1. Business Process Management
for Enterprises
Ing. Antonio Caforio
Centro Cultura Innovativa d’Impresa
Università del Salento
antonio.caforio@unisalento.it
2. Business Motivation
Ends
What an enterprise wants to be
Vision
“Be the premier software services
provider for SMEs”
End
Goal
“20% increase in market share in the
next 3 years”
4. What is Mission
A Mission should consist of
An action (i.e “provide”, “make”, “deliver”, …)
A product or service (i.e. “aircraft engine components”, “pizza”, …)
A market or customer segment (i.e. “airlines”, “city-wide
customers”, …)
Mission
makes operative
Vision
A Mission or a Value Proposition
“Provide pizza of good quality quickly at home to all customers
in the neighbourhood”
5. What is Strategy
A Strategy is
an approach accepted and pursued by an enterprise to achieve its
goals, given the environmental constraints and risks
Strategy
directs efforts
towards
Goal
6. What is Strategy
“The essence of strategy is choosing to perform the activities
differently than rivals do” M. Porter
7. What is Strategy
“The essence of strategy is choosing to perform the activities
differently than rivals do” M. Porter
Southwest Airlines
Activity Map
Taken from : M. E. Porter; “What is Strategy?”; Harvard Business Review, Nov-Dec 1996
9. What is Goal
A Goal is
a statement about a future state or condition of the enterprise that is
desirable to be achieved through appropriate Means
Strategy
directs efforts
towards
Goal
10. How to define Goals
The Balanced Scorecard (BSC) Approach
“If we succeed, how
will we look to our
shareholders?”
Financial
Perspective
Customer
Perspective
“To achieve our
vision, how must we
look to our
customers?”
Ritaglia e disponi
“To satisfy our
customers, which
processes must we
excel at?”
Internal
Perspective
Learning &
Growth
Perspective
“To achieve our
vision, how must our
organization learn
and improve?”
11. How to define Goals
BSC Dimensions
• Productivity Strategy
• Revenue Growth Strategy
Financial
Perspective
Customer
Perspective
Ritaglia e disponi
Internal
Perspective
Learning &
Growth
Perspective
14. How to define Goals
BSC Dimensions
• Productivity Strategy
• Revenue Growth Strategy
Financial
Perspective
Customer
Perspective
Ritaglia e disponi
• Operations management
processes
• Customer management
processes
• Innovation processes
• Regulatory and social
processes
Internal
Perspective
Learning &
Growth
Perspective
• Customer satisfaction
• Customer retention
• Customer acquisition
• Customer profitability
• Market share
• Account share
• Human Capital
• Information Capital
• Organizational Capital
15. Value Proposition and Goals
Strategy Types and the BSC Customer Perspective
Source: R. S. Kaplan, D. P. Norton; “Strategy Maps: Converting Intangible Assets into Tangible Outcomes”; Harvard Business Press, 2004
16. Strategy Maps
Source: R. S. Kaplan, D. P. Norton; “Strategy Maps: Converting Intangible Assets into Tangible
Outcomes”; Harvard Business Press, 2004
17. Strategy Maps
Low Cost Airline Example
Source:
R. S. Kaplan, D. P. Norton;
“Strategy Maps:
Converting Intangible
Assets into Tangible
Outcomes”; Harvard
Business Press, 2004
18. The path from Vision and Mission
Vision
Strategy
Map
Mission
Strategy
Balanced
Scorecard
21. What is a Process
“a sequence of steps performed for a given purpose”
(IEEE)
“the logical organization of people, materials, energy, equipment, and procedures into work
activities designed to produce a specified end result”
(Pall, Quality Process Management, 1987)
“a structured, measured set of activities designed to produce a specific output for a
particular customer or market. It implies a strong emphasis on how work is done within an
organization, in contrast to a product focus’s emphasis on what. A process is thus a
specific ordering of work activities across time and space, with a beginning and an end,
and clearly defined inputs and outputs: a structure for action. ... Taking a process approach
implies adopting the customer’s point of view. Processes are the structure by which an
organization does what is necessary to produce value for its customers”
(Davenport ,1993)
“a collection of activities that takes one or more kinds of input and creates an output that is
of value to the customer”
(Hammer & Champy’s ,1993)
23. The Value Chain Concept
A Value Chain is
a comprehensive collection of all of the activities that are
performed to design, produce, market, deliver, and support a
product line.
Management Processes
Value Chain
Administer Contracts
Manage Programs
Ensure
Customer
Satisfaction
Core Processes
Create New Products
Produce Products
Deliver Products
Support Processes
Provide HR
Provide Information
Systems & Services
Manage Facilities
24. Process Architecture
A Process Architecture is
a hierarchical decomposition of the processes that are contained
in a value chain.
Value
Chain
VC
Level 1
Business
Process 1
Business
Process 2
Business
Process 3
Business
Process 4
Level 2
Process
3.1
Process
3.2
Process
4.1
Level 3
SubProcess
3.2.1
SubProcess
3.2.2
SubProcess
3.2.3
Process
4.2
25. How to create a Process Architecture
KPIs
Value
Chain
VC
Level 1
Business
Process 1
Business
Process 2
Business
Process 3
Business
Process 4
Level 2
Process
3.1
Process
3.2
Process
4.1
Level 3
SubProcess
3.2.1
SubProcess
3.2.2
Process
4.2
SubProcess
3.2.3
Reference Frameworks
28. Building Process Architectures
2.0 Develop and
Manage Products
and Services
• 2.2 Develop products
and services
• 2.2.1 Design, build,
and evaluate
products and
services
• 2.2.1.1 Assign
resources to
product/service
project
•…
• 2.2.1.3 Develop
product/service
design
specifications
•…
• 2.2.1.6 Build
prototypes
•…
• 2.2.2 Test market
for new or revised
products and
services
• 2.2.3 Prepare for
production
3.0 Market and Sell
Products and Services
• 3.1 Understand
markets, customers,
and capabilities
• 3.1.1 Perform
customer and
market intelligence
analysis
• 3.1.1.1 Conduct
customer and
market research
•…
• 3.1.2 Evaluate and
prioritize market
opportunities
• 3.2 Develop
marketing strategy
• 3.3 Develop sales
strategy
• 3.4 Develop and
manage marketing
plans
• 3.5 Develop and
manage sales plans
4.0 Deliver Products
and Services
• 4.1 Plan for and
acquire necessary
resources (SCP)
• 4.2 Procure materials
and services
• 4.3 Produce /
Manufacture / Deliver
product
• 4.3.1 Schedule
production
• 4.3.2 Produce
product
•…
10.0 Manage
Environmental Health
and Safety (EHS)
• 10.1 Determine
environmental health
and safety impacts
• 10.2 Develop and
execute EHS
program
• 10.3 Train and
educate employees
• 10.4 Monitor and
manage EHS
management
program
• 10.5 Ensure
compliance with
regulations
•…
29. Building Process Architectures
2.0 Develop and Manage Products and Services
2.2 Develop products
and services
3.0 Market and Sell
Products and Services
4.0 Deliver Products
and Services
• 2.2.1 Design, build,
and evaluate
products and
services
• 2.2.1.1 Assign
resources to
product/service
project
•…
• 2.2.1.3 Develop
product/service
design
specifications
•…
• 2.2.1.6 Build
prototypes
•…
• 2.2.2 Test market for
new or revised
products and
services
• 2.2.3 Prepare for
production
• 3.1 Understand
markets, customers,
and capabilities
• 3.1.1 Perform
customer and
market intelligence
analysis
• 3.1.1.1 Conduct
customer and
market research
•…
• 3.1.2 Evaluate and
prioritize market
opportunities
• 3.2 Develop
marketing strategy
• 3.3 Develop sales
strategy
• 3.4 Develop and
manage marketing
plans
• 3.5 Develop and
manage sales plans
• 4.1 Plan for and
acquire necessary
resources (SCP)
• 4.2 Procure materials
and services
• 4.3 Produce /
Manufacture / Deliver
product
• 4.3.1 Schedule
production
• 4.3.1.1 Generate line
level plan
• 4.3.1.2 Generate
detailed schedule
• 4.3.1.3 Schedule
production orders
and create lots
• 4.3.1.4 Release
production orders
and create lots
• 4.3.2 Produce
product
•…
Operations
Management
Processes
Internal Perspective
Customer
Management
Processes
Innovation
Processes
10.0 Manage
Environmental Health
and Safety (EHS)
• 10.1 Determine
environmental health
and safety impacts
• 10.2 Develop and
execute EHS
program
• 10.3 Train and
educate employees
• 10.4 Monitor and
manage EHS
management
program
• 10.5 Ensure
compliance with
regulations (11184)
•…
Regulatory
and Social
Processes
31. Process Performance Measures
Process performance are measured through
Key Performance Indicators (KPI)
Efficiency
Productivity
Quality
Percentage of Rejects
Service
Delivery on-time
Process perfomance are measured against a Service Level
Service Level Agreement (SLA)
32. Process Performance Measures
Key Performance Indicators (KPI)
External KPI
– Throughput time, waiting time, service level
Poor performances cause loss of money!!!
Internal KPI
– Rate of resource utilization, number of cases,
cost of resources
Good performances can be expensive!!!
33. PPM from frameworks
APQC Framework
Process Name
Metric
2.1 Manage product and service portfolio
Total cost to generate new product/service ideas per
$1,000 revenue
Total R&D cost per business entity employee for the
current reporting period
2.2 Develop products and services
Average time-to-market in days for new
product/service development projects
Number of FTEs who develop and manage products
and services per $1 billion revenue
SCOR Framework
Performance Attribute
Level 1 Metric
Supply Chain Delivery Reliability
Delivery Performance
Perfect Order Fulfillment
Supply Chain Responsiveness
Order Fulfilllment Lead Times
Supply Chain Costs
Cost of Goods Sold
Total SC Management Costs
34. Key Performance Indicators
Auto Transportation example
Type
KPI
Metric
Trucks Utilization
Hours Utilized /
Hours Available
Routing Efficiency
KMs with load /
KMs travelled
Efficiency
…
Wrong Delivery
Wrong Deliveries /
Total Deliveries
Damages
Total number of
damages
Quality
…
Delivery Time
Average DT
Delivery on time
Pct Dot
Service
35. Process Management
Plan
Work
Monitor & Control
Work
Gather Information
Monitor Processes
Develop Forecasts
Take Preventive/Corrective Actions
Execute
Work
Set Goals
Establish Process
Define Plans, Resources
Determine Budget
Use
Inputs
to
Produce
Outputs
36. Processes and the Organizational Chart
Management
Engineering
Production
Marketing
Sales
Value Chain
Develop New Product
Sell Product
Build Product
Source: P. Harmon; “Business Process Change: A Guide for Business Managers and BPM and
Six Sigma Professionals”; MK Press, 2007
37. Quality Standards
UNI EN ISO 9001:2008
Principles of Quality Management
Customer orientation
Leadership
Personnel Involvement
Process Orientation
Systemic approach to management
Continuous improvement
Facts-based Decisions
Beneficial interrelationships with suppliers
38. Quality Standards
UNI EN ISO 9001:2008
Process
Classification
Primary Processes
Secondary Processes
Information Flow
Management
Responsibility
Measures,
Analysis and
Improvement
Resource
Management
input
Product Realization
output
Information
Flow
Product
Customer Satisfaction
Customer Requirements
Continuous improvement of the QMS
39. References
APQC.org; “APQC Process Classification Framework 6”,
http://www.apqc.org/process-classification-framework - last accessed
on October 2013
G. Bracchi, C. Francalanci, G. Motta; “Sistemi informativi e aziende in
rete”; McGraw Hill Italia, 2001
M. E. Porter; “Competitive Advantage: Creating and Sustaining
Superior Performances”; The Free Press,1985
M. E. Porter; “What is Strategy?”; Harvard Business Review, Nov-Dec
1996
R. S. Kaplan, D. P. Norton; “Strategy Maps: Converting Intangible
Assets into Tangible Outcomes”; Harvard Business Press, 2004
P. Harmon; “Business Process Change: A Guide for Business
Managers and BPM and Six Sigma Professionals”; MK Press, 2007
Supply Chain Council; “SCOR Reference Framework”, http://supplychain.org/scor - last accessed on October 2013
OMG Specification; “Business Motivation Model”; 2010
UNI EN ISO 9011:2008, International Standards Organization
