Chapter 2: Process Identification

Contents
1. The Context of Process Identification
2. Definition of the Process Architecture
1. Process Categories
2. Relationships Between Processes
3. Reuse of Reference Models
4. Process Landscape Model
5. The Example of SAP’s Process Architecture
3. Process Selection
1. Selection Criteria
2. Process Performance Measures
3. Process Portfolio
4. Recap

SEITE 1
Process Identification in the BPM Lifecycle

Process
Management Processes

Define Vision Develop Strategy Implement Manage Risk

Strategy

identification Core Processes

Procure Procure Market Deliver

Manage
Customer
Materials Products Products Products
Service

Support Processes

Process architecture Manage Personnel

Manage
Information Manage Assets

Conformance and Process As-is process

performance discovery model
insights

Process Process
monitoring analysis

Executable Insights on
process weaknesses and
model their impact

Process Process
implementation To-be process redesign
model
Chapter Overview

 Process identification refers to systematically defining business processes of

organization and establishing criteria to select processes for improvement.
 Output is process architecture, which represents processes and interrelations.
 Process architecture serves as framework for defining priorities and the scope of
process modeling and redesign projects.
 First, we discuss the context of process identification.
 We present a method based on process architecture definition and process selection.
 Definition is concerned with listing initial set of processes and their architecture.
 Selection considers criteria for defining priorities of processes using a portfolio.

SLIDE 3
Chapter 2: Process Identification

Contents
1. The Context of Process Identification
2. Definition of the Process Architecture
1. Process Categories
2. Relationships Between Processes
3. Reuse of Reference Models
4. Process Landscape Model
5. The Example of SAP’s Process Architecture
3. Process Selection
1. Selection Criteria
2. Process Performance Measures
3. Process Portfolio
SEITE 4 4. Recap
Definition of Business Strategy

Business strategy is an organizational perspective on

setting and meeting business goals. (Mintzberg)

SLIDE 5
Balanced Scorecard (Kaplan & Norton)
Learning and
Financial Customer Internal
Growth
Perspective InPerspective
the financial Perspective
perspective, Perspective
“Long-term Thevalue”
share Operations
holder concept of a customer
Product/Service Management
goal broken down into
Attributes valuetheproposition
Processes four posits that
Improve Cost
Structure subgoals: Price Supply
the product andCulture
Distribution
service-
Productionrelated
Risk Mgmt.
The
attributes customer
of price, perspective
•improving the cost structure, is influenced
selectionby the
Quality
• increasing asset quality, availability,
utilization,
Increase Asset Availability andManagement
Customer functionality, internal
serviceperspective
and as
Utilization •expanding revenue defined by as processes of
Processes
Selection
opportunities partner relationships,Leadership
well
asvalue.
Selection brand
Retentionimage operations
are valued management,
by
internal•enhancing
perspective is Acquisition
Functionality customer Growth customer management,
Long-Term customers. For instance, a
Shareholder ultimately influenced innovation,
Value by human capital, company
Innovation
used to selling and booksregulatory
Relationship in Processes
shops and now compliance.
making them This means
information capital, that, for example,
and organizational
Service available
Opportunity Design on Alignment
Amazon could offering
Expand Revenue
capital in the
Opportunities learning
Partnership
Researchimprove
Launch itscheap
customer books as a product-
value
proposition, related
becauseproposition
it should
and growth be consistent
perspective.
Regulatory and Social
becomes easier
Processes
to orderwith cheap
Enhance Image production
(availability).
Teamwork
processes on
Customer Value
Brand
Environment Employment the operations
Safety/Health Community
management level.
SLIDE 6
Enterprise Architecture according to TOGAF
(The Open Group Architecture Framework)

 Organizational perspective:
actors, roles, and organizational structure.
 Product perspective:
products and services along with their relationships.
 Business process perspective:
process architecture.
 Data perspective:
informational entities and their relationships.
 Application perspective:
different pieces of software with their dependencies.
 Technical infrastructure:
computer hardware and communication networks.

SLIDE 7
Exercise 2.1: Construction Company BuildIT

Construction Sight of WU Vienna‘s New Campus opened in 2013.

Source: Wikimedia Commons
Exercise 2.1-2: Construction Company BuildIT
Consider the construction company BuildIT and its procure-to-pay process that is described on page 2.
1. To which category in the internal perspective of Figure 2.1 does this process belong?
2. How does it influence different aspects of the customer perspective?
3. How is it shaped by aspects of the learning and growth perspective?

 The procure-to-pay process belongs to the operations management

processes. The way it is organized has an impact on the customer
perspective.
 If it is not working well, this causes problems with availability and quality.
Customers might be less willing to pay a high price and to extend the
partnership. Altogether, these problems would also translate into a bad brand
image.
 The procure-to-pay process is influenced by how well the process owner takes
leadership of the management responsibility and how well the process is
aligned with strategic goals. Problems are less likely to occur if there is good
teamwork of the process participants and a general organization
culture of getting problems solved.
 Changes of Strategic Relevance: Mannesmann

Mannesmann was established in the last decade of the nineteenth century as a producer of
steel pipes. In the twentieth century, Mannesmann expanded into various industries,
among others into producing trucks. In 1990, Mannesmann set up a business division for
telecommunications after the liberalization of the German telecommunications market. Its
cellular network D2 Mannesmann soon became the major competitor of Deutsche Telekom.
In 2000, after a thrilling takeover battle, Mannesmann was acquired by the British company
Vodafone for e 190 billion. The story of Mannesmann illustrates that the strategic
importance of different processes may drastically change over a longer period of time.
Therefore, process identification can never be a one-time activity.
SLIDE 10
The Process Checklist
It may not be easy to decide on what to consider as a business process. A chunk of work
that is frequently repeated might not be a business process on its own. To prevent poor
scoping decisions, it is useful to consider the following process checklist:

 Is it a process at all?  Is the process important enough to manage?

 It must be possible to identify main action, which  There is customer who is willing to pay for
is applied to a category of cases. outcomes,
 Name is of form verb + noun.  Organization that carries out the process would be
 Can the process be controlled? willing to pay another party for taking over, or
 Legal, mandatory framework compels an
 Repetitive series of events and activities to
organization to execute it.
execute individually observable cases.
 Is the scope of the process not too big?
 Without a clear case notion, process management
is not feasible.  1:1 relation between initial event and activities.
 Also, without any sense of repetition, a group of  Is the scope of the process not too small?
business activities may better qualify as a project  Rule of thumb: there should be at least three
than as a business process.
different actors – excluding the customer – involved.
 If there are no handoffs between multiple actors or
systems, there is little that can be improved using
BPM methods.

SLIDE 11
Chapter 2: Process Identification

Contents
1. The Context of Process Identification
2. Definition of the Process Architecture
1. Process Categories
2. Relationships Between Processes
3. Reuse of Reference Models
4. Process Landscape Model
5. The Example of SAP’s Process Architecture
3. Process Selection
1. Selection Criteria
2. Process Performance Measures
3. Process Portfolio
4. Recap
SEITE 12
Process Categories

SLIDE 13
Exercise 2.3: University

WU Vienna‘s New Campus opened in 2013. Source: Wikimedia Commons

Exercise 2.3: University

 What are core, support, and management processes of a university?

 Relationships between Processes

SLIDE 16
 Relationships between Processes

SLIDE 17
 Relationships between Processes

SLIDE 18
Exercise 2.4: Relationships

 Can you think of other types of relations that are useful to distinguish between
processes?
 Hint. Think about the purpose of identifying the relations between business
processes

Organizations wish to accomplish certain goals. Processes are a means to achieve these
goals. A relation that, therefore, may be important is how processes are related to one
another in the sense that they contribute to the same or related goals. Other, context-
specific relations may be important for organizations as well. Consider how it may be
important for an organization to know on which technologies their processes are based; if
a particular technology becomes obsolete, such an organization knows which processes
are affected. A similar line of reasoning can be taken for geographic areas, regulations,
etc.
Process Architecture

Generic Process Architecture British Telecom

Model structure, methodology and

Meta modelling standards
Level 1 Level
Defines business activities

Operations Levels Process Levels Business Levels

Level A
Process
Distinguishes operational customer
oriented processes from management
Business Activities and strategic process

Landscape Shows groups of related business

Level B Logical
(incl. Value Chains)
functions and standard end-to-end
processes (e.g. Service Streams)
Process Groupings Levels
Level C Core processes that combine together to
Level 2 Core Processes
deliver Service Streams and other end-
to-end processes

Business Processes Level D Decomposition of core processes into

(e.g. BPMN)
detailed ‘success model’ business
Business Process Flows process flows

Detailed operational process flows

Level E Physical
Level 3+
with error conditions and product and
Operational Process Flows geographical variants (where
Levels required).

Sub-processes and Tasks Level F Further decomposition of detailed

(e.g. BPMN) Detailed Process Flows operational where required

© British Telecommunications (2005)

SLIDE 20
 APQC* Process Classification Framework

(*American
Productivity &
Quality Center)

SLIDE 21
APQC* Process Classification Framework

SLIDE 22
Process Landscape Model:
Example of Wienerlinien (Vienna Public Transport)

Management Processes

Manage Communicate Manage Manage Manage Risks and Manage

Enterprise in and out Processes Quality Opportunities Innovation

Core Processes
Manage
Contact Manage Foster
Customer
Customer Sales Relationship
Relationship

Operate Plan and Buy Maintain Check

Vehicles Vehicles Vehicles Vehicles

Transport Plan Customer Transport Evaluate

Customer Transport Customer Transport

Provide Plan Build Maintain Evaluate

Infrastructure Infrastructure Infrastructure Infrastructure Infrastructure

Support Processes

Manage Manage Manage Manage Manage Provide Winter

Personnel Financials Information Materials Disruptions Service

SLIDE 23
How to define Process Landscape Model
1. Clarify terminology:
 Define key terms.
 Use organizational glossary.
 Use reference models.
 Ensure that stakeholders have a consistent understanding of process landscape model.
2. Identify end-to-end processes:
 Those processes interface with customers and suppliers.
 Goods and services that organization provides are good starting point.
 Properties help to distinguish processes, including: Product type, Service type, Channel, Customer type.
3. For each end-to-end process, identify its sequential processes:
 Identify the internal, intermediate outcomes of end-to-end process.
 Perspectives help set boundaries: Product lifecycle, Customer relationship, Supply chain, Transaction
stages, Change of business objects, Separation.
4. For each business process, identify its major management and support processes:
 What is required to execute the previously identified processes.
 Typical support processes are management of personnel, financials, information, and materials.
 However, these can be core processes if they are integral part of business model.
 Management processes are usually generic.

SLIDE 24
How to define Process Landscape Model

5. Decompose and specialize business processes:

 Processes of process landscape should be further subdivided into abstract process on Level 2.
 Further subdivision until processes can be managed autonomously by single process owner.
 Considerations when this subdivision should stop: Manageability and Impact.
6. Compile process profile:
 Each of the identified processes should be described using process profile.
 Process profile supports definition of boundaries, vision performance indicators, resources, etc.
7. Check completeness and consistency:
 Reference models can be used to check whether all major processes are included.
 Reference models can help to check consistency of terminology.
 Check whether all processes can be associated with functional units of organization chart and vice versa.

SLIDE 25
Exercise 2.5: Construction Company BuildIT

Construction Sight of WU Vienna‘s New Campus opened in 2013.

Source: Wikimedia Commons
Exercise 2.5: Construction Company BuildIT

 Which APQC categories on Level 1 are relevant for a construction company like
BuildIT?

SLIDE 27
Example 2.2: Construction Company BuildIT

The following passage describes the company BuildIT from a more general perspective.
With this information, its process landscape model can be constructed.
The overall end-to-end process of BuildIT starts with a customer demand and ends with
the expiry of the warranty of construction works. The business development department is
responsible for identifying customer demands and public tenders. Together with the
presales engineering department, they select projects for which BuildIT prepares bids.
Bids that are approved lead to contract negotiations. Once contracts are signed, the
contract is transferred to execution. Contract execution starts with the project initiation,
which includes engineering, design, and planning. What follows then are the actual
construction works. The procure-to-pay process that we already know from Example 1.1
also belongs to these initiation procedures. Once the construction works are finished, the
construction sight is commissioned to the customer. What can still follow are corrective
works to meet warranty obligations.
 Name of Process: Procure-to-Pay
Vision: The objective of the procurement process is to secure that the
entire range of external products and services becomes available on time
and is at the required level of quality.
Process Owner: Chief Financial Officer (CFO)

Customer of process: Expectation of customer:

 Requesting unit  Timely, economic and complete
provision

Process profile of Outcome: Delivered products or provided services for the requested unit

BuildIT‘s Trigger: Need is identified

First activity: Submit Request
procure-to-pay ͙..
Last activity: Create Purchase Order
process Interfaces inbound: Plan-to-Procure
Interfaces outbound: Construct-to-Complete

Required resources:
 Human resources:
Site Engineer, Clerk, Works Engineer
 Information, documents, know-how:
procurement guidelines, supplier rating, framework contract
 Work environment, materials, infrastructure:
Procurement information system

Process Performance Measures:

 Cycle Time
 Operational Costs
 Error Rate

SLIDE 29
 Management Processes

Develop Vision Develop and Manage Business Market and Sell

and Strategy Manage Services Capabilities Services

Core Processes

Contract
Demand-to-Selection Selection-to-Bid Approval-to-Contract
Acquisition

Contract
Contract-to-Plan Plan-to-Completion Completion-to-Expiry
Execution

Support Processes

Manage Human Manage Financial Manage Risk and Manage External

Capital Manage IT Resources Manage Assets Compliance Relationships

SLIDE 30
Exercise 2.6: University

WU Vienna‘s New Campus opened in 2013. Source: Wikimedia Commons

Exercise 2.6: University

 Create a process landscape model for a university by applying the seven steps
described in this section. Use the APQC Process Classification Framework as an
aid.
Exercise 2.7: Manageabilty and Impact

 Explain how the trade-off between impact and manageability works out for broad
and narrow processes, respectively.
Example of SAP Process Map

Management Processes

ManageDefine, Operationalize, and Track Strategy Sales, Franchise, and Partner Management
Manage
Enterprise Innovation

Core Processes

Innovate Sell Deliver

Support Processes

Workplace and Corporate Finance Shareholder and

Procure to Pay
Attract, Develop, and Infrastructure and Operational Stakeholder
Retain Workforce Provision Compliance Management

SLIDE 34
Chapter 2: Process Identification

Contents
1. The Context of Process Identification
2. Definition of the Process Architecture
1. Process Categories
2. Relationships Between Processes
3. Reuse of Reference Models
4. Process Landscape Model
5. The Example of SAP’s Process Architecture
3. Process Selection
1. Selection Criteria
2. Process Performance Measures
3. Process Portfolio
4. Recap
SEITE 35
Selection Criteria

 Strategic Importance:
 Find out which processes have the greatest impact on the strategic goals.
 Consider profitability, uniqueness, or contribution to competitive advantages.
 Select those processes for process management that relate to strategy.
 Health:
 Determine which processes are in deepest trouble.
 These processes may profit the most from BPM initiatives.
 Feasibility:
 Determine how susceptible process is to BPM initiatives, incidentally or continuously.
 Culture and politics may be obstacles.
 BPM should focus on those processes where it is reasonable to achieve benefits.

SLIDE 36
Exercise 2.8: Selection Criteria

 Exercise 2.8. Consider again the procure-to-pay process of BuildIT (page 2) and
the admission process of a university (page 5) as described in Chapter 1.
 Discuss their strategic importance, their health, and the feasibility of a potential
improvement to these processes.
Further Questions:
 Given all the discussed criteria, does an assessment of the importance, health, and
feasibility always point us to the same processes to actively manage?
 Should all processes that are unhealthy, of strategic importance, and feasible to
manage be subjected to BPM?

SLIDE 37
Process Performance Measures

Performance Measures Performance Objectives

 Time  Formulate performance objectives of the
process at a high level, in the form of a
 Cost
desirable state that the process should
 Quality ideally reach, e.g., customers should be
 Flexibility served in less than 30 minutes.
 For each performance objective, identify the
relevant performance dimension(s) and
aggregation function(s), and from there,
define one or more performance measures
for the objective in question, e.g., the
percentage of customers served in less than
30 minutes. Let us call this measure ST(30).
 Define a more refined objective based on
this performance measure, such as
ST(30) >99%.

SLIDE 38
Example 2.3: Restaurant

 A restaurant has recently lost many customers  In this scenario, most relevant performance
due to poor customer service. The dimension is serving time.
management team has decided to address  One objective is to completely avoid waiting
this issue first of all by focusing on the delivery times above 30 min.
of meals.
 Percentage of customers served in less than
 The team gathered data by asking customers 30 min should be close to 100%.
about how quickly they liked to receive their
 Thus, the percentage of customers served in
meals and what they considered as an
acceptable wait. less than 30 minutes is relevant performance
measure.
 The data suggested that half of the customers
 Threshold mentioned in scenario is 15 min.
would prefer their meals to be served in 15
min or less. All customers agreed that a  Choice between two performance measures:
waiting time of 30 min or more is unacceptable average meal delivery time or percentage of
customers served in 15 min.

SLIDE 39
Exercise 2.9: Travel Agency
 Consider the following summary of issues reported in a travel agency.
 A travel agency has recently lost several medium-sized and large corporate
customers due to complaints about poor customer service. The management team
of the travel agency decided to appoint a team of analysts to address this problem.
The team gathered data by conducting interviews and surveys with current and
past corporate customers and also by gathering customer feedback data that the
travel agency has recorded over time.
 About 2% of customers complained about errors that had been made in their
bookings. In one occasion, a customer had requested a change to a flight booking.
The travel agent wrote an email to the customer suggesting that the change had
been made and attached a modified travel itinerary. However, it later turned out that
the modified booking had not been confirmed in the flight reservation system. As a
result, the customer was not allowed to board the flight and this led to a series of
severe inconveniences for the customer.

SLIDE 40
Exercise 2.9: Travel Agency
 Similar problems had occurred when booking a flight initially: the customer had
asked for certain dates, but the flight tickets had been issued for different dates.
Additionally, customers complained of the long times it took to get responses to
their requests for quotes and itineraries. In most cases, employees of the travel
agency replied to requests for quotes within 2-4 working hours, but in the case of
some complicated itinerary requests (about 10% of the requests), it took them up to
2 days.
 Finally, about 5% of customers also complained that the travel agents did not find
the best flight connections and prices for them. These customers essentially stated
that they had found better itineraries and prices on the Web by searching by
themselves.
1. Which business processes should the travel agency select for improvement?

2. For each of the business processes you identified above, indicate which
performance measure the travel agency should improve.

SLIDE 41
Balanced scorecards with cascading
process performance measures

SLIDE 42
Process Portfolio

High Selection Focus Feasibility

Rating
Loan Contract
Controlling Prepatation Low
Loan
Decision
Loan Market
Medium
Evaluation
Importance

Handling
High
Payments

Loan
Loan Planning
Application
Low

Poor Health Good

SLIDE 43
Exercise 2.10: University

WU Vienna‘s New Campus opened in 2013. Source: Wikimedia Commons

Exercise 2.10: University
A university defined four core processes in relation to teaching. An evaluation of strategic
importance, health, and feasibility using a survey among the department chairs has
resulted in the following assessment:
 Develop and Manage Study Programs: Importance 90%, Health 90%, Feasibility 40%.
 Market Study Programs: Importance 75%, Health 80%, Feasibility 60%.
 Schedule Courses: Importance 95%, Health 30%, Feasibility 50%.
 Deliver Courses: Importance 95%, Health 70%, Feasibility 30%.
 Manage Student Services: Importance 85%, Health 50%, Feasibility 40%.
 Manage Facilities: Importance 40%, Health 35%, Feasibility 70%.
Draw a process portfolio and suggest one process to be selected for process improvement.
Justify your choice.
Exercise 2.10: University

High Schedule Develop and Manage Feasibility

Courses Manage
Study Programs
Student
Services Low
Market
Study
Programs Medium
Importance

Deliver Courses
High

Manage
Facilities

Low

Poor Health Good

Chapter 2: Process Identification

Contents
1. The Context of Process Identification
2. Definition of the Process Architecture
1. Process Categories
2. Relationships Between Processes
3. Reuse of Reference Models
4. Process Landscape Model
5. The Example of SAP’s Process Architecture
3. Process Selection
1. Selection Criteria
2. Process Performance Measures
3. Process Portfolio
4. Recap
SEITE 47
Recap

 In this chapter, we discussed process identification.

 Process architecture definition aims at enumerating major processes of organization.
 Process architecture defines relationship between processes.
 Seven-step method for definition of process architecture including process landscape model.
 Process selection is concerned with prioritizing processes.
 Priorities upon importance of processes, health, and feasibility of improvements.
 Assessed by process owners or grounded on process performance measures and objectives.
 Most common performance dimensions are time, cost, quality, and flexibility.
 Process portfolios help in selection of processes for improvement.
 Selected processes become subject of remaining phases of BPM lifecycle.

SLIDE 48