Establishing a BPM COE

1. Establishing a BPM COE Creating a BPM discipline, developing BPM capability, integrating BPM efforts

2. How to Develop a Process Enterprise • There are many different models available for developing a high performance process enterprise • However, their basic components are usually the same: • Align strategy with processes • Develop a process-oriented culture • Establish a process or BPM community of practice (COP) • Assign process roles and responsibilities in the organization • Create a BPM Group or Center of Excellence (BPM COE) • Develop infrastructure that is process-oriented: • information systems support the efficiency and effectiveness of cross-functional processes (rather than just departments) • reward and recognition systems focused on processes as well as outcomes BA 553: Business Process Management

3. 5. Create a BPM Center of Excellence (COE) • A Center of Excellence is a work group responsible for the overall BPM effort for the organization • It is similar to a functional group, in that it has a senior manager and employees focused on a specific discipline (in this case, BPM) • The BPM COE is responsible for activities such as: • Governance • Ensuring BPM efforts are aligned with strategic plans • Integrating process change efforts • Assessing BPM maturity/capability and closing needed gaps • Knowledge development and retention • Developing and providing training in BPM methods and tools • Hiring and managing BPM professionals • Documentation • Maintaining the process architecture (network) • Collecting and documenting process metrics BA 563: Business Process Management

4. What Does a BPM COE Do? BPM Group Core Processes Assemble information on existing processes Document new processes Identify processes needing improvement Conduct strategic planning effort Collect daily / monthly data on process performance Hire/promote new managers within the business Develop job descriptions for process role s Identify requirements for BPM professionals External demands for process documentation and measures Maintain up-to-date process architecture Work with strategy group to estimate implications of changes Undertake BPM projects Report on corporate process performance Identify problems and recommend solutions Develop plans to address process maturity gaps Manage process owners’ BPM scorecards and evaluations Train new managers in BPM Acquire BPM tools Manage BPM projects Prepare reports for Sarbanes-Oxley and ISO 9000 documentation A. Create & maintain the enterprise business process architecture, maintain proc. inventory/repository B. Identify, integrate, prioritize, and scope BPM projects, and manage process change resources C. Help create, maintain& manage the business process performance system, assess maturity D. Help create and support the process manager/owner system and provide training E. Recruit, train, and manage BPM COE professionals, standardize on BPM methods and tools F. Manage risk / standards / compliance reporting and documentation Note: items in red have been covered previously, items in blue are in this class session, green is in future sessions. Harmon, Paul (2007), Managing the Process-Centric Organization, presentation, BPMTrends. BA 563: Business Process Management

5. BPM COE Value Chain Jesus, L. et. al. (2009), A Framework for a BPM Center of Excellence, white paper, BPMTrends. BA 563: Business Process Management

6. A. Maintain business process inventory • A process inventory is hierarchical listing of business processes • Can be initially developed at the local or regional level, but will eventually be required for the entire enterprise in order to achieve its full potential • Some organizations develop a process inventory at the department level: this can result in difficulties when the inventory is expanded to include the entire enterprise, as most processes cross between departments • Once the process inventory listing is developed, it and the related process documentation should be kept in a process library • This can be as simple as a share drive where employees can access the information, or it can be stored within one of the many types of process modeling software (Visio, ARIS, etc.) • The latter usually provides some method for viewing the processes with less or more detail, and also for connecting the processes to each other BA 563: Business Process Management

7. Optimizing Collections of Processes • Redundant processes and process standardization • The enterprise process inventory provides a means to identify processes that have similar intents and should be examined for redundancy and potential standardization • Cross-process integration • The enterprise process inventory clarifies how processes should be related • The process library helps us find the current model of the processes and map their relationships • Developing common terminology and definitions for the inputs and outputs is critical. • Processes with common sub-processes • Re-usable sub-processes are analogous to subroutines in computer programming • Having a collection of processes in the common process library modeled with similar notation and terminology will help identify potentially redundant sub-processes • A collection of processes can be modeled based on the capabilities or functionalities used within the processes, which can help identify common capabilities and functions that cross processes (common components) • This kind of analysis can also be useful in identifying related competencies and roles, with the goal of either simplifying training, or identifying potential synergies in job assignments. Chevron, “Business Process Management”, presented July 2007. BA 563: Business Process Management

8. Why develop a process inventory? An enterprise-level process inventory: • Assists with the identification of the enterprise value chain • Ensures processes that are documented within the enterprise can be located within a larger framework • Facilitates the development of enterprise-level process standards (e.g., process and sub-process numbering system, resource naming conventions, search keyword definitions) • Helps process teams avoid overlap of process efforts (encourages discussion and resolution at process boundaries) • Helps establish the enterprise process network, which shows employees how their activities fit into the larger picture of creating and delivering the organization’s products and services • Provides a foundation for prioritizing future process change efforts and aligning them with organizational strategy BA 563: Business Process Management

9. Identifying the Process Inventory • Start by documenting the primary activities in the organization’s value chain (described in session 4) • Next, identify the secondary activities in the value chain - these both comprise Level 0 processes • List the Level 0 processes in an outline form (see next slide), and assign a numbering system that enables items to be added later • Work with employees from the enterprise as needed to fill in the rest of the inventory to one level below the value chain - these comprise the Level 1 processes • If the organization has previously documented any processes, collect the flowcharts, determine any overlaps, and identify where in the value chain they are located - some of these may comprise Level 2 processes • Process documentation and process change teams can fill in the remaining Level 2 processes as they work on their projects BA 563: Business Process Management

10. Value Chain and Level 1-2-3 Processes Level 0Level 1Level 2Level 3 Harmon, Paul (2007), Managing the Process-Centric Organization, presentation, BPMTrends. BA 563: Business Process Management

11. Example Process Inventory (Partial) BA 563: Business Process Management

12. B1. Integrate BPM Projects • In most organizations undertaking process documentation or process change efforts, the high-level enterprise process network and process inventory have not been established • In these situations, it is common that the various process efforts will involve some overlap • This results in inefficiency and potential conflicts, as parts of a larger process may be undergoing changes by multiple groups within the organization • In order to achieve the full potential of the investment in process change, it is critical that the organization first identify and document the existing process efforts and any overlaps among them - an example is shown on the next two slides • Once overlaps or conflicts are identified and analyzed, some efforts may need to be redirected or stopped - this will need to be discussed with the team members involved • The next step is to ensure the integration of future process efforts by aligning them with the process inventory and the organization’s strategy BA 563: Business Process Management

13. Example: Current Process-Related Efforts • Project A: A project designed to develop and implement targeted, sustainable improvements in fuels value chain optimization processes, technology / information and organizational capabilities • Project B: A project scoped with standardizing business processes related to ERP and HR systems, and consolidating 88 business systems and 64 HR systems and related data • Project C: This project designed to identify opportunities for global process standardization in Production and determine ways to greater align Marketing and Customer support functions • Project D: This project is restructuring a regional operations organization and redesigning the associated operations processes • Operations Center of Excellence (COE): This group has as part of its mandate to document, standardize, and improve where necessary operations processes as well as assessing and improving organizational capability within operations personnel • Supply and Trading Capability: This group will develop sustainable organizational capabilities, establish standardized processes and systems, and implement a new integrated business model • Project E: A project that will provide the systems and solutions needed to enable the vision and goal of doubling the department’s bottom line in five years • Business Process Initiative (BPI): This effort involves documenting, standardizing, and improving selected processes requested by the business and developing organizational capability in process documentation and improvement, while integrating with other ongoing process efforts • Business Process Management (BPM): This initiative is institutionalizing a business architecture methodology project across the organization. A BPM Community of Practice (COP) has been developed • Loss Prevention System (LPS): A system to prevent or reduce losses (including injuries, inefficiencies, compromises in product quality, reliability issues, etc.). It is focused on identifying, observing, and eliminating risky behaviors within processes BA 563: Business Process Management

14. Loss Prevention System (LPS) Business Architecture – Business Process Management (BPM) Overlaps of Current Process-Related Efforts 1. These efforts are integrating with regard tothe process documentation methods and tools used 11 2. Both of these efforts involve standardizing processes for supply business systems (HR and ERP) and improving the systems used 3. These efforts are integrating with regard to the process documentation methods and tools used Project E Supply and Trading Capability 4. These efforts are integrating with regard to process standardization and centralization 10 5. The project is restructuring the organization and redesigning the processes 9 6. These two efforts will integrate in the development of the capabilities of operations personnel 8 6 Business Process Initiative (BPI) 7. These efforts are integrating with regard tothe foundational work (tools, methods, training) 7 Operations Center of Excellence 8. These efforts include as part of their effort improving selected support processes 9. These efforts include as part of their effort improving selected core processes 1 5 3 Project D 10. These efforts are changing some of the key systems to increase business capabilities Project B Project A 11. The LPS integrates with many of the other process efforts in that they’re all focused on reducing losses from business inefficiencies 2 4 Project C 12 12. The Business Architecture group is advancing a BPM methodology across the organization BA 563: Business Process Management

15. Integrating Enterprise-Wide Improvements • While non-BPM company projects may have a primary purpose of changing systems or infrastructure, they are also likely to result in process changes • For example, installing a new IT system or software will often change the processes of end users, including their performance • The resulting process changes need to be documented as the new way of doing things, and put into the process library • It is therefore critical to ensure that, if the Project Management Office and the BPM Center of Excellence do not fall under the same management structure, there is at least a requirement for regular integration between the groups to ensure there is no conflict or overlap in their activities • It is useful if the governance bodies of the two groups have common members • This integration is made much easier if all of the change efforts for the year are identified as part of the organization’s strategic planning effort • In cases where they are identified later in the year due to changing circumstances, they must be aligned with the existing strategy (session 3) BA 563: Business Process Management

16. B2. Prioritize BPM Projects • Once a process inventory has been developed and the current process efforts have been identified, future process efforts can be prioritized using a scoring system • Examples of criteria that might be evaluated when prioritizing efforts include: • Alignment with strategy: Whether the process change is aligned with the organization’s strategic goals (more alignment would score higher) • Importance to customer: Whether the process is part of the primary or secondary value chain items (primary items would score higher) • Level of standardization: Whether the process is standardized across all regions (non-standardized processes would score higher) • Impact of change: Whether the process is currently performing well (more poorly-performing processes or processes with no existing metrics would score higher) • Speed of results: Whether the effort can be accomplished in a timely manner (processes that can be improved more quickly would score higher) • Cost/benefit: Whether the cost of the change will be greatly outweighed by the benefit (processes with higher cost/benefit would score higher) • Risk: Whether the change will incur other risks, for example, require major systems changes (processes with less risk would score higher) BA 563: Business Process Management

17. E. Roles in the BPM COE: BPM Manager • Authority and location in the business: • Authority over the BPM COE (may be regional BPM Managers depending on the size of the organization) • Has joint leadership of the BPM Steering Committee (with the Sponsor) • Senior manager at the global or regional level (depends on company size) • Responsibilities: • Establishing the BPM COE and its products and services • Developing a BPM master plan and implementing that plan • Supervising team of organization-wide process experts • Managing all BPM activities at the group or regional level • Using KPIs and other measures to communicate BPM’s effectiveness • Defining the process architecture • Required capabilities/skills: • Detailed knowledge of the enterprise and its processes • Good understanding of the organization’s process architecture • Excellent understanding of BPM methodologies and tools • Character: well accepted by senior management, good negotiation skills BA 563: Business Process Management

18. Roles in the BPM COE: Process Expert • Authority and location in the business: • No authority over individuals processes in the business • Often centrally located, but may travel to support BPM projects (depends on company size) • Responsibilities: • Maintaining excellence in BPM methodologies and tools • Providing BPM knowledge as needed on projects • Supporting project managers on BPM projects • Marketing the effectiveness of BPM among the workforce • Supporting the BPM Manager in all efforts of the BPM COE (e.g., BPM training, BPM capability assessments, etc.) • Required capabilities/skills: • Excellent project management skills • Profound knowledge of BPM methodologies and tools • Good understanding of the organization’s process architecture • Character: able to move from one project to another, providing expertise BA 563: Business Process Management

19. Steps in Establishing a BPM COE • Attain executive sponsorship • Define goals and success criteria • Define governance structure • Establish BPM framework, tools, and standards • Set up the BPM library/repository and process architecture • Define BPM COE approach for managing process change • Develop inventory of documented processes • Prioritize process selection based on strategic objectives • Start executing BPM projects Company publication (2010), Process Center of Excellence, white paper, Progress| Savivon. BA 563: Business Process Management