BUSINESS PROCESS MANAGEMENT
CO5270
CHAPTER 2 – PROCESS IDENTIFICATION
Dr. Thai-Minh Truong
thaiminh@[Link]
Adapted from [Link]
Chapter 2: Process Identification
Contents
1. Definition of the Process Architecture
1. Process Categories
2. Relationships Between Processes
3. Reuse of Reference Models
4. Process Landscape Model
2. Process Selection
1. Selection Criteria
2. Process Performance Measures
3. Process Portfolio
3. Recap
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Process Identification in
the BPM Lifecycle
Management Processes
Process Define Vision Develop Strategy Implement
Strategy
Manage Risk
Examples for BPM lifecycle and process mining identification Core Processes
Procure Procure Market Deliver
Manage
Customer
Materials Products Products Products
Service
35h B 30h Support Processes
15h Process architecture Manage Personnel
Manage
Information Manage Assets
A E
D
5m 3m 5m 10m 30m 2h 10m
15m
C
1.5h 10min
Conformance and Process As-is process
performance discovery model
insights
A B C D E
Process Process
monitoring analysis
Executable Insights on
process weaknesses and
model their impact
Process Process
implementation To-be process redesign
model
Chapter Overview
▪ Process identification refers to systematically defining business processes of
organization and establishing criteria to select processes for improvement.
▪ Output is process architecture, which represents processes and interrelations.
▪ Process architecture serves as framework for defining priorities and scope of projects.
▪ We present a method based on process architecture definition and process selection.
▪ Definition is concerned with listing initial set of processes and their architecture.
▪ Selection considers criteria for defining priorities of processes using a portfolio.
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Chapter 2: Process Identification
Contents
1. Definition of the Process Architecture
1. Process Categories
2. Relationships Between Processes
3. Reuse of Reference Models
4. Process Landscape Model
2. Process Selection
1. Selection Criteria
2. Process Performance Measures
3. Process Portfolio
3. Recap
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Process Categories
▪ Process categories based on Porter’s Value Chain model
▪ Core processes cover the essential value creation of a company, that is the
production of goods and services for which customers pay. These include design
and development, manufacturing, marketing and sales, delivery, after-sales, and
direct procurement (i.e., sourcing required for the making of products or the
delivery of services).
▪ Support processes enable the execution of these core processes. These include
indirect procurement (i.e., sourcing of hardware, furniture, stationery, etc.),
human resource management, information technology management, accounting,
financial management, and legal services.
▪ Management processes provide directions, rules, and practices for the core and
support processes. These include strategic planning, budgeting, compliance and
risk management, as well as investors, suppliers, and partners management.
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Process Categories
Management Processes
Define Vision Develop Strategy Implement Manage Risk
Strategy
Core Processes
Manage
Procure Produce
Procure Market Deliver
Customer
Materials Products Products Products
Service
Support Processes
Manage
Manage Personnel Information Manage Assets
Example of process categories of a production company
(process landscape model)
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Exercise : University
▪ What are core, support, and management processes of a university?
WU Vienna‘s New Campus opened in 2013. Source: Wikimedia Commons
Relationships between Processes
▪ Three types of relationships between processes: sequence, decomposition, and
specialization
▪ Sequence: This relationship describes that there is a logical sequence between
two processes. Sequence is also referred to as a horizontal relationship.
▪ Decomposition: This relationship describes that there is a decomposition in
which one specific process is described in more detail in one or more subprocesses.
Decomposition is also referred to as a vertical or hierarchical relationship.
▪ Specialization: This relationship describes that there exist several variants of a
generic process.
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Relationships between Processes
Sequence
Manage
Procure Produce
Procure Market Deliver
Customer
Materials Products
Products Products Products
Service
Decomposition Specialization
Produce
Procure Handle Job
Products
Products Application
Handle Job Handle Job
Process Assemble
Application Application
Parts Parts
(Austria) (Germany)
Value chain models for sequence, decomposition, and specialization
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Process Architecture
▪ The definition of a process architecture often
Generic Process Architecture proceeds in a top-down fashion,
as illustrated by the pyramid.
▪ The starting point is the process landscape on
Level 1 that shows the value chains of the
company.
Level 1
▪ Level 2 provides a decomposition for each
Process business process of the value chains.
Landscape
▪ Level 3 provides a further decomposition down
(incl. Value Chains) to sub-processes and tasks.
Level 2 ▪ The arrows in the figure indicate these
Business Processes decompositions.
(e.g. BPMN) ▪ A level should be defined with respect to a
specific purpose.
Level 3+
▪ Processes on Level 1 are often modeled as so-
Sub-processes and Tasks called value chains while processes on Levels 2
(e.g. BPMN) and 3 are modeled with BPMN.
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Process Architecture
British Telecom
Model structure, methodology and
Meta modelling standards
Level
Defines business activities
Operations Levels Process Levels Business Levels
Level A Distinguishes operational customer
oriented processes from management
Business Activities and strategic process
Shows groups of related business
Level B Logical functions and standard end-to-end
processes (e.g. Service Streams)
Process Groupings Levels
Level C Core processes that combine together to
deliver Service Streams and other end-
Core Processes to-end processes
Level D Decomposition of core processes into
detailed ‘success model’ business
Business Process Flows process flows
Detailed operational process flows
Level E Physical with error conditions and product and
Operational Process Flows geographical variants (where
Levels required).
Level F Further decomposition of detailed
Detailed Process Flows operational where required Slide
© British Telecommunications (2005)
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Reuse of Reference Models
▪ It might be helpful to use reference models as an aid. These reference models are
developed by a range of industry consortia, non-profit associations, government research
programs, and academia.
▪ The best-known examples:
▪ The Information Technology Infrastructure Library (ITIL) by AXELOS,
▪ The Supply Chain Operations Reference Model (SCOR) by APICS,
▪ The Process Classification Framework (PCF) by the American Productivity and Quality
Center (APQC),
▪ The Performance Framework by Rummler & Brache.
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Reuse of Reference Models
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Level 1 and Level 2 of the APQC Process Classification Framework
Reuse of Reference Models
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Level 1 and Level 2 of the APQC Process Classification Framework
Process Landscape Model: Example of
Wienerlinien (Vienna Public Transport)
Management Processes
Manage Communicate Manage Manage Manage Risks and Manage
Enterprise in and out Processes Quality Opportunities Innovation
Core Processes
Manage
Contact Manage Foster
Customer
Customer Sales Relationship
Relationship
Operate Plan and Buy Maintain Check
Vehicles Vehicles Vehicles Vehicles
Transport Plan Customer Transport Evaluate
Customer Transport Customer Transport
Provide Plan Build Maintain Evaluate
Infrastructure Infrastructure Infrastructure Infrastructure Infrastructure
Support Processes
Manage Manage Manage Manage Manage Provide Winter
Personnel Financials Information Materials Disruptions Service
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How to define Process Landscape Model
1. Clarify terminology:
▪ Define key terms.
▪ Use organizational glossary.
▪ Use reference models.
▪ Ensure that stakeholders have a consistent understanding of process landscape model.
2. Identify end-to-end processes:
▪ Those processes interface with customers and suppliers.
▪ Goods and services that organization provides are good starting point.
▪ Properties help to distinguish processes, including: Product type, Service type, Channel, Customer
type.
3. For each end-to-end process, identify its sequential processes:
▪ Identify the internal, intermediate outcomes of end-to-end process.
▪ Perspectives help set boundaries: Product lifecycle, Customer relationship, Supply chain, Transaction
stages, Change of business objects, Separation.
4. For each business process, identify its major management and support processes:
▪ What is required to execute the previously identified processes.
▪ Typical support processes are management of personnel, financials, information, and materials.
▪ However, these can be core processes if they are integral part of business model. Slide
▪ Management processes are usually generic. 17
How to define Process Landscape Model
5. Decompose and specialize business processes:
▪ Processes of process landscape should be further subdivided into abstract process on Level 2.
▪ Further subdivision until processes can be managed autonomously by single process owner.
▪ Considerations when this subdivision should stop: Manageability and Impact.
6. Compile process profile:
▪ Each of the identified processes should be described using process profile.
▪ Process profile supports definition of boundaries, vision performance indicators, resources, etc.
7. Check completeness and consistency:
▪ Reference models can be used to check whether all major processes are included.
▪ Reference models can help to check consistency of terminology.
▪ Check whether all processes can be associated with functional units of organization chart and vice versa.
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Example : Construction Company BuildIT
The following passage describes the company BuildIT from a more general perspective. With
this information, we will construct its process landscape model.
BuildIT is a construction company specialized in public works, such as roads, bridges, pipelines,
tunnels and railroads. Within BuildIT, it often happens that engineers working at a construction
site (called site engineers) need a piece of equipment, such as a truck, an excavator, a
bulldozer, a water pump, etc. BuildIT owns very little equipment and instead it rents most of
its equipment from specialized suppliers.
The overall end-to-end process of BuildIT starts with a customer demand and ends with the
expiry of the warranty of construction works. The business development department is
responsible for identifying customer demands and public tenders. Together with the presales
engineering department, they select projects for which BuildIT prepares bids. Bids that are
approved lead to contract negotiations. Once contracts are signed, the contract is transferred
to execution. Contract execution starts with the project initiation, which includes engineering,
design, and planning. What follows then are the actual construction works. The procure-to-pay
process that we already know from Example 1.1 also belongs to these initiation procedures.
Once the construction works are finished, the construction sight is commissioned to the
customer. What can still follow are corrective works to meet warranty obligations.
Process profile of BuildIT‘s procure-to-pay process
Name of Process: Procure-to-Pay
Vision: The objective of the procurement process is to secure that the
entire range of external products and services becomes available on time
and is at the required level of quality.
Process Owner: Chief Financial Officer (CFO)
Customer of process: Expectation of customer:
• Requesting unit • Timely, economic and complete
provision
Outcome: Delivered products or provided services for the requested unit
Trigger: Need is identified
First activity: Submit Request
..
Last activity: Create Purchase Order
Interfaces inbound: Plan-to-Procure
Interfaces outbound: Construct-to-Complete
Required resources:
• Human resources:
Site Engineer, Clerk, Works Engineer
• Information, documents, know-how:
procurement guidelines, supplier rating, framework contract
• Work environment, materials, infrastructure:
Procurement information system
Process Performance Measures:
• Cycle Time
• Operational Costs Slide
• Error Rate 22
Chapter 2: Process Identification
Contents
1. Definition of the Process Architecture
1. Process Categories
2. Relationships Between Processes
3. Reuse of Reference Models
4. Process Landscape Model
2. Process Selection
1. Selection Criteria
2. Process Performance Measures
3. Process Portfolio
3. Recap
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Selection Criteria
▪ Strategic Importance:
▪ Find out which processes have the greatest impact on the strategic goals.
▪ Consider profitability, uniqueness, or contribution to competitive advantages.
▪ Select those processes for process management that relate to strategy.
▪ Health:
▪ Determine which processes are in deepest trouble.
▪ These processes may profit the most from BPM initiatives.
▪ Feasibility:
▪ Determine how susceptible process is to BPM initiatives, incidentally or continuously.
▪ Culture and politics may be obstacles.
▪ BPM should focus on those processes where it is reasonable to achieve benefits.
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Exercise: Selection Criteria
▪ Exercise: Consider again the procure-to-pay process of BuildIT.
▪ Discuss their strategic importance, their health, and the feasibility of a potential
improvement to these processes.
Further Questions:
▪ Given all the discussed criteria, does an assessment of the importance, health, and
feasibility always point us to the same processes to actively manage?
▪ Should all processes that are unhealthy, of strategic importance, and feasible to manage be
subjected to BPM?
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Process Performance Measures
▪ Time
▪ Cost
▪ Quality
▪ Flexibility
Devil’s quadrangle (cost, time, quality, flexibility) (S.
Liman Mansar, H.A. Reijers, 2007)
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Process Performance Measures
▪ Time:
▪ Cycle time is the time that it takes to handle one case from start to end
▪ Time dimension:
▪ Processing time (also called service time): the time that resources spend
on actually handling the case.
▪ Waiting time: the time that a case spends in idle mode. Waiting time
includes queueing time — waiting time due to the fact that no resources are
available to handle the case — and other waiting time
▪ Cost:
▪ Fixed costs: are overhead costs which are (nearly) not affected by the intensity of
processing. Typical fixed costs follow from the use of infrastructure and the
maintenance of software systems.
▪ Variable costs: are positively correlated with some variable quantity
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Process Performance Measures
▪ Quality: can be viewed from at least two different angles: from the client’s side
(external quality) and from the process participant’s perspective (internal quality)
▪ External quality: client’s satisfaction with either the
product or the process
▪ Churn rate: how many customers do not complete their interaction successfully
▪ Net promoter score: how far customers would be willing to recommend a product
or service (range from 1 to 10)
▪ Internal quality:
▪ the level that a process participant feels in control of the work performed
▪ the level of variation experienced
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Process Performance Measures
▪ Flexibility: the ability to react to changes
▪ These changes may concern various parts of the business process:
▪ The ability of resources to execute different tasks within a business process
setting
▪ The ability of a business process as a whole to handle various cases and
changing workloads
▪ The ability of the management to change the structure and allocation rules
▪ Another way is to distinguish between runtime and build-time flexibility.
▪ Runtime flexibility: concerns the opportunities to handle changes and variations
while executing a specific business process.
▪ Build-time flexibility: concerns the possibility to change the business process
structure.
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Example: Restaurant
▪ A restaurant has recently lost many customers due
to poor customer service. The management team
has decided to address this issue first of all by
focusing on the delivery of meals.
▪ The team gathered data by asking customers about
how quickly they liked to receive their meals and
what they considered as an acceptable wait.
▪ The data suggested that half of the customers
would prefer their meals to be served in 15 min or
less. All customers agreed that a waiting time of
30 min or more is unacceptable
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Balanced scorecards with cascading
process performance measures
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Example of balanced scorecard for three processes of a utility company 34
Process Portfolio
High Selection Focus Feasibility
Loan
Rating
Contract
Controlling Prepatation Low
Loan
Decision
Loan Market
Medium
Importance
Evaluation
Handling
High
Payments
Loan
Loan Planning
Application
Low
Poor Health Good
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Process portfolio of a financial institution 35
Exercise: University
A university defined four core processes in relation to teaching. An evaluation of
strategic importance, health, and feasibility using a survey among the department chairs
has resulted in the following assessment:
▪ Develop and Manage Study Programs: Importance 90%, Health 90%, Feasibility 40%.
▪ Market Study Programs: Importance 75%, Health 80%, Feasibility 60%.
▪ Schedule Courses: Importance 95%, Health 30%, Feasibility 50%.
▪ Deliver Courses: Importance 95%, Health 70%, Feasibility 30%.
▪ Manage Student Services: Importance 85%, Health 50%, Feasibility 40%.
▪ Manage Facilities: Importance 40%, Health 35%, Feasibility 70%.
Draw a process portfolio and suggest one process to be selected for process
improvement. Justify your choice.
Chapter 2: Process Identification
Contents
1. Definition of the Process Architecture
1. Process Categories
2. Relationships Between Processes
3. Reuse of Reference Models
4. Process Landscape Model
2. Process Selection
1. Selection Criteria
2. Process Performance Measures
3. Process Portfolio
3. Recap
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Recap
▪ In this chapter, we discussed process identification.
▪ Process architecture definition aims at enumerating major processes of organization.
▪ Process architecture defines relationship between processes.
▪ Seven-step method for definition of process architecture including process landscape model.
▪ Process selection is concerned with prioritizing processes.
▪ Priorities upon importance of processes, health, and feasibility of improvements.
▪ Assessed by process owners or grounded on process performance measures and objectives.
▪ Most common performance dimensions are time, cost, quality, and flexibility.
▪ Process portfolios help in selection of processes for improvement.
▪ Selected processes become subject of remaining phases of BPM lifecycle.
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Q&A