Monday, July 21, 2008

BPM = Body Perfect and Muscled - part II

In the part I of this post I've explained the first and most important step to comprehend Business Process Management (BPM) as a discipline is by understanding the strong relation between Business Strategy and Business Processes. Well, as I said ARIS Business Process Excellence framework explains so good this relation by defining 4 phases: Strategy, Design, Implementation and Controlling, altogether joined by Continuous Improvement and Change Management. In the Strategy phase I said we have to indentify the "Core Processes". Before to go forward, I would like to explain a little bit more details about Strategy and Core Processes (see figure 1)

Figure 1

  1. What are Core processes?
    Core Processes represent products or services which are identified from Business Strategy according to how clients appraise them and from definition of stakeholders' goals. For instance, both products or services which contribute biggest value for a company from a client point of view, but necessarily either biggest sales volume or biggest financial revenues from a stakeholder point of view.
    Another (and more realistic) example is a financial services company which has 3 products: loans, savings, and insurances (as third party involved) and "loans" represent the most important product due to the biggest financial revenues, but it has a bad evaluation from the clients because a long processing time. Nevertheless, "insurances" product has the biggest sales volume and a good evaluation from the clients.
    What is the core process here?
    obviously you should first consider stakeholders' goals to align our selection to business strategy.
    On this case, if one stakeholders goal is to increase financial revenues we should select "loans" as core product and thus as core process which needs service improvement (from a client point of view); but if a goal is to increase sales volume, we should select "insurances" as core product and thus core process and obviously this one does not need an urgent improvement.
    Moreover, Core Processes as any other process involve people (human resources) and technology (information systems, etc.). People uses and interacts with technology to complete its work according to a defined process, and this interaction generates knowledge and know-how (see figure 1) which need to be managed.

  2. How could we align business processes to business strategy?
    By identifying core processes we can build a matrix (see figure 2) and categorize every process according to stakeholders' goals. This is a good exercise to see a big picture of products/services categorized and aligned to business strategy. As a second step, we can identify the core process which needs improvements according to clients' requirements, in the previous example, the "loans" process, and then labeled with an orange square color. As a third step we may identify processes are supporting these core processes.

    Figure 2

  3. How could we relate previous Core Process-matrix with Balanced Scorecard?

  4. How could we relate Core Process-matrix with Hammer's Process Maturity model?

  5. How could we use Core Process-matrix for Corporate Performance Management?

  6. How are Core Process Matrix, Balanced Scorecard, Hammer's Process Maturity Model and Corporate Performance Management related each other?

On part-III I'll answer last 4 questions. See you soon.

- Ricardo Seguel P.

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