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Volume 6, Number 4 February 26, 2008

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Moving from Level 2 to Level 3
Some companies and BPM practitioners use the SEI's Capability Maturity Model Integration
(CMMI) as a way to benchmark where their organization is on the way to process maturity.*
Those that are familiar with CMMI know the "stair step model" that defines an organization's
process maturity in terms of five levels or steps. We've pictured the "stair step model" in
Figure 1 and described the characteristics of each of the levels.

Figure 1. The CMMI Process Maturity Levels

There are, of course, other process maturity models,** and there are different ways of
interpreting CMMI audits. The "stair step model" is popular, however, because it is widely
perceived to describe the overall steps companies follow as they become more sophisticated
in managing business processes.

Research by SEI has long suggested that most organizations are at Level 2 and moving
toward Level 3. In the recent BPTrends Survey titled, The State of the BPM - 2008, currently
available at www.bptrends.com, we asked respondents to describe the maturity level of their
respective organizations. The data suggests that most organizations are at level 2 and that
the next largest group is at level 3. (Only 3-5 percent of the respondents described what we
might call Level 5 organizations.)

As Figure 1 suggests, Level 2 organizations are interested in processes, but are mostly
focused on defining and improving processes at the departmental level, preferring to
understand all their processes at the departmental level before moving to Level 3. At Level 3,
organizations begin to take a broader view of their business processes and begin to define
value chains that show how processes must work together, across departmental boundaries,
to efficiently deliver quality products and services to customers.

Once companies begin to focus on Level 3 concerns, a number of possibilities open up. The
narrower concerns that were sufficient for the improvement of the smaller, departmentally-
bound processes, give way to techniques designed to think of processes from an enterprise
perspective. For one thing, process modeling becomes more complex and we move from
workflow or SIPOC diagrams that show a set of activities, to workflow diagrams with
swimlanes that show how different processes in different departments, or organizations, work
together to produce results.

Similarly, we begin to reconsider how we gather and evaluate performance measures. When
we focus on processes confined to a single department, our performance measures tend to be
those assigned to that department by senior management. When we begin to look at
processes that cross departmental boundaries, we need a process performance measurement
system designed to monitor the success of an entire value chain. And, we need to allocate the
value chain measures to the sub-processes that contribute to the success of the value chain.
Once we have value chain and major process performance measures in place, we are
positioned to compare and contrast the contributions of the various sub-processes and focus
our future redesign efforts on the specific sub-processes that will yield the greatest return on
our investment.

In our BPTrends BPM methodology and training curriculum, we make a distinction between
"Process Redesign", which focuses on the problems of actually changing specific processes,
and "Enterprise Architecture", which focuses on the problems organizations face when they
attempt to move to Level 3. Level 3 challenges involve defining a process architecture for the
entire organization, defining systematic process performance measurement systems, defining
process management systems and establishing processes for those who work in BPM centers
of excellence. These skills are different from the skills required to do process redesign and
improvement within a department. We have identified some of these skills in Figure 2, below.

Readers familiar with the Supply Chain Council's SCOR, the TeleManagement Forum's eTOM
or the Value Chain Group's VRM frameworks know that these frameworks are specifically
designed to help companies working at Level 3 or higher, providing models and benchmarks
that make it possible to target sub-processes that yield the largest ROI. In a similar way,
Lean's focus on Value Stream Mapping and on identifying bottlenecks and inventory problems
is also a methodology designed to help organizations working on Level 3. Mastering the use of
frameworks is clearly a Level 3 skill.

Level 3 efforts, in turn, require that organizations begin to rethink how they organize their
managers. The availability of well-defined cross-departmental processes and good process
metrics suggests that specific managers should be assigned to manage the cross-
departmental processes. Similarly, Level 3 usually results in an organization establishing
some kind of BPM Center of Excellence. Enterprise models require ongoing maintenance.
Process performance metrics need to be monitored and someone needs to maintain an
overview of the results and make recommendations regarding the allocation of redesign funds
to maximize overall corporate performance.

Anyone who comes to process management who hasn't worked in a large organization can be
forgiven for thinking that a top-down approach is the most logical approach. First, we define
our value chains and value chain performance measures. Then, we define our large-scale,
cross departmental processes, and proceed on down through the sub-process, the sub-sub-
process and the activity levels. As we suggest, this is a logical approach, but it isn't the way
most real world organizations operate.

Historically, organizations were structured by departments and divisions. When most people
first encountered the idea of defining "processes" - in the Seventies or Eighties - they focused
on what they were responsible for - processes residing within departments. In a similar way,
when companies began to automate, IT developers began responding to departmental
requests for the automation of specific departmental activities. Initially, if an organization
doesn't understand its processes, a focus on local processes yields significant improvements.
Later, however, most local process improvement efforts run into problems that derive from a
lack of integration with processes operating in other departments. At this point, local process
practitioners begin to think about how much more they could do if they could tackle larger
processes that cross departmental boundaries.
 It is only after companies learn and become more sophisticated that they step back and
realize that they could achieve a lot more if they were to focus more broadly. Today, most
process practitioners realize that it makes sense to approach processes at a higher level. At
the same time, however, many have difficulty convincing their senior executives to support
this approach. Senior management is more likely thinking at Level 2, even if the more
sophisticated process analysts are ready to begin to work at Level 3.

The good news, according to our BPTrends Survey, is that most organizations are interested
in Level 3 issues - in enterprise process architectures, in enterprise process performance
measures and in process management. The current interest in Business Process Management,
and the broader drivers that lie behind it - change, globalization, new technology,
outsourcing, etc. - are all driving organizations to focus on becoming more sophisticated in
their management of processes. Most organizations, today, are between CMMI Level 2 and
Level 3. They are working on departmental process projects and they are learning about
Level 3 issues so they will be ready to take the next step.

Till next time,

Paul Harmon

* For a good overview of CMMI, see: CMMI, Second Edition, Guidelines for Process
Integration and Product Improvement by Mary Beth Chrissis, Mike Konrad and Sandy Shrum
(Addison-Wesley, 2007)

** The OMG, for example, has recently created a Business Process Maturity Model (BPMM)
that is more appropriate for some companies than CMMI and it will probably gain acceptance
as a reference for process benchmarking over the course of the next few years. In a similar
way, Queensland University of Technology (QUT) has published a number of studies on more
sophisticated models for auditing process maturity. Articles on both are available on the
BPTrends website.

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