3.0 Value-Driven Design

The high impact, high opportunity processes are subject to detailed process innovation and optimization activities, focusing on the previously identified value-drivers (Kirchmer, 2011). The degree of achievement is measured through KPIs that relate to the identified value-drivers. The check of the quality of a process design through KPIs can be used in agile as well as in top-down waterfall design approaches. Depending on the specific process and the culture of the organization, either approaches or a combination of both can be relevant (Morris, 2014). The design approach uses formal modeling methods like Event-driven Process Chains (EPC) or the Business Process Modeling Notation (BPMN) to facilitate the integration of process design and implementation.

Product and market-oriented design approaches (Kirchmer, 1999b) have been proven effective since they link processes with their value-drivers to the offerings a client is looking for. The product and market-oriented design supports an integrated product (offering) and process innovation. Such an approach is especially important for the processes that are highly relevant for the strategic positioning of an organization, hence the top 5%. In order to identify these business processes another segmentation of the high impact processes is required distinguishing between strategic and non-strategic high impact processes. The focus is on high impact strategic processes (Franz, Kirchmer, 2012).

New technologies, especially information technologies (IT), relevant for a specific process, have to be evaluated in the same business-driven way. You can, e.g. model different processes scenarios representing various degrees of automation. The best scenario is chosen based on the expected value of the relevant KPIs as compared to the level of investment (and complexity) to introduce it.

For all high impact processes techniques like process model based simulations and animations are helpful to identify the most appropriate design solutions based on KPIs. Often even the transparency created through these information models is sufficient by itself to discover relevant improvement or even innovation opportunities.

Traditional improvement methods like Lean or Six Sigma (George, 2010) can be applied in selected cases. However, these are generally not approaches that support a focused innovation or a full blown optimization of processes, including automation opportunities. Hence, they are more targeted to bringing less strategic, people intense processes to better efficiency, in most cases resulting in cost or time reductions.

The starting points for the design of the 80% commodity processes are industry or functional reference models. These models are available through industry organizations or consulting and software companies (Kirchmer, 2011). In many cases they are already developed using standard modeling methods. The industry common practices reflected in those models are only adjusted to the specific organization when this is absolutely necessary, e.g. due to legal requirements in country subsidiaries or specific logistics requirements through the product.

The process design work focuses on “making the industry standard happen”. If process areas are identified where the industry standard cannot be applied, e.g. due to product specifics, only those areas will be designed in a company specific way, keeping the adjustments as close to the industry standard as possible. Process solutions can here often be found through a simple application of the mentioned traditional improvement methods like Lean and Six Sigma since a pure efficiency focus is in most cases justified here. However, it is important to keep in mind that it is in general not worth improving above industry average performance.

A structured modeling and design approach is essential to produce information models of the business processes that enable a seamless link to implementation. A well proven and academically sound framework is “ARIS”, the Architecture of Integrated Information Systems (Scheer 1998). This framework facilitates the design of processes from different viewpoints: organization, functions, data, deliverables and control flow. Result are process models and other information models (e.g. entity-relationship-models) that contain all information necessary for a holistic process design and the following process implementation. The ARIS architecture is shown in figure 5.

Figure 5: ARIS Architecture by August-Wilhelm Scheer

This value-driven process design approach is visualized in figure 6. It shows that reference models can also be used as an input for the design of high impact processes. But this is only one component of getting all information together to come up with real innovative and optimized solutions regarding the KPIs and the value-drivers they relate to.

Figure 6: Value-driven Process Design approach

In both cases process models are developed down to a level of detail that still provides relevant business information. The decomposition of the function “Enter Customer Order” into “Enter First Name”, “Enter Last Name”, etc. would from a business point of view not add any additional relevant content (but may be necessary later for the development of software). Less detail would also be required when reference models are used, only adding more detail where the design deviates from the initial industry model.

Both, high impact and commodity processes are part of overlying end-to-end business processes. Process-interfaces in the underlying detailed processes reflect this overall context and make sure that the various process components or sub-processes fit together. Hence, during the process improvement work cause and-effect considerations have to take place in order to avoid fixing issues in one area while creating new ones in other processes.

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