Documenting Process Architecture Identifying a process network and documenting the process hierarchy

BA 553: Business Process Management2 A Traditional Organizational Structure In an organization that utilizes a functional management approach and a command-and-control style of operation, the predominant view of the organizational structure is a chart of the reporting responsibilities of the management team to the senior executive. CEO

BA 553: Business Process Management3 A Process Network Structure A different perception of how an organization is structured is often referred to as the organization’s “network of processes.” This is compatible with a functional organization structure, as expertise in functional areas is still necessary to undertake the variety of process tasks needed to deliver products and services to customers. The organizational process network structure consists of a network of the primary processes the organization uses to conceive, develop and deliver products and services to customers.

BA 553: Business Process Management4 A Process Network View of the Organization Suppliers Customers Internal to the organization

BA 553: Business Process Management5 Understanding Process Networks Work processes and process networks exist in all organizations but are often not formally documented It is the knowledge of work processes and process networks that enable those who understand them to integrate their daily work Knowledge of work processes and process networks enable front-line workers to work together effectively with less direction and to increase the ability to utilize a self-organizing approach for undertaking daily work Organizational performance depends upon the efficiency and effectiveness of these processes

BA 553: Business Process Management6 Process Networks for Groups of Processes ISO 9000:2008 has been modified from earlier versions of the standard to provide a “system of processes” view of the organization’s quality management processes The Project Management Institute’s Project Management Body of Knowledge (PMBOK) provides a “system of processes” view of the organization’s project management processes

BA 553: Business Process Management7 ISO 9000:2008 An advantage of the process approach is the ongoing control that it provides over the linkage between the individual processes within the system of processes, as well as over their combination and interaction

BA 553: Business Process Management8 PMI’s PMBOK The PMBOK describes project management’s knowledge and practice in terms of five process groups, as shown below These align with the P 2 DCA approach described earlier in this class PurposePlan Check Do Act Initiating Processes Initiating Processes Planning Processes Planning Processes Controlling Processes Controlling Processes Executing Processes Executing Processes Closing Processes Closing Processes

BA 553: Business Process Management9 PMI’s Project Management Process Network Initiating Planning Executing Controlling Closing

BA 553: Business Process Management10 Example: Outage Maintenance For one utility, the area management wanted to improve was outage maintenance The utility had a history of outages running over schedule and over budget. Often, some of the needed maintenance would be put off until the next outage just to get the units back up and running Discussions with the plant management about this problem led to the question, “what measures does the plant collect related to outage performance?” The answer was, “we measure total budget spent and total days and man-hours needed for the outage.” The next question was, “if the budget and schedule have gone over the estimates made at the beginning of the outage, what information do you have to remedy the situation for the next outage?” The answer was, “none.”

BA 553: Business Process Management11 Example: Outage Maintenance (Cont’d.) By providing the plant with a process management capability, employees and managers could see the processes that impacted outage maintenance Oftentimes, the causes of a problem lie “upstream” from the process where the problem shows up This was the situation with outage maintenance – many of the processes that affected the efficiency of the outage occurred before the outage began One example of such a process was the process for creating work orders (W/Os). The number and accuracy of work orders had a major impact on the efficient use of the time of mechanics and their foremen during the outage

BA 553: Business Process Management12 Example: Outage Maintenance (Cont’d.) It was determined that mechanics and their foremen spent much of their time investigating duplicate work orders. This frequently caused mechanics to be assigned to work orders for problems that had already been fixed under another work order The following pages demonstrate the analysis by the plant of the outage process and its upstream processes. The first chart is a diagram of the process, showing the inputs to the process of outage maintenance, the outputs resulting from completing outage maintenance, and the various customers for the outputs. Many of these customers are internal to the organization The second chart shows the processes that exist upstream of outage maintenance Developing this understanding of the outage maintenance process enabled the plant to establish and collect measurement data to improve outage maintenance performance

BA 553: Business Process Management13 The Outage Maintenance Process Inputs Outage Maintenance Transformation Process Equipment Planned work scope Planned schedule Planned budget Outage W/Os Materials People/manpower, including contractors Outputs Actual schedule and Actual budget Actual work done (equipment fixed) Level of satisfaction with contractors Paperwork done Used parts Customer Plant mgmt. Shareholders Operations Maintenance Dispatch Ratepayers Accounting Warehouse

BA 553: Business Process Management14 Upstream Processes of Outage Maintenance Equipment available Doing Outage Maintenance Providing Clearances Manpower availability Managing the Workforce Ordering Parts Managing Contractors and their work scope Materials/ Parts W/O’s with status of equipment to be fixed Creating Work Orders Planning Outages Planned schedule Planned budget Planned work scope Outage W/O’s

BA 553: Business Process Management15 Impact of Improvement on Performance To understand the impact of improving the outage maintenance process, the plant needed to examine the “downstream” processes. These are the processes that eventually lead to providing the company’s product (electricity) to its customers, thereby impacting the plant’s bottom line In any organization that is improving, either formally or informally, there are feedback loops that provide information from the outputs back to the inputs. An example might be an organization using customer surveys to improve its product design The plant realized that some of its important feedback loops related to outage maintenance were weak or missing, making it difficult to improve outage performance One example was the use of contractors during the outage. The main contractor used for the past several years had not been performing its duties adequately. Somehow, this information never got back to the person who contracted with the firm, so the contractor continued to return to the plant year after year

BA 553: Business Process Management16 Downstream Processes of Outage Maintenance Equipment available Doing Outage Maintenance Providing Clearances Manpower availability Managing the Workforce Ordering Parts Managing Contractors and their work scope Materials/ Parts W/O’s with status of equipment to be fixed Creating Work Orders Planning Outages Planned schedule Planned budget Planned work scope Outage W/O’s Equipment working Actual schedule Actual budget Actual work completed Paperwork done Amount of contractor work complete Used parts Level of satisfac- tion with contractor Doing Daily Maint. Operating Plant Storing or Disposing of Scrap

BA 553: Business Process Management17 Adding Feedback Loops Equipment available Doing Outage Maintenance Providing Clearances Manpower availability Managing the Workforce Ordering Parts Managing Contractors and their work scope Materials/ Parts W/O’s with status of equipment to be fixed Creating Work Orders Planning Outages Planned schedule Planned budget Planned work scope Outage W/O’s Equipment working Actual schedule Actual budget Actual work completed Paperwork done Amount of contractor work complete Used parts Level of satisfac- tion with contractor Doing Daily Maint. Operating Plant Storing or Disposing of Scrap FEEDBACK LOOPS

BA 553: Business Process Management18 Example: Manufacturing Process Inputs Manufacturing process Transformation Process People/manpower Subassemblies Production Schedule Budget Procedures Equipment Materials Outputs People with skills Quality of subassemblies Actual schedule Budget spent Actual procedures used Status of equipment Manufactured product

BA 553: Business Process Management19 Example: Manufacturing Process (Cont’d.) People Satisfaction with contractor Actual Schedule Actual Budget Product Equipment FEEDBACK LOOPS Manufacturing process Hiring/ training Managing Subcontrac- tors Planning/ scheduling Budgeting Writing mfg. procedures Maintaining equipment Purchasing/ inventory ctl. People Procedures Budget Subassemblies Production schedule Equipment Materials/ parts Product specs Product design Selling product Package & deliver

BA 553: Business Process Management20 Example: Credit Process Set up new clients/ conduct annual review of clients Manage collateral Manage credit limits Monitor client and financial information Manage client default Review credit terms for unique or long-term deals Prepare and distribute reports Ensure compliance Market data Contracts Accounting Manufac- turing Operations Corporate Credit Corporate Compliance CREDIT

Process Levels All of these processes are at a single level of detail A value chain is the largest process we normally document: it is usually called the “Level 0” process Within this value chain, many of the boxes can be documented as a more detailed process: these would be called the “Level 1” processes The boxes in these processes can again be subdivided into more and more detailed levels of processes, until the boxes contain only single steps It’s common to see the process hierarchy divided into 3 or 4 levels: it’s rarely documented at more than 7 levels BA 553: Business Process Management21 Harmon, Paul, “Business Process Change”, 2007.

BA 563: Business Process Management22 Maintaining a Business Process Inventory A process inventory is hierarchical listing of business processes Can be initially developed at the local or regional level, but will eventually be required for the entire enterprise in order to achieve its full potential Some organizations develop a process inventory at the department level: this can result in difficulties when the inventory is expanded to include the entire enterprise, as most processes cross between departments Once the process inventory listing is developed, it and the related process documentation should be kept in a process library This can be as simple as a share drive where employees can access the information, or it can be stored within one of the many types of process modeling applications (Visio, ARIS, etc.) The latter usually provides some method for viewing the processes with less or more detail, and also for connecting the processes to each other

BA 563: Business Process Management23 Optimizing Collections of Processes Redundant processes and process standardization The enterprise process inventory provides a means to identify processes that have similar intents and should be examined for redundancy and potential standardization Cross-process integration The enterprise process inventory clarifies how processes should be related The process library helps us find the current model of the processes and map their relationships Developing common terminology and definitions for the inputs and outputs is critical. Processes with common sub-processes Re-usable sub-processes are analogous to subroutines in computer programming Having a collection of processes in the common process library modeled with similar notation and terminology will help identify potentially redundant sub-processes A collection of processes can be modeled based on the capabilities or functionalities used within the processes, which can help identify common capabilities and functions that cross processes (common components) This kind of analysis can also be useful in identifying related competencies and roles, with the goal of either simplifying training, or identifying potential synergies in job assignments. Chevron, “Business Process Management”, presented July 2007.

BA 563: Business Process Management24 Why develop a process inventory? An enterprise-level process inventory: Assists with the identification of the enterprise value chain Ensures processes that are documented within the enterprise can be located within a larger framework Facilitates the development of enterprise-level process standards (e.g., process and sub-process numbering system, resource naming conventions, search keyword definitions) Helps process teams avoid overlap of process efforts (encourages discussion and resolution at process boundaries) Helps establish the enterprise process network, which shows employees how their activities fit into the larger picture of creating and delivering the organization’s products and services Provides a foundation for prioritizing future process change efforts and aligning them with organizational strategy

BA 563: Business Process Management25 Identifying the Process Inventory Start by documenting the primary activities in the organization’s value chain Next, identify the secondary activities in the value chain - these both comprise Level 0 processes List the Level 0 processes in an outline form (see next slide), and assign a numbering system that enables items to be added later Work with employees from the enterprise as needed to fill in the rest of the inventory to one level below the value chain - these comprise the Level 1 processes If the organization has previously documented any processes, collect the flowcharts, determine any overlaps, and identify where in the value chain they are located - some of these may comprise Level 2 processes Process documentation and process change teams can fill in the remaining Level 2 processes as they work on their projects

Value Chain and Level Processes Level 0Level 1Level 2Level 3 BA 563: Business Process Management26 Harmon, Paul (2007), Managing the Process-Centric Organization, presentation, BPMTrends.

BA 563: Business Process Management27 Example Process Inventory (Partial) L0 L1 L2 L3 Process Title 11.0Develop Organizational Capabilities 11.1Develop Skilled Employees Develop Career Path Create Development Plan Develop Annual Performance Objectives Administer 360 Feedback Process Develop Succession Plan Execute Commercial Skills Development Program Evaluate Learning and Development Opportunities Conduct Needs Assessment Develop / Modify / Improve Courses Provide Courses Process Course Enrollment Schedule the Room and Equipment Deliver Course Evaluate Course Assess Employee Competencies