Business Process Management

Lecture 2 – Process Identification and

Architecture

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018 1
Course structure

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018 2
Process identification

What?
1. Identify an organization’s business processes
2. Prioritize their management based on certain criteria

Why?
3. Understand the organization
4. Maximize value of BPM projects

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Process identification steps
1. Designation step
• Enumerate main processes Process
Architecture
• Determine process scope

2. Prioritization step (aka Process selection)

Prioritize processes based on:
Prioritized
• Importance Process
• Health Portfolio
• Feasibility

After Davenport (1993) 4

 Process Enumeration

“Most businesses have just three core processes:

1. Sell stuff
2. Deliver stuff
3. Making sure you have stuff to sell and deliver”

Geary Rummler

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Porter: Types of processes

Management
Processes

Customers / Stakeholders
Suppliers / Partners

Core Processes

Support Processes

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After Michael Porter (1985)
Example: core, support and management processes
Wholesaler
Core processes
• Sales (lead-to-quote, quote-to-order, order-to-cash)
• Direct procurement (supplies replenishment)
•…

Support processes
• Indirect procurement (parts replenishment, operational resources
replenishment…)
• HR (policies update, recruitment, induction, probation…)
•…

Management processes
• Suppliers management (suppliers planning, suppliers acquisition…)
• Logistics management (logistics planning, logistics controlling…)
•… 7
Relations between core, support, mgt processes

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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Example: process architecture
Wholesaler

Strategic
Manageme
nt
Logistics Suppliers
Managemen Managemen
t t
Warehouse Demand
Managemen Managemen
t t Process
Management processes group

Direct
Distributi
procuremen Sales
on
t
Marketin
Service
g
Core processes
Indirect
Finance procuremen IT HR
t
Support processes
Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018 9
Example: process architecture
Insurance company

Strategic
Management
Corporate Market
Investor
Developmen Developme
Relations
t nt
Management processes

Risk Assessment & Management

Marketing & Sales

Underwriting Policy Claims
Management Servicing Management
Payments Collection and Disbursement
Assets Management
Core processes
Finance/ Legal/
Reinsurance IT HR
Treasury Audit
Support processes
Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
10
Process Architecture Example

Television New Zealand

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
11
Exercise: identify process types
These groups of processes are typically performed at a
university. Categorize each process group as core, support or
management
Sport Indirect
HR
services procurement

Strategic Teaching
Management award courses

IP
Marketing
Management

Course Additional
Management services mgt

Language Admissio
IT
training n

Market Teaching
management professional courses

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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Solution: identify process types

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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Process scoping

Processes are interdependent insights into interrelations

required
• Specialization: general – special product/service
• Horizontal: upstream – downstream processes and their value chains
• Vertical: main processes – sub-processes

Process architecture

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 Value chain modeling
• Chain of processes an organization performs to deliver value
to customers and stakeholders
• More generally, a mechanism to group high-level business
processes according to an order relation (can be applied to
core, support and management processes)

business
process
Procure-to-service

order
relation
Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
15
 Guidelines to identify horizontal boundaries in
value chains
1. Change of key business object in the process
2. Change of granularity of main business object
3. Change in frequency/time
4. Change in intermediate
outcome/resolution/objective

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Example: value chain
Wholesaler
Core processes

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
17
Building up a value chain (for core processes)
Think around three main steps:
• Imagine it (design new product/service)
• Build it (source, assemble, deliver product/service)
• Sell it (market, sell, service product/service)

Stocked Producer
Example:
products:

Specializations
MTO
products:

ETO
products:
Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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Example: value chains for service provider
IT service provider

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
19
Example: value chain of non-core processes
Support processes

HR:

Accounting:

Management processes

Suppliers
management:

Risk
management:
Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
20
Example: process architecture & value chains
Wholesaler

Strategic
Manageme
nt
Warehouse Logistics
Managemen Managemen
t t
Suppliers Demand
Managemen Managemen
t t
Management processes
Chevron: Direct
Distributi Box:
procuremen Sales
collapsed t
on
groups
Procure-to-Service
value chain processes/
Marketin
Service
Core processes g value chains
Indirect
Finance procuremen IT HR
t
Support processes

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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Alternative: process architecture – groups
Consultancy Firm

Expanded
process
group

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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Typical artifacts for vertical scoping
Value chains
Chains of processes. Stay at a high level. Rule of thumb: 3-7 processes
• Procure-to-service, Risk management

(Root/Main) Processes
Build up value chains and affect each other. They are abstract
• Lead-to-quote, Quote-to-order, Order-to-cash

Subprocesses Typical focus of Process enumeration

Build up processes. They are detailed, involve multiple activities and can be layered on
different levels of abstraction (i.e. sub-subprocesses)
• Order shipment, invoicing

Process tasks
Build up processes and sub-processes. They are atomic and performed by human beings, IT
systems or equipment
• Approve invoice

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Process architecture: hierarchical view

Level 1
Process
Landscape

Process hierarchy
Level 2
Main
Processes
(e.g. BPMN)

Level 3+
Subprocesses, Tasks
(e.g. BPMN)

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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How many levels in the process architecture?

There’s no rule fits all,

it’s a decision that depends on inherent
complexity of the organization,
focus of the identification/BPM initiative,
and
conventions established

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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Example: process hierarchy
Insurance company

Level 1
Strategic
Management
Corporate Market
Investor
Developme Developm
Relations
nt ent
Management processes

Risk Assessment & Management

Marketing & Sales

Underwriting Policy Claims
Management Servicing Management
Payments Collection and Disbursement
Assets Management
Core processes
Finance/ Legal/
Reinsurance IT HR
Treasury Audit
Support processes

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
26
Example: process hierarchy
Insurance company
Level 2

Strategic Corporate Marketing Investor

Management development development relations
Process
group
Define
Define offering Plan
business concept Design & manage
and customer investor
& corporate policies
value proposition relations
long-term vision
Develop
Define pricing
Build Process
Manage
business investor subgroup
knowledge strategy
strategy relations

Manage Manage Define and Manage

strategic change & manage investor
initiatives improvement channel strategy relations

Manage Communicate
partners with stakeholders

Manage
investments &
divestments

Management processes

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
27
Example: process hierarchy
Develop Define offering
Insurance company business and customer Process
strategy value proposition subgroup
Define
Develop overall
offering and
mission statement
positioning

Main
Evaluate strategic Develop value
Level 3 options proposition process

Select
Validate value
long-term business
proposition
strategy
Coordinate
functional and Develop
operational new branding
strategies
Align
functional and
operational
strategies
Create
organisational
design
Management processes
Develop
organisational
goals

Formulate
business unit
strategies

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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Example: process hierarchy
Insurance company

Level 4
Develop overall
mission Main
statement process
Define
current business

Formulate Subprocess
mission

Communicate
mission

Management processes

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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Designation via reference models
A reference model is used as a template to design the process
architecture

Examples:
• Information Technology Infrastructure Library (ITIL)
• Supply Chain Operations Reference Model (SCOR)
• Process Classification Framework (PCF)
• Control Objectives for Information Technology (COBIT)
• Value Reference Model (VRM)
• Voluntary Interindustry Commerce Solutions (VICS)
• eTOM Business Process Framework
• Performance Framework
Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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Example: APQC Process Classification Framework (PCF)

• Industry-neutral enterprise model

• Open standard for benchmarking
• Four levels
• Categories
• Process group
• Process
• Activity

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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APQC PCF Overview

Category

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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 APQC Classification Framework

Group

Activity

Process
Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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APQC Classification Framework
Available industry sectors:
• Aerospace & Defense
• Automotive
• Banking
• Broadcasting
• Consumer Electronics Just released
• Consumer Products
• Education
• Electric Utilities
• Petroleum Downstream
• Petroleum Upstream
• Pharmaceutical
• Retail
• Telecommunications

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Prioritization (aka Process Selection)

1. Importance
Which processes have greatest impact on the organization‘s strategic
objectives?
2. Health (or Dysfunction)
Which processes are in deepest trouble?
3. Feasibility
Which processes are most susceptible to successful process
management?

Prioritized process portfolio

Hammer, Champy (1993)

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Example: prioritized process portfolio
Financial institution

Short-term action
High Feasibility
Loan Rating
Low
controlling Contract
preparation Medium
Loan
decision Loan market High
Importance

evaluation
Handling of
payments Loan
planning
Loan
application
Low
Poor Health Good
Possible Strategic fit?

Source: M. Dumas, M. La Rosa, J. Mendling and H. Reijers, Fundamentals of Business Process Management, 2nd edition, Springer, 2018
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