Thursday, July 24, 2008

BPM = Body Perfect and Muscled - part III

Let's continue. On part II was explained the relation between Core Processes and Business Strategy, and a Core Process Matrix was depicted. Following in the Strategic Level in this post I'm going to answer last open questions:
  1. How could we relate Core Process Matrix with Balanced Scorecard?
    Balanced Scorecard allow us to align Vision and Business Strategy in a company by defining 4 levels or perspectives: Learning and Growth, Business Processes, Customers, Financial (see figure 1 below). In each level are defined objectives, measures, targets and initiatives which force to the company for collecting data and analyzing it, so a company scorecard, or even more a corporate performance scorecard, is defined. However, we know Balanced Scorecard cannot be implemented overnight and it needs to be defined by phases as any other company's big project and by focusing it on critical areas.
    Well, what are these critical areas?
    Generally, critical areas are identified by lower financial outcomes: lower revenues, lower sales volume, etc. and they are affecting overall company's results. Nevertheless, critical areas may be those with lower quality of service, lower customer support level, or higher customer complaint rates, etc. which are affecting public company's image, one of most important assets for a modern company today (see my post about Groundswell book review).
    On this way, we can identify core processes from critical areas in a company from both client (customers) and stakeholders (financial) point of view.

    Figure 1: Balanced Scorecard

    From Financial, Customer, and Business Processes perspectives of Balanced Scorecard we can relate them with Core Processes Matrix forming a Magic Triangle as depicted in figure 2. Magic Triangle just represents this relation and it help us to understand importance of core processes in a straightforward way, with managerial language with no necessity for technical details. Moreover, an important insight here is comprehending that identified core processes are aligned with vision and business strategy.

    Figure 2: Magic Triangle

    Therefore, by identifying core processes aligned to business strategy we may start to manage process improvements in a much easier way, so Magic Triangle and Core Processes Matrix become complementary to Balanced Scorecard but not a replacement.

  2. How could we relate Core Process Matrix with Hammer's Process Audit or Maturity model?
    Process Audit or Maturity Model was defined by Dr. M. Hammer to measure maturity in 4 process levels and 4 enterprise levels into a company. This model is very useful to understand what is real state of a company and to start improvement initiatives focused on those critical areas. On this way, we can first identify Core Process Matrix aligned to business strategy as it was shown previously, and then to measure maturity levels according to Hammer's Process Audit Model, so Core Process Matrix becomes complementary to Process Audit Model.

  3. How could we use Core Process Matrix for Corporate Performance Management?
    Corporate Performance Management (CPM) was coined by Gartner Group to describe the combination of "processes, methodologies, metrics, and technologies to measure, monitor and manage the performance of the business" (2004) (See Book of Scheer et. al. -2006 as reference)
    CPM is the foundation stone of permanent controlling based on key indicators and processes so that the process-oriented organization can respond cohesively, rapidly and flexibly to changed requirements and framework conditions, and can make decisions sooner.

    Therefore, Core Process Matrix serves as first step for identifying in an Strategic level what are those company's critical areas which need improvement initiatives.

  4. How are Core Process Matrix, Balanced Scorecard, Hammer's Process Maturity Model and Corporate Performance Management related each other?
    Everyone has been explained from Strategic Level and all of them addresses Performance Management as common goal. So, that's truth:
    What cannot be measure cannot be Optimized

    From this premise we can understand usefulness of previous models and comprehend the relation of each other (See figure 3 below).

    Figure 3: Core Process Matrix in Strategic Level
    from ARIS Business Process Excellence Framework

    We could use everyone separately to address the same objective: Performance Management, starting from Strategic Level obviously.
    However, we could use them together:
    Core Process Matrix allows us to identify those critical areas which need improvement initiatives aligned to the Business Strategy by means of a Balanced Scorecard which allows us to define objectives, measures, targets and initiatives in 4 perspectives and then to collect data and analyze it for reviewing advances in every Process and Enterprise Level regarding to the Process Audit Model which enable to any company to start being a process-oriented organization and so to reach a Corporate Performance Management.

On part I, II and III was explained the big picture about how to understand Business Process by starting from Strategic Level, and this gives us a good foundation to continue with discussion of my previous post about Process Optimization, and a good step to continue with other phases: Design, Implementation and Controlling which will be addressed soon on the next posts.
These were good exercises for getting a company with a BPM or Body Perfect and Muscled!!

- Ricardo Seguel P.

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