1.0 Targeting Value Systematically

In our increasingly digital world, organizations have to master the ability to continuously adapt to an ever-changing business environment in order to strive and to survive in the medium to long term. Dealing successfully with a volatile business environment, in general, means continuously “leveraging people to build a customer-centric performance-based culture” (Mitchel, Ray, van Ark, 2014). Therefore, it is not only important to have a good strategy, hence to know what to do. But in many organizations the key challenge is about how to execute the strategy. In order to overcome this challenge, more and more organizations establish a value-driven Business Process Management (BPM) Discipline (BPM-Discipline) with a consequent process-orientation across the company (Kirchmer, Franz, 2014-2) (Franz, Kirchmer, 2012).

This management discipline is about moving strategy into execution, fast with low risk. It especially enforces a customer and performance focus since business processes deliver (by definition) a result of value for a client outside the process. This is even more pronounced for a digitalization approach, to make sure that emerging technologies are used in a way they really have a positive business impact. A key component of a BPM-Discipline is a structured value-driven design of processes realizing the business strategy of an organization (Rummler, Ramias, Rummler, 2010) (Burlton, 2010).

This chapter presents an approach for business process design and implementation that meets those requirements of targeting value (Kirchmer, 2014). It is both, focused on executing the strategy of an organization while being as resource efficient as possible. Result is a practical and effective approach to process design and implementation. Typical results of this approach embedded in a BPM-Discipline are transparency over an organization’s processes which enables achieve quality and efficiency, agility and compliance, external integration and internal alignment, as well as innovation and conservation. Figure 1 shows the “BPM-D Value-Framework” with categories of values delivered through a BPM-Discipline (Kirchmer, Franz, 2014-2).

 

Figure 1: The BPM-D® Value-Framework

Research has shown that organizations only compete with approximately 5% of their processes with a further 15% being important core processes, supporting the competitive advantage (LEADing, 2014) (Franz, Kirchmer, 2012). This means that 80% of the business processes are commodity processes that can be carried out using industry standards or common industry practices. An industry average performance is sufficient for these and significant innovation in these usually detracts focus away from the differentiating core. Sophisticated improvement approaches or even innovation and sophisticated digitalization initiatives, targeting higher performance, don’t deliver any real additional business value on this 80%. Hence, process innovation and optimization initiatives have to focus mainly on the 20% high impact processes while other business processes can be designed and implemented using existing industry common practices. Results are highly organization specific business processes where this really delivers competitive advantages and processes following industry common practices where this is sufficient.

Targeting value systematically requires the appropriate segmentation of processes, as basis for a differentiated design and implementation approach. Process models, developed during the process design, need to reflect the requirements of those different process segments with an understanding of the importance, of the resulting business processes, in enabling the strategy of the organization. Different levels of sophistication of the improvement approaches are required. The subsequent process implementation, including the appropriate software support, is executed according to the process design based on the characteristics of the identified process segmentation. Value-driven design often prescribes different approaches to procure the required, enabling software. Highly organization-specific processes often require an individual development of software. Processes designed based on industry standards lead, in most cases, to the use of standard software packages, adapted as little as possible.

A value-driven approach to design and implementation of processes enables organizations to use resources where they provide best value during improvement initiatives. As an example the people, who are highly qualified in applying sophisticated process improvement methods, focus their time on high value areas. They can systematically target value as well as reduce the risk of project failure (Kirchmer 2013). They focus on moving the organization to the next level of performance, including the right degree of digitalization. This requires in many cases an “enlightened” Chief Information Officer (CIO) (Scheer 2013) who moves away from being a technical expert to becoming a driver of innovation and performance. The business value-focus allows such a CIO to transition into a “Chief Process Officer” (CPO) (Franz, Kirchmer, 2012) (Kirchmer, Franz, 2014-1).

The approach has been developed based on practical experience in large and midsize organizations, mainly in the USA, South America, Japan, India and Europe. It has been combined with academic research regarding value-driven design and implementation methodologies, especially the LEADing Practice guidelines (LEADing, 2014).

 

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