“World Class Processes”; How to Get There! Class Processes - How to Get There.pdf“World Class...
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“World Class Processes”; How to Get There! November, 2007 Steve Arbogast
Transcript of “World Class Processes”; How to Get There! Class Processes - How to Get There.pdf“World Class...
“World Class Processes”; How to Get There!
November, 2007Steve Arbogast
Objectives / Agenda
ObjectiveShare observations and approaches for achieving “World Class” with respect to Business Processes; in any industry and any business
AgendaAddress the typical organizationPossible Roadmap to WCPsMaturity Model perspectivesAddress usages and overlaps in use and application of business processes; Business Architecture, SOA, Risk Mgt., BPMRoadmap and ApproachConclusionsQ&A
Typical Process and Architecture
What we see:Silo-basedDisconnectedProcess handoffs often not identified at all, or handoffs are inefficientNot reusableNot published, shared, and used in day to day business executionOften viewed as an “IT Thing”Not version managed; static viewsMetrics often not defined, or defined incorrectlyNo assessments and audits to understand how the process is workingProcess maps/designs in static “diagrams”Process maps/designs tucked away in drawers
From state of confusion and disconnection, no integrated, aligned, or converged architecture, or a static view of the architecture.
To effective and efficient change management, information and knowledge sharing, and convergence and integration of total business with IT.
Typical Organization Behavior
Lack overall commitment to Business ArchitectureStrategies linked to goalsStrategies and goals linked to processProcess linked to the organization, systems, and data
Fear of changeOne off process initiativesNo commitment to continual improvementNo governance over architectureNo organization (people) committed to process/architecture managementUnaware of Process Maturity management; unaware of maturity level in their organization
World Class Processes; What might they look like?
What is a WCP????????????We believe it is a journey!There are means to getting there that can be defined.
“World Class Process”Roadmap
Remove or breakdown the silosAlign, converge, connectInclude process dimensions
People/organizationSystems/automationDataMetricsGoals, Strategies, Rules, Policies, etc.
Define Inputs and OutputsDefine Triggers (events) that initiate the processEstablish a management system to support the Process workAssess Process Maturity and plan for improvement
Process Maturity; M. HammerProcess Enablers
•Design The comprehensiveness of the specification of how the process is to be executed.
•Purpose•Context•Documentation
•Performers The people who execute the process, particularly in terms of their skills and knowledge.
•Knowledge•Skills•Behavior
•Owner A senior executive who has responsibility for the process and its results.
•Identity•Activities•Authority
•Infrastructure Information and management systems that support the process.
•Information Systems•Human Resource Systems
•Metrics The measures the company uses to track the process performance.
•Definition•Uses
Enterprise Maturity; M. HammerEnterprise Capabilities
Leadership Senior executives who support the creation of processes.•Awareness•Alignment•Behavior•Style
Culture The values of customer focus, teamwork, personal accountability, and a willingness to change.
•Teamwork•Customer Focus•Responsibility•Attitude toward change
Expertise Skills in, and methodology for, process redesign.•People•Methodology
Governance Mechanisms for managing complex projects and change initiatives.
•Process Model•Accountability•Integration
PEMM; M. HammerProcess Maturity
P1: A process is reliable and predictable; it is stable.
P2: A process delivers superior results because the company has designed and implemented it from one end of the organization to the other.
P3: A process delivers optimal performance because executives can integrate it, where necessary, with other internal processes to maximize its contribution to the company’s performance.
P4: A process is best in class, transcending the company’s boundaries and extending back to suppliers and forward to customers.
P0: Organizations haven’t focused on developing their business processes, and processes work erratically.
PEMM; M. HammerEnterprise Maturity
E1: When the enterprise has E1 capabilities in leadership, culture, expertise, and governance, it is ready to advance all its processes to the P1 level.
E2: When all four capabilities reach E2, the company can move along its processes to P2.
Etc.
Maturity Model Concerns
•Maturity Model complexity may be too much for the Business Audience
•Ensure concrete connection between maturity levels and Business Performance
•Critical Success Factors: • Strategic Alignment
•Vision•Mission•Goals•Strategies
•Linkage with Business Outcomes
•Multiple Maturity Models out there for you to use
•Net: Each business must decide what maturity model to use, and how to adapt it to their needs.
Process Relationships to Business Initiatives
Business Processes
Business Process Management Business Architecture
Risk ManagementIT Solution DevelopmentSOA
Enterprise/Business Architecture Perspective
Data Function Network People Time Motivation
Scope{contextual}
Planner
BusinessModel{conceptual}Owner
SystemModel{logical}Designer
TechnologyModel{physical}Builder
DetailedPresentations{out-of-context}Subcontractor
FunctioningEnterprise
List of ThingsImportant to thebusiness
List of Processesthe businessperforms
List of locations inWhich theBusinessOperates
List ofOrganizationsImportant to theBusiness
List ofEvens/CyclesSignificant to theBusiness
List of BusinessGoals/Strategies
WHAT WHEREHOW WHO WHEN WHY
e.g., BusinessProces Model
e.g., BusinessLogistics System
e.g., Work FlowModel
e.g., MasterSchedule
e.g., BusinessPlan
e.g., Logical DataModel
eg., ApplicationArcitechture
e.g., DistributedSystemArchitecture
e.g., HumanInterfaceArchitecture
e.g., ProcessingStructure
e.g., BusinessRule Model
e.g., PhysicalData Model
e.g., SystemDesign
e.g., TechnologyArchitecture
e.g., PresentationArchitecture
e.g., ControlStructure e.g., Rule Design
e.g., DataDefinition e.g., Program e.g., Network
Architecturee.g., SecurityArchitecture
e.g., TimingDefinition
e.g., RuleSpecification
e.g., Data e.g., Function e.g., Network e.g., Organization e.g., Schedule e.g., Strategy
e.g., SemanticModel
•Process represented through the “HOW” column
“WCP” Designs in the EA (i.e., HOW things are done!)
LeadIdentificationandManagement
SolutionOpportunityIdentification
SalesConfiguration
Contract Prep Solution PricingOrder Requestprep andforward
SalesConfigurator
ContractMgmtSystem
PricingSystem
Product/ServiceOfferings
Contract to beregistered or
changed
Solution tobe priced
Lead/Prospectidentified
Sales Process Flow
CustomerOrder
Product ValueChain
Marketing
Sales Manufacturing
Distribution
Financial
Client/Customer
SAP R3
SalesConfigurator Pricing
System
Distributor
Order Interface
Order confirm
Order FulfillmentCosts & Billing
Trigger
ManufacturingCosts
Finished Goods
DistributionCosts
Product ShipInvoice
Payment
Product or ServiceFulfillment
SAP R3
Planner
Order receiver
CustomerOrder
12
Receive Order
1
Check orderinformation
Informationcomplete? 1
Contactcustomer
3
Accept order
Orderconfirmation Confirmed
order
Customer
Orderconfirmation
Yes
No
Receive Order WorkFlow
Customer
Customer Service
Order Administration
8
Customer signspurchase agreement(i.e., Contract)
Customer submitsorder request
7
Receive orderrequest
Registeragreement
5
Shop forproducts
Check for productavailability/schedule toensure ability to deliver
2
Confirm availabilityand delivery schedule
Save orderrequest as salesorder
Customeragreement tobuyproduct/service
OrderRequestForm
Business Process linked to and breaks down to operational process.
Business Functional view linked to and breaks down to process/sub-process views.
Operational Activities may link to and break down to lower level operational views.
•Align the organization to the strategy.•Discover how the organization is working.
C-Suite
Functional Level
Operational Level
DirectedStrategy
DiscoveredStrategy
“WCP” Links across the Enterprise/Living Architecture
LeadIdentificationandManagement
SolutionOpportunityIdentification
SalesConfiguration
Contract Prep Solution PricingOrder Requestprep andforward
SalesConfigurator
ContractMgmtSystem
PricingSystem
Product/ServiceOfferings
Contract to beregistered or
changed
Solution tobe priced
Lead/Prospectidentified
Sales Process Flow
CustomerOrder
Stations
Cars Makes
Categories
Contracts Customers Zip codes
Payments Currencies
Special rental fees Fees
fulf illed-by
fulf ills
Supply Chain ManagementCRM
CRM Siebel
SAP FF
SAP FF
SAP Finance
Customer DB
Product andPrice DB
Customer Records
Product and Price information
Sales Configurators
PricingSystem
Order RequestSales Order
Product Distribution Notice
Invoice
Process-based information flow linked to data architecture.
Data architecture linked to databases in System Architectures.
The systemCustomer
CustomerRepresentative
Shippingagent
Clerk
Inventorysystem
Place order
Get order status
Cancel order
Deliver product
Receive productsfrom supplier
Update account
«include»
«include» Accountingsystem
Product
+getProductDescription+getProductNumber
Person
#navn#address
getAddress
Non-Customer
Order
#orderDate#orderNumber#orderStatus#paymentMethod
+getOrderNumber+getStstus+setOrderStatus
Order Line
#quantity#price
+getPrice+getQuantity
«DBEntity»Customer
+«DBEntity»GetName+SetName+getAccountNo
Account
#balance
+GetBalance+Withdraw+checkCredit+updateAccount+Deposit
Class diagram for Ordering system
Service Layer
Process Relationships to Business Initiatives
Business Processes
Business Process Management Business Architecture
Risk ManagementIT Solution DevelopmentSOA
SOA; relevance to WCPs
Provide customer/business value through standard processes and execution of themThe business drivers include:
AgilitySpeed (time to market)Cost effectivenessAccuracyFlexibility
WCP relevance to SOA
ServiceCommon or reused process, set of processes, or activitiesFunction(s) implementing a capability delivering a Result in the support of the Business ProcessesThe result may be the activity in itself (activity service)Or it may be information (entity service)
WCP relevance to SOA
Business opportunitiesOutsourcing/offshoringMass customizationCustomer focusGlobalizationOn demandIntegrationImprovement in General (Cost, elimination of duplicate processes)
SOA; The processes control the systems!
Database
Applicationlogic
User interface
CRM
Database
Applicationlogic
User interface
Order
Applicationlogic
User interface
Inventory
Database
Applicationlogic
User interface
SupplierCRMServices
OrderServices
InventoryServices
SupplierServices
Process Relationships to Business Initiatives
Business Processes
Business Process Management Business Architecture
Risk ManagementIT Solution DevelopmentSOA
WCP Relevance to Risk Management
Activity
May reduce risk
May Generaterisk
BusinessProcess
Fin. Account
Strategy/Goal Product/Service
Application
Organization
ControlDeficiency
CorrectiveAction
Evaluation
Vendor
Purchaserequirementis made
Purchaser - Creater of Purchase Order
Verifies ifVendor exists inmaster file
Newvendor/Changedetails
No
Creates /ChangesPurchase Order
generate [Risk] [Key Control] [Key Control]generate [Risk] [Key Control]
Yes
Based onmasterplanrequestpurchase orderlist is created
generate [Risk] [Key Control] [Key Control]
Doesvendorexist?
3.2.2 Approvalof purchaserequisition /purchase order.
reduce [Risk]reduce [Risk]
Yes
Places Purchaseorder
Purchaserapproves thepurchase order
reduce [Risk]
Changesrequiredtopurchaseorder /requisition
PurchaseOrder /RequisitionIsApproved
PurchaseOrder /Requisitionrequiresapproval.
NoIs purchaseorder value
within Purchaserauthorisation
limit?
Vendorreceivespurchaseorder /confirmspurchaseorder
One Process; Multiple UsesIdentification of Risk Areas and Key Controls
Process Relationships to Business Initiatives
Business Processes
Business Process Management Business Architecture
Risk ManagementIT Solution DevelopmentSOA
Automates the operational processes of the business
Business Process Management
LeadIdentificationandManagement
SolutionOpportunityIdentification
SalesConfiguration
Contract Prep Solution PricingOrder Requestprep andforward
SalesConfigurator
ContractMgmtSystem
PricingSystem
Product/ServiceOfferings
Contract to beregistered or
changed
Solution tobe priced
Lead/Prospectident ified
Sales Process Flow
CustomerOrder
Product ValueChain
Marketing
Sales Manufacturing
Distribution
Financial
Client/Customer
SAP R3
SalesConfigurator Pricing
System
Distributor
Order Interface
Order confirm
Order FulfillmentCosts & Billing
Trigger
ManufacturingCosts
Finished Goods
DistributionCosts
Product ShipInvoice
Payment
Product or ServiceFulfillment
SAP R3
Planner
Order receiver
CustomerOrder
12
Receive Order
1
Check orderinformation
Informationcomplete? 1
Contactcustomer
3
Accept order
Orderconf irmation Confirmed
order
Customer
Orderconf irmation
Yes
No
Receive Order WorkFlow
•BPEL•XPDL•Etc.
Monitor performance; measure
Improve; Optimize
WCP Recap
•Process is at the Heart of the Business and its Business/Enterprise Architecture•SOA requires a foundation in process•Risk Management requires linkage to controls in the process•BPM can only be achieved within a “Process Focused Organization”
BUT, this does not mean one possesses WCPs!
Let’s look at an Approach for moving to World Class
The Roadmap to World Class; A Pragmatic Approach
EA Value Chain
Manage EAinitiative
Define Vision Build BusinessArchitecture
Metamodelling ReleaseManagement
Status handling &Review
LanguageManagement
Audit & SelfAssessment
Non ConformanceManagement
Event Management& Notification Publishing
InitiativeorProjectDefined
Updates,feedbackandrequirementsavailable
Define initiativesBuild TechnologyArchitecture
Conclusion
• World Class Processes cannot be self-defined or self-declared• Must be recognized by others as “World Class”; i.e., only by your customers and suppliers• Business must be committed to the Process Journey and to …..
Continuous improvement and evaluation through some sort of Maturity Model
• Being “World Class” is about how the Processes are..ManagedGovernedUsedAssessed and AuditedChanged and Continually Improved
