IAB203 – Business Process Modelling

Week 9, 28 Apr 2015

A/Prof. Marcello La Rosa

BPM Discipline
Queensland University of Technology
R
a university for the real world
1

CRICOS No. 00213J

Process Identification

Process
identification

Process
Process architecture
architecture

Conformance
Conformance and
and Process As-is
As-is process
process
performance insights
performance insights discovery model
model

Process
monitoring and Process
controlling analysis

Executable
Executable Insights
Insights on
on
process
process weaknesses
weaknesses and
and
model
model their
their impact
impact

Process Process
implementation To-be
To-be process
process redesign
model
model

3
Process identification

What?
1. Identify an organization’s business processes
2. Prioritize their management based on certain criteria

Why?
1. Understand the organization
2. Maximize value of BPM projects

How long?
Processes change over time (“dynamics of time”)
• identification should be exploratory and iterative
• improvement opportunities are time-constrained
Process identification steps
1. Designation step
• Enumerate main processes Process
Architecture
• Determine process scope

2. Prioritization step (aka Process selection)

Prioritize processes based on: Prioritized
• Importance Process
• Health Portfolio
• Feasibility

After Davenport (1993)

Process enumeration
There is no “number fits all” - it really depends on
organization’s domain and size

Rule of thumb: 10-20 processes

Trade-off:
• ensuring process scope is manageable, since…
• process scope determines potential impact
Example: enumeration
Wholesaler

• Order-to-cash • Staff recruitment

• Lead-to-quote • Staff induction
• Quote-to-order • Staff probation
•… • Policies update
•…
• Supplies replenishment
• Operational resources • Suppliers planning
replenishment • Suppliers acquisition
•… •…

• Demand forecasting • Strategy development

• Logistics planning •…
•…
Process architecture
Components of a process architecture

Management
Processes

Customers / Stakeholders
Suppliers / Partners

Core Processes

Support Processes

After Michael Porter (1985)

Core vs support processes (Porter)
Core, support and management processes

• Strategic and Planning

Management • Budgeting
processes • Compliance and Risk management
• Investors, Suppliers and Partners management

• Design and Development

Core • Manufacturing
• Marketing and Sales
processes • Delivery and After-sale
• Direct procurement

• Indirect procurement
Support • Human Resources
processes • Information Technology
• Accounting, Financial and Legal

After Michael Porter (1985)

Example: core, support and management processes
Wholesaler
Core processes
• Sales (lead-to-quote, quote-to-order, order-to-cash)
• Direct procurement (supplies replenishment)
•…

Support processes
• Indirect procurement (parts replenishment, operational resources
replenishment…)
• HR (policies update, recruitment, induction, probation…)
•…

Management processes
• Suppliers management (suppliers planning, suppliers acquisition…)
• Logistics management (logistics planning, logistics controlling…)
•…
Example: process architecture
Wholesaler

Strategic
Management

Warehouse Logistics
Management Management
Suppliers Demand
Management Management
Process
Management processes group

Direct
Sales Distribution
procurement

Marketing Service
Core processes
Indirect
Finance IT HR
procurement
Support processes
Example: process architecture
Insurance company

Strategic
Management
Corporate Market Investor
Development Development Relations
Management processes

Risk Assessment & Management

Marketing & Sales

Underwriting Policy Claims
Management Servicing Management
Payments Collection and Disbursement
Assets Management
Core processes

Finance/ Legal/
Reinsurance IT HR
Treasury Audit
Support processes
Example: process architecture
Australian water supplier

Management
Processes

Core
Processes

Support
Processes
Example: process architecture
Broadcasting company
Process scoping

Processes are interdependent  insights into interrelations

required
• Specialization: general – special product/service
• Horizontal: upstream – downstream processes and their value chains
• Vertical: main processes – sub-processes

Process architecture
Scoping a process
Key scoping questions:
1. When does a given process instance start?
2. When do we consider a process completed?
3. What key objects does the process manipulates?
4. Who participates in the process?
5. Who owns the process?

A well-scoped process:
• Has a clear start, clear end (input, output)
• Has a clear, coherent set of “main objects” and “participants”
• Has a clear owner
Guidelines to identify horizontal boundaries

1. Change of key business object in the process

2. Change of multiplicity of main business object
3. Change in frequency/time
4. Change in intermediate outcome/resolution/objective
Guidelines to identify horizontal boundaries (cont’ed)
1. Core processes
• From an input to an outcome that generates value
• Decompose by identifying intermediate outcomes

2. Support processes
• From a need to a resolution
• Decompose by identifying intermediate resolutions

3. Management processes
• To control other processes
• Decompose by identifying intermediate objectives
 Value chain modeling
• Chain of core processes an organization performs to deliver
value to customers and stakeholders
• More generally, a mechanism to group high-level business
processes according to an order relation (can be applied to
core, support and management processes)

business
process
Procure-to-service

order
relation
Example: value chain
Wholesaler
Core processes
Building up a value chain (for core processes)
Think around three main steps:
• Imagine it (design new product/service)
• Build it (source, assemble, deliver product/service)
• Sell it (market, sell, service product/service)
Building up a value chain (for core processes)
Example: Producer

Stocked
products:

Specializations
MTO
products:

ETO
products:

After Paul Harmon, 2014

Example: value chains for service provider
IT service provider

Design Market Sales Deliver Service

Systems Integration

Outsourcing

Network Services

Enterprise Server Technology

After Paul Harmon, 2014

Example: value chain of non-core processes
Support processes

HR:

Accounting:

Management processes

Suppliers
management:

Risk
management:
Example: process architecture & value chains
Wholesaler

Strategic
Management

Warehouse Logistics
Management Management
Suppliers Demand
Management Management
Management processes
Collapsed Direct Groups
Sales Distribution
value procurement
processes/
Procure-to-Service
chain value
Marketing Service
Core processes chains

Indirect
Finance IT HR
procurement
Support processes
Alternative: process architecture – groups
Consultancy Firm
Manage Firm
1.1 1.2 1.3 1.4 1.5
Management Plan the Govern the (Re)design Develop Methods Change the
processes Business Business Processes & Standards Business

Expanded
Relate to Clients
Core 2.1 2.2 2.3 2.12 process
Optimize Develop Raise Awareness Evaluate Client
processes Stakeholder
Relationships
Service Offerings of Services Solution Delivery group

Optimize Portfolio Deliver Solutions

2.4 2.5 2.6 2.7 2.8
Plan Delivery of 2.13 Deliver Provide
Gain Initiative Deliver Business
Service to Service Adjust Portfolio Infrastructure Professional
Commitment System Solutions
Corp. Solutions Services

Optimize Solutions
2.9
Operate 2.10 2.11
Infrastructure & Retire Solutions Support Users
Business Systems

Support Firm
3.1 3.2 3.4 3.6
Support 3.3 3.5
Provide Expert Provide HR Acquire Goods & Provide Working
Provide IT Tools Obtain Financial
processes Advice & Capabilities Services Facilities
Services
Knowledge
Process architecture: further process attributes

• Process stakeholders and objectives, e.g. via a Stakeholder-

Objectives Matrix

• Process context, e.g. via a SIPOC (Suppliers, Inputs, Process,

Output, Customers) Diagram

• Process guides and enablers, e.g. via an IGEO

(Input/Guides/Enablers/Outputs) Diagram
Identify process stakeholders

• Process owner, responsible for the effective and efficient

operation of the process being modeled

• Primary process participants, i.e. those who are directly involved

in the execution of the process under analysis, e.g. customers and
internal staff

• Secondary process participants, i.e. those who are directly

involved in the execution of the preceding or succeeding
processes
Identify process objectives

• Primary (hard) process objectives Core

• Time, cost, quality
Processes
• Compliance, agility…

• Secondary process objectives Support/

• To purchase goods, to hire new staff members
Management
Processes

• Accompany with appropriate process metrics

• Let involved stakeholders define their priorities
Example Stakeholder-Objectives matrix
Claims handling process
Primary stakeholders Objectives
Customer Maximize policy value,
Smooth experience
Process owner Minimize process costs
Claims handler Minimize idle times

Stakeholder pairs Conflicting objectives Shared objectives

Customer, Process owner Policy value vs process

costs
Process owner, Claims Process costs and idle
handler time
Customer, Claims handler Smooth experience and
lower idle times
References
Required
• M. Dumas, M. La Rosa, J. Mendling, H.A. Reijers, “Fundamentals of Business Process
Management”, Springer, 2013, Chapter 2

Recommended
• T.H. Davenport, “Process Innovation: Reengineering Work Through Information Technology”,
Harvard Business School Press, 1993
• M. Hammer, J. Champy, “Reengineering the Corporation: A Manifesto for Business
Revolution”, HarperCollins, 1993
• M.E. Porter, “Competitive Advantage: Creating and Sustaining Superior Performance”, Free
Press, 1985
• P. Harmon, Business Process Change, Morgan Kaufmann, 2014 (3rd edition)
• M. Rosemann, “Process Portfolio Management”, BPTrends, April 2006
• R. Dijkman, I. Vanderfeesten, H.A. Reijers, “The road to a business process architecture: an
overview of approaches and their use”. BETA Working Paper Series, WP 350. Eindhoven
University of Technology, Eindhoven (2011)

Web-sites
• http://www.value-chain.org (Value Reference Model)
• http://www.mindtools.com/pages/article/newSTR_66.htm (more on value chains)
• http://www.apqc.org/process-classification-framework (APQC PCF website)