Lecture 03 - Strategy and Governance in BPM
MPHACMS Business Process Management Michal Krcäl
Department of Corporate Economics 30. 9. 2013
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013      1 /27
Table of contents
O Strategy
• What is strategy?
• How to align Strategy with BPM?
Q Summary
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPfv 30.9.2013 2/27
Content of other courses
• Michael Porter's lecture (first 30 minutes)
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 3/27
Content of other courses
• Michael Porter's lecture (first 30 minutes)
• Other interesting video about strategy
Content of other courses
• Michael Porter's lecture (first 30 minutes)
• Other interesting video about strategy
• Information strategy - more about how to align ICT with overall strategy but contains some useful remarks and ideas
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 3/27
Porter's Value Chain I
• 1985: Porter came with the idea based on the process view of organization, that we can identify two kinds of activities.
► Primary Activities = Inbound logistics, operations, outbound logistics, marketing and sales, service
► Support Activities = Procurement, HR, technological development, infrastructure
Source
Michal Krcal (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 4/27
Porter's Value Chain II
Administrative, Legat, accounting, financial managemenl
finance infrastructure
Human resources managemenl
Product and technology development
Personnel, lay recruitment, training, staff planning, etc.
Product and process design, production engineering, market testing. RSD
Supplier management, funding, subcontracting, specification
INBOUND	OPERATION	OUTBOUND	SALES &	SERVICING
LOGISTICS		LOGISTICS	MARKETING	
Examples:	Examples:	Examples:	Examples:	Examples:
Quality control;	Manufacturing;	Finistiing goods;	Customei	Warranty;
receiving;	packaging;	order handling:	management:	maintenance;
raw materials	production	dispatch:	order taking;	education
control:	control; quality	delivery:	promotion;	and training:/
supply schedules	control;	invoicing	sales analysis;	upgrades /
	maintenance		market	
			research	
) lesa 0051 = /Profi!margin ,
Source
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 5/27
Business Motivation Model
Referenced elements ill business model, defined externally
Business Motivation Model
Recommended
Figure 7 1 - BMM Overview
BMM specification
Michal Krrjäl (KPH ESF MU)
Lecture 03 - Strategy and Governance in BPIV
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BMM - Ends
• Ends = are about what an enterprise wants to be
► Vision = overall image of what the organization wants to be or become
► Desired results
* Goal = long, more qualitative
* Objective = step along the way towards a Goal (end date, criteria - if accomplished)
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 7/27
BPM - Means
• Means = are about what an enterprise has decided to do in order to become what it wants to be
► Mission = indicates the ongoing operational activity of the enterprise
► Course of Action = defines what has to be done, not how well it has to be done (see Objectives)
* Strategies = long term, broad in scope
* Tactics = implementation of (more than one) strategy
► Directive
* Business Policies = exist to govern; that is, control, guide, and shape the Strategies and Tactics. They define what can be done and what must not be done, and may indicate how, or set limits on how, it should be done.
* Business Rules = are not directly actionable. Actionable Directives are Business Rules, and they need to be defined as such, and managed for consistency and completeness. Business Rules are derived from Business Policies.
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 8/27
Influencers
Influencer * Internal ► External
•0 0.0
One way how to align strategy with BPM
• Burlton's Methodology:
O Understand the Enterprise
O Validate Strategic Direction
O Determine Stakeholder Relationships
O Consolidate Strategic Criteria O Architect and Align
O Architect Business Processes
O Identify Measures of Performance
O Align Process Governance
O Prioritize Processes
0 Align Process Capabilities
© Establish Enterprise Transformation Portfolio
4 □ ►  4 S
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV
Validate Strategic Direction
• The purpose is not in creating strategy but understand it!
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013      11 /27
Validate Strategic Direction
• The purpose is not in creating strategy but understand it!
• Already introduced BMM can be used
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013      11 /27
Validate Strategic Direction
• The purpose is not in creating strategy but understand it!
• Already introduced BMM can be used a PEST, SWOT BSC etc.
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013      11 /27
Determine Stakeholder Relationships
• You have to know who you are dealing with!
□
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV
Determine Stakeholder Relationships
You have to know who you are dealing with!
Start with customers (consumers) -> owners -> staff -> suppliers -> community -> competitors -> enterprise -> others
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 12/27
Consolidate Strategic Criteria
• You can't satisfy all stakeholders at once - there will be conflicts
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 13/27
Consolidate Strategic Criteria
• You can't satisfy all stakeholders at once - there will be conflicts
• The are needs for decision-making and this has to be solved in advance of future decisions
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Architect Business Processes
• What is important to those for whom we do it
4 □ ►
Michal Krcäl (KPH ESF MU) Lecti
Identify Measures of Performance
Each process has performance indicators that are associated with objectives and stakeholder needs
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Align Process Governance
• Responsibility
► process lead = responsible for completion of specific process instance for a specific customer from start to the end
► process manager = plans, directs, and monitors defined sets of processes, instances, and resources
► process steward = responsible for the designs of a related enterprise process; plans and sponsors their development and deployment
► process executive = governs a logical group of enterprise processes at the value stream or value chain (top level)
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Prioritize processes
• What is important and what is less important for success, improvement etc.
Align Process Capabilities
• Find what is needed to know
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 18/27
Establish Enterprise Transformation Portfolio
• Is what we are doing aligned with strategy?
4 □ ►  4 S
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV
Table of contents
0 Strategy
• What is strategy?
• How to align Strategy with BPM?
0 Governance
Q Summary
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 20/27
What is Governance?
• Direction, coordination, and control of individuals, groups, or organizations that are at least to some extent autonomous: that is, not directly subject to the same hierarchical authority (they are peers).
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What is Governance?
• Direction, coordination, and control of individuals, groups, or organizations that are at least to some extent autonomous: that is, not directly subject to the same hierarchical authority (they are peers).
a And what does it mean in practice?
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013      21 /27
What is Governance?
• Direction, coordination, and control of individuals, groups, or organizations that are at least to some extent autonomous: that is, not directly subject to the same hierarchical authority (they are peers).
a And what does it mean in practice?
► Type of organizational structure and related problems
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Organizational structures
• Solution of problems regarding decision-making, reporting, managing...
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Organizational structures
Solution of problems regarding decision-making, reporting, managing...
Criteria for dividing company into autonomous business units
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013
Organizational structures
• Solution of problems regarding decision-making, reporting, managing...
• Criteria for dividing company into autonomous business units:
► Functions
► Regions (Customers)
► Products
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 22/27
Organizational structures
• Solution of problems regarding decision-making, reporting, managing...
• Criteria for dividing company into autonomous business units:
► Functions
► Regions (Customers)
► Products
• What do they have in common (remember first lecture)?
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 22/27
Handling cross-cutting issues
• Hierarchy - take it to the heavy weight
• Lateral relations - small 'chaos' (business process governance)
• New organizational units - somebody will focus on the cross-cutting issues (process organizations)
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Lateral relations
• Informal
► What is their biggest problem?
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 24/27
Lateral relations
• Informal
► What is their biggest problem? Likelihood!
• Formal
► Coordinators
► Committee - no access to resources
► Coordination unit
► Process organizational unit
► Process organization
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 24/27
Lateral relations
• Informal
► What is their biggest problem? Likelihood!
• Formal
► Coordinators
► Committee - no access to resources
► Coordination unit
► Process organizational unit
► Process organization
► Which one should be chosen?
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 24/27
Lateral relations
• Informal
► What is their biggest problem? Likelihood!
• Formal
► Coordinators
► Committee - no access to resources
► Coordination unit
► Process organizational unit
► Process organization
► Which one should be chosen? Go through the table in the article.
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 24/27
Table of contents
0 Strategy
• What is strategy?
• How to align Strategy with BPM?
0 Governance 0 Summary
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 25/27
What should be added?
• Everything has its price!
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 26/27
What should be added?
• Everything has its price!
• You can't focus only on strategy or governance.
What should be added?
• Everything has its price!
• You can't focus only on strategy or governance.
• Operational effective (well governed) company that does not follow its strategy is doomed to failure.
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 26/27
What should be added?
• Everything has its price!
• You can't focus only on strategy or governance.
• Operational effective (well governed) company that does not follow its strategy is doomed to failure.
• If the company follows its strategy but is not able to govern the processes well... dtto
Michal Krčál (KPH ESF MU) Lecture 03 - Strategy and Governance in BPIV 30.9.2013 26/27
People and Culture (last 'boring' lecture and only two lectures left) Reading:
► Ulrike Baumoel: Cultural Change in Process Management (HoBPM vol. 2, p. 487)
► Kokkonen and Bandara: Expertise in Business Process Management (HoBPM vol. 2, p. 401)
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