Process Modeling Series VI: What do you want to model as part of Enterprise Business Process Modeling?
As discussed in the initial blog, enterprises are organized structurally as business units/departments/divisions and virtually as functions; all these organization are in turn to enable business processes for bringing out products/services to customers effectively. Michael Porter's classic Value Chain principle is a better way of looking into an enterprise structure - primary functions (inbound logistics, operations, outbound logistics, marketing & sales, services) which bring in products/services to customers and support functions (firm infrastructure, human resource management, technology development and procurement) which support the overall process of bringing value to customers. Michael Porter introduced Value Chain Analysis as a 'systematic way' of examining all the activities a firm performs and how they interact for analyzing the sources of competitive advantage. Value Chain disaggregates a firm into its strategically relevant activities in order to understand the behavior of costs and the existing potential sources of differentiation. With this in mind, we can safely utilize Value Chain analysis as a start for process architecture definition and by defining the primary and secondary functions of the enterprise first and then drill down hierarchically identifying major business processes. Once major processes are listed down, then using a process modeling methodology and process modeling tool one can get into the act of information gathering exercise and model the business processes along with all possible business resources that are part of the business processes.
The other viewpoint is to take a 'Value Stream' view, which cuts across the structural set of business units/divisions as well as virtual organization of business functions (CRM, Supply Chain, etc); an enterprise can be divided into typically 12 value streams like order to cash, concept to design, manufacturing to distribution, recruitment to retire etc. A classical information rich 'Enterprise - Value Stream or Capability Hierarchy' description can be found in the following link - http://www.enterprisebusinessarchitecture.com/model/Enterprise%20-%20Entity/Enterprise%20-%20Value%20Stream%20or%20Capability%20Hierarchy.htm (by Ralph Whittle & Conrad Myrick - authors of 'Enterprise Business Architecture - The formal link between strategy and results' book). This will give an idea of defining an enterprise and how to drill down to major business processes part of the value stream and from there defining the details of the activity/task flow using a process modeling methodology and tool.
So, for an enterprise wide process modeling there are two top-down approaches to identify and list business processes - one is a value chain based approach and other is value stream based approach. Both these views are quite efficient in nature to see the bigger picture of the enterprise in terms of business processes and of interest to the top management community. If I have to provide a representative view of a value chain based approach for process modeling for a generic enterprise, I would represent the bigger picture as something like this - this is just a representation and is not complete or real life enterprise representation:
The significant idea in this representation is that we have the Corporate Planning and Performance Management process that involves business planning, strategy formulation and business motivation development as a value stream that can be represented in detail through hierarchically listing down the various business processes part of this stream. The Primary Functions/Operations involves Production/Manufacturing & Services Design & Development and other major business processes as represented - these value streams can be broken down further granularity and business processes are to be modeled. For Secondary Functions - there can be two classifications - one business enablement and control and other related to human resources; subsequently these major processes/streams can be represented in more detail by hierarchically breaking down the process flows. One draw back in this representation is that no where we see 'customers' here - so it is highly necessary to include customer side view point - wherein the journey of how customer reaches out to the enterprise and how the enterprise reaches out to the customer is to be modeled and analyzed for better results. Modeling "Customer Journey and Handshakes" processes is crucial for improving business processes apart from having a wider & bigger representation of the enterprise itself through value chain or value stream representation.
I would like to quote one important insight from the book "Improving Performance - How to manage the white space on the organization chart" by Rummler and Brache. Rummler and Brache communicate that "Many managers don't understand their businesses. Given the recent "back to basics" and "stick to the knitting" trend, they may understand their products and services. They may even understand their customer and their competition. However, they often don't understand, at a sufficient level of detail, how their businesses get products developed, made, sold and distributed. We believe that the primary reason for this lack of understanding is that most managers (and non-managers) have a fundamentally flawed view of their organizations". With this insight, they go on to communicate that there are three standard ways of viewing an enterprise - 1) The Traditional (Vertical) View of an Organization 2) The Systems (Horizontal) View of an Organization and 3) The Organization as an Adaptive System; the authors list the details of these views in the book.
From the above insight, we can clearly have a take away - "viewing the organization" with a sufficient level of understanding is essential and I would suggest that this answers the question of the blog - what would you like to model as part of Enterprise Process Modeling - one would like to create "views" of the organization as process architecture blueprint and from there drill down to the lower levels of information detail of how a product/service is made, developed and reaches customers. It is foremost importance to educate managers and process modeling is a better language to do that; if managers are aware where do they stand in the giant enterprise machinery and how to do they contribute to the satisfaction of customer - it is the first step for process improvement. So, join the journey of Enterprise Process Modeling and travel the path from enterprise side and from customer side and fix the gaps and breaks so as to improve business and customer satisfaction!
In subsequent blogs we shall discuss the operational aspects of enterprise process modeling - the complexity associated with the effort and how to attack the operational hiccups.