BPM Framework – Metode og modeller S ession 3 25 th September 2011

1. BPM Framework – Metode og modellerSession 325thSeptember 2011

2. Agenda • BPM Framework • Different frameworks • A Six Stage System by Kaplan and Norton • Blue Ocean • Business Model Generation • Linking Strategy to Operations: Process Models and Innovation • BPM Governance Framework • Case – SAP AG • Group Exercise • Final Exercise types • Session 4

3. Overview of all sessions

4. Purpose of the session I denne session vil vi gennemgå definitionen for en Business Process Management Framework og hvilke komponenter såsom metoder og modeller som indegår i denne. Vi vil kigge på nogle af de anvendte BPM frameworks inklusive hvordan virksomheder anvender og implementere dem i dag. Den studerende vil få kendskab til hvilke metoder og modeller et BPM Framework kan indeholde inklusive sammenspilde mellem disse.

5. BPM Framework

6. BPM Framework

7. Agenda • BPM Framework • Different frameworks • A Six Stage System by Kaplan and Norton • Blue Ocean • Business Model Generation • Linking Strategy to Operations: Process Models and Innovation • BPM Governance Framework • Case – SAP AG • Group Exercise • Final Exercise types • Session 4

8. Different frameworks:A Six Stage System by Kaplan and NortonBlue OceanBusiness Model GenerationLinking Strategy to Operations: Process Models and InnovationBPM Governance Framework

9. A Six-Stage System

10. Stage 1: Develop the Strategy • Develop the strategy using an array of strategy tools such as mission, values, and vision (MVV) statements; external competitive, economic, and environmental analyses; methodologies such as Michael Porter´s five forces and cpmpetitive positioning framework, the resource-based view of strategy, and blue ocean strategies, as well as scenario planning, dynamic simulations, an war-gaming. • Questions: • What business are we in, and why? • What are the key issues we face? • How can we best compete?

11. What is innovation ? • http://www.wimp.com/innovationfinest/

12. Blue Ocean vs. Red Ocean An approach to develop Business Model Innovation

13. Blue Ocean Strategy : Overview Click image to access Blue Ocean synopsis on YouTube

14. Blue Ocean Strategy Approach > What factors in the business model should be created/increased or eliminated/decreased (compared to the industry standard) to create an uncontested market space and make the competition irrelevant and what ideas does that trigger?

15. Blue Ocean Strategy: Overview

16. Blue Ocean Example : Apple iPhone Eliminate Raise Multiple operating system platforms Complexity of user interface The view of a mobile phone Ability to access all type of media Clear distinction between products EXAMPLE Create Reduce New market segments for smart phones Desire for a “status item” New simple and profitable route to market forpublishers (apps, video, ...) Complexity to buy (“ONE” DEVICE ONLY)

17. Other Blue Ocean Examples … from emotional to functional appeal Online bookstore • Nintendo WII • new User experience •  cheaper hardware … from functional to emotional appeal Netflix vs. Blockbuster  DVD-Mail Order vs. Video rental Store

18. What is the purpose of a business ? • The purpose of a business is to maintain and attract customers!

20. Business Model Framework A Business Model is the rationale of how an organization creates, delivers, and captures value > • A business model is about the following: • An Organization serves one or several Customer Segments. • It seeks to solve customer problems and satisfy customer needs with Value Propositions • Value propositions are delivered to customers through communication, distribution, and sales Channels • Customer Relationships are established and maintained with each customer segment • Revenue Streams results from value propositions successfully offered to customers • Key Resources are the assets required to offer and deliver the previously described elements… • …by performing a number of Key Activities • Key Partnerships are formed to outsource and acquire some activities outside of the organization. • The business model elements results in the Cost Structure. * See www.businessmodelgeneration.com

21. Business Model Building BlocksWhich is the building block where you see more potential for generating innovative ideas? • Customer Segments • Value Propositions • Channels • Customer Relationships • Revenue Streams • Key Resources • Key Activities • Key Partnerships • Cost Structure 7 4 1 6 2 8 3 9 5

22. The Business Model Canvas

23. Building Block – Customer Segments (CS) • The Customer Segments Building Block defines the different group of peoples or organizations and enterprise aims to reach. • Customer Groups represent separate segments if: • Their needs require & justify a distinct offer • They are reached through different Distribution Channels • They require different types of relationships • They have substantially different profitability's • They are willing to pay for different aspects of the offer Sample Types: • Mass Market • Niche Market • Segmented • Diversified Page20

24. Building Block – Value Propositions (VP) • The Value Propositions Building Block describes the bundle of products and services that create the value for a specific Customer Segment • Questions to ask: • What value do we deliver to the customer? • Which one of our customer’s problems are we helping • Which customers needs are we satisfying? • What bundles of products and services are we offering to each customer segment ? Sample Types: • Newness • Risk Reduction • Customization • Price Page22

25. Building Block – Channels (CH) • The Channels Building Block describes how a company communicates with and reaches its Customer Segments to deliver a Value Propositions • Questions to ask: • Through which Channels do our Customer Segments want to be reached ? • How are we reaching them now ? • How are our channels integrated ? • Which ones work best ? • Which ones are most cost-efficient? • How are we integrating them with our customer routines ? Sample Types: • Direct • Indirect Page26

26. Building Block – Customer Relationships (CR) • The Customer Relationships Building Block describes the types of relationships a company establishes with specific Customer Segments. • Questions to ask: • What type of relationship does each of our Customer Segments expect us to establish and maintain with them ? • Which ones have we established ? • How costly are they ? • How are they integrated with the rest of our business model ? Sample Types: • Co-Creation • Communities • Personal Assistance Page28

27. Building Block – Revenue Streams • The Revenue Streams Building Block represents the cash a company generates from each Customer Segment • Questions to ask: • For what value are our customers really willing to pay ? • For what do the currently pay ? • How are they currently paying? • How would they prefer to pay ? • How much does each Revenue Stream contribute to overall revenues ? • What Pricing Models – dynamic vs. fixed ? Sample Types: • Licensing • Asset Sale • Usage Fee • Subscription Fee Page30

28. Building Block – Key Resources (KR) • The Key Resources Building Block describes the most important assets required to make the business model work. • Questions to ask: • What Key Activities do our: • Value Propositions require? • Distribution Channels require? • Customer Relationships require? • Revenue Streams require? Sample Types: • Production • Problem Solving • Platform / Network Page34

29. Building Block – Key Activities (KA) • The Key Activities Building Block describes the most important things a company must do to make the business model work. • Questions to ask: • What Key Activities do our: • Value Propositions require? • Distribution Channels require? • Customer Relationships require? • Revenue Streams require? Sample Types: • Production • Problem Solving • Platform / Network Page36

30. Building Block – Key Partnership (KP) • The Key partnership Building Block describes the network of suppliers and partners that make the business model work. • Questions to ask: • Who are our Key Partners? • Who are our Key Suppliers? • Which Key resources are we acquiring from partners? • Which Key Activities do partners perform • Type of Costs / Advantages: • Variable • Fixed • Economies of Scale / Scope Sample Types: • Optimization and Economies of Scale • Reduction of risk and uncertainty • Acquisition of particular resources and activates Page38

31. Building Block – Cost Structure (CS) • The Cost Structure Building Block describes the most important costs incurred while operating under a particular business model • Questions to ask: • What are the most important cost inherent in our business model? • Which key resources are most expensive? • Which Key Activities are most expensive? • Type of Costs / Advantages: • Variable • Fixed • Economies of Scale / Scope Sample Types: • Cost Driven • Value Driven Page40

32. Skype 2003 Business model: gain customer base

33. 2004 – 2010: Freemium Model & Partnerships

34. 2011 – Freemium, B2B, HW Partners, acquisition by MSFT • Skype Facts: • 13 % of all international calls • Valuation 8.5B USD • Investment 2.5B USD • 100 Million active User per month

35. Innovating Business Models • Combining the Blue Ocean Strategy with the Business Model Canvas • Porters Five Forces

36. Business Model Canvas Cost-Side Value-Side

37. Value Innovation - COSTS + VALUE

38. Blue Ocean Strategy and the BM-Canvas - COSTS + VALUE

39. Relating the Business Model to Porters Five Forces Model Competitive Rivalry within an Industry Threat of new Entrants Bargaining Power of the Customer Bargaining Power of the Suppliers Threat of Substitute Products

40. Stage 2: Plan the Strategy • Plan the strategy using such tools as strategy maps and Balanced Scorecards, along with targets and strategic initiatives. • Questions: • How do we describe our strategic? • How do we measure our plan? • What action programs does our strategy need? • How do we fund our initiatives? • Who will lead strategy execution?

41. Stage 3: Align the Organization with the Strategy • Align the organization with the strategy by cascading strategy maps and Balanced Scorecards to all organizational units, by aligning employees though a formal communications process, and by linking employees´personal objectives and incentives to strategic objectives. • Questions: • How do we ensure that all business units are aligned? • How do we align support units with business-unit and corporate strategies? • How do we motivate employees to help us execute the strategy?

42. Stage 4: Plan Operations • Plan operations using tools such as quality and process management, reengineeringt, process dashboards, rolling forecasts, activity-based costing, resource capacity planning, and dynamic budgeting. • Questions: • Which business process improvements are most critical for executing the strategy? • How do we link strategy with operating plans and budgets? • Sales forcast, Resource capacity plan Dynamic operating and capital budgets

43. Linking the Strategy Model to the Operation Model Source: Linking Strategy to Operations: Process Models and Innovation by David P. Norton and Randall H. Russell

44. Linking the Strategy Model to the Operation Model Source: Linking Strategy to Operations: Process Models and Innovation by David P. Norton and Randall H. Russell

45. Linking the Strategy Model to the Operation Model Source: Linking Strategy to Operations: Process Models and Innovation by David P. Norton and Randall H. Russell

46. Business Process Mangement (Conceptual) Big Picture

47. Stage 5: Monitor and learn • Monitor and learn about problems, barriers, and challenges. This process integrated information about operations and strategy into a carefully designed structure of management review meetings. • Questions: • Are our operations under control? • Are we executing our strategy well?

48. Stage 6: Test and adapt • Test and adapt the strategy, using internal operational data and new external environmental and competitive data – thus launching a new cycle of integrated strategy planning and operational execution. • Questions: • Do we have the right strategy?

49. The BPM Roadmap

50. Agenda • BPM Framework • Different frameworks • A Six Stage System by Kaplan and Norton • Blue Ocean • Business Model Generation • Linking Strategy to Operations: Process Models and Innovation • BPM Governance Framework • Case – SAP AG • Group Exercise • Final Exercise types • Session 4