In our fast moving digital environment, understanding who is responsible for and thus empowered to change business processes, is now more than ever a critical prerequisite for standardization and harmonization success. We refer to this in the BPM-Discipline framework as Process Governance.
In a world, which is constantly changing, knowing what doesn’t need to change is helpful. Extensive research (Kirchmer, Franz, 2014-3) has proved that an organization competes through less than 20 per cent of its business processes. This leaves 80 per cent for which it is sufficient to achieve an industry average. The 20 percent tend to be the ones which offer more opportunity to drive innovation, increase agility and adapt to the needs of particular customers. The remaining 80 per cent are usually made up of routine processes which operate using a common industry practice e.g. payment processes, payroll, procurement of office material or credit checks.
An organization may have hundreds of sub-processes. Sorting them, understanding their characteristics and finally segmenting them into the 80/20 structure can be a daunting prospect (Kirchmer, Franz, 2014-3). In the authors’ experience, this is therefore usually not given the attention it deserves. Process management – using our patent-pending BPM-Discipline Framework – systematically enables the strategy-based analysis of processes, which in turn allows them to be prioritized and segmented.
The essence of the approach starts by drawing the link between business strategy and the high impact/ low maturity business processes using a Process Impact Assessment Matrix (PIAM). It then looks at the high impact sub-processes from two dimensions:
Strategic Importance and Uniformity as outlined in the book “Value-Driven BPM” (Franz, Kirchmer, 2012). These are shown in the matrix in Figure 3 below. Some processes neatly fit into one of the four quadrants as the examples show in each of these.
Figure 3: Process Segmentation Model (Franz, Kirchmer, 2012)
The titles (colored in red) in each quadrant suggest the most appropriate management approach typically assigned to processes in each quadrant. For the purposes of this paper, those items higher on this chart require the most strategic agility.
The less strategic or even commodity processes should not be forgotten though. While a process might be routine it may need significant variation to accommodate the specific requirements of: the products or services (what); the market (where); the customer (who); and the time (when). Understanding and minimizing related variations based on real business need, is essential to achieving the goal of harmonization and standardization. Unwillingness to change and vested interests can often cloud well thought-through analysis but a well-structured approach helps to align conflicting points of view.
Segmentation is the starting point for making it absolutely clear who is empowered to change business processes and/or adapt them to their specific needs. This provides the basis for a refined process governance required to establish and maintain the right level of standardization and harmonization of the business processes. As an example, this would be by establishing the empowered global and local process owners as one of the elements of this approach.
A more detailed overview of the governance can be found in the paper: “Chief Process Officer – The Value Scout.” (Kirchmer, Franz, 2014-1). Here the governance is outlined using the BPM-D Organization framework as shown (at a high level) in figure 4 below. This is a reference structure to sustain process standardization and harmonization by establishing the necessary governance roles and bodies.
Figure 4 : BPM-D Governance Model (Franz, Kirchmer, 2014-1)
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