MTAT.03.

231
Business Process Management

Lecture 2 – Process Identification

Marlon Dumas

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Course structure

Week 2

Weeks 3-4

Weeks 12-14 Gover- Weeks 5-7

Strategy nance

Culture

Weeks 10-11 Weeks 8-9

2
Many years later, as he faced the firing
squad, Colonel Aureliano Buendía was
to remember that distant afternoon
when his father took him to discover
ice. At that time Macondo was a village
of twenty adobe houses, built on the
bank of a river of clear water that ran
along a bed of polished stones, which
were white and enormous, like
prehistoric eggs. The world was so
recent that many things lacked
names, and in order to indicate
them it was necessary to point.

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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
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

“Most businesses have just three core processes:

1. Sell stuff
2. Deliver stuff
3. Making sure you have stuff to sell and deliver”

Geary Rummler
Porter: Types of processes

Management
Processes

Customers / Stakeholders
Suppliers / Partners

Core Processes

Support Processes

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…)
•…
Relations between core, support, mgt processes
Example: process architecture
Wholesaler

Strategic
Management

Logistics Suppliers
Management Management
Warehouse 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
Process Architecture Example

Television New Zealand

Strategic Management

Marketing Management Process Management

Programming and Scheduling

Sales
Sales

Content
Content

Packaging and Delivery

Facilities People Technology Finance

Exercise: identify process types
These groups of processes are typically performed at a
university. Categorize each process group as core, support or
management
Sport Indirect
HR
services procurement

Strategic Teaching
Management award courses

IP
Marketing
Management

Course Additional
Management services mgt

Language Admissio
IT
training n

Market Teaching
management professional courses
Solution: identify process types
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
 Value chain modeling
• Chain of 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
Guidelines to identify horizontal boundaries in
value chains
1. Change of key business object in the process
2. Change of granularity of main business object
3. Change in frequency/time
4. Change in intermediate outcome/resolution/objective
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)

Stocked Producer
Example:
products:

Specializations
MTO
products:

ETO
products:
Example: value chains for service provider
IT service provider

Design Market Sales Deliver Service

Systems Integration

Outsourcing

Network Services

Enterprise Server Technology

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
Chevron: Direct Box:
Sales Distribution
collapsed procurement
groups
Procure-to-Service
value chain processes/
Marketing Service
Core processes value 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
Typical artifacts for vertical scoping
Value chains
Chains of processes. Stay at a high level. Rule of thumb: 3-7 processes
• Procure-to-service, Risk management

(Root/Main) Processes
Build up value chains and affect each other. They are abstract
• Lead-to-quote, Quote-to-order, Order-to-cash

Subprocesses Typical focus of Process enumeration

Build up processes. They are detailed, involve multiple activities and can be layered on
different levels of abstraction (i.e. sub-subprocesses)
• Order shipment, invoicing

Process tasks
Build up processes and sub-processes. They are atomic and performed by human beings, IT
systems or equipment
• Approve invoice
Process architecture: hierarchical view

Level 1
Process
Landscape

Process hierarchy
Level 2
Main
Processes
(e.g. BPMN)

Level 3+
Subprocesses, Tasks
(e.g. BPMN)
How many levels in the process architecture?

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Example: process hierarchy
Insurance company

Level 1
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 hierarchy
Insurance company
Level 2

Strategic Corporate Marketing Investor

Management development development relations
Process
group
Define Define offering Plan
Design & manage
business concept & and customer investor
corporate policies
long-term vision value proposition relations

Develop Build Process

Manage Define pricing
business investor subgroup
knowledge strategy
strategy relations

Manage Manage Manage

Define and manage
strategic change & investor
channel strategy
initiatives improvement relations

Manage Communicate
partners with stakeholders

Manage
investments &
divestments

Management processes
Example: process hierarchy Develop Define offering
business and customer Process
Insurance company strategy value proposition subgroup
Define
Develop overall
offering and
mission statement
positioning

Main
Evaluate strategic Develop value
options proposition process
Level 3
Select
Validate value
long-term business
proposition
strategy

Coordinate
Develop
functional and
new branding
operational strategies

Align
functional and
operational strategies

Create
organisational
design

Develop
organisational
goals

Formulate
business unit
strategies

Management processes
Example: process hierarchy
Insurance company

Level 4

Develop overall Main

mission statement
process
Define
current business

Formulate Subprocess
mission

Communicate
mission

Management processes
Designation via reference models
A reference model is used as a template to design the process
architecture

Examples:
• Information Technology Infrastructure Library (ITIL)
• Supply Chain Operations Reference Model (SCOR)
• Process Classification Framework (PCF)
• Control Objectives for Information Technology (COBIT)
• Value Reference Model (VRM)
• Voluntary Interindustry Commerce Solutions (VICS)
• eTOM Business Process Framework
• Performance Framework
Example: APQC Process Classification Framework (PCF)

• Industry-neutral enterprise model

• Open standard for benchmarking
• Four levels
• Categories
• Process group
• Process
• Activity
APQC PCF Overview

Category
 APQC Classification Framework

Group

Activity

Process
APQC Classification Framework
Available industry sectors:
• Aerospace & Defense
• Automotive
• Banking
• Broadcasting
• Consumer Electronics Just released
• Consumer Products
• Education
• Electric Utilities
• Petroleum Downstream
• Petroleum Upstream
• Pharmaceutical
• Retail
• Telecommunications
Prioritization (aka Process Selection)

1. Importance
Which processes have greatest impact on the organization‘s strategic
objectives?
2. Health (or Dysfunction)
Which processes are in deepest trouble?
3. Feasibility
Which processes are most susceptible to successful process
management?

Prioritized process portfolio

Hammer, Champy (1993)

Example: prioritized process portfolio
Financial institution

Short-term action
High Feasibility
Loan Rating
Low
controlling Contract
preparation Medium
Loan
decision Loan market High
evaluation
Handling of
payments Loan
planning
Loan
application
Low
Poor Health Good
Possible Strategic fit?
Prioritization

1. Importance
Which processes have greatest impact on the organization‘s strategic
objectives?
2. Health (or Dysfunction)
Which processes are in deepest trouble?
3. Feasibility
Which processes are most susceptible to successful process
management?

Prioritized process portfolio

Hammer, Champy (1993)

Example: prioritized process PICK chart
Financial institution

Short-term action
High Feasibility
Loan Rating
Low
controlling Contract
preparation Medium
Loan
decision Loan market High
evaluation
Handling of
payments Loan
planning
Loan
application
Low
Poor Health Good
Possible Strategic fit?
Further Readings & Resources

• Fundamentals of Business Process Management

• Chapter 2 – Process Identification

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Next Week
Process Modeling

41