How to define Key Performance Indicators (I)

One of the favorite phrases in business is "You Get What You Measure". Not wonder whay there are many business with not so good results:

- 75% of the companies with a Balanced Scorecard do not connect their Key Performance Indicators (KPIs) to their strategic factors.

- Organizations employ too much time and effort gathering data and information that are not key for the decision making process.

- 43% of managers think that capability of taking important decisions are blocked by too much information.

- Estimates suggest that more than 40 billion USD are employed annually in "data warehousing" applications. 60% of that figure is used in data cleansing.

(Based in a research of Accenture).

Let´s Start with the Basics...

In our experience, KPIs (and metrics in general) should have the following characteristics:

- The KPIs must be linked (directly or in cascade) to the success factors of the strategy of the company. So, it is important to understand the strategy and to know with detail how the KPI will measure the progress toward the strategic goals.

- Differentiate KPIs from metrics. KPIs evaluate the success of the company or a function. A metric measure what a function does. Understand well what are the few KPIs that will help us to identify success.

- Focus more on the KPIs that "predict" a possible future outcome (leading KPIs) and less in the KPIs that help to explain what happened (lagging KPIs).

- The responsibility of a role or position on a KPI is directly proportional to the ability to influence such KPI.

- The KPIs should "cascade" transparently along the business. The employees should know how their performance contribute to a higher KPI and to the business outcomes.

How to identify a well defined KPI?

A well defined KPI should comply with the following criteria:

- Enable decision making and control. If the KPI does not help you to take a decision, may be it is not a KPI.

- Relevant. If the KPI does not support the company strategy (directly or as part of a bigger KPI) is not relevant for the company.

- Easy to understand. If the KPIs requires a degree on math to understand it, it is going to be difficult to calculate and to communicate. Make it simple! As Einstein said: "Everything Should Be Made as Simple as Possible, But Not Simpler".

- Measurable. Sounds evident, but KPIs should be extracted directly from the information systems of the company, not as a result of calculations made by somebody in his/her spreadsheet.

- Specific. Do not use KPIs that may be interpreted in different ways. Try to define them in a clear way and try to measure one variable at a time. If you require to represent several KPIs to identify if you are going in the right direction, define a index.

- Think in a target. The KPI will have a target, so start thinking in the desirable objective and the normal ranges for the KPI. If you can not define it, think twice if it is the right KPI.

Process Leaders: is the solution?

Typically, when we implement a BPM capability, it will be supported by a Process Governance. I do think Process Governance is a key component to assure sustainability of the new capability, and the support for migrating to a process oriented organization.

As you can see in the following figure, we have to make clear the difference between the role of a Functional Leader and a Process Leader. It tends to be mixed but their objectives are different.

A Functional Leader role is devoted to the business outcomes. Depending on the function, the expected outcome may be sales volume, revenues, costs, profitability, employe retention, etc. The Key Performance Indicators (KPIs) of this role aim to these outcomes and typically, will be part of its bonus payment or variable part.

On the other hand, the Process Leader is devoted to the "how". It means, how the company can be more effective and efficient through implementing the best processes. In consequence, the KPIs for this role are oriented to: efficiency, time, cost, agility, etc. The Process Leaders are the responsible and custodian of the design, maintenance, improvement, harmonization and development of business process, and hence, of business capabilities.

The Functional Leadership or Process Leadership roles can be executed by the same person. However, his/her behaviour and orientation will be different based on the role he/she is playing at the moment. For example, a Manufacturing Director plays the Manufacturing Leader role as part of his job. If additionally, he is the Process Leader for "Planning to Deployment", he will have the responsibility of viewing the process end-to-end, implying that he will consider not only the Manufacturing part of the process, but also other players like Finance, Procurement, Human Resources, IT, etc. In the Process Leader role, he must have a vision of orchestration of all actors in the execution of this process.

The problem arises when this second role is not clear. There are four aspects to take in consideration when defining it:

- A clear criteria for defining a Process Leader. If criteria is not clear, the organization can think of a new way of distributing power, and can divert from the target that is to implement or improve a process.

 - The Process Leader itself. There are certain characteristics in this role that are needed. The PL must understand quite well the process, and the impacts of the definition over the performance of the process. If the expected leader has a vision too narrow and functional, it will not work. He or she must have characteristics like: knowledgeable about the operation of the process, good degree of influence over other areas, understand how to lead the team to an agreement, among others.

- The degree of power of the Process Leader.  You can go from a "Assessor type" Process Leader to a "Director type" Process Leader. The power continuum goes from "moral influence" over the team to a "business direction" degree, as an example. I will recommend a actionable degree of power, like "owner of the budget for process improvements".

- The definition of KPIs for the role, and the consequent rewards and compensation scheme tied to such KPIs and their targets. For example, as a Process Leader you may have as part of your objetive to "reduce the cost to serve in x % at the end of the year". With the same goal, all process participants shall share (in a different degree) the same KPI and targets. If not, the Process Leader will not achieve such targets.

These findings are based on my expertise, but feel free to share your opinions as part of the discussion.

Business Process Harmonization: Science and Art (II).

Once you have defined your approach, if you decided "Path B" (see my previous blog in http://bauzanotebook.blogspot.com/2013/05/business-process-harmonization-science.html), I recommend to use the following elements to achieve BPH:

Let´s discuss each element:

- Internal Best Practices: leverage what the companies or regions do right, and incorporate these practices in your inventory to be considered in the harmonized process. To calibrate what is good and what is not so good, use your own expertise and capability maturity models. This is an important element, because we don´t want to discard what has make them different in the market. Also, is a key component in the change management process of accepting a new process design.

- Industry Reference Model: these are those sets of process, best practices, KPIs, etc. used in the industry as a reference to build your own model. For example, is widely known that eTOM (enhanced Telecommunications Operations Map) is a business framework for the Telco industry.  There are several (public and non-public) reference models. We at Accenture have several propietary, very detailed, industry reference models for each industry. It will help you to show the best practices in the industry and a starting point for your new processes, KPIs, etc.

- Vistis, Interviews, Questionaires: devot time in an intelligent way to understand really deep the operations of the two or more companies or regions you want to harmonize. Do not underestimate the time required to do visits, interviews, surveys, questionaries with the operation. Collect evidence and examples of the way they operate. They will be key during the harmonization workshops.

- Harmonization Workshops: this element is key, and define the success of the process. You have to plan the workshop carefully, having in mind the convergence of the process. You will bring to the workshop a "proposal", at least partially validated. Do not start in a white page. Your actions and workshop dynamics should be well thought to lead the team to an harmonized process. Do your homework in socializing findings (beforehand!!!) with key stakeholders. Do not surprise key stakeholders in the workshop, it will play against your objective of harmonization.

There are other elements, but if you plan and implement these elements, you will have more chance of success in harmonizing processes.

Innovation is not working out the way many companies expected.

Accenture recently sought to identify the state of innovation by surveying executives’ at large organizations. The survey revealed that innovation is not working out the way many companies expected. Despite increasing commitment, funding and organizational accountability, many companies are disappointed by the returns they are deriving from their investments.

The survey also found that those organizations that have a holistic, formal system in place for innovation, consistently report better outcomes and higher levels of satisfaction from their innovation investment. To help companies better understand the formal system approach to innovation the PoV describes five key aspects of a formal innovation system.

The report, authored by Adi Alon and Wouter Koetzier, is based on a survey of 519 executives from more than 12 industry sectors across the U.S., U.K. and France. The objective of the research was to explore the current state of innovation and the findings reveal some intriguing results. Let´s share some of them:

- The vast majority of executives, 93 percent, think innovation will shape the company long-term success. However, less than one out of five (18 percent) believe their own innovation strategy is delivering a competitive advantage.

- Companies feel that they have sluggish innovation processes.

- Those organizations that have a holistic, formal system in place for innovation, consistently report better outcomes and higher levels of satisfaction from their innovation investment.

There are 5 key aspects to implement this formal innovation system in your company:

- Run innovation as an end-to-end value chain emphasizing speed and flexibility.
- Move from product to business innovation.
- Apply risk management practices specially tailored to innovation.
- Leverage the digital power of Big Data and social media to integrate the Voice of the Customer.
- Pursue frugal innovation to capture middle class consumers in emerging economies and also to disrupt markets in developed economies.


More information:

https://primary.acn-edit.accenture.com/us-en/Pages/insight-low-risk-innovation-costly.aspx

Business Process Harmonization: Science and Art (I).

I have gone through the process of business process harmonization in big companies and I´ve learned some lessons I would like to share. We understand Business Process Harmonization as the “elimination of differences and inconsistencies in their activities, inputs, outputs or owners among processes that share the same goal in order to make them uniform or mutually compatible”(1).

Typically, the companies initiate a Business Process Harmonization (BPH) project as a result of:

•    A Post-Merger and Acquisition process
•    Implementation of a enterprise wide system (like an ERP)
•    Difficulties in the interoperability of Regions
•    A expansion strategy
•    Definition of a common model (or Company-Way)

The benefits of a BPH are:

•    Improvements in efficiency
•    Decreasing operating costs
•    Increasing internal control
•    Reduce IT spends
•    Improve interoperability across regions
•    Speed in the implementation on new operations
•    Achieve synergies

There are essentially two ways to define and implement a BPH:

I have used both path, but I consider Path B as my preferred. Why? Look at the following table:

If you want to seize the opportunity of process harmonization to redefine and implement best-practices, Path B should be the choice.

Sources:
(1)    “A literature review in process harmonization: a conceptual framework” http://cms.ieis.tue.nl/Beta/Files/WorkingPapers/wp_379.pdf

5 steps to consider before starting your Process Mapping effort.

A process mapping effort, especially if it will be enterprise-wide, implies an important investment of resources and time. Hence, it is important to consider at least five important things before starting to map:
 
1.     Define the Strategy: be clear what the business objective(s) of the process mapping effort is. This objective (or objectives) must be shared with the project team. Depending on the strategy, the type of mapping shall be defined. For example, you may want to do a mapping effort for:


·        Compliance: to have the process maps to fulfill requirements of auditing, ISO-9000 initiatives, normative, company documentation, enterprise architecture, etc.
·        System implementation: the process maps will be the business blueprint for an ERP or another type of information system.
·        Process improvement: the maps will be used to detect areas of opportunities to be more efficient or productive.
·        Reengineering: the process maps will be used as the tool to reengineer the operation.
·        Process orchestration: the main purpose is to serve as the basis for the process orchestration using a methodology like BPM/SOA.
·        Training: main objective is to train employees in the way the company do the work.
·        Process harmonization/homologation: the company requires having standard process across geographies, business units, etc. Typically, we need this approach in a post-merger integration or in the preparation of the company to a global strategy.
·        Cost reduction: when you want to understand where the cost opportunities are in the different process of the company.

It is clear that depending on the purpose, the information reflected in the process map (so, in the same way, the methodology used for mapping) will be different. The other aspect that must be well defined is the time horizon of your mapping:

·        Is it an “As-is” process mapping?
·        Is it a “To-be” process mapping? If so, what is the time horizon (i.e. next year, aligned to a milestone, etc?)

This time horizon must be applied to the whole process mapping. If not, you are going to have a mixture of future with present processes.

If the strategy is not clear, you will have an organization “frustrated” because it didn´t get the expected benefits of the mapping effort.

2.     Create a process inventory: have a preliminary list of all the process that will be part of the mapping effort. This inventory will change, but you should have a starting point. This inventory and the complexity of each process will help you to dimension the size of the teams. The approach should be “top-down” with adjustments coming “bottom-up”. This is one of the reasons that you may start with a business process framework for the company and then go down to the list of the further levels.

3.     Establish the plan: have a detailed plan of the process mapping effort, indicating clearly time and resources required in each activity. You should use the estimation based on the process inventory to identify quantity and skills of resources needed.

4.     Select and prepare a process repository: based on the strategy, you should define the type of repository and tools needed. If for example, you want to do simulations, you have to be sure that the tool will support this functionality. The same applies to other functionalities like process orchestration.

5.     Establish the process mapping conventions: define clear rules for the process mapping. You should not start any process mapping effort without the rules of mapping. You can use a standard as a basis (i.e. BPMN), but always aligned to the strategy you already defined. The conventions must help you to achieve the project objective. The rules must be easy to understand and to apply, and be as exhaustive as required. You have to define, in this convention:

·        The standard that will be the base of the convention
·        The naming conventions
·        The symbols conventions
·        The style conventions
·        Diagrams of what is allowed and what is not, and examples of good mapping
·        Attributes to be filled in the diagrams
·        Change control procedures and documentation
·        Users and security standards

If you fill these steps, you will have a better chance to start with the right approach the mapping effort.

The right sequence: Process, Organization and then, Technology.

It is normal to consider that one way of making changes to a better level of operation in the organization is through the implementation of a new technology (i.e. a new ERP or information system). One of the paradigms behind that is that the "ERP brings the best practice". Although this statement is partially true, this road has driven to more problems than solutions. With the high investment in technology the companies make, it is recommendable to take a second look to the sequence.

The main subject is that we are humans (and should be treated like that...), and there are some steps to be fullfilled to achieve the change required. In this article, we consider the definition on each element as follows (I´m assuming that the Strategy is clear for all cases):

- Process: changes in activities, way of doing the work, techniques, methodologies, KPIs.

- Organization: changes in roles, responsibilities, objectives, targets, job title, job description, organization charts.

- Technology: changes in systems, new technologies, equipments.

Let´s take a look to the combinations and see the possible outcomes (I do not pretend to be exhaustive...). Ideally, you should do all changes at the same time, but depending on the degree of the change, the organization may or may not absorb it completely. Also, the "Solution designer" may have a clear picture about the vision of all elements working together and not to be completely sequential. It means that if you are designing process supported by an ERP, you have to consider the ERP restrictions from the very beginning.

Map the Business Model, then the Business Process Model (II).

Someone can think "it is very difficult to understand the Business Model, let´s do the work and let´s start mapping processes...". The reality is that if you gather the  required audience (leaders and decision takers of the organization), you can have a good understanding of the Business Model, before starting to map a Business Process Model.

I recommend to take a look to the book of Alexander Oster and Yves Pigneur, "Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers", or review presentations that explain quite well the concept and the methodology, like http://www.slideshare.net/Alex.Osterwalder/what-is-a-business-model


Let´s try, for example, to map the business model for a non-alcoholic beverage company. For this company, we start with the Customer Segments, and then move to the left in the canvas. It is desirable to create a first draft model, and complete the model with the leadership of the company during a workshop.

Then, we can analize the model in terms of required capabilities to deliver the value to the clients, and start to list them. Such capabilities will be part of the Business Process Model of the company. In this case, we find that some of the capabilities are:

- Client and consumer sales capabilities
- Supply chain management capabilities (procurement, manufacturing, distribution, warehousing, transportation)
- Product lifecycle management capabilities
- Marketing and Trade Marketing capabilities
- Support capabilities (HR, finance, TI)

As a first draft and as simplified example, we can create a Business Process Model that will contain the capabilities mapped in the following way:

You should refine this model (and its representation) with leadership. Macro-process, processes, subprocesses and so forth will be linked to these capabilities and will form the process inventory for the company.

A proposed scale to achieve process adoption.

Adoption is one of the principal challenges for the processes defined. In this article we will understand "adoption" as the execution of the process as it was designed, i.e. following the steps, executed by the designed roles, using the inputs, generating the outputs and complying with the process KPIs.

We may have the best business blue print, very well structured and consistent, but if the business does not execute the process as it was mapped, it is useless.

We tend to think that if we make the effort (most of the time, a daunting effort) to map the business process, we will have a big advance in the execution of the process in the real life. My experience is not like that...

From my point of view, the adoption scale will depend of the methodology and tools that we use to achieve this goal. This scale can be depicted as follows:

The scale is cumulative, in other words, you should have the previous methodology and tools in the scale to achieve the required level of adoption. What the figure suggests is that we stop at Process Mapping, we are not going to achieve much. We should train the actors that will execute the process, or even better, design the new process with them.

When you have the responsibility of process design, think in adoption. It will make the difference...

Map the Business Model, then the Business Process Model (I).

Mapping the Business Process Model of an organization can be a difficult task, but it is even more difficult if you don´t understand clearly what is its business model. You may think, what is the difference?

A Business Model, in words of Alexander Ostelwarder, "describes the rational of how an organization creates, delivers and captures value". So, it is very useful to understand how the organization makes money, delivering value to its clients, and what are the principal cost elements.

A Business Process Model is a representation of the current (or future) processes of the organization, i.e. the way of how the organization works. If you see both definitions, the Business Process Model must support the Business Model. If not, your processes will not help to deliver the expected value to its clients.

To map the Business Model, I have employed with success the method of "Business Model Generation" of Alexander Osterwalder and Yves Pigneur. You should start using the "Business Model Canvas" (shown below) starting from the Customer Segment back to the Key Partners, filling up all relevant aspects of the business in this model.

When you have clear the Business Model, I recommend to identify the capabilities required to make reality the Value Proposition. For example, if one of your value proposals to your clients is "Innovative products", you should have a clear Product Innovation and Development capability in your Business Process Model. All your Value Propositions have to have (or be part of) a Capability in your Business Process Model.

If you use a Business Process Model with a structure of the type "From the Client to Support", use the Business Model to map:

- Client Related Capabilities with the information collected in the Customer Segment, Customer Relationships, Sales Channel and Revenue Streams segments.

- Operational Capabilities with the information collected in Value Proposition and Key Activities.

- Support Capabilities with the information from Key Resources, Key Partners and Cost Structure.

More references:
http://www.businessmodelgeneration.com/book

Planning a Speech? Try a Roller Coster model.

Almost everyone has experienced the thrill of a ride in a roller coaster. In the line, is the excitement of what is coming… when you are in, is the expectation of how it will be... then starting to move, ups and downs, turns, fast and slow, and at the end, you have a memorable experience. The speeches, specially the short ones, should be like that.

Let´s use this graph to explain the idea. The x-axis will be time and y-axis will be the intensity of the speech. Intensity in this context can be understood as peak of a story, an awesome picture or message, level of energy, etc.  If your speech is planned to be of high intensity all the time, it is going to be like a flat roller coaster a high altitude. If you are with low intensity all the time, it will be like the kids´ merry-go-round (boring if you are looking for excitement).


 

Before starting making the slides, you should plan the intensity over time of your speech. For example, you may plan a rhythm like this:

I do recommend to start always with high energy (like “The Hulk”...), and ending also with high energy. The reason is that you catch your audience in the first seconds of your speech and at the end; you want to put a “call to action” to your audience.


You should try planning beforehand the rhythm that you will give to your presentation. Identify clearly what will be:

-          Your exciting opening (a story, an anecdote, a non-evident fact or figures that support your message)

-          The preparation for the next peak message (“valleys” of your roller coaster). Use a slower speed here.

-          Peak points of your speech (demonstrations, surprise, etc.)

-          A high energy ending, with a call to action.

Governance Models: How Enterprise Architecture, Balanced Scorecard and Program Management Office interact (II)

Where does this governance fit?

Regarding the key question of “How the Governance entity will fit into the organization?”, it will depend greatly on the power distribution within the organization. The newly defined Governance entity will require connecting and interacting with other governance entities. The governance entity will not survive isolated in the organization; it has to allow the “flow” of the power for managing the subject of governance. This net of relationships can be quite complex, but we have to map the possible interactions to know who decides what, and what type of information is exchanged amongst the Governance models. As a design principle, interactions shall be kept as simple as possible, and we have to leverage (at the most) current governance entities, in order to avoid an explosion of meetings at the C- level.

 

Defining the Degree of Power

The next step is to define the degree of power the Governance entity will have over the subject of governance. Most of the subjects (the asset or process being ruled by the governance entities), are shared amongst different governance entities, so it is required to define clearly who makes the decision. Having this in mind, we can use the RACI matrix (an acronym for Responsible, Accountable, Consulted and Informed), typically used at a lower level of governance definition, to assign the degree of power to each entity.

As a reminder, the RACI matrix is a technique used to identify the roles and responsibilities of individuals or groups involved in a particular activity. It defines the degree of power of the entity over the subjects.

Term	Degree of Power	Definition
Responsible	+++	Individual(s) who perform a take - the doer, responsible for action/implementation. The degree of responsibility is defined by the accountable person.  R’s can be shared
Accountable	++++	The individual who is ultimately accountable includes yes/no and power of veto. Only one “A” can be assigned to a task
Consulted	++	The individual to be consulted prior to a final decision or action is taken. Two way communication.
Informed	+	The individual(s) who needs to be informed after a decision or action is taken.

So, based on the degree of power, it looks like the matrix should be called ARCI.

For the EA, BSC and PMO governance, there are several subjects that are shared. As an example, we can define the degree of power as illustrated below:

 

Conclusions

Most of the projects we do imply the creation of a Governance Model, in order to help in the implementation and evolution of a newly created capability in the organization. The design of the Governance Model is a mix of science and art, and some projects tend to create fuzzy governance that will fade with time. To solve this issue, 7 key strategic questions should be answered at the beginning. Such definitions will help to define design principles that will be reflected in the final Governance Model.

Typically, the subjects of governance are shared, and defining clearly where the borders are will help to create a robust model. The RACI matrix is a simple and clear way to define such borders and the degree of power of the Governance entities, in particular for Enterprise Architecture, Balanced Scorecard y Program Management Office governance models. With that definition clear, governance processes are easier to design and implement.

 

Governance Models: How Enterprise Architecture, Balanced Scorecard and Program Management Office interact (I)

Power, the 5th Element

 

In the traditional diamond shaped model used by consultants (where Strategy, Process, Technology and People play a part) there is a 5th element, Power. In most of the projects I have participated (ranging from Post-Merger Integration to Supply Chain consolidation), the dynamic of the power for a recent created capability is always an issue. The problem is that if we don´t define power relationships properly, the sustainability of the “diamond” will be in jeopardy.

 

Defining Governance Models is a mix of science and art, where the specific power dynamics within the organization plays a critical part. In the other hand, all Governance Models are not created equal, although they have several aspects in common.

In this article, we are going to explore the power dynamics (or Politics) between the Governance models for three specific capabilities in the organization: Enterprise Architecture, Balanced Scorecard and Program Management Office. It is clear that there are others governance entities that will interact with these three players (i.e. IT Governance Model, CAPEX governance, etc.), however, we will focus in the mentioned above.

 How to define Governance Models, a framework

 

Governance Models are defined in all projects, but sometimes they look fuzzy and without a specific purpose. In order to solve this problem, it is required before drawing boxes and lines, to define clearly 7 elements that will help to create the guiding design principles for the Governance Model. Such elements are:

 

Sometimes, we rush to define a Governance Model without having crisp and clear the elements mentioned above. We are going to elaborate about some of these 7 key questions for EA (Enterprise Architecture), BSC (Balanced Scorecard) and PMO (Program Management Office).

 

The Seven Key Question for EA, BSC and PMO governance

The first step is to respond to the mentioned key questions of the framework. In this article will focus on questions 1,2, 5 y 6. It is important for the organization to know why the enterprise will concede a quote of power to the newly created entity. Also, for communication purposes it is necessary to properly respond to these questions to the organization.

Key questions	EA	BSC	PMO
Why a governance model is needed?	In order to design, implement, manage and measure the EA.	In order to achieve vision/mission/strategic objectives in a structure way, aligning the BSC perspectives, initiatives and KPIs.	In order to achieve program and project objectives, in time and fulfilling project client quality expectations.
What is governed?	Business architecture framework. Meta-architecture. Enterprise Architecture model. Process orchestration (BPM/SOA). Dimensions of the EA. Process KPIs. Standards, methodologies and techniques for EA.	Strategy. Strategy maps. Strategy KPIs. Initiatives. Standards, methodologies and techniques for BSC.	Program and projects execution and tracking. Program and project KPIs. Standards, methodologies and techniques for PMO.
Who will govern what?	EA Governance processes and rules.	BSC Governance processes and rules.	PMO Governance processes and rules.

(TO BE CONTINUED...)

Are you boring your client? May be this is the reason...

Do you feel that your client (or your boss) is bored when you are talking to him/her? Or you feel he or she is waiting for something else? The problem can be the level of conversation you are using.

Sometimes, we tend to impose our planned or intended level of conversation, but the client not necesarilly is on the same page. As a required skill, you have to be flexible enough to adjust this level, and if you can manage the conversation, you can direct your client to the required level to support your message.

Let´s take a look at the conversation levels:

What happens when you and your client are not aligned in their level of conversation? Well, there are different degrees of dissapointment that you have to detect and mitigate during the conversation. The following matrix shows how to detect the degree of misalignment and what can you do to solve it.

What can you do?

- If you are at the red signs: stop politely the conversation, reset the expectations and adjust accordingly to the required level.

- If you are at the yellow signs: adjust the level of your conversation, and explore if you are getting to green (or red!).

- If you are at the green signs: keep the conversation at this level and try to move it to the level you want. Explore if your client wants to get there to keep aligned.

A proposed structure for Business Process Models (II)

I have identified that the organization of the capabilities within the Business Process Model can be at least one of the three following types:

1) From the Strategy to the Operation
2) From the Client to Support capabilities
3) Value Chain Type

Every type conveys a different message. The first is more oriented to make clear how to land the strategy into the day to day operation. The second is Client centered and all capabilities are aiming to fulfill client expectations. The third is oriented and how the company transforms its inputs to outputs, adding value in this process.

If we take, as an example, the Enhanced Telecom Operations Map (eTOM) model, used as a business process model of reference in the telecommunications industry, you will find that it is of the type From the Client to Support:

Source: http://en.wikipedia.org/wiki/Enhanced_Telecom_Operations_Map

An example of hospital operations process model is Value Chain Type:

Source: http://141.13.6.53:8080/forschung/publikationen/html/mie96/mie96.htm

Note: If you have examples or other taxonomies, please reply with a comment and it will help to enrich this catalog.

A proposed structure for Business Process Models (I)

I have found that Business Process Models have a structure. As the starting "rendering" or blueprint of the business, it is desirable that the Model shows certain order. It will help the company or institution to communicate better its process architecture (or even, its enterprise architecture).
Based in multiple business models I have worked with, the first step is to define the elements of the model, as shown below:

 I will explain each section, starting from outside.
- DOMAIN. In this case, refer to the capabilities layer for a company or institution. For example, "Food Business" is a domain. A company can have several domains. For example, we may have a food company that also have a retail arm, in this case, it will have two domains.
- CAPABILITY. Represents a combination of processes, technology and organization that makes the company or institution able to add value to a client. "Create Demand" and "Manufacture products" may be names for capabilities.
- SUB-CAPABILITY. A group of macroprocesses within a Capability that is useful to differentiate because represents a competitive advantage or area of focus in the Model. "New Product Design" can be a sub-capability underneath "Create Demand" capability.
- MACROPROCESS. The superior level for process grouping. Is the entry point for the process hierarchy. "Supply Chain Planning" can be a macroprocess that cover the processes of: Demand Planning, S&OP and Supply Planning.