BPM Governance Identifying methods for prioritizing, standardizing, measuring and controlling BPM efforts

Enterprise BPM Methodology BA 553: Business Process Management Session 5 Session 5 Sessions 8 & 10 Build Process Management Capability Sess. 4 Session 5 Session 8 Session 8 Session 10 BA 563: Process Improvement “Managing the Process-Centric Organization”, presentation by Paul Harmon. BA 553: Business Process Management

Governance: What, Why, When, How What is governance? Governance is derived from a Greek word which means “to steer” System of policies, rules, and controls Provides models and methods for direction, coordination, and control of the organization Why is BPM governance important? When is BPM governance needed? When in the BPM lifecycle to implement governance Governance during phases of process change How is BPM governance implemented? Governance critical success factors Governance frameworks BA 553: Business Process Management

Why is BPM governance important? BPM Governance Activity Benefit Establish governance groups, roles, and responsibilities (session 10) Identifies ownership of and accountability for BPM activities Establish BPM annual lifecycle approach (session 8) Ensures alignment with planning and budgeting lifecycles Establish methods for BPM project portfolio management Ensures integration with enterprise project portfolio management Establish methods for documenting and controlling process architecture (session 5) Ensures revision control of flowcharts, and integration into value chain Establish BPM rules, policies and standards (session 10) Ensures compliance with applicable regulations, and control Establish BPM measurement approach (session 7) Ensures alignment with KPIs and identifies decision-making authority Establish BPM tools, models, and methods Ensures consistency of BPM efforts and integration with other company activities BA 553: Business Process Management

When is BPM governance needed? Governance is required through all lifecycle phases of BPM in the company Governance is required through all process change phases: Business process strategy phase Strategic plan Value chain KPIs and Business scorecards Business process design phase Process architecture Process redesign project Desired (“to be”) process performance targets Business process implementation phase Comprehensive process change implementation plan, including training and communications plans Improved process implemented in the organization Business process control phase Process performance management system Process performance measures, impacts on KPIs and strategy Countermeasure plans to modify process performance Scheer, A-W. and Brabander, E. (2010), The Process of Business Process Management. In: vom Brocke, J. and Rosemann, M. (eds.) Handbook on business process management, vol. 2. Springer: Heidelberg. BA 553: Business Process Management

BPM Governance: Success Factors Determine governance authorities and boundaries for each group, e.g., which group has authority over cross-functional processes, which group is responsible for standardizing tools and methods Establish a schedule for how frequently various governance activities are conducted Balance benefits of optimizing the performance of a process and optimizing the performance of the organization (don’t sub-optimize) Align BPM governance approach with organizational management approach and organizational culture Align the related lifecycles: BPM lifecycle aligned with company lifecycle Process lifecycles aligned with product/service lifecycles BA 553: Business Process Management

BPM Lifecycle: One Perspective Scheer, A-W. and Brabander, E. (2010), The Process of Business Process Management. In: vom Brocke, J. and Rosemann, M. (eds.) Handbook on business process management, vol. 2. Springer: Heidelberg. BA 553: Business Process Management

BPM Governance: Success Factors (Cont’d.) Do not approach BPM governance as something to be addressed later. BPM governance represents a fundamental transformation of the organization’s culture Gain an agreement across the organization regarding what constitutes a process. A key attribute is the ability to measure a distinct output from work performed Identify key executives that take responsibility for the end-to- end performance of the organization’s core processes Create a center-of-excellence that facilitates the move toward improved process management and provides standards, tools, methods, and best practices across the organization Presentation by Satyam “Establish Business Process Governance Best Practices” (2006). BA 553: Business Process Management

How is BPM governance implemented? Select a BPM governance framework: Assess the organization’s current process capability or maturity (session 11) Determine the level of management structure that is appropriate for the organization’s culture Determine the level of centralization that is appropriate for the organization’s culture (example on next slide) Identify the level of resources (people and budget) the organization can dedicate to BPM at this time Decide on a governance framework based upon the above items (examples in this presentation) Establish a BPM growth model, if the current BPM approach is not at the desired level (session 11) BA 553: Business Process Management

Determining the Level of Centralization Localized Model Regional Model Business Unit Model Enterprise Model Description Ultimate decision authority at the local level by process Localities have lead process owners who make decisions for their locality Consistency not maintained across the enterprise Advantages Enables nimble decision making Localities have flexibility to design processes to meet their needs Tradeoffs Costly solution to build and maintain; loss of efficiencies Loss of standardization benefits Most difficult to manage business globally Description Ultimate decision authority is at the regional level by process The regional process owners may meet to gain informal consistency across the enterprise Local governance bodies make lower level decisions Advantages Provides flexibility for regions in process design Decision making typically faster than Enterprise and BU Models Tradeoffs More difficult to manage enterprise globally Some loss of flexibility to meet business unit needs within a given region Description Ultimate decision authority is at the Business Unit level by process The BU process owners may meet to gain informal consistency across the enterprise Regional level bodies make lower level decisions Advantages Provides flexibility for business units in process design Decision making typically faster than Enterprise Model Tradeoffs Loss of cross Business Unit synergies Some loss of local control Description Ultimate decision authority is at the Enterprise level by process Enterprise governance body can be led by a single process owner or small board of owners Regional and/or BU level bodies make lower level decisions Advantages Less costly to maintain Full standardization benefits Enables global management of the business Tradeoffs Some loss of flexibility to meet specific business needs Greatest change challenge Open Strict Typical Attributes Exceptions granted as requested Loose network of process experts (if any) Local review boards manage exceptions Decentralized decision making Typical Attributes Regional or BU business justified exceptions granted Regional or BU process expert network Decision making bodies Typical Attributes Exceptions typically granted only for compliance or significant benefit Corporate process owners Global review boards Centralized decision making BA 553: Business Process Management Example from Chevron, as discussed in session 6.

Example Governance Model http://www.exigenservices.com/methodology/engagement-process website, accessed 3 April 2010. BA 553: Business Process Management

Lean Sigma Governance Model Process Owner VP (or other designated leadership team member) Leadership Team (DRB for the deployment) Process Improvement Team Leader (Lean Sigma Process Advisor) Lean Sigma Advisory Council Project Facilitators (Black Belts and Green Belts) This slide and next: Internal Chevron presentation, 2005. BA 553: Business Process Management

Lean Sigma Process Improvement Cycle VOICE OF CUSTOMER Gap Identified STRATEGIC PLAN Output Metrics BUSINESS UNIT SCORECARD Oper. Exc. Improved Metric BUSINESS OBJECTIVES Production UCL LCL Avg Financials BUSINESS MEASURES Improve Control Define Measure Analyze VALUE STREAM PROCESS FLOW Tools & Methodology PROCESS SCORECARD Process Metric UCL PROCESS MEASURES Avg LCL X's Y's BA 553: Business Process Management

Process Organization Governance Model Leader CEO/President Process Owner Chief Process Officer Process Team Process Council Process Office Steering Committee Business Transformation Catalyst Source: Tom Colman, CPO/CIO Sloan Valve, 2006 BA 553: Business Process Management

Process Governance Roles Burlton, R. (2010), Delivering Business Strategy Through Process Management. In: vom Brocke, J. and Rosemann, M. (eds) Handbook on business process management, vol. 2. Springer: Heidelberg. BA 553: Business Process Management

Governance Model for a Large Organization Scheer, A-W. and Brabander, E. (2010), The Process of Business Process Management. In: vom Brocke, J. and Rosemann, M. (eds.) Handbook on business process management, vol. 2. Springer: Heidelberg. BA 553: Business Process Management