Chapter 2:

Process Identification

Contents:

2.1 Focusing on Key Processes

2.2 Designing a Process Architecture

Raya Shunnar
2

Course structure

Process
identification Week 1-2

Process
discovery

Process
monitoring and
Gover- Process
Strategy nance analysis
controlling

Culture

Process Process
implementation redesign
Process identification

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

Why?
1. Understand the organization
2. Maximize value of BPM projects
Process identification steps

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

2. Prioritization step (aka Process selection)

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

After Davenport (1993)

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
Porter: Types of processes

1
5 Management 2
Processes

Customers / Stakeholders
Suppliers / Partners

3 Core Processes

Sell
Deliver
Make sure you have stuff to sell

Human Resources
4 Support Processes IT
Finance

After Michael Porter (1985)

Example: core, support and management processes
Grocery Wholesaler Ex.: Al Tal Al Akhdar

Core processes

• Sales (lead-to-quote, quote-to-order, order-to-cash)

• Purchase-to-Pay (direct procurement, e.g. supplies replenishment)

• …

Support processes

• Purchase-to-pay (indirect procurement, e.g. parts replenishment, operational resources replenishment…) Ex.: Buying shelves

• HR (policies update, recruitment, induction, probation…)

• …

Management processes

• Suppliers management (suppliers planning, suppliers acquisition…)

• Logistics management (logistics planning, logistics controlling…)

• …
 Relations between core, support, mgt processes

Management processes Sign

provide direction, rules and Contracts
practices
Establish
Sourcing Plan Evaluate
Procedure Vendors Vendors
Process

Core processes
Fill Order Process
generate value as they
are directly linked to Receive Approve Deliver
Fill Order
external customers Order Order Order

Reorder
Supplies
Support processes provide Process
Stock Order
resources to be used by other Supplies Supplies
processes
Receive
Supplies
Example: process architecture
Wholesaler

Strategic
Management

Logistics Suppliers
Management Management
Warehouse Demand
Management Management
Process
Management processes group

Direct
Sales Distribution
procurement

Marketing Service
Core processes
Indirect
Finance IT HR
procurement
Support processes
Example: process architecture
Insurance company
Management processes
Strategic
Management
Corporate Market Investor
Development Development Relations

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
Exercise: classify by process type
These groups of processes are typically performed at a university. Categorize each
process group as core, support or management

Indirect
Sport
HR procurement
services

Strategic Teaching
Management degree courses

IP
Management Marketing

Curriculum Additional
Management services mgt

Language Admission IT
training

Market Teaching
management professional
courses
Solution: identify process types
Process scoping

Processes are interdependent ➔ insights into interrelations required

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

Process architecture
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

The output of one process is the input to the next process

order
relation
Guidelines to identify horizontal boundaries in value chains

1. Change of key business object in the process Example: Change from delivering the product to issuing an invoice

2. Change of granularity of main business object How detailed are you?

3. Change in frequency/time Example: Seasons at Al Arz Factory, Car Paint,

4. Change in intermediate outcome/resolution/objective Example: Changin from Selling to Customer Care

Example: value chain
Wholesaler
Core processes
Main Process
Vertical

Sub- Processes
 Typical value chains 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)

Example: Producer
Make to Stock
Stocked Example: Textile/
products: Clothes Factories

Specializations
Make to Order MTO Example: DELL

products:

Engineer to Order ETO Example: 3D Printing

products:
Example: value chain of non-core processes
Support processes

HR:

Accounting:

Management processes

Suppliers
management:

Risk
management:
Example: process architecture & value chains
Wholesaler

Strategic
Management

Warehouse Logistics
Management Management

Suppliers Demand
Management Management
Management processes
Chevron: Direct Box:
Sales Distribution
collapsed procurement
groups
Procure-to-Service
value chain processes/
Marketing Service
Core processes value chains

Indirect
Finance IT HR
procurement
Support processes
Alternative: process architecture – groups
Consultancy Firm
Manage Firm
1.1 1.2 1.3 1.4 1.5
Management Plan the Govern the (Re)design Develop Methods Change the
processes Business Business Processes & Standards Business

Expanded
Relate to Clients
Core 2.1 2.2 2.3 2.12 process
Optimize Develop Raise Awareness Evaluate Client
processes Stakeholder
Relationships
Service Offerings of Services Solution Delivery group

Optimize Portfolio Deliver Solutions

2.4 2.5 2.6 2.7 2.8
Plan Delivery of 2.13 Deliver Provide
Gain Initiative Deliver Business
Service to Service Adjust Portfolio Infrastructure Professional
Commitment System Solutions
Corp. Solutions Services

Optimize Solutions
2.9
Operate 2.10 2.11
Infrastructure & Retire Solutions Support Users
Business Systems

Support Firm
3.1 3.2 3.4 3.6
3.3 3.5
Support Provide Expert Provide HR Acquire Goods & Obtain Financial Provide Working
Advice & Provide IT Tools
processes Capabilities Services Services Facilities
Knowledge
Typical artifacts for vertical scoping
Typical focus of Process enumeration
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
These are detailed, involve multiple activities and can be layered on different levels.
• Order shipment, invoicing
Tasks
These are atomic and performed by human resources, IT systems or equipment
• E.g. Approve invoice
Process architecture: hierarchical view

Level 1
Process
Landscape

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

Level 3+
Subprocesses, Tasks
(e.g. BPMN)
24

How many levels in the process architecture?

Example: hierarchical process architecture
Insurance company

Strategic
Level 1 Management

Corporate Market Investor

Development Development Relations

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
Example: hierarchical process architecture
Insurance company
Level 2

Strategic Corporate Marketing Investor Process

Management development development relations
group
Define Define offering Plan
Design & manage
business concept & and customer investor
corporate policies
long-term vision value proposition relations

Develop Build Process

Manage Define pricing
business investor subgroup
knowledge strategy
strategy relations

Manage Manage Manage

Define and manage
strategic change & investor
channel strategy
initiatives improvement relations

Manage Communicate
partners with stakeholders

Manage
investments &
divestments

Management processes
Example:
Develop Define offering
process architecture business
strategy
and customer
value proposition
Process
subgroup
Insurance company Develop overall
Define
offering and
mission statement
positioning

Main
Evaluate strategic Develop value
options proposition process
Level 3
Select
Validate value
long-term business
proposition
strategy

Coordinate
Develop
functional and
new branding
operational strategies

Align
functional and
operational strategies

Create
organisational
design

Develop
organisational
goals

Formulate
business unit
strategies

Management processes
Example: hierarchical process architecture
Insurance company

Level 4

Develop overall Main

mission statement process

Define
current business

Formulate Subprocess
mission

Communicate
mission

Management processes
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
Example: APQC Process Classification Framework (PCF)

• Industry-neutral enterprise model

• Open standard for benchmarking
• Four levels
• Categories
• Process group
• Process
• Activity
APQC PCF Overview

Category
APQC Classification Framework

Group

Activity

Process
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)

Example: prioritized process portfolio

Financial institution
Short-term action
High Feasibility
Loan Rating
Low
controlling Contract
preparation Medium
Loan
decision Loan market High
evaluation
Handling of
payments Loan
planning
Loan
application
Low
Poor Health Good
Possible Strategic fit?
Example: prioritized process PICK chart
PICK: Possible, Implement, Challenge, Kill
Financial institution
Short-term action
High Feasibility
Loan Rating
Low
Implement controlling Contract
(Start Here) preparation Challenge Medium
Loan (Long Term)
decision Loan market High
evaluation
Handling of
payments Loan
planning
Possible
(Quick wins) Loan Kill
application (Ignore)
Low
Poor Health Good
Possible Strategic fit?
37

Further Readings & Resources

• Fundamentals of Business Process Management

• Chapter 2 – Process Identification
38

Next Lecture

Process Modeling

Finance ERP Invoice Report Invoice

Department
Enter Check
no
Invoice Invoice Post Invoice
mismatches
Invoice Details Mismatches
Invoice
received posted

Invoice DB Invoice
Senior Finance Officer
mismatch Block
exists Invoice
Invoice
blocked