivable Resources Delivery Accounts Payable Food Preparation Purchasing Credit Organization BPM: the discipline that Business improves measurable business Business process performance through Performance ongoing optimization of enterprise-wide processes and Processes their capabilities. Facilities 14 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 15. What is a Business Process Architecture There’s no broad agreement on this term. Here’s our definition. A Business Process Architecture (BPA) • is a set of models and documents that provide information about the organization’s business processes • consists of models and documents that describe the organization s organization’s processes and the various relationships among them. • describes the relationship of the processes to the organization s organization’s strategic intent and stakeholders stakeholders. • defines how the processes are measured • describes how the processes are aligned to other p g organizational resources, including Business Rules, IT assets and Human Resources. 15 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 16. The BPTrends Associates Pyramid 16 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 17. The BPTrends Associates BPM Methodology 17 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 18. Undertake Enterprise Level Process Work to Support Ongoing Management Goals 18 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 19. A Quick Evaluation of Your Enterprise BPM Gap 19 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 20. Section 2 S ti Understand Enterprise Context ©2009 BPTrends Associates. All Rights Reserved
  • 21. Architecture Development Activities 21 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 22. Strategic Intent: Mission, Vision, Goals, Objectives • Organizations use different names for the concepts – but most have some description of what they are trying to accomplish • The organization strategic intent is usually defined by an executive committee • It is key to process work that we align our processes to our organization’s intent • In most cases this primarily involves examining documents that already exist • In some cases you may find documents that are vague or ases o ma do ments a e ag e o that don’t cover everything you will need to drive your process architecture work 22 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 23. A Basic Organizational Vocabulary 23 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 24. Understanding an Organization • Mission: We aim to produce something of value* for customers. • Vision: We want to produce something of value for customers in some way better than we do now • Goal: We want to break our vision into a set of more definitive accomplishments to support our Vision • Objective: We want to be able to set a measurable target to evaluate our attainment of our goals • Key Performance Indicator: We want to establish the performance indicator that lets us monitor our progress towards our objective * V l i determined by customers Value is d i db 24 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 25. Define Organization Boundaries 25 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 26. Define Organization Value Chains (Lines of Business) 26 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 27. Define Stakeholders for Value Chains 27 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 28. Analyze Each Stakeholder Relationship Understand or Determine what does the successful future look like at the end of the planning horizon: • The Goals for future of Value Creation (Stakeholder Expectations) • The Measurement Indicators of success (KPIs) for ( ) each Relationship Type • The Objectives (Target Levels) for performance Improvement during the Planning Timeframe p g g • Those Capabilities that must be in place and Critical Success Factors that must be addressed to attain the Stakeholder value goals, expectations and KPI targets g , p g • Together these are Evaluation Criteria for Business, Process, Technology and Human Change 28 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 29. Workshop You have been asked to take on responsibility for the entire ‘Santa’s North Pole’ enterprise process architecture. • What are 3 external drivers and pressures today? • Set a planning horizon for change • Briefly discuss the business strategic intent • Identify 10 main stakeholders of the business? • Identify for 1 of the stakeholders – 2 future expectations you want them to have – 2 KPIs and target levels you want to achieve – 2 Critical Success Factors that must be satisfied • Guidelines – Make up your situation – There are no thinking constraints – Have fun 29 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 30. Section 3 S ti Model Enterprise Processes ©2009 BPTrends Associates. All Rights Reserved
  • 31. Architecture Development Activities 31 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 32. Some Process Architecture Principles • The Architecture is built from the perspective of a clear “Organization in Focus” (OIF) • E Everything coming i hi i into the OIF must come from at l h f least one external stakeholder and be received by at least one process • E Everything l thi leaving th OIF must go to at l i the t t t least one t external stakeholder and be produced by at least one process • Internally a chain of processes move stakeholder relationships through a lifecycle of state changes - from unawareness through termination • Internally a chain of processes move OIF assets through a lifecycle of state changes - from conception through retirement 32 32 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 33. The Role of Value Chains, Value Streams and Processes • Value Chain: A complete set of value streams and their processes that an organization performs to produce a complete set of value added outputs for its external customers. t f l dd d t t f it t l t – eg: Core Customer Value Chain • Value Stream: A subset of the value chain that supports the delivery of a specific product service or result that contributes product, to customer value. – eg: Acquire Customer Value Stream, Provide Insurance Solutions Value Stream • Process: A set of activities that transforms process inputs into defined outputs to contribute towards the value stream’s goals and objectives. – eg: Identify and Qualify Needs, Secure the Business Needs 33 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 34. An Organization Diagram with Three Value Streams (High Level Processes) 34 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 35. As We Drill Down We Keep Expanding the Effort Involved Level 1 Level 2 Process Process Value Chain Level 1 Level 2 Process Process Level 1 Level 2 Organization Value Chain Process Process Level 1 Level 2 Process Process Value Chain Level 1 Level 2 Process Process 1 Organization g 3 Value Chains 3x5 = 15 Level 15x5 = 65 Level 2 1 Processes Processes 35 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 36. Core, Management and Support Processes 36 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 37. Business Process Frameworks • A Business Process or Reference Framework is a template that prescribes a set of high level processes and measures that stereotypical companies use with those processes • A company can use a BP Framework to quickly define an initial cut at parts of a Business Process Architecture • You would not expect a framework to be implementable “off the shelf” to cover an entire enterprise in all it does • Several different professional g p groups are working on BP p g Frameworks. – Generic Enterprise Models – Industry Specific Models Industry-Specific – Domain-Specific Models – Process Lifecycle and Value Chain Models 37 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 38. Some Business Process (or OR) Frameworks • Generic Enterprise Models intended to describe organizations of all types in all sectors. – APQC’s Process Classification Framework APQC s • Industry-Specific Models aiming to describe an industry in whole. – ACORD Insurance Framework (Being developed) – TeleManagement Forum’s eTOM • Domain-Specific Models geared towards particular functions within the organization and the processes within them – OCG’s ITIL (Info. Tech. Infrastructure Library) – ISACA’s COBIT (Control OBjectives for IT) • Process Lifecycle and Value Chain Models to examine all work in a connected process chain across and within enterprises. – Supply Chain Council’s SCOR – Canada Government (Treasury Board Secretariat) GSRM (Governments Strategic Reference Model) 38 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 39. APQC’s Process Classification Framework 39 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 40. ITIL Framework 40 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 41. SCOR Example: Level 2 Processes Supply Chain Plan Source Make Deliver Return 41 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 42. SCOR Example: Level 3 Processes in Source ETO Product • Each of the Level 2 processes comes in one of three “stereotypes;” • Off-the-Shelf • Made to Order • Engineered to Order. Order • In the example above, Source describes an Engineered to Order Source process. • There are few variations in the Level 3 process, no matter which stereotype is involved. 42 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 43. Process Decomposition Diagram for VRM* * Value Chain Group’s Value Reference Model: Only Core Processes 43 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 44. Some Frameworks Provide Measures, Benchmarks Priorities: SCOR Example 44 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 45. Business Process Semantics: Rules for Naming a Process Strict Naming Non–verb structures disallowed: Structure: NO stand alone nouns or gerunds:  Anything that ends in A process is  …ing described by an  …tion active verb-noun  …ent structure.  …al Verbs to be wary of: The intended  Anything that is lazy and not clearly result purpose of the focused  manage process must be in  handle the name of the  process process.  do 45 45 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 46. The Process Architecture must Support Relationship Lifecycles All Stakeholder Relationships go through a progression from unawareness through termination What relationships do we have to manage? 46 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 47. The Process Architecture must Support Asset and Capability Lifecycles All assets and capabilities go through a progression from concept identification through retirement What things do we have to manage? 47 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 48. Financial Services Example Core Define Manage Improve & Govern the EDC Strategic External Develop Policies Transform the Ensure Compliance value chain Business Intent Relationships Business in Manage the Understand Design Develop Plan & Manage corporate Markets & Products Business Core Business Customers & Services Strategy Operations context Create Identify and Develop Monitor & Awareness & Develop the Secure the Core Customer Interest Qualify Value Solution Business Administer Needs Proposition Value Chain Solution Acquire Customer Provide Insurance Solutions Value Provide Financing Solutions Streams Provide Bonding Solutions P id B di S l ti Customer Provide Advisory Services Customer Manage Manage Customer Relationships Assets Manage Partner Relationships Optimize Financial Assets Enable the Provide Provide Manage Financial Provide Manage Manage Facilities & Legal Human Business B i Supplies IT Services Resources Services Knowledge Relationships (Budget) 48 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 49. Sample IT Level 1 and 2 Processes 49 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 50. Group Workshop • Looking back on the frameworks mentioned, identify the types that may work for Santa’s business. • Identify the processes in lifecycle of the child • Identify the processes in the lifecycle of a gift • Identify some Management and Support Processes of the North Pole? • Guidelines – Verbs please – 5-10 core processes – 16 20 total processes 16-20 50 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 51. Section 4 S ti Define Performance Measures ©2009 BPTrends Associates. All Rights Reserved
  • 52. Architecture Development Activities 52 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 53. From Strategic and External to Internal Performance Measures as we Decompose • Strategic and External Measures tell us about the results achieved by the value chains or business processes in delivery to stakeholders • Internal Measures tell us about the results achieved by contributing processes, sub-processes or activities 53 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 54. Ensuring Traceability of Process Measures up and down Process Levels Organizational Financial Customer Measures Measures Measures Internal Learning & Process Growth Measures Measures Value Chain Financial Customer Measures Measures Measures The goals and measures of Internal Learning any given Level Process Process Measures & Growth Measures should be a subset of their Level 1 higher level goals and Financial Customer Process Measures Measures M Measures M measures Internal Learning Process & Growth Measures Measures 54 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 55. A Balanced Scorecard With Goals and Measures 55 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 56. Knowledge of Stakeholder Goals Drives Process Goals and KPIs Products and Services 1 Original Documents 2 Copies Financial Customer 3 Payments 4 Paper and Ink 5 Invoices Goal - KPI 3 Goal - KPI 5 6 Copy Machines 7 Licenses 8 Taxes Process Learning 9 Jobs 10 Time / Experience Goal - KPI 9 Goal - KPI 12 56 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 57. Section 5 S ti Establish Process Governance ©2009 BPTrends Associates. All Rights Reserved
  • 58. Architecture Development Activities 58 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 59. Governance vs. Management • Governance and Management are NOT the same thing. • Governance is concerned with goals, principles and structures that define who can make what decisions, frameworks, policies, decisions frameworks policies rules, and processes that define or constrain day-to-day management activities. • Management responds to daily circumstances and performance by taking daily actions. Managers should be guided or constrained by established governance documentation. 59 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 60. Organizational Governance Structures CEO VP Finance VP IT SVP Divisons SVP SVP Manufacturing Sales & Marketing VP Asian VP US Name SV Europe SV Americas VP EMEA VP Sales Manufacturing Manufacturing Title • At the organization level, we h h l l have people who are clearly l h l l in charge and responsible for functional performance • As we develop our process architecture we will need to determine who will be responsible for the results achieved by the value chain, value streams and composite processes 60 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 61. A Typical Functional Organization CEO Sales S l Manufacturing M f t i Delivery D li Department Department Department VP VP VP Sales Manufacturing Delivery Manf. Supervisor Delivery Sales Supervisor (Operational Process Manager) Supervisor • Who is responsible for cross functional Sell Manufacture Deliver performance and the advocacy for cross functional change? 61 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 62. Determine Who Will Govern Each Value Chain 62 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 63. How is Power & Responsibility Allocated? Sales Department • Who has the budget? VP • Who has bonuses? Sales • Who evaluates the Day-to-Day Manager? o? ty Tw ili e ib es ns Th po • Who cont ols support controls s ppo t n es Plan Pl & Monitor M it & ee R et r & Organize Control B we functions? (e.g. IT w ed o id P iv is D w budget) o H Widget Process Plan & Organize Value Chain Day-to-Day Day to Day Manager Process Manager Monitor & Control Plan & Monitor & • It’s the formal division of power & Organize Control Sell responsibility that p y define BPM governance Widget Value Chain policies 63 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 64. Aligning Process Measures & Process Manager Performance Evaluation Scorecards Organizational A process scorecard Financial Customer Measures Measures Measures system automatically generates a Internal performance Process Learning & Growth evaluation system for Measures Measures process managers Value Chain Measures Financial Customer Measures Measures Financial Customer Measures Measures Internal Learning Process & Growth Measures Measures Internal Learning Process & Growth Measures Measures Value Chain Manager’s Manager s Scorecard 64 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 65. Governance Purpose & Scope Process governance aims to ensure we are good at:  Aligning Processes with Strategic Intent  Controlling Process Performance  Improving and Adapting Processes  Sustaining the Benefits of Process Change g g Scope of Process Governance:  Design the Business Process Architecture and business processes  Define and oversee the process Performance Management Framework  Define and oversee the process Change Management Framework Note: These are intertwined and feed one another 65 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 66. Governance : How many ROLES are needed and Who will perform them? develop & manage Govern all Governance governance processes framework design & Improve and adapt a process Stewardship improve process performance & process approach improvement i t Day to day & guidance feedback Management Execute and control a process specific customer conduct specific customer with specific need instance of with specific solution process Day to day enabling resources Leadership feedback on (human, technical, infrastructural) effectiveness of enablers provide Support enablers 66 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 67. Case in Point: Financial Services Firm Roles and Reporting Roles can rec r at m ltiple levels: recur multiple le els: Executive Value Chain Value Stream Process Coordinator C i Steward Legend: Manager Focus = Change Management Focus = Performance Management Lead Focus = Both Change and Performance Management Mechanisms to elaborate on decisions, synchronize activities, and report on performance f Accountability relationship Collaborative relationship 67 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 68. Section 6 S ti Align Enterprise Capabilities ©2009 BPTrends Associates. All Rights Reserved
  • 69. Architecture Development Activities 69 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 70. Enterprise Complexity Requires a More Elegant Architectural Model* g Strategy Stakeholders Opportunities Value Chains Principles Mission Goals Constraints Objectives Weaknesses Vision Threats Values Requirements Strengths Organizations Products Processes Events Methodologies Services Triggers Functions Procedures Skills Workflow Responsibilities Business Rules Roles Risks Financial Assets People Projects Jobs Budget Objects Time Facilities Data Information Tax Legal Cost Locations Knowledge Tools Models Applications Systems Databases Middleware Use Cases Hardware From To • TOGAF Framework 70 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 71. Align Processes with Human Resources Organization For example: Align competencies required b t i i d by the processes that require them Value Chain Level 1 Level 1 Level 1 Level 1 Level 1 Process Process Process Process Process Market Product Product Problem Sales Research Engineering g g g Configuration Solving g 71 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 72. Align Processes with Business Rules For example: Align processes with policies and ith li i d Business Rules that are used in the processes 72 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 73. Align Processes with Applications 73 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 74. Align Processes with SOA Services MDA/BPMN Business MDA/BPDM Processes MDA/SBVR ebXML BPEL Interfaces defined by business processes y p MDA/XMI Business Services MDA/UML Interfaces defined by enterprise semantics and requirements WSDL XML Integration UDDI IS IS IS IS IS IS IS SOAP Services TCP /IP MDA/J 2EE MDA/Eclipse Operational Resources Servers Servers Data Data Data Data Mainframes Mainframes Figure After a BPTrends Column by Mike Rosen, Jan. 2006 74 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 75. Section 7 S ti Prioritize and Manage Change ©2009 BPTrends Associates. All Rights Reserved
  • 76. The BPTrends Associates BPM Methodology 76 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 77. Using a Pain-Gain Matrix for Prioritization 1. Identify Processes 2. Identify Stakeholders you want to prioritize who are interested in the Processes Process Gain Worksheet Process Pain Worksheet Process 10 Weighting Process 1 Process 2 Process 3 Process 4 Process 5 Process 6 Process 7 Process 8 Process 9 Process 10 Weighting Process 1 Process 2 Process 3 Process 4 Process 5 Process 6 Process 7 Process 8 Process 9 Stakeholders : Stakeholders : 1. 1. 2. 2. 3. 3. 4. 4. 5. 5. 6. 6. 7. 7. 8. 8. 9. 9. Combined Gain: Combined Pain: Process Gain Ranking : 3. Determine how much Copyright © 2008. BPTrends Associates. All Rights Reserved. Process Pain Ranking : Copyright © 2008. BPTrends Associates. All Rights Reserved. each Stakeholder 4. 4 Determine how much each potentially gains from Stakeholder is frustrated by each process Pain-Gain Matrix each process Highest Amount 1 of Pain 2 mproved ? 3 5. 5 Create a matrix that 4 PAIN - How much the process can be im 5 locates each process so 6 7 Processes it you can identify the 8 9 would be best processes that are most 10 11 to focus on value and also frustrate Least Amount of Pain 12 12 11 10 9 8 7 6 5 4 3 2 1 stakeholders the most Copyright © 2008. BPTrends Associates. All Rights Reserved. Smallest Possible GAIN GAIN - Contribution to Strategic Intent Largest Possible GAIN 77 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 78. Alternate Process Migration Strategy (Triage2) Performance Competent Best Practice World Class Gap Commodity Competitive Differentiation pain B 1 1/3 3 i Large g A3 5 Performance g Gap e 15 4 s t 16 8 14 Moderate 1/3 G B3 B2 Performance a p 12 6 13 Gap R a 2 7 n 9 10 No/ Little 1/3 k C3 C2 C1 i Performance n 11 Gap G g gain Inherent 1/3 1/3 1/3 Value Greatest Value Potential to Business Strategy and Performance 78 78 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 79. Scope of the Support Group(s)? Govern Provide Capability Provide Consulting Governance Support CoE CoE CoE Enterprise Process Governance CoE CoE Office or CPO Process Process Governance CoE CoE Office or CPO Technology T h l Process Governance CoE or IT Function? CoE or IT Function? Implementation Office or CPO Human Implementation Process Governance CoE or HR Function? CoE or HR Function? Office or CPO Operations Process Governance Day to day Process Day to day Process Office or CPO Manager Manager 79 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 80. Section 8 S ti Conclusions ©2009 BPTrends Associates. All Rights Reserved
  • 81. Documentation Required for Each Value Chain, Value Stream and Process  Events  Opening  Closing  Description  Relevant Stakeholders R l t St k h ld  Process Goals  Other Relevant Processes  Process Responsible Parties  Governance  Stewardship  Management  KPIs  Indicator with Unit of Measure  Current Performance  Target Performance  Value Added Rank  Performance Gap  IGOEs  Inputs  Guides  Outputs  Enablers • Sub level Activities  Sub Processes (next level) 81 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 82. Finishing Your Enterprise Architecture • We have described a general methodology for creating the elements needed to organize and manage processes at the enterprise level • In fact, however, we have only been able to approximate the work you will need to do to actually implement the enterprise methodology • Having explored the elements of the methodology, you will need a plan to actually implement it and we want it, to provide some suggestions as to how you might approach it 82 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 83. Maintain Process Architecture • The first issue to face, after initially creating a process architecture, is how to maintain it • A good process architecture is a valuable corporate asset • Every day that passes will introduce changes in the e y a oduce c a ges e architecture • Most days will also generate information that could be captured to enrich your architecture. Every process architecture redesign project, for example, will produce updated and more detailed information about specific processes that make up the architecture • You need a standard, systematic process that gathers information about changes and enhancements and uses them to update the company architecture p p y 83 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 84. Maturity: What Level Do We Want to Reach? And By When? Processes Teams Level 5. Continuously Processes Improve Processes Continuously Improved Processes are Level 4. Measured and Processes Are Managed Managed g Systematically S t ti ll Processes are Level 3. Organized and Redesigned at the Most Processes + Measurement & Organized BS&T Level Governance Processes are Improved at the Level 2. Work Group or Some Organized Departmental Level Processes + Architecture Map & KPIs Level 1. No Organized Cultures Processes of Heros 84 Copyright © 2009 BPTrends Associates. All Rights Reserved.
  • 85. Process Architecture : It's inevitable - just a matter of time • Process is the b t choice t translate Strategic P i th best h i to t l t St t i Intent into Capability. It’s what we do to get what we want. g • All capabilities must be aligned with the processes and strategies. 1 We have to have a clear language and common target • We must have frameworks that manage and govern our assets. We have to invest in and do the right things 85 Copyright © 2009 BPTrends Associates. All Rights Reserved.