Process Optimization- Workshop 3 (Process Architecture)
The Appleton Greene Corporate Training Program (CTP) for Process Optimization is provided by Dr. Ogunbiyi Certified Learning Provider (CLP). Program Specifications: Monthly cost USD$2,500.00; Monthly Workshops 6 hours; Monthly Support 4 hours; Program Duration 12 months; Program orders subject to ongoing availability.
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Learning Provider Profile
Dr. Ogunbiyi is a Certified Six Sigma Master Black Belt and entrepreneur with extensive experience in harnessing the interplay between technology and processing to improve operational outcomes across two decades in the financial and public service sectors. He is the founder of a boutique consultancy specialising in business process management and co-founder of a Software-as-a-Service (SaaS) company that enables public service providers to improve interaction continuously and measurably with the public.
He has a proven track record of delivering a variety of successful strategic, global, cross-functional programmes and to date, he has led process optimization initiatives that have yielded tens of millions of Euros in savings.
In addition, Dr. Ogunbiyi is an academic researcher who has made original contributions to the field of process mining and monitoring. His research interests include exploring how contextual (i.e., case, process, social and external) factors contribute to the predictive power of process mining models, causal process mining and object-centric process mining among others.
He obtained a BSc in Computing Science from the University of Greenwich, an MBA from Imperial College Business School and his PhD in Computing Science from the University of Westminster, where he currently serves as a part-time visiting lecturer.
MOST Analysis
Mission Statement
To strategically enhance organizational efficiency and achieve long-term goals by integrating Enterprise Business Process Analysis with innovative Enterprise Process Models, continuously optimizing workflows, and managing risks through best practices.
To improve performance by modeling, analyzing, transforming enterprise business processes, and leveraging systems analysis to inform decisions that lead to significant and enduring improvements in complex systems.
Objectives
01. To develop and sustain a competitive advantage through a detailed assessment of internal capabilities and external market dynamics.
02. To provide a comprehensive understanding of how processes interact within an organization, using process taxonomy and hierarchical process modeling to improve decision-making and operational workflows.
03. To develop a comprehensive EPM using reference models, ensuring completeness, standardization, and alignment with strategic business goals.
04. To enhance stability and financial performance by managing significant operational risks, including internal process, people, systems, external, and legal risks, through effective risk management strategies.
05. To prioritize and select key processes for optimization through a structured evaluation using the process catalog, enhancing operational efficiency and compliance.
06. To ensure seamless integration of systems and processes across the organization, allowing for dynamic management and adaptability to changing business conditions.
07. To identify and remedy inefficiencies within an organization’s multitude of processes using EBPA tools, aiming to ensure these processes are well-orchestrated within the organizational operational model and resilient to transitions in digital business models.
08. Define and explore the components, relationships, and functions of dynamic systems in organizational contexts to facilitate a better understanding and effective management.
09. To understand and articulate how the state of various organizational systems influences overall system behavior and decision-making through a systems thinking approach.
10. Identify and implement strategic changes at leverage points within organizational and business systems to maximize effectiveness and minimize unintended consequences.
Strategies
01. Allocate resources effectively across the organization’s value chain, focusing on innovation and quality to maintain market leadership.
02. To map out and analyze the sequential, decomposed, and specialized relationships among processes to optimize efficiency, manage risks, and foster collaborative environments through the establishment of clear, actionable Enterprise Process Models.
03. Adopt reference models as foundational frameworks to expedite the development of a standardized and efficient EPM, incorporating industry best practices and ensuring scalability and adaptability.
04. Implement a comprehensive risk management framework that includes robust internal controls, regular training, advanced technology, and contingency planning to mitigate diverse operational risks.
05. Implement a dynamic process catalog derived from the Enterprise Process Model (EPM), enriched with critical information like risks and controls, to serve as a foundation for continuous process improvement and standardization.
06. Utilize advanced software and technologies to integrate various automated and manual activities, maintain centralized control, and dynamically adapt processes to optimize business operations
07. Adopt a holistic use of EBPA tools across various business units to streamline processes through strategy execution, business process analysis, enterprise architecture, and process automation, ensuring each tool is aligned with specific stakeholder needs and organizational objectives.
08. Utilize a systems lens approach to problem-solving, which includes integrating interconnected subsystems and anticipating the consequences of actions to develop sustainable solutions.
09. Explore key concepts such as system states, structural influences, and bounded rationality in decision-making to equip managers with the knowledge to effectively respond to changes and plan strategically.
10. Prioritize understanding and manipulating system parameters, buffers, redesigns, and delays through comprehensive analysis and targeted interventions to improve overall system behavior.
Tasks
01. Identify and cultivate core competencies through continuous analysis of business processes and customer feedback to ensure adaptability and resilience in a changing environment.
02. Examine the roles and connections between organizational processes at various levels of detail, from broad process groups down to specific tasks, to enable more effective management and optimization of these processes.
03. Implement a seven-step process for creating a robust EPM, leveraging reference models for guidance and utilizing governance mechanisms to maintain its accuracy and relevance.
04. Develop and maintain a centralized system for risk identification and management, facilitated by the Enterprise Process Model (EPM), to ensure effective oversight and responsiveness to operational risk across all organizational processes.
05. Create and maintain an updated process catalog that not only documents all L3 and L4 processes but also supports the prioritization and optimization of these processes based on their impact, compliance requirements, and potential for efficiency improvements.
06. Implement a process orchestration engine that manages and aligns all process endpoints and systems, ensuring they operate harmoniously and efficiently to meet business objectives.
07. Evaluate and implement EBPA tools by considering their capabilities to support organizational needs in strategy alignment, operational efficiency, and process automation, ensuring the selection enhances customer centricity and integrates well with the organizational ecosystem.
08. Create systems diagrams that accurately represent the dynamic interactions within business processes, focusing on elements such as stocks, flows, and feedback loops to support improved decision-making.
09. Analyze various organizational systems, including inventory, HR, customer service, and production, to demonstrate how understanding their current states can guide strategic decisions and troubleshooting efforts.
10. Map system components and their interactions, analyze leverage effects of proposed changes, and monitor outcomes to adjust strategies as needed for sustained system improvement.
Introduction
This workshop takes an enterprise view of processes and examines how they are crucial for successfully deploying organizational strategy. It also seeks to equip participants with the skills and knowledge to adopt a systems lens to analyze enterprise processes to optimize them. The first course examines organizational strategy – the comprehensive plan designed to achieve long-term goals and align efforts across an organization by defining its vision, mission, values, and strategic objectives. This strategy is crucial for leveraging competitive advantages and adapting to changes in the external environment through innovation. The course explores how these strategies relate to an organization’s core competencies and the role of business and process architecture in managing these competencies. It also explores core competencies, identified through value chain analysis and customer feedback, which are essential for sustaining competitive advantage and are supported by business architecture that aligns these competencies with organizational goals. Additionally, process architecture is discussed as a crucial element for optimizing business processes and enhancing organizational functionality and adaptability.
The next course elaborates on the interplay and importance of Enterprise Process Models (EPMs) in an organization, emphasizing the interdependence of processes, each affecting the other and impacting overall performance. Processes are often sequential, where the output of one is the input for another and can be decomposed into simpler sub-processes for better manageability or specialized based on specific needs, such as different geographic or regulatory environments. Understanding these relationships is vital for optimizing efficiency, managing risks, enhancing collaboration across departments, and aligning with organizational goals. The course also introduces a structured process taxonomy that categorizes processes into a hierarchy from broad process groups to specific tasks, facilitating a clear and systematic approach to improving business operations and achieving strategic objectives. This comprehensive framework not only aids in efficient process management but also prepares organizations to adapt to changes and optimize resources effectively.
Subsequently, reference models are introduced as a valuable tool for creating and reviewing Enterprise Process Models (EPMs). This course includes a discussion of a seven-step process for EPM creation and its governance to ensure ongoing accuracy and relevance. Reference models provide a standardized framework embodying best practices and industry commonalities, which help organizations build their unique process architectures without reinventing the wheel. These models enhance process development speed, ensure completeness, and foster standardization across organizational processes. Examples like ITIL for IT service management, SCOR for supply chain operations, and the Process Classification Framework (PCF) illustrate how different sectors use reference models to align business processes with industry standards, optimize efficiency, and enable continuous improvement. The course also covers EPM governance, emphasizing the importance of periodic recertification, effective reporting, continuous monitoring, and robust controls to maintain process integrity and align with strategic goals.
The next course examines Operational Risk Management (ORM), which involves identifying, analyzing, evaluating, and controlling risks stemming from internal failures or external events to minimize financial losses and optimize risk-return profiles. It covers a range of risk categories, including internal process errors, employee actions, system failures, external disruptions, and legal issues, each illustrated with real-world examples such as UBS Warburg’s trading mistake, Barings Bank’s collapse due to rogue trading, Equifax’s data breach, and the legal repercussions faced by Volkswagen in the emissions scandal. Effective ORM necessitates a robust framework for risk management, incorporating thorough internal controls, staff training, strong cybersecurity, legal compliance, and a proactive contingency planning to mitigate these risks. This approach helps stabilize financial outcomes and supports organizational resilience against operational disruptions.
The following course outlines the strategic necessity for organizations to create and maintain a process catalog—essentially a detailed inventory of all processes, aiding standardization, transparency, and compliance. Derived from the Enterprise Process Model (EPM), the catalog helps prioritize critical processes for optimization by showcasing potential risks, redundancies, and inefficiencies, which can be mitigated to enhance overall performance and reduce costs. It supports regulatory compliance by clearly outlining process controls and audit trails. The dynamic nature of the process catalog necessitates regular updates to ensure it reflects current operational needs and complies with evolving external and internal conditions. Integrating the balanced scorecard within this framework aids in aligning process management with broader strategic goals, assessing processes across various dimensions—financial, customer, internal, and learning—to prioritize and manage them effectively within a process portfolio. This portfolio visualizes processes for optimization, balancing operational needs and strategic significance to maintain organizational agility and responsiveness to change.
Subequently, the focus shifts to process orchestration. Process Orchestration – akin to an orchestra conductor ensuring harmony among musicians – systematically coordinates various elements within a business process—from systems to devices—into an efficient workflow to achieve business goals. This coordination is achieved through integration and dynamic management of automated and non-automated tasks, employing technologies enabling diverse processes to work cohesively. The importance of such orchestration is highlighted in complex environments like banking, where different technology platforms must interact seamlessly to avoid integration issues that can disrupt workflow and business objectives. Unlike simple automation, which focuses on repetitive tasks, orchestration manages entire workflows, providing flexibility, enhancing decision-making, and ensuring business agility and compliance. Organizations benefit from streamlined operations, improved customer experiences, and competitive advantage, especially when processes are complex, demand high scalability and quick adaptation to changes.
The next course explores Enterprise Business Process Analysis (EBPA), a sophisticated approach to assessing and enhancing business operations across multiple units and departments to eliminate inefficiencies such as redundancies and duplications. EBPA is characterized by its comprehensive integration of strategy, analysis, architecture, and automation to improve business performance and align processes with organizational goals and broader business ecosystems. EBPA tools empower leaders to better manage technology and architecture by enhancing business outcomes and fostering resilience, particularly as businesses transition to digital models. The course takes a deep dive into a selection of EBPA tools, highlighting their role in orchestrating well-aligned business operations and fostering resilience through smoother digital transitions.
The final three courses in the workshop focus on the dynamic systems within organizations and their business processes. A dynamic system, a collection of interacting elements evolving over time to fulfill a specific purpose, ranges from natural ecosystems to complex social structures. These systems comprise elements, connectedness, and purpose, where the real purpose often emerges from observed behaviors rather than stated objectives. The systems lens, emphasized throughout this section of the workshop, is crucial for understanding these interactions holistically, avoiding piecemeal solutions that could lead to unintended consequences. By adopting this lens, we can better understand complex issues, predict outcomes, and create sustainable solutions. This approach not only aids in managing and adapting to changes but also enhances innovation by integrating cross-functional efforts, as seen in successful companies like 3M and Apple. Understanding dynamic systems through detailed systems diagrams and recognizing their characteristics like self-organization, resilience, and adaptability is essential for effective decision-making and problem-solving in various organizational contexts.
In the penultimate course, we investigate the behavior of dynamic systems, emphasizing the importance of understanding system states, structural influences, and bounded rationality in decision-making. A dynamic system’s state, essentially a snapshot of various operational metrics at a given time, aids in predicting its future behavior and adjusting strategies accordingly, as seen in examples across inventory, HR, customer service, and production contexts. System behavior, influenced by its structure and the interactions between its components, can manifest as changes in output and system states over time. Factors such as system boundaries and structure, including feedback loops and decision-making constraints, fundamentally shape the system’s response to internal and external stimuli. This holistic analysis helps manage and optimize systems effectively, aiming to enhance responsiveness and stability, thereby ensuring sustainable growth and competitive advantage in dynamic environments.
The final course discusses system leverage points, which are specific areas within a system where minor, targeted actions can yield significant and lasting changes. These leverage points, which include system parameters, buffers, delays, redesigns, and various feedback loops, are crucial for effectively managing complex systems like those in organizational and business environments. They offer the potential for profound impacts on the system’s overall behavior but are often counterintuitive and risky, as unintended consequences can arise without a deep understanding of the system’s dynamics. This course explores the nature and application of these leverage points, providing examples from business processes to illustrate their potential and pitfalls. Additionally, the course discusses the importance of correctly identifying and using these points wisely to avoid exacerbating system issues, emphasizing that while simple changes at these points can be impactful, they require careful consideration and a strategic approach to benefit the system and prevent potential disruptions truly.
Executive Summary
Chapter 1: Organizational Strategy
Organizational strategy encompasses a comprehensive plan designed to achieve an organization’s long-term goals and steer its operations toward these objectives. It outlines the organization’s vision, mission, core values, and strategic goals while assessing internal capabilities and external market conditions through a SWOT analysis. The strategy focuses on leveraging the organization’s competitive advantages and navigating the business environment effectively. This course will explore the relationship between an organization’s strategy and core competencies, exploring how business and process architectures facilitate identifying and managing these competencies.
Organizational strategy aims to set a clear direction for the company, dictating resource allocation to pursue this direction effectively. Key elements of strategic decisions include their long-term impact, complexity due to external uncertainties, inherent high risks, and the multifaceted considerations required. These decisions, typically made by top management across various organizational levels, focus on innovation, adaptation, and significant resource allocation to strategic projects. Companies like Apple and Starbucks exemplify successful strategic deployment, focusing on innovation and customer experience, respectively to maintain market dominance.
Core competencies are unique, integral abilities that an organization develops, which are crucial for delivering value to customers and difficult for competitors to replicate. These competencies are characterized by their value to customers, competitive uniqueness, applicability across markets, and the integrated coordination of various organizational skills and technologies. Identifying core competencies involves introspective organizational analysis, including value chain analysis, benchmarking, customer feedback, cross-functional collaboration, and strategic experimentation. These competencies form the foundation of sustained competitive advantage and are essential for strategic organizational alignment and adaptation.
The value chain concept breaks down an organization into strategic activities to understand cost drivers and differentiation sources, facilitating competitive advantage. Value networks expand this framework to include interconnections with stakeholders like suppliers and customers, which is essential for co-creating value and competitive advantage in the digital age. Business architecture outlines organizational structures and processes to ensure operational efficiency and strategic goal alignment, enhancing the ability to nurture and leverage core competencies effectively, while process architecture helps optimize these strategies by visualizing and managing process flows and interdependencies, crucial for organizational agility and growth.
Chapter 2: Enterprise Process Modeling
This course builds on previous discussions about process architecture, aiming to explore the interconnectedness of organizational processes and set the stage for understanding Enterprise Process Models (EPMs). It introduces the concept of process taxonomy and the hierarchical structure of EPM levels, which are pivotal in orchestrating comprehensive organizational planning and fostering growth through adaptive and integrated process management.
The relationship between organizational processes is intricate, akin to threads woven into a tapestry that collectively form a complete picture. This interconnection implies that any alteration or disruption in one process can have significant ripple effects throughout other processes, affecting overall operational efficiency and customer satisfaction. Understanding the types of process relationships—sequential, decomposed, and specialized processes—is crucial to effectively managing these interdependencies. These relationships facilitate holistic decision-making, optimize resource allocation, and enhance organizational problem-solving.
The Enterprise Process Model (EPM) is a robust framework that illustrates various processes’ interrelations and individual contributions towards achieving business goals. The model is structured in multiple levels, each offering a different degree of detail and focus, from broad process groups to specific tasks. This layered approach not only aids in the systematic management and improvement of processes but also helps visualize the operational landscape, thereby supporting strategic alignment and operational clarity.
In conclusion, a well-integrated EPM facilitates effective process management by categorizing and detailing processes across different levels of specificity. This organization helps identify critical interdependencies, optimize workflows, and improve risk management by clearly understanding how individual processes interlink and contribute to broader business objectives. The subsequent sections will delve deeper into the application of these models, providing a practical guide to harnessing their potential to enhance organizational efficiency and resilience.
Chapter 3: Reference Models
Reference models encapsulate industry-specific best practices and provide a framework to guide organizational process structuring, are invaluable tools for creating and reviewing Enterprise Process Models (EPMs). By utilizing reference models, organizations can harness industry commonalities and best practices to expedite the development of their EPMs, ensuring they are both comprehensive and efficient.
Reference models like the Information Technology Infrastructure Library (ITIL) and the Supply Chain Operations Reference Model (SCOR) provide tested frameworks that align enterprise processes with industry standards, facilitating effective process management. These models prevent the reinvention of the process development wheel, promote standardization, and enhance efficiency across various organizational domains. By adopting such models, companies can also facilitate benchmarking and continuous improvement, adapting and scaling their processes in response to evolving business needs.
The process landscape model, or EPM Level 1, illustrates how organizational processes interconnect and contribute to overall business strategy. The course outlines a seven-step process for creating a process landscape model, starting with defining key terms and mapping out end-to-end processes to developing detailed process profiles. This systematic approach helps organizations visualize their operational dynamics, supporting strategic planning and process improvement initiatives. It ensures the EPM is comprehensive, accurate, and aligned with business objectives, fostering a robust framework for future enhancements.
Lastly, governance of the EPM is crucial to ensure that it remains relevant and aligned with the organization’s strategic goals. Effective EPM governance involves periodic recertification, structured reporting, proactive monitoring, and effective controls. These governance activities help manage risks and compliance and are supported by clear roles and responsibilities within the organization, such as those assigned to the Enterprise Process Management Centre of Excellence and the Enterprise Process Owner. This structured governance framework ensures that the EPM continuously supports operational effectiveness, compliance, and strategic alignment.
Chapter 4: Operational Risk Management
Operational Risk Management (ORM) aims to identify, analyze, evaluate, and manage the risk of losses that arise from internal failures—such as inadequate processes or systems—or external events. These risks are inherent in all types of organizations, and ORM’s goal is to minimize potential losses while optimizing the organization’s risk-return profile. This course explores the nature of operational risk events and the role of the Enterprise Process Model (EPM) in managing these risks effectively.
Various categories of operational risks exist, including internal process risks, people risks, systems risks, external risks, and legal risks, each accompanied by definitions and real-world examples. For instance, internal process risks might involve errors in core business processes, while people risks involve employee actions that could lead to significant financial loss. Systems risks cover IT system failures, exemplified by the Equifax data breach in 2017, emphasizing the need for stringent cybersecurity measures.
The course details the steps involved in the risk management process, including risk identification, assessment, measurement, mitigation, monitoring, and reporting. Each step is crucial and interconnected, forming a dynamic framework for proactively managing risks. For example, risk identification uses various methods to pinpoint potential threats, while risk assessment and measurement evaluate and quantify these risks to prioritize management efforts. Effective risk mitigation and continuous monitoring are essential to adapt to changing conditions and emerging risks, ensuring that the management strategies remain relevant and practical.
Lastly, the role of the Enterprise Process Model (EPM) in operational risk management is highlighted. EPM aids in clear visualization and understanding of organizational processes, which helps pinpoint and assess risks more accurately. It also provides risk metadata, which is critical for associating specific risks with process activities, enabling better prioritization and management of risks. Examples from banking, healthcare, and manufacturing sectors illustrate how EPM and process mining can be leveraged to enhance operational resilience and compliance, making a compelling case for their adoption in managing operational risks across various industries.
Chapter 5: Process Prioritization
Organizations face the challenge of selecting and prioritizing processes for optimization due to limited resources. This course introduces the concept of a process catalog, derived from the Enterprise Process Model (EPM), which serves as a comprehensive listing of all organizational processes. This catalog, essential for maintaining an operational overview and uniform understanding among employees, categorizes processes and may include additional information like risks and controls to aid in regulatory reporting.
The process catalog benefits organizations by facilitating process standardization and optimization, enhancing transparency and accountability, and supporting compliance and risk management. These functions allow organizations to identify redundancies and inefficiencies, ensuring more streamlined operations and reduced costs. Additionally, the catalog helps manage risks and meet stringent regulatory requirements by providing clear audit trails and process controls. Various tools and software can assist in developing these catalogs, which should be dynamic and regularly updated to stay relevant.
The balanced scorecard, is another critical tool discussed in the course. It measures organizational performance through a balanced perspective of financial, customer, internal processes, and learning and growth metrics. This comprehensive framework helps managers align business activities with strategic goals, enhancing overall performance and supporting continuous improvement through its holistic approach. The scorecard’s integration of both financial and non-financial factors aids in strategic decision-making and performance management.
Finally, the course outlines a method for prioritizing processes using a process portfolio. This strategic tool visualizes processes based on criteria derived from the balanced scorecard, including strategic importance, process health, and optimization feasibility. This visualization aids in effective decision-making regarding resource allocation, risk management, and identifying process improvement opportunities. The process portfolio is not static but an evolving tool that needs regular updates to reflect changes in the market, technology, and organizational goals, ensuring the organization remains agile and responsive to both external and internal shifts.
Chapter 6: Process Orchestration
Process Orchestration involves a systematic approach to coordinating various elements of a process or multiple processes into a unified and efficient workflow. Much like a conductor leading an orchestra to ensure harmony among different instruments, process orchestration integrates process performers, systems, and devices to seamlessly work together towards achieving business objectives. This is facilitated through software and technologies that enable different processes and systems to operate cohesively, aiming to streamline workflow and improve business outcomes.
Key aspects of process orchestration include the integration of systems and processes to function as a whole, centralized control for better monitoring and management, and the ability to dynamically manage processes in response to changing business conditions. These features address the need for coordinated action among diverse technological tools and legacy systems, which, like in an orchestra, may fail to harmonize without proper direction. This coordination is critical in maintaining efficiency and preventing issues like broken automation and lack of process transparency, which can hinder business agility and operational tracking.
The distinction between automation and orchestration is significant, despite their overlap. Automation focuses on performing specific tasks without human intervention to increase efficiency and reduce errors through repetitive tasks. Conversely, orchestration encompasses a broader scope, integrating automated and manual processes to optimize overall business workflow. Orchestration enhances flexibility, allowing for process adjustments in real-time, and aligns activities to broader business goals, unlike automation’s task-specific focus.
The benefits of implementing process orchestration are manifold, including improved efficiency, productivity, customer experience, and enhanced decision-making through better data integration. Orchestration also supports scalability and flexibility in business operations, facilitates risk management and compliance, and provides a competitive edge by enabling businesses to adapt quickly to market changes. These advantages underscore why organizations, especially those dealing with complex processes and diverse technological environments, might consider adopting process orchestration to ensure cohesive and efficient operation across various business functions.
Chapter 7: Enterprise Business Process Analysis Tools
Enterprise Business Process Analysis (EBPA) seeks to address inefficiencies within complex organizational processes that span multiple business units and departments. It achieves this by analyzing, transforming, and enhancing business performance through comprehensively integrating strategic, analytical, architectural, and automation perspectives. This cross-functional approach aims not only to optimize existing processes but also to strengthen the overall resilience of organizations, thereby facilitating smoother transitions to digital business models. As businesses increasingly require well-coordinated operations within their broader ecosystems, EBPA tools emerge as essential instruments in orchestrating these complex processes and ensuring they align with the organizational strategic goals.
The adoption of EBPA tools is primarily driven by the need to align intricate business operations with organizational strategies and build operational resilience in a digitally transforming world. These tools cater to various stakeholders through four main use cases: strategy to execution, business process analysis, enterprise architecture, and process automation. Each use case targets specific roles within the organization, demanding distinct features and functionalities from the EBPA tools. These functionalities range from translating strategic objectives into executable plans, analyzing and optimizing business processes, designing supportive IT environments, and automating routine processes for increased efficiency and reliability.
Selecting the right EBPA tool involves carefully considering the organization’s needs, the specific capabilities of the tools, and the alignment with stakeholder objectives. Organizations must identify the key personnel who will utilize these tools and determine the essential features necessary for their operational goals. Choosing an appropriate tool is critical and involves evaluating the tools based on criteria that reflect the organization’s priorities, including flexibility, adaptability, and the ability to provide a comprehensive view of business processes. Tools like Celonis, Microsoft Visio, and QPR Enterprise Architect offer diverse strengths and functionalities tailored to support extensive process modeling, automation, and optimization initiatives.
Deep-diving into specific tools, Celonis is renowned for its process mining capabilities, Microsoft Visio is favored for its robust diagramming features, and QPR Software excels in performance management and enterprise architecture. Each tool has unique advantages, such as intuitive design, integration capabilities, and comprehensive process insights, but they also present challenges such as complexity in use, integration difficulties, and cost considerations. Organizations must weigh these factors carefully to select tools that address their immediate needs and are scalable and adaptable to future changes and challenges. These EBPA tools are crucial for enhancing operational efficiencies and achieving strategic business outcomes, making them indispensable in the modern business landscape.
Chapter 8: Systems Lens
The remainder of the workshop focuses on dynamic systems and highlights the importance of using a system lens. It explores the key elements, connections, and purposes that characterize dynamic systems within an organizational context, like HR, supply chain, and customer service systems. This course elaborates on the complex nature of these systems, which can evolve based on interactions among their components. It discusses the essential components of a dynamic system: elements, connectedness, and purpose, emphasizing that a system’s real impact may differ from its stated purpose due to observable behaviors.
The significance of adopting a system lens in problem-solving is underscored, contrasting it with the process lens to provide a holistic understanding of systemic interactions and prevent the piecemeal approach that can lead to unintended consequences. This perspective is crucial for appreciating the interdependencies and complexities within systems, helping to anticipate outcomes and devise sustainable solutions. It reveals the benefits of systemic thinking, such as enhanced adaptability, resilience, and the ability to leverage synergies among interconnected issues, which are crucial for long-term sustainability and avoiding negative repercussions from narrowly focused solutions.
Dynamic systems are described as entities with the inherent ability to self-organize, self-heal, and adapt, which allows them to maintain functionality despite changes and stresses. Fundamental properties such as hierarchy and resilience facilitate these capabilities, enabling systems to manage complexity and recover from disruptions. The discussion also covers emergent properties that arise from component interactions within a system, influencing organizational culture and innovation and highlighting the importance of a system’s capacity to evolve and adapt as external conditions change.
Finally, the structure of dynamic systems is examined through various system attributes such as stocks, flows, and feedback loops, which are vital for understanding how systems operate and evolve. Systems diagrams, including causal loop and stock-and-flow diagrams, are presented as tools for visualizing these complexities, helping stakeholders understand the intricate relationships and processes within a system. The course provides a step-by-step guide on creating these diagrams, emphasizing their role in enhancing communication, understanding, and decision-making within organizational and business environments.
Chapter 9: System Behavior
System states are snapshots that capture the essential variables of a system at any moment, providing crucial insights for effective management and future projections. This course discusses how the structure of these systems influences their behavior, incorporating the concept of bounded rationality within decision-making processes to understand the limits and potential of organizational strategies.
The course presents detailed examples of states in organizational systems such as inventory management, human resources, customer service, and production lines. Each example highlights how knowledge of the system’s current state can guide strategic decisions—whether it’s replenishing stock based on current levels, adjusting HR policies according to employee satisfaction, or optimizing production processes based on machine efficiency and material inventories. This understanding is fundamental for reacting to present conditions, planning future actions, and troubleshooting, thus enhancing overall system efficiency.
Various factors including system structure, boundaries, and individual and collective rationality within those boundaries influence behavior in dynamic systems. The course emphasizes that a system’s behavior emerges from its parts and the interaction among these parts. Factors such as the system’s structural design, feedback loops, and the clarity of its boundaries critically shape how the system responds to internal and external pressures. By extending the concept of bounded rationality, the course illustrates how decisions, even when rational from an individual’s perspective, might lead to suboptimal outcomes if they fail to consider the system’s full context.
Finally, the discussion on feedback loops and delays sheds light on their profound impact on system behavior, illustrating this with simple business scenarios like inventory management and marketing. Feedback loops allow for self-regulation and adaptation, whereas delays can disrupt these processes, potentially leading to inefficiencies or system failures. By strategically managing these elements, organizations can enhance their operational stability and adaptability, ensuring sustained performance and competitiveness in a dynamic market environment. This course aims to equip learners to understand and apply these concepts in practical organizational settings for better management and predictive outcomes.
Chapter 10: System Leverage
System leverage points are crucial places within a system where small, targeted actions can lead to significant and lasting changes. These points offer critical insights into how complex systems can be successfully changed. However, leverage points are often not intuitive, making them powerful yet risky if not handled correctly. Misjudgments in their use can result in unintended consequences, emphasizing the need for a deep understanding of the system’s structure and dynamics.
The course identifies several leverage points within business and organizational systems, detailing their potential impacts from least to most significant. Although easily adjustable, system parameters often don’t lead to lasting change. Buffers provide stability by absorbing fluctuations but can tie up resources and decrease flexibility. System redesigns offer substantial transformation possibilities but are costly and slow to implement. Delays affect the timing of responses within the system and can significantly alter outcomes. Lastly, altering feedback loops—balancing and reinforcing—can extensively modify a system’s dynamics, regulating growth or maintaining stability.
A structured approach is recommended in solving problems within dynamic systems, starting with clear problem identification and thorough system mapping to understand all relevant interactions. Analyzing system behavior helps identify patterns and trends, clarifying potential leverage points for intervention. This phase is followed by testing different interventions through simulations or pilot projects to see their effects before full implementation. Continuous monitoring post-implementation ensures the interventions remain effective as the system evolves.
Effective system management requires understanding the system’s rhythms and promoting transparency in models and information flow. Managers should incorporate system concepts into organizational vocabulary to foster a systems-thinking culture. It’s also crucial to track non-quantifiable but essential elements like employee morale. Embracing system complexity, considering long-term impacts, and staying responsive to feedback loops are vital for sustainable management. Leaders must remain humble and ready to learn from the ever-changing dynamics of systems, ensuring strategies are adaptable and robust against future challenges.
Curriculum
Process Optimization– Workshop 3 – Process Architecture
- Organizational Strategy
- Enterprise Process Modeling
- Reference Models
- Operational Risk Management
- Process Prioritization
- Process Orchestration
- Enterprise Business Process Analysis Tools
- Systems Lens
- System Behavior
- System Leverage
Distance Learning
Introduction
Welcome to Appleton Greene and thank you for enrolling on the Process Optimization corporate training program. You will be learning through our unique facilitation via distance-learning method, which will enable you to practically implement everything that you learn academically. The methods and materials used in your program have been designed and developed to ensure that you derive the maximum benefits and enjoyment possible. We hope that you find the program challenging and fun to do. However, if you have never been a distance-learner before, you may be experiencing some trepidation at the task before you. So we will get you started by giving you some basic information and guidance on how you can make the best use of the modules, how you should manage the materials and what you should be doing as you work through them. This guide is designed to point you in the right direction and help you to become an effective distance-learner. Take a few hours or so to study this guide and your guide to tutorial support for students, while making notes, before you start to study in earnest.
Study environment
You will need to locate a quiet and private place to study, preferably a room where you can easily be isolated from external disturbances or distractions. Make sure the room is well-lit and incorporates a relaxed, pleasant feel. If you can spoil yourself within your study environment, you will have much more of a chance to ensure that you are always in the right frame of mind when you do devote time to study. For example, a nice fire, the ability to play soft soothing background music, soft but effective lighting, perhaps a nice view if possible and a good size desk with a comfortable chair. Make sure that your family know when you are studying and understand your study rules. Your study environment is very important. The ideal situation, if at all possible, is to have a separate study, which can be devoted to you. If this is not possible then you will need to pay a lot more attention to developing and managing your study schedule, because it will affect other people as well as yourself. The better your study environment, the more productive you will be.
Study tools & rules
Try and make sure that your study tools are sufficient and in good working order. You will need to have access to a computer, scanner and printer, with access to the internet. You will need a very comfortable chair, which supports your lower back, and you will need a good filing system. It can be very frustrating if you are spending valuable study time trying to fix study tools that are unreliable, or unsuitable for the task. Make sure that your study tools are up to date. You will also need to consider some study rules. Some of these rules will apply to you and will be intended to help you to be more disciplined about when and how you study. This distance-learning guide will help you and after you have read it you can put some thought into what your study rules should be. You will also need to negotiate some study rules for your family, friends or anyone who lives with you. They too will need to be disciplined in order to ensure that they can support you while you study. It is important to ensure that your family and friends are an integral part of your study team. Having their support and encouragement can prove to be a crucial contribution to your successful completion of the program. Involve them in as much as you can.
Successful distance-learning
Distance-learners are freed from the necessity of attending regular classes or workshops, since they can study in their own way, at their own pace and for their own purposes. But unlike traditional internal training courses, it is the student’s responsibility, with a distance-learning program, to ensure that they manage their own study contribution. This requires strong self-discipline and self-motivation skills and there must be a clear will to succeed. Those students who are used to managing themselves, are good at managing others and who enjoy working in isolation, are more likely to be good distance-learners. It is also important to be aware of the main reasons why you are studying and of the main objectives that you are hoping to achieve as a result. You will need to remind yourself of these objectives at times when you need to motivate yourself. Never lose sight of your long-term goals and your short-term objectives. There is nobody available here to pamper you, or to look after you, or to spoon-feed you with information, so you will need to find ways to encourage and appreciate yourself while you are studying. Make sure that you chart your study progress, so that you can be sure of your achievements and re-evaluate your goals and objectives regularly.
Self-assessment
Appleton Greene training programs are in all cases post-graduate programs. Consequently, you should already have obtained a business-related degree and be an experienced learner. You should therefore already be aware of your study strengths and weaknesses. For example, which time of the day are you at your most productive? Are you a lark or an owl? What study methods do you respond to the most? Are you a consistent learner? How do you discipline yourself? How do you ensure that you enjoy yourself while studying? It is important to understand yourself as a learner and so some self-assessment early on will be necessary if you are to apply yourself correctly. Perform a SWOT analysis on yourself as a student. List your internal strengths and weaknesses as a student and your external opportunities and threats. This will help you later on when you are creating a study plan. You can then incorporate features within your study plan that can ensure that you are playing to your strengths, while compensating for your weaknesses. You can also ensure that you make the most of your opportunities, while avoiding the potential threats to your success.
Accepting responsibility as a student
Training programs invariably require a significant investment, both in terms of what they cost and in the time that you need to contribute to study and the responsibility for successful completion of training programs rests entirely with the student. This is never more apparent than when a student is learning via distance-learning. Accepting responsibility as a student is an important step towards ensuring that you can successfully complete your training program. It is easy to instantly blame other people or factors when things go wrong. But the fact of the matter is that if a failure is your failure, then you have the power to do something about it, it is entirely in your own hands. If it is always someone else’s failure, then you are powerless to do anything about it. All students study in entirely different ways, this is because we are all individuals and what is right for one student, is not necessarily right for another. In order to succeed, you will have to accept personal responsibility for finding a way to plan, implement and manage a personal study plan that works for you. If you do not succeed, you only have yourself to blame.
Planning
By far the most critical contribution to stress, is the feeling of not being in control. In the absence of planning we tend to be reactive and can stumble from pillar to post in the hope that things will turn out fine in the end. Invariably they don’t! In order to be in control, we need to have firm ideas about how and when we want to do things. We also need to consider as many possible eventualities as we can, so that we are prepared for them when they happen. Prescriptive Change, is far easier to manage and control, than Emergent Change. The same is true with distance-learning. It is much easier and much more enjoyable, if you feel that you are in control and that things are going to plan. Even when things do go wrong, you are prepared for them and can act accordingly without any unnecessary stress. It is important therefore that you do take time to plan your studies properly.
Management
Once you have developed a clear study plan, it is of equal importance to ensure that you manage the implementation of it. Most of us usually enjoy planning, but it is usually during implementation when things go wrong. Targets are not met and we do not understand why. Sometimes we do not even know if targets are being met. It is not enough for us to conclude that the study plan just failed. If it is failing, you will need to understand what you can do about it. Similarly if your study plan is succeeding, it is still important to understand why, so that you can improve upon your success. You therefore need to have guidelines for self-assessment so that you can be consistent with performance improvement throughout the program. If you manage things correctly, then your performance should constantly improve throughout the program.
Study objectives & tasks
The first place to start is developing your program objectives. These should feature your reasons for undertaking the training program in order of priority. Keep them succinct and to the point in order to avoid confusion. Do not just write the first things that come into your head because they are likely to be too similar to each other. Make a list of possible departmental headings, such as: Customer Service; E-business; Finance; Globalization; Human Resources; Technology; Legal; Management; Marketing and Production. Then brainstorm for ideas by listing as many things that you want to achieve under each heading and later re-arrange these things in order of priority. Finally, select the top item from each department heading and choose these as your program objectives. Try and restrict yourself to five because it will enable you to focus clearly. It is likely that the other things that you listed will be achieved if each of the top objectives are achieved. If this does not prove to be the case, then simply work through the process again.
Study forecast
As a guide, the Appleton Greene Process Optimization corporate training program should take 12-18 months to complete, depending upon your availability and current commitments. The reason why there is such a variance in time estimates is because every student is an individual, with differing productivity levels and different commitments. These differentiations are then exaggerated by the fact that this is a distance-learning program, which incorporates the practical integration of academic theory as an as a part of the training program. Consequently all of the project studies are real, which means that important decisions and compromises need to be made. You will want to get things right and will need to be patient with your expectations in order to ensure that they are. We would always recommend that you are prudent with your own task and time forecasts, but you still need to develop them and have a clear indication of what are realistic expectations in your case. With reference to your time planning: consider the time that you can realistically dedicate towards study with the program every week; calculate how long it should take you to complete the program, using the guidelines featured here; then break the program down into logical modules and allocate a suitable proportion of time to each of them, these will be your milestones; you can create a time plan by using a spreadsheet on your computer, or a personal organizer such as MS Outlook, you could also use a financial forecasting software; break your time forecasts down into manageable chunks of time, the more specific you can be, the more productive and accurate your time management will be; finally, use formulas where possible to do your time calculations for you, because this will help later on when your forecasts need to change in line with actual performance. With reference to your task planning: refer to your list of tasks that need to be undertaken in order to achieve your program objectives; with reference to your time plan, calculate when each task should be implemented; remember that you are not estimating when your objectives will be achieved, but when you will need to focus upon implementing the corresponding tasks; you also need to ensure that each task is implemented in conjunction with the associated training modules which are relevant; then break each single task down into a list of specific to do’s, say approximately ten to do’s for each task and enter these into your study plan; once again you could use MS Outlook to incorporate both your time and task planning and this could constitute your study plan; you could also use a project management software like MS Project. You should now have a clear and realistic forecast detailing when you can expect to be able to do something about undertaking the tasks to achieve your program objectives.
Performance management
It is one thing to develop your study forecast, it is quite another to monitor your progress. Ultimately it is less important whether you achieve your original study forecast and more important that you update it so that it constantly remains realistic in line with your performance. As you begin to work through the program, you will begin to have more of an idea about your own personal performance and productivity levels as a distance-learner. Once you have completed your first study module, you should re-evaluate your study forecast for both time and tasks, so that they reflect your actual performance level achieved. In order to achieve this you must first time yourself while training by using an alarm clock. Set the alarm for hourly intervals and make a note of how far you have come within that time. You can then make a note of your actual performance on your study plan and then compare your performance against your forecast. Then consider the reasons that have contributed towards your performance level, whether they are positive or negative and make a considered adjustment to your future forecasts as a result. Given time, you should start achieving your forecasts regularly.
With reference to time management: time yourself while you are studying and make a note of the actual time taken in your study plan; consider your successes with time-efficiency and the reasons for the success in each case and take this into consideration when reviewing future time planning; consider your failures with time-efficiency and the reasons for the failures in each case and take this into consideration when reviewing future time planning; re-evaluate your study forecast in relation to time planning for the remainder of your training program to ensure that you continue to be realistic about your time expectations. You need to be consistent with your time management, otherwise you will never complete your studies. This will either be because you are not contributing enough time to your studies, or you will become less efficient with the time that you do allocate to your studies. Remember, if you are not in control of your studies, they can just become yet another cause of stress for you.
With reference to your task management: time yourself while you are studying and make a note of the actual tasks that you have undertaken in your study plan; consider your successes with task-efficiency and the reasons for the success in each case; take this into consideration when reviewing future task planning; consider your failures with task-efficiency and the reasons for the failures in each case and take this into consideration when reviewing future task planning; re-evaluate your study forecast in relation to task planning for the remainder of your training program to ensure that you continue to be realistic about your task expectations. You need to be consistent with your task management, otherwise you will never know whether you are achieving your program objectives or not.
Keeping in touch
You will have access to qualified and experienced professors and tutors who are responsible for providing tutorial support for your particular training program. So don’t be shy about letting them know how you are getting on. We keep electronic records of all tutorial support emails so that professors and tutors can review previous correspondence before considering an individual response. It also means that there is a record of all communications between you and your professors and tutors and this helps to avoid any unnecessary duplication, misunderstanding, or misinterpretation. If you have a problem relating to the program, share it with them via email. It is likely that they have come across the same problem before and are usually able to make helpful suggestions and steer you in the right direction. To learn more about when and how to use tutorial support, please refer to the Tutorial Support section of this student information guide. This will help you to ensure that you are making the most of tutorial support that is available to you and will ultimately contribute towards your success and enjoyment with your training program.
Work colleagues and family
You should certainly discuss your program study progress with your colleagues, friends and your family. Appleton Greene training programs are very practical. They require you to seek information from other people, to plan, develop and implement processes with other people and to achieve feedback from other people in relation to viability and productivity. You will therefore have plenty of opportunities to test your ideas and enlist the views of others. People tend to be sympathetic towards distance-learners, so don’t bottle it all up in yourself. Get out there and share it! It is also likely that your family and colleagues are going to benefit from your labors with the program, so they are likely to be much more interested in being involved than you might think. Be bold about delegating work to those who might benefit themselves. This is a great way to achieve understanding and commitment from people who you may later rely upon for process implementation. Share your experiences with your friends and family.
Making it relevant
The key to successful learning is to make it relevant to your own individual circumstances. At all times you should be trying to make bridges between the content of the program and your own situation. Whether you achieve this through quiet reflection or through interactive discussion with your colleagues, client partners or your family, remember that it is the most important and rewarding aspect of translating your studies into real self-improvement. You should be clear about how you want the program to benefit you. This involves setting clear study objectives in relation to the content of the course in terms of understanding, concepts, completing research or reviewing activities and relating the content of the modules to your own situation. Your objectives may understandably change as you work through the program, in which case you should enter the revised objectives on your study plan so that you have a permanent reminder of what you are trying to achieve, when and why.
Distance-learning check-list
Prepare your study environment, your study tools and rules.
Undertake detailed self-assessment in terms of your ability as a learner.
Create a format for your study plan.
Consider your study objectives and tasks.
Create a study forecast.
Assess your study performance.
Re-evaluate your study forecast.
Be consistent when managing your study plan.
Use your Appleton Greene Certified Learning Provider (CLP) for tutorial support.
Make sure you keep in touch with those around you.
Tutorial Support
Programs
Appleton Greene uses standard and bespoke corporate training programs as vessels to transfer business process improvement knowledge into the heart of our clients’ organizations. Each individual program focuses upon the implementation of a specific business process, which enables clients to easily quantify their return on investment. There are hundreds of established Appleton Greene corporate training products now available to clients within customer services, e-business, finance, globalization, human resources, information technology, legal, management, marketing and production. It does not matter whether a client’s employees are located within one office, or an unlimited number of international offices, we can still bring them together to learn and implement specific business processes collectively. Our approach to global localization enables us to provide clients with a truly international service with that all important personal touch. Appleton Greene corporate training programs can be provided virtually or locally and they are all unique in that they individually focus upon a specific business function. They are implemented over a sustainable period of time and professional support is consistently provided by qualified learning providers and specialist consultants.
Support available
You will have a designated Certified Learning Provider (CLP) and an Accredited Consultant and we encourage you to communicate with them as much as possible. In all cases tutorial support is provided online because we can then keep a record of all communications to ensure that tutorial support remains consistent. You would also be forwarding your work to the tutorial support unit for evaluation and assessment. You will receive individual feedback on all of the work that you undertake on a one-to-one basis, together with specific recommendations for anything that may need to be changed in order to achieve a pass with merit or a pass with distinction and you then have as many opportunities as you may need to re-submit project studies until they meet with the required standard. Consequently the only reason that you should really fail (CLP) is if you do not do the work. It makes no difference to us whether a student takes 12 months or 18 months to complete the program, what matters is that in all cases the same quality standard will have been achieved.
Support Process
Please forward all of your future emails to the designated (CLP) Tutorial Support Unit email address that has been provided and please do not duplicate or copy your emails to other AGC email accounts as this will just cause unnecessary administration. Please note that emails are always answered as quickly as possible but you will need to allow a period of up to 20 business days for responses to general tutorial support emails during busy periods, because emails are answered strictly within the order in which they are received. You will also need to allow a period of up to 30 business days for the evaluation and assessment of project studies. This does not include weekends or public holidays. Please therefore kindly allow for this within your time planning. All communications are managed online via email because it enables tutorial service support managers to review other communications which have been received before responding and it ensures that there is a copy of all communications retained on file for future reference. All communications will be stored within your personal (CLP) study file here at Appleton Greene throughout your designated study period. If you need any assistance or clarification at any time, please do not hesitate to contact us by forwarding an email and remember that we are here to help. If you have any questions, please list and number your questions succinctly and you can then be sure of receiving specific answers to each and every query.
Time Management
It takes approximately 1 Year to complete the Process Optimization corporate training program, incorporating 12 x 6-hour monthly workshops. Each student will also need to contribute approximately 4 hours per week over 1 Year of their personal time. Students can study from home or work at their own pace and are responsible for managing their own study plan. There are no formal examinations and students are evaluated and assessed based upon their project study submissions, together with the quality of their internal analysis and supporting documents. They can contribute more time towards study when they have the time to do so and can contribute less time when they are busy. All students tend to be in full time employment while studying and the Process Optimization program is purposely designed to accommodate this, so there is plenty of flexibility in terms of time management. It makes no difference to us at Appleton Greene, whether individuals take 12-18 months to complete this program. What matters is that in all cases the same standard of quality will have been achieved with the standard and bespoke programs that have been developed.
Distance Learning Guide
The distance learning guide should be your first port of call when starting your training program. It will help you when you are planning how and when to study, how to create the right environment and how to establish the right frame of mind. If you can lay the foundations properly during the planning stage, then it will contribute to your enjoyment and productivity while training later. The guide helps to change your lifestyle in order to accommodate time for study and to cultivate good study habits. It helps you to chart your progress so that you can measure your performance and achieve your goals. It explains the tools that you will need for study and how to make them work. It also explains how to translate academic theory into practical reality. Spend some time now working through your distance learning guide and make sure that you have firm foundations in place so that you can make the most of your distance learning program. There is no requirement for you to attend training workshops or classes at Appleton Greene offices. The entire program is undertaken online, program course manuals and project studies are administered via the Appleton Greene web site and via email, so you are able to study at your own pace and in the comfort of your own home or office as long as you have a computer and access to the internet.
How To Study
The how to study guide provides students with a clear understanding of the Appleton Greene facilitation via distance learning training methods and enables students to obtain a clear overview of the training program content. It enables students to understand the step-by-step training methods used by Appleton Greene and how course manuals are integrated with project studies. It explains the research and development that is required and the need to provide evidence and references to support your statements. It also enables students to understand precisely what will be required of them in order to achieve a pass with merit and a pass with distinction for individual project studies and provides useful guidance on how to be innovative and creative when developing your Unique Program Proposition (UPP).
Tutorial Support
Tutorial support for the Appleton Greene Process Optimization corporate training program is provided online either through the Appleton Greene Client Support Portal (CSP), or via email. All tutorial support requests are facilitated by a designated Program Administration Manager (PAM). They are responsible for deciding which professor or tutor is the most appropriate option relating to the support required and then the tutorial support request is forwarded onto them. Once the professor or tutor has completed the tutorial support request and answered any questions that have been asked, this communication is then returned to the student via email by the designated Program Administration Manager (PAM). This enables all tutorial support, between students, professors and tutors, to be facilitated by the designated Program Administration Manager (PAM) efficiently and securely through the email account. You will therefore need to allow a period of up to 20 business days for responses to general support queries and up to 30 business days for the evaluation and assessment of project studies, because all tutorial support requests are answered strictly within the order in which they are received. This does not include weekends or public holidays. Consequently you need to put some thought into the management of your tutorial support procedure in order to ensure that your study plan is feasible and to obtain the maximum possible benefit from tutorial support during your period of study. Please retain copies of your tutorial support emails for future reference. Please ensure that ALL of your tutorial support emails are set out using the format as suggested within your guide to tutorial support. Your tutorial support emails need to be referenced clearly to the specific part of the course manual or project study which you are working on at any given time. You also need to list and number any questions that you would like to ask, up to a maximum of five questions within each tutorial support email. Remember the more specific you can be with your questions the more specific your answers will be too and this will help you to avoid any unnecessary misunderstanding, misinterpretation, or duplication. The guide to tutorial support is intended to help you to understand how and when to use support in order to ensure that you get the most out of your training program. Appleton Greene training programs are designed to enable you to do things for yourself. They provide you with a structure or a framework and we use tutorial support to facilitate students while they practically implement what they learn. In other words, we are enabling students to do things for themselves. The benefits of distance learning via facilitation are considerable and are much more sustainable in the long-term than traditional short-term knowledge sharing programs. Consequently you should learn how and when to use tutorial support so that you can maximize the benefits from your learning experience with Appleton Greene. This guide describes the purpose of each training function and how to use them and how to use tutorial support in relation to each aspect of the training program. It also provides useful tips and guidance with regard to best practice.
Tutorial Support Tips
Students are often unsure about how and when to use tutorial support with Appleton Greene. This Tip List will help you to understand more about how to achieve the most from using tutorial support. Refer to it regularly to ensure that you are continuing to use the service properly. Tutorial support is critical to the success of your training experience, but it is important to understand when and how to use it in order to maximize the benefit that you receive. It is no coincidence that those students who succeed are those that learn how to be positive, proactive and productive when using tutorial support.
Be positive and friendly with your tutorial support emails
Remember that if you forward an email to the tutorial support unit, you are dealing with real people. “Do unto others as you would expect others to do unto you”. If you are positive, complimentary and generally friendly in your emails, you will generate a similar response in return. This will be more enjoyable, productive and rewarding for you in the long-term.
Think about the impression that you want to create
Every time that you communicate, you create an impression, which can be either positive or negative, so put some thought into the impression that you want to create. Remember that copies of all tutorial support emails are stored electronically and tutors will always refer to prior correspondence before responding to any current emails. Over a period of time, a general opinion will be arrived at in relation to your character, attitude and ability. Try to manage your own frustrations, mood swings and temperament professionally, without involving the tutorial support team. Demonstrating frustration or a lack of patience is a weakness and will be interpreted as such. The good thing about communicating in writing, is that you will have the time to consider your content carefully, you can review it and proof-read it before sending your email to Appleton Greene and this should help you to communicate more professionally, consistently and to avoid any unnecessary knee-jerk reactions to individual situations as and when they may arise. Please also remember that the CLP Tutorial Support Unit will not just be responsible for evaluating and assessing the quality of your work, they will also be responsible for providing recommendations to other learning providers and to client contacts within the Appleton Greene global client network, so do be in control of your own emotions and try to create a good impression.
Remember that quality is preferred to quantity
Please remember that when you send an email to the tutorial support team, you are not using Twitter or Text Messaging. Try not to forward an email every time that you have a thought. This will not prove to be productive either for you or for the tutorial support team. Take time to prepare your communications properly, as if you were writing a professional letter to a business colleague and make a list of queries that you are likely to have and then incorporate them within one email, say once every month, so that the tutorial support team can understand more about context, application and your methodology for study. Get yourself into a consistent routine with your tutorial support requests and use the tutorial support template provided with ALL of your emails. The (CLP) Tutorial Support Unit will not spoon-feed you with information. They need to be able to evaluate and assess your tutorial support requests carefully and professionally.
Be specific about your questions in order to receive specific answers
Try not to write essays by thinking as you are writing tutorial support emails. The tutorial support unit can be unclear about what in fact you are asking, or what you are looking to achieve. Be specific about asking questions that you want answers to. Number your questions. You will then receive specific answers to each and every question. This is the main purpose of tutorial support via email.
Keep a record of your tutorial support emails
It is important that you keep a record of all tutorial support emails that are forwarded to you. You can then refer to them when necessary and it avoids any unnecessary duplication, misunderstanding, or misinterpretation.
Individual training workshops or telephone support
Please be advised that Appleton Greene does not provide separate or individual tutorial support meetings, workshops, or provide telephone support for individual students. Appleton Greene is an equal opportunities learning and service provider and we are therefore understandably bound to treat all students equally. We cannot therefore broker special financial or study arrangements with individual students regardless of the circumstances. All tutorial support is provided online and this enables Appleton Greene to keep a record of all communications between students, professors and tutors on file for future reference, in accordance with our quality management procedure and your terms and conditions of enrolment. All tutorial support is provided online via email because it enables us to have time to consider support content carefully, it ensures that you receive a considered and detailed response to your queries. You can number questions that you would like to ask, which relate to things that you do not understand or where clarification may be required. You can then be sure of receiving specific answers to each individual query. You will also then have a record of these communications and of all tutorial support, which has been provided to you. This makes tutorial support administration more productive by avoiding any unnecessary duplication, misunderstanding, or misinterpretation.
Tutorial Support Email Format
You should use this tutorial support format if you need to request clarification or assistance while studying with your training program. Please note that ALL of your tutorial support request emails should use the same format. You should therefore set up a standard email template, which you can then use as and when you need to. Emails that are forwarded to Appleton Greene, which do not use the following format, may be rejected and returned to you by the (CLP) Program Administration Manager. A detailed response will then be forwarded to you via email usually within 20 business days of receipt for general support queries and 30 business days for the evaluation and assessment of project studies. This does not include weekends or public holidays. Your tutorial support request, together with the corresponding TSU reply, will then be saved and stored within your electronic TSU file at Appleton Greene for future reference.
Subject line of your email
Please insert: Appleton Greene (CLP) Tutorial Support Request: (Your Full Name) (Date), within the subject line of your email.
Main body of your email
Please insert:
1. Appleton Greene Certified Learning Provider (CLP) Tutorial Support Request
2. Your Full Name
3. Date of TS request
4. Preferred email address
5. Backup email address
6. Course manual page name or number (reference)
7. Project study page name or number (reference)
Subject of enquiry
Please insert a maximum of 50 words (please be succinct)
Briefly outline the subject matter of your inquiry, or what your questions relate to.
Question 1
Maximum of 50 words (please be succinct)
Maximum of 50 words (please be succinct)
Question 3
Maximum of 50 words (please be succinct)
Question 4
Maximum of 50 words (please be succinct)
Question 5
Maximum of 50 words (please be succinct)
Please note that a maximum of 5 questions is permitted with each individual tutorial support request email.
Procedure
* List the questions that you want to ask first, then re-arrange them in order of priority. Make sure that you reference them, where necessary, to the course manuals or project studies.
* Make sure that you are specific about your questions and number them. Try to plan the content within your emails to make sure that it is relevant.
* Make sure that your tutorial support emails are set out correctly, using the Tutorial Support Email Format provided here.
* Save a copy of your email and incorporate the date sent after the subject title. Keep your tutorial support emails within the same file and in date order for easy reference.
* Allow up to 20 business days for a response to general tutorial support emails and up to 30 business days for the evaluation and assessment of project studies, because detailed individual responses will be made in all cases and tutorial support emails are answered strictly within the order in which they are received.
* Emails can and do get lost. So if you have not received a reply within the appropriate time, forward another copy or a reminder to the tutorial support unit to be sure that it has been received but do not forward reminders unless the appropriate time has elapsed.
* When you receive a reply, save it immediately featuring the date of receipt after the subject heading for easy reference. In most cases the tutorial support unit replies to your questions individually, so you will have a record of the questions that you asked as well as the answers offered. With project studies however, separate emails are usually forwarded by the tutorial support unit, so do keep a record of your own original emails as well.
* Remember to be positive and friendly in your emails. You are dealing with real people who will respond to the same things that you respond to.
* Try not to repeat questions that have already been asked in previous emails. If this happens the tutorial support unit will probably just refer you to the appropriate answers that have already been provided within previous emails.
* If you lose your tutorial support email records you can write to Appleton Greene to receive a copy of your tutorial support file, but a separate administration charge may be levied for this service.
How To Study
Your Certified Learning Provider (CLP) and Accredited Consultant can help you to plan a task list for getting started so that you can be clear about your direction and your priorities in relation to your training program. It is also a good way to introduce yourself to the tutorial support team.
Planning your study environment
Your study conditions are of great importance and will have a direct effect on how much you enjoy your training program. Consider how much space you will have, whether it is comfortable and private and whether you are likely to be disturbed. The study tools and facilities at your disposal are also important to the success of your distance-learning experience. Your tutorial support unit can help with useful tips and guidance, regardless of your starting position. It is important to get this right before you start working on your training program.
Planning your program objectives
It is important that you have a clear list of study objectives, in order of priority, before you start working on your training program. Your tutorial support unit can offer assistance here to ensure that your study objectives have been afforded due consideration and priority.
Planning how and when to study
Distance-learners are freed from the necessity of attending regular classes, since they can study in their own way, at their own pace and for their own purposes. This approach is designed to let you study efficiently away from the traditional classroom environment. It is important however, that you plan how and when to study, so that you are making the most of your natural attributes, strengths and opportunities. Your tutorial support unit can offer assistance and useful tips to ensure that you are playing to your strengths.
Planning your study tasks
You should have a clear understanding of the study tasks that you should be undertaking and the priority associated with each task. These tasks should also be integrated with your program objectives. The distance learning guide and the guide to tutorial support for students should help you here, but if you need any clarification or assistance, please contact your tutorial support unit.
Planning your time
You will need to allocate specific times during your calendar when you intend to study if you are to have a realistic chance of completing your program on time. You are responsible for planning and managing your own study time, so it is important that you are successful with this. Your tutorial support unit can help you with this if your time plan is not working.
Keeping in touch
Consistency is the key here. If you communicate too frequently in short bursts, or too infrequently with no pattern, then your management ability with your studies will be questioned, both by you and by your tutorial support unit. It is obvious when a student is in control and when one is not and this will depend how able you are at sticking with your study plan. Inconsistency invariably leads to in-completion.
Charting your progress
Your tutorial support team can help you to chart your own study progress. Refer to your distance learning guide for further details.
Making it work
To succeed, all that you will need to do is apply yourself to undertaking your training program and interpreting it correctly. Success or failure lies in your hands and your hands alone, so be sure that you have a strategy for making it work. Your Certified Learning Provider (CLP) and Accredited Consultant can guide you through the process of program planning, development and implementation.
Reading methods
Interpretation is often unique to the individual but it can be improved and even quantified by implementing consistent interpretation methods. Interpretation can be affected by outside interference such as family members, TV, or the Internet, or simply by other thoughts which are demanding priority in our minds. One thing that can improve our productivity is using recognized reading methods. This helps us to focus and to be more structured when reading information for reasons of importance, rather than relaxation.
Speed reading
When reading through course manuals for the first time, subconsciously set your reading speed to be just fast enough that you cannot dwell on individual words or tables. With practice, you should be able to read an A4 sheet of paper in one minute. You will not achieve much in the way of a detailed understanding, but your brain will retain a useful overview. This overview will be important later on and will enable you to keep individual issues in perspective with a more generic picture because speed reading appeals to the memory part of the brain. Do not worry about what you do or do not remember at this stage.
Content reading
Once you have speed read everything, you can then start work in earnest. You now need to read a particular section of your course manual thoroughly, by making detailed notes while you read. This process is called Content Reading and it will help to consolidate your understanding and interpretation of the information that has been provided.
Making structured notes on the course manuals
When you are content reading, you should be making detailed notes, which are both structured and informative. Make these notes in a MS Word document on your computer, because you can then amend and update these as and when you deem it to be necessary. List your notes under three headings: 1. Interpretation – 2. Questions – 3. Tasks. The purpose of the 1st section is to clarify your interpretation by writing it down. The purpose of the 2nd section is to list any questions that the issue raises for you. The purpose of the 3rd section is to list any tasks that you should undertake as a result. Anyone who has graduated with a business-related degree should already be familiar with this process.
Organizing structured notes separately
You should then transfer your notes to a separate study notebook, preferably one that enables easy referencing, such as a MS Word Document, a MS Excel Spreadsheet, a MS Access Database, or a personal organizer on your cell phone. Transferring your notes allows you to have the opportunity of cross-checking and verifying them, which assists considerably with understanding and interpretation. You will also find that the better you are at doing this, the more chance you will have of ensuring that you achieve your study objectives.
Question your understanding
Do challenge your understanding. Explain things to yourself in your own words by writing things down.
Clarifying your understanding
If you are at all unsure, forward an email to your tutorial support unit and they will help to clarify your understanding.
Question your interpretation
Do challenge your interpretation. Qualify your interpretation by writing it down.
Clarifying your interpretation
If you are at all unsure, forward an email to your tutorial support unit and they will help to clarify your interpretation.
Qualification Requirements
The student will need to successfully complete the project study and all of the exercises relating to the Process Optimization corporate training program, achieving a pass with merit or distinction in each case, in order to qualify as an Accredited Process Optimization Specialist (APOS). All monthly workshops need to be tried and tested within your company. These project studies can be completed in your own time and at your own pace and in the comfort of your own home or office. There are no formal examinations, assessment is based upon the successful completion of the project studies. They are called project studies because, unlike case studies, these projects are not theoretical, they incorporate real program processes that need to be properly researched and developed. The project studies assist us in measuring your understanding and interpretation of the training program and enable us to assess qualification merits. All of the project studies are based entirely upon the content within the training program and they enable you to integrate what you have learnt into your corporate training practice.
Process Optimization– Grading Contribution
Project Study – Grading Contribution
Customer Service – 10%
E-business – 05%
Finance – 10%
Globalization – 10%
Human Resources – 10%
Information Technology – 10%
Legal – 05%
Management – 10%
Marketing – 10%
Production – 10%
Education – 05%
Logistics – 05%
TOTAL GRADING – 100%
Qualification grades
A mark of 90% = Pass with Distinction.
A mark of 75% = Pass with Merit.
A mark of less than 75% = Fail.
If you fail to achieve a mark of 75% with a project study, you will receive detailed feedback from the Certified Learning Provider (CLP) and/or Accredited Consultant, together with a list of tasks which you will need to complete, in order to ensure that your project study meets with the minimum quality standard that is required by Appleton Greene. You can then re-submit your project study for further evaluation and assessment. Indeed you can re-submit as many drafts of your project studies as you need to, until such a time as they eventually meet with the required standard by Appleton Greene, so you need not worry about this, it is all part of the learning process.
When marking project studies, Appleton Greene is looking for sufficient evidence of the following:
Pass with merit
A satisfactory level of program understanding
A satisfactory level of program interpretation
A satisfactory level of project study content presentation
A satisfactory level of Unique Program Proposition (UPP) quality
A satisfactory level of the practical integration of academic theory
Pass with distinction
An exceptional level of program understanding
An exceptional level of program interpretation
An exceptional level of project study content presentation
An exceptional level of Unique Program Proposition (UPP) quality
An exceptional level of the practical integration of academic theory
Preliminary Analysis
EXPLORING CORPORATE STRATEGY 8th Edition
Book by Gerry Johnson, Kevan Scholes and Richard Whittington
Introduction
In November 2006 Yahoo! manager Brad Garlinghouse issued a memo that directly challenged the senior management of the Internet giant. Leaked to the media as ‘The Peanut Butter Manifesto’, his memo accused Yahoo!’s leadership of lacking strategic direction. Growth had slowed, Google had overtaken Yahoo!
in terms of online advertising revenues, and the share price had fallen by nearly a third since the start of the year. According to Brad Garlinghouse, Yahoo! was spread too thin, like peanut butter. It was time for strategic change.
All organisations are faced with the challenges of strategic direction: some from a desire to grasp new opportunities, others to overcome significant problems, as at Yahoo!. This book deals with why changes in strategic direction take place in organisations, why they are important, how such decisions are taken, and the concepts that can be useful in understanding these issues.
This introductory chapter addresses particularly the meaning of ‘strategy’ and ‘strategic management’, why they are so important and what distinguishes them from other organisational challenges, tasks and decisions. It also introduces the kind of work that different types of managers involved in strategy may do, whether as general managers, in-house specialists or as strategy consultants.
The chapter will draw on the Yahoo! example..to illustrate its points.
This book uses the term ‘corporate’ strategy for two main reasons. First, because the book is concerned with strategy and strategic decisions in all types of organisation – small and large, commercial enterprises as well as public services – and the word ‘corporate’ embraces them all. Second, because, as the term is used in this book (discussed more fully in section 1.2.2), ‘corporate strategy’ denotes the most general level of strategy in an organisation and in this sense embraces other levels of strategy. Readers will probably come across other terms, such as ‘strategic management’, ‘business policy’ and ‘organisational strategy’, but these are all used to describe the same general topic.
THINKING IN SYSTEMS – A PRIMER
Book by Donella H. Meadows
A Note From The Author
This book has been distilled out of the wisdom of thirty years of systems modeling and teaching carried out by dozens of creative people, most of them originally based at or influenced by the MIT System Dynamics group. Foremost among them is Jay Forrester, the founder of the group. My particular teachers (and students who have become my teachers) have been, in addition to Jay: Ed Roberts, Jack Pugh, Dennis Meadows, Hartmut Bossel, Barry Richmond, Peter Senge, John Sterman, and Peter Allen, but I have drawn here from the language, ideas, examples, quotes, books, and lore of a large intellectual community. I express my admiration and gratitude to all its members. I also have drawn from thinkers in a variety of disciplines, who, as far as I know, never used a computer to simulate a system, but who are natural systems thinkers. They include Gregory Bateson, Kenneth Boulding, Herman Daly, Albert Einstein, Garrett Hardin, Václav Havel, Lewis Mumford, Gunnar Myrdal, E.F. Schumacher, a number of modern corporate executives, and many anonymous sources of ancient wisdom, from Native Americans to the Sufis of the Middle East. Strange bedfellows, but systems thinking transcends disciplines and cultures and, when it is done right, it overarches history as well. Having spoken of transcendence, I need to acknowledge factionalism as well. Systems analysts use overarching concepts, but they have entirely human personalities, which means that they have formed many fractious schools of systems thought. I have used the language and symbols of system dynamics here, the school in which I was taught. And I present only the core of systems theory here, not the leading edge. I don’t deal with the most abstract theories and am interested in analysis only when I can see how it helps solve real problems. When the abstract end of systems theory does that, which I believe it will some day, another book will have to be written. Therefore, you should be warned that this book, like all books, is biased and incomplete. There is much, much more to systems thinking than is presented here, for you to discover if you are interested. One of my purposes is to make you interested. Another of my purposes, the main one, is to give you a basic ability to understand and to deal with complex systems, even if your formal systems training begins and ends with this book.
1. Recommended Pre-Workshop Activities
• If the organization has an existing Enterprise Process Model (EPM), the participant should arrange to have access to the EPM during the workshop.
• To assess the health of key organizational processes, collect existing organizational metrics or KPIs that shed light on the following Voice of the Process data, including:
i. Targets
ii. Actual performance for last 12 months
iii. Process Variation
Course Manuals 1-10
Course Manual 1: Organizational Strategy
1.1. Introduction
Organizational strategy refers to the comprehensive plan an organization develops to achieve its long-term goals and objectives. This strategy guides the organization’s decisions and actions, aligning resources and efforts across various functions to achieve desired outcomes. Setting organizational strategy typically involves defining the organization’s vision, mission, core values, and strategic goals. It encompasses the assessment of internal strengths and weaknesses, understanding external opportunities and threats (SWOT analysis), and formulating strategic initiatives to leverage competitive advantages and navigate the business environment effectively.
This course manual will explore how an organization’s strategy relates to its core competencies. We will also examine how business and process architecture facilitate the discovery and management of these core competencies.
1.2. Understanding Organizational Strategy
At its core, organizational strategy is about setting a direction for the company and determining how to allocate resources to pursue this direction effectively. Several key features characterize the nature of strategic decisions in the context of organizational strategy:
• Long-term Impact: Strategic decisions have long-lasting effects on the organization’s direction. They are concerned with the overall scope and direction of the organization and have the potential to shape its future.
• Complexity: These decisions are often complex due to the uncertainty of the external environment, the interdependencies of various business functions, and the significant implications of these decisions on the organization’s resources and market position.
● High Risk: Given their long-term nature and the uncertainties involved, strategic decisions carry a high level of risk. The consequences of these decisions can significantly affect the organization’s ability to achieve its goals.
● Multifaceted Considerations: Strategic decisions require a holistic view of the organization and its environment, considering various factors, including economic, social, technological, competitive, and regulatory dynamics.
● Involvement of Top Management: Though strategy exists at different organizational levels – corporate, business unit, and operational – strategic decisions are typically made by top management at each level, cascading from the corporate to the operational level. These decisions usually require a broad and deep understanding of the organization and its external environment.
● Resource Allocation: Strategic decisions often involve allocating significant resources, including capital, human, and technological resources, to strategic initiatives and projects to achieve long-term objectives.
● Innovation and Adaptation: Strategic decisions may involve innovation and adopting new technologies or processes to maintain or enhance competitive advantage. They also require an adaptation strategy to respond to changes in the external environment effectively.
Apple Inc. provides a prime example of successful organizational strategic formulation and deployment. Apple’s strategy focuses on innovation, high-quality products, and a strong brand image. Apple has maintained a competitive edge in the technology market by continuously innovating and creating products like the iPhone, iPad, and MacBook.
Another example is Starbucks. Starbucks’ strategy revolves around offering a premium coffee experience, including high-quality coffee and a comfortable and inviting store environment. Their focus on customer experience and brand loyalty has helped them dominate the coffee shop industry.
1.3. Core Competencies
Core competencies are a set of unique abilities and expertise that an organization possesses, which are central to its operations and difficult for competitors to replicate (see Figure 1.1). These competencies enable an organization to deliver value to its customers in a distinct and superior way to the competition. The concept, popularized by Prahalad and Hamel in their seminal 1990 article, “The Core Competence of the Corporation,” suggests that these competencies are the foundation for an organization’s sustained competitive advantage.
1.3.1. Characteristics of Core Competencies
Core competencies are characterized by several key attributes that collectively distinguish them from other organizational capabilities:
● Value to Customers: A core competency must significantly contribute to the perceived customer benefits of the end product, offering something that meets their needs in a unique or superior way.
● Competitive Uniqueness: It should provide a competitive advantage by being difficult for competitors to imitate. This uniqueness could stem from proprietary knowledge, processes, or relationships that the organization has developed.
● Applicability Across Markets: Core competencies should not be confined to a single product or market. Instead, they should be versatile and extendable across various products and markets, enabling the organization to leverage them for multiple opportunities.
● Integration and Coordination: Effective core competencies result from harmonizing various organizational skills and technologies. They encapsulate a complex interplay of individual capabilities that collectively create value.
1.3.2. Identifying Organizational Core Competencies
Identifying core competencies is a strategic process that requires introspection and analysis by an organization. Below are steps an organization can take to identify its core competencies:
● Value Chain Analysis: By examining each stage of its value chain, from inbound logistics to after-sales services, an organization can identify which activities contribute most significantly to customer value (see Section 1.4).
● Benchmarking and Competitive Analysis: Understanding how the organization’s capabilities stack up against competitors can help highlight areas of unique strength or advantage.
● Customer Feedback: Understanding what customers value most about the organization’s offerings can provide insights into potential core competencies. The VoC data collection process discussed in Workshop 2 facilitates this understanding.
● Cross-functional Collaboration: Bringing together diverse perspectives from across the organization can help recognize the complex interdependencies and synergies that constitute core competencies.
● Strategic Experimentation: Experimenting with new business models or entering new markets can also reveal latent capabilities that could be developed into core competencies.
It should be noted that core competencies are often challenging to identify, and organizational leaders may not understand them as they may be embedded deep into the organization at the level of underlying assumptions, which are the least visible aspect of organizational culture (See Workshop 1 Course Manual 11 Section 11.2). Johnson and Scholes, in ‘Exploring Corporate Strategy’ highlight the example of a consumer goods business that won several major retail accounts from competitors due to operational employees utilizing ‘organization slack’ (which senior management was trying to eliminate) and ‘bending the rules’, e.g. permitting returns from major retails though the organizational policies did not allow this. From the customer’s perspective, the enhanced relationship due partly to these behaviours was viewed as superior performance vis-a-vis their competitors. This illustrates that identifying and cultivating core competencies requires open-minded knowledge about the whole system across various organizational levels.
In the following sections, we will illustrate a common source of core competencies – an organization’s value chain and network – followed by how business and process architecture enables an organization to cultivate this competence.
Exercise 1.1
1.4. Organizational value chains
Organizational value chains represent a comprehensive framework for examining an organization’s activities to deliver a valuable product or service to the market. This concept, introduced by Michael E. Porter in his 1985 book ‘Competitive Advantage’ has become a cornerstone in understanding how companies achieve and sustain competitive advantage. This section will explore the value chain components, their relation to core competencies, and the relationships between value chains and networks.
1.4.1. Defining the Value Chain
At its core, the value chain dissects an organization into its strategically relevant activities to understand the cost drivers and sources of differentiation. Porter distinguished between primary activities and support activities, each playing a critical role in adding value and creating competitive advantage (see Figure 1.2).
Primary Activities
Primary activities directly relate to creating the product or service, its sale and transfer to the buyer, and after-sale support. These activities include:
● Inbound Logistics: These activities are related to receiving, storing, and disseminating inputs internally, such as materials handling, stock control, and transportation.
● Operations: This involves the transformation of inputs into the final product form through manufacturing, packaging, assembly, or equipment maintenance.
● Outbound Logistics: These activities deliver the product to the customer, encompassing warehousing, order fulfillment, transportation, and distribution management.
● Marketing and Sales: This encompasses the identification of customer needs and the generation of sales through advertising, promotion, sales force, quoting, and channel selection.
● Service: After-sale services that maintain and enhance the product’s value include customer support, repair services, installation, and warranty management.
Secondary (Support) Activities
Support (also referred to as Support) activities, although not directly involved in the production process, facilitate the effectiveness or efficiency of primary activities:
● Procurement: The process of acquiring the various inputs (materials, supplies, equipment) required for production.
● Technology Development: Activities related to technology development to support value-creating activities, such as research and development, process automation, and other technological improvements.
● Human Resource Management: Activities involved in the recruitment, hiring, training, development, and compensation of employees.
● Firm Infrastructure: The company’s support systems and the functions that allow it to maintain daily operations, including planning, administration, finance, accounting, legal, and government affairs.
The value chain analysis helps identify and build on core competencies by understanding how different activities contribute to value creation and competitive advantage. For example, effectively managing the supply and distribution chain can become a core competency that differentiates a company in the marketplace. Efficient logistics, innovative marketing strategies, and exceptional after-sales service are other examples of how an organization can leverage its value chain to develop core competencies that are difficult for competitors to replicate.
1.4.2. Value Networks
While the value chain focuses on the internal activities of an organization, the concept of value networks expands this perspective to include the interconnections between various companies and stakeholders in delivering a product or service to the end customer. A value network is a complex set of social and technical resources that work together via relationships to create economic value and competitive advantage. This broader view considers suppliers, distributors, partners, and customers as part of an extended network that collaborates to produce value. Figure 1.3 shows the value network for a technology provider.
Value networks are crucial for understanding how companies interact within an ecosystem, influence each other, and co-create value. The transition from value chains to value networks is significant in the digital age, where collaboration, integration, and interdependence among businesses are critical drivers of innovation and competitive advantage. Effectively managing these networks requires a deep understanding of the roles and contributions of all participants and the dynamics and flows of information, resources, and goods.
While the value chain framework remains a powerful tool for analyzing organizational activities and their contribution to competitive advantage, understanding value networks is equally vital in the increasingly interconnected and digital world. Both concepts emphasize the importance of efficiently managing activities and relationships to create and sustain value. Organizations can achieve superior performance and a lasting competitive edge in the global marketplace by focusing on core competencies and leveraging the strengths of value networks.
1.5. Business architecture
Just as a building’s architecture provides a blueprint for its construction, detailing the layout, structure, and aesthetics, business architecture outlines an organization’s structure, processes, and operations, ensuring it can fulfil its goals efficiently and effectively.
Below, we explore the parallels between these two forms of architecture, highlighting how the principles of design, functionality and adaptability are integral to both.
Design and Planning
The initial phase of both building and business architecture involves extensive design and planning. In building architecture, this phase translates to creating detailed blueprints that outline the intended construction’s structural integrity, utility, and aesthetics. Similarly, in business architecture, strategic planning involves the design of organizational structures, processes, and systems that ensure the business can operate efficiently, meet its strategic objectives, and provide value to its customers. Both processes require a clear vision, understanding of purpose, and meticulous attention to detail to ensure that the final outcome is practical and aligned with the desired objectives.
Functionality and Efficiency
At their core, both forms of architecture aim to maximize functionality and efficiency. A well-designed building optimizes space usage, facilitates a smooth flow of movement, and incorporates features that enhance the occupants’ comfort and productivity. Correspondingly, a well-structured business architecture ensures that the organization’s operations are streamlined, resources are utilized efficiently, and workflows are optimized to enhance productivity and performance. In both cases, the emphasis is on creating a system where every component serves a purpose, and collectively, they contribute to the overall functionality and efficiency of the structure or organization.
Adaptability and Scalability
Another parallel between building and business architecture is the need for adaptability and scalability. Buildings are often designed with the future in mind, incorporating elements that allow for expansion or modification as needs change. Similarly, business architectures are crafted to be flexible, enabling the organization to adapt to market changes, technological advancements, and evolving customer needs. This adaptability is crucial for long-term sustainability, allowing buildings and businesses to remain relevant and functional in changing circumstances.
Business architecture provides the framework for identifying, nurturing, and leveraging core competencies discussed in the previous section. By mapping out the organization’s structures, processes, and information flows, business architecture helps identify areas where the company has unique strengths or could develop them. It also reveals gaps or misalignments that might hinder developing or exploiting these competencies.
Furthermore, the business architecture facilitates the strategic alignment of core competencies with the organization’s vision and goals. This alignment ensures that the organization’s unique strengths are directed towards areas where they can create the most value, enhancing competitive advantage and driving sustainable success. Figure 1.4 shows the various artifacts that comprise the business architecture.
1.6. Process Architecture
Process architecture refers to the structured design and layout of business processes. It involves identifying and categorizing various organizational processes and mapping how they interconnect and contribute to the overall business objectives.
The primary objective of process architecture is to create a coherent representation of these processes, providing a clear understanding of how work is conducted and how different processes interrelate within the organizational framework.
As seen in Figure 1.5, process architecture is a component of business architecture. Figure 1.4 also supports this assertion as various process artifacts, e.g. process catalog, process flow diagrams and value stream maps, are included in the set of business architecture artifacts. Extending the analogy with a building’s architecture from the previous section, the following are similarities between building and process architecture:
● Blueprints and Planning: Just as architects create blueprints to outline the design and structure of a building, process architects map out the business processes. This ‘blueprint’ includes the workflow, the roles and responsibilities, and the tools and technologies used, much like a building plan consists of the layout of rooms, the materials to be used, and the structural elements.
● Foundation and Structure: In building architecture, a strong foundation and a well-thought-out structure are crucial for the building’s stability and functionality. Similarly, in process architecture, foundational processes must be robust and effectively structured to support the organization’s operations and enable it to respond to changes in the business environment. Process architects also set process modelling standards
● Aesthetics and Functionality: Architects balance aesthetics with functionality to ensure that buildings are pleasing to the eye and practical. In process architecture, this balance is mirrored in creating efficient (functionality) processes that align with the organization’s culture and values (aesthetics).
Process architecture plays a pivotal role in managing and optimizing business processes. It allows for:
1. Visualization of Process Flow: By creating visual models of processes, it becomes easier to understand how organizational tasks and activities flow.
2. Identification of Interdependencies: Understanding how different processes interact and depend on each other is crucial for effective management and coordination.
3. Gap Analysis: Identifying gaps or inefficiencies in processes that might hinder performance.
4. Risk Management: Recognizing potential risks in process flows and implementing measures to mitigate these risks.
5. Process Prioritization for Optimization: One of the key benefits of process architecture is the ability to identify which processes should be prioritized for optimization. This links back to the debate raised earlier between the exhaustive approach, which entails identifying and prioritizing every organizational process and the high-impact approach (See Workshop 2 Course Manual 1 Section 1.3.2). The process architecture is essential for establishing an approach for identifying all processes across the organization and prioritizing the order in which they should be optimized based on the overall value delivered. This approach will be explored in Course Manual 5
In conclusion, the process architecture provides the structure and plan necessary for efficient and effective processes, dictating how well an organization functions, adapts, and grows. In subsequent course manuals, we will examine the output of the process architecture – the Enterprise Process Model – and how it adds value to the organization.
Case Study: Supply Chain Management, Toyota Motor Company
Problem
In 2008, Toyota Motor Corporation, a member of the Japanese Toyota Group, surpassed General Motors to become the world’s largest vehicle manufacturer for the first time. Several of its affiliates and subsidiary businesses manufacture automobiles, automobile parts, and commercial and industrial vehicles. Nagoya, Japan, is home to Toyota Motor Corporation’s headquarters. The company developed numerous innovative methods, including Jidoka, the Kanban System, and the Just-in-Time System.
Eliminating a vast inventory and acquiring resources just as they are required for manufacturing is known as Just-In-Time (JIT) inventory management. The objective is to significantly reduce the inventory held by work-in-progress and raw materials by precisely matching material receipts with their utilization. By fostering stronger links with suppliers and coordinating frequent delivery of commodities in small amounts, JIT purchasing aims to minimise stock levels and save a significant amount of money on material handling and storage expenses. Long-term contracts are signed with their suppliers to achieve this goal and reduce ordering expenses.
However, an earthquake and tsunami struck Japan on March 11, 2011, adversely impacting many of Toyota’s suppliers and interrupting business as usual. This natural disaster prompted Toyota to review its JIT policy and determine what changes were required to ensure operational resilience.
How value network analysis helped
The company realised that its buying strategy needed to be altered as it tried to resume manufacturing after the natural disaster. It subsequently performed an analysis that revealed that the purchase of more than 1,200 parts and materials would potentially be impacted by its brittle supply chains. It then produced a list of 500 high-priority products, including semiconductors, that would require stable supply in the future. It signed stockpiling agreements with its suppliers for these items.
Advanced alert mechanisms were established for additional goods from its vast supplier network, and a priority list of essential items requiring immediate attention was produced. These systems could forewarn the company about potential shortages of other goods. Toyota convened a crisis response team and promptly established corporate “countermeasures” offices in Tokyo and other locations following the earthquake. The creation of a centralized information collection system supported these offices.
While its JIT strategy delivered efficiency and cost-effectiveness, the company did not hesitate to modify its strategies due to changes in its external environment. Its diversified supply chain resilience strategies proved beneficial a decade later during the semiconductor chip crisis amid the COVID-19 pandemic.
Due to the increased demand for semiconductors driven by increased smartphone usage and computational capabilities, Toyota devised a plan to ensure a reliable chip supply, foreseeing the emerging challenges due to escalating demand and dwindling supply. It arranged for suppliers to supply in bulk per batch of units produced to ensure consistent raw material supplies and uninterrupted vehicle production, although this would raise inventory costs. Its model is notable for balancing lean inventory essential for just-in-time (JIT) production at its facilities, while ensuring suppliers hold sufficient stocks to avoid supply interruptions.
Results
In early May 2021, Toyota Motor Corporation reported a $7 billion profit for the January to March quarter. This profit was four times that of the same quarter the previous year. Sales rose, showcasing Toyota’s rebound from the pandemic. Ironically, this occurred against the backdrop of projections of a $110 million impact on the automobile industry due to the semiconductor chip shortage.
A brief review of Toyota Motor Corporation’s profit margins from 2017 to 2021 illustrates the company’s resilience and ongoing adaptability to revenue fluctuations.
Source: xim.edu.in
Exercise 1.2
Course Manual 2: Enterprise Process Modeling
2.1. Introduction
In the previous course manual, we explored how process architecture facilitates organizational planning and enables the adaption and growth of the organization. This course manual will examine the interrelationship between processes, laying the foundation for discussing Enterprise Process Models (EPMs), including the process taxonomy and how the various EPM levels relate.
2.2. Relationship between Processes
Processes within an organization are akin to the threads in a tapestry, each interwoven to create a complete picture. This interconnectedness means that changes or issues in one process can significantly impact others. For example, as highlighted by the case study in the previous course manual, a delay in the supply chain process can affect production processes and ultimately impact customer satisfaction. Recognizing these connections helps in holistic decision-making and effective problem-solving.
Below are the three main types of process relationships:
2.2.1. Sequence
Processes often follow a sequential order, where the output of one becomes the input of another, described in terms of upstream (preceding) and downstream (subsequent) processes. This horizontal relationship structure can be viewed as a producer-consumer relationship where the downstream process consumes the output of the upstream (producer) process (see Figure 2.1).
For example, in a manufacturing setting, the procurement process is upstream of production, and production is upstream of quality control.
Visualizing this sequence helps identify dependencies and potential bottlenecks and plan for contingencies.
2.2.2. Decomposition:
Decomposition involves breaking down a complex process into smaller, more manageable sub-processes or tasks. This breakdown helps us understand how each sub-process contributes to the more extensive process and the overall organizational goal. It also aids in identifying which sub-processes are interdependent, which is essential for resource allocation and scheduling.
In Figure 2.2, Procure Product decomposes into two sub-processes, Process Parts and Assemble Parts.
2.2.3. Specialization:
Specialization refers to dividing processes into specific, narrowly focused processes, which may be required where certain attributes (e.g. location) necessitate different inputs or activities. Consider Figure 2.3, where the Austrian variant of the Handle Job Application process may require additional inputs (e.g. for regulatory reasons), which are not necessary for the German variant
Specialization necessitates effective communication and coordination among different variants to ensure that the interconnected processes align and function seamlessly.
2.2.4. The Importance of Understanding Process Interconnections
As highlighted by the examples above, it is critical to understand the relationship between processes for the following reasons:
● Efficiency and Optimization: Understanding interconnectedness helps streamline operations, reduce redundancies, and optimize resource use.
It enables organizations to synchronize processes, ensuring smooth workflows and timely outputs.
● Risk Management: Recognizing how processes are linked allows for better anticipation of risks and more effective risk management strategies. It helps identify potential ripple effects of disruptions in one process on others.
● Enhanced Collaboration: Awareness of interdependencies fosters a collaborative culture, as teams recognize the impact of their work on other areas of the organization. It encourages cross-functional teamwork and communication, breaking down silos.
In conclusion, the interconnectedness of processes in an organization is a fundamental aspect that underpins its operational efficiency and effectiveness. Organizations can ensure smooth operations, minimize risks, and foster a collaborative and efficient work environment by effectively communicating and managing these interconnections. The following section will build on these relationships as we explore Enterprise Process Models.
Exercise 2.1
2.3. The Enterprise Process Model
An Enterprise Process Model (EPM) is a comprehensive representation of the processes within an organization, showcasing how they interrelate and contribute to the overall business goals. This model is the tangible representation of the process architecture and is an essential tool for organizations seeking to understand, analyze, and improve their operational workflows. The EPM typically comprises different levels, each providing varying detail. Understanding and effectively mapping these levels is crucial for creating a clear and actionable process model. In this section, we will explore the different levels of an EPM and the methodology for mapping them.
2.3.1. Process Taxonomy
A process taxonomy is a hierarchical framework that organizes and categorizes organizational processes. This structure allows for a detailed and systematic approach to understanding, managing, and improving how an organization functions. The taxonomy comprises five levels: Enterprise Process Groups, Enterprise Processes, Processes, Sub-processes, and Tasks. Each level represents a further refinement and specificity of the business activities, enabling a clear view of operations from the macro to the micro level.
Below, we examine each of these levels in detail
2.3.2. Enterprise Process Groups
This level represents the most abstract view of the organization’s processes, providing a bird’s-eye view of an organization’s core processes. It is often called the “Process Landscape” because it encompasses the broad overview of the organization’s processes, much like a landscape offers a comprehensive view of a terrain. This analogy helps visualize the interrelationships and dependencies among various processes, facilitating a holistic understanding of how individual processes contribute to the organization’s overarching objectives.
It comprises a group (or collection) of enterprise processes that directly contribute to the company’s value chain, such as ‘Idea-to-Market’ or ‘Demand-to-Cash’, focusing on outlining the primary functions and their interrelationships without delving into specific tasks. Figure 2.1 shows the process landscape for SAP, a leading enterprise application software provider.
Below are the desired attributes of the Level 1 EPM:
● Abstract: The Level 1 processes are abstract. This abstraction is essential because it allows for a simplified representation of complex processes. By abstracting details, Level 1 focuses on the core elements of the business, making it easier to comprehend the overall process architecture without getting lost in the intricacies of specific operations.
● Understandable: Level 1 processes need to be easily understandable despite the abstraction. This clarity is vital for ensuring stakeholders grasp the fundamental business processes. Understandability aids in better communication, training, and workforce alignment with the organization’s strategic vision.
● Limitation to 20 Processes: It is strongly recommended that the number of Level 1 processes be limited to no more than 20. This recommendation is based on the principle of simplicity and manageability. Too many processes at this level can lead to complexity and confusion, detracting from the model’s effectiveness. Limiting the number of processes ensures that only the most critical and value-adding enterprise process groups are included, promoting focus and efficiency.
In conclusion, the Process Landscape’s attributes of abstraction, understandability, and a cap on the number of processes make it an effective tool for aligning business operations with strategic objectives. Organizations can better navigate the complexities of their operations, leading to improved performance and competitiveness by maintaining a transparent and manageable process landscape.
2.3.3. Enterprise Process
Level 2, or the Enterprise Processes, directly connects to Level 1 by breaking down (or decomposing) these broad process groups into more detailed and specific processes. For instance, under the Demand-to-Cash process group (Level 1), Level 2 would detail specific processes like Lead-to-Quote, Quote-to-Order, and Order-to-Cash (see Figure 2.6). This level bridges the high-level overview provided by Level 1 processes and the detailed process workflows described in Level 3. It contextualizes the specific activities and workflows within the broader process groups, clarifying how individual processes contribute to the overall objectives of the process groups.
An enterprise process clusters related business processes into a coherent group based on shared characteristics, objectives, or functions. This categorization is essential for creating a structured and efficient approach to managing business processes.
This categorization offers numerous benefits, as described below:
● Improved Clarity and Understanding: Grouping processes help demystify the complexities of an organization’s operations. It provides a clearer picture of how different processes interact and contribute to the overall business objectives. This clarity is vital for stakeholders at all levels to understand their roles and responsibilities within the broader business context.
● Enhanced Focus on Core Processes: Organizations can more easily identify and focus on their core competencies by categorising processes. This focus is crucial for allocating resources effectively, prioritizing strategic initiatives, and ensuring critical processes receive the attention they deserve.
● Streamlined Process Management: Grouping processes leads to more streamlined management. It allows managers to oversee related processes collectively rather than dealing with numerous disparate tasks. This streamlined approach can lead to more efficient decision-making and improved operational agility.
● Facilitates Process Optimization: Categorizing processes makes identifying improvement areas easier. Process grouping allows organizations to benchmark performance within and across groups, identify best practices, and implement process improvements more systematically.
● Better Risk Management: Organizations can better assess and manage risks by understanding the interdependencies and the collective impact of grouped processes. This grouping facilitates a more holistic approach to risk management, ensuring that potential issues are identified and addressed at the group level.
● Enhanced Communication and Collaboration: Process grouping fosters better organizational communication and collaboration. Teams working on related processes can coordinate more effectively, share insights, and collaborate on solutions, leading to a more cohesive and integrated operational approach.
● Resource Optimization: Grouping processes allows for more effective resource allocation. Resources can be optimized across a group of related processes, ensuring that they are deployed where they can generate the most value.
A well-defined Level 2 Enterprise Process possesses several key attributes that ensure its effectiveness in bridging high-level process groups with detailed process diagrams:
● Clarity and Precision: Each process group should be clearly defined, with a precise scope that avoids overlap with other process groups. This clarity ensures stakeholders have a common understanding of each process.
● Alignment with Business Goals: Process groups should be directly aligned with the organization’s strategic objectives, ensuring they contribute effectively to achieving business goals.
● Measurability: Effective Level 2 processes have clear metrics and Key Performance Indicators (KPIs) that enable measuring process performance and identifying areas for improvement.
● Integration: While detailing specific activities, these process groups should also demonstrate how they integrate with and support other processes within the organization, facilitating smooth cross-functional workflows.
● Adaptability: They should be flexible enough to accommodate changes in business strategies, technology, and market demands, ensuring the organization remains agile and responsive.
● Efficiency: Processes should be optimized for efficiency, minimizing waste and redundancies, thereby ensuring that resources are used effectively to add value to the organization.
2.3.4. Processes
Each process in an enterprise process defined in Level 2 is further elaborated into process models as we move to Level 3. Level 3 provides a detailed, graphical representation of the workflows, activities, and decision points within each process identified in Level 2. It includes specific tasks, their sequences, roles responsible for each task, inputs, outputs, and interaction with other processes. The transition from Level 2 to Level 3 is a move from a descriptive to a prescriptive model of processes, where the abstract descriptions of processes are translated into actionable and operational workflows.
For example, the Level 2 Demand-to-Cash enterprise process expands in Level 3 to three process models. Figure 2.7 shows the activities for the Order-to-Cash process from order receipt through shipment, delivery, customer quality check and payment or return. These models are a practical tool for process implementation, analysis, and optimization.
The process definition standards detailed in Workshop 1 describe the requirements for a Level 3 process. These are summarized below:
● Clarity and Understandability: A good Level 3 process model should be clear and easy to understand, even for individuals who are not process experts. This means using standard symbols and notation, such as those provided by the Business Process Model and Notation (BPMN) framework, to represent elements like tasks, events, gateways, and flows(see Workshop 1 Course Manual 2). The models should be organized logically, with a clear starting point, sequential steps, and a defined endpoint, enabling stakeholders to follow the process flow easily.
● Comprehensive Detailing: The model must provide a thorough depiction of the process, including all relevant activities, decision points, roles involved, inputs, outputs, and any interdependencies with other processes. It should detail the flow of information and materials through the process, ensuring that every aspect of the process is documented. It is also recommended that process metadata is documented, including (but not limited) to the process owner, risks and controls and IT applications used. This comprehensive detailing aids in identifying inefficiencies, bottlenecks, and areas for improvement. Course Manual 4 of this workshop will explore how these risk mitigation details can facilitate operational risk management.
● Consistency: Consistency in using symbols, terminology, and layout across all process models within the organization is crucial. This consistency helps maintain a standard approach to process documentation, making it easier for stakeholders to understand and compare different processes. It also facilitates the integration of new processes into the existing process architecture.
● Accuracy: Accuracy is paramount in a Level 3 process model. The diagram should accurately reflect the current state of the process, including the actual activities performed, the sequence in which they occur, and the roles responsible for each step. Accurate process models are essential for effective process analysis, management, and optimization.
● Scalability and Flexibility: Good process models are designed with scalability and flexibility in mind. They should be easy to update and modify in response to changes in the business environment, process improvements, or technological advancements. This adaptability ensures that the models remain relevant and valuable over time, supporting continuous process improvement.
● Usability: The model should be user-friendly, facilitating easy navigation, interpretation, and analysis. This may include the use of color coding, legends, and annotations to highlight key aspects of the process, such as critical paths, risk points, and performance metrics. Usability enhances the practical value of the model as a tool for training, communication, and process management.
2.3.5. Sub-processes
Sub-processes decompose the processes further into more granular activities. These are a group or sequences of activities within a process that lead to completing a higher-level activity. For example, the Order-to-Cash Process Model (see Figure 2.8) consists of two sub-processes – Shipment and Invoicing (see Figure 2.8a & b). This level allows for a deeper understanding of how this process is executed and provides a basis for process optimization and efficiency improvement.
2.3.6. Activities
At the bottom of the taxonomy, activities represent the most detailed level of the framework. These are the individual actions or operations that must be performed to complete a sub-process. Activities are the fundamental units of work and can be as simple as “log the customer’s complaint into the system” or “issue a refund to the customer.” This level is critical for operational efficiency, as optimizing activities can significantly improve process performance.
In conclusion, we have established that organizational processes do not exist in isolation; they are interconnected components of a complex system. Understanding the relationships and interconnectedness between these processes is crucial for efficient and effective operations. In the following course manual, we will examine how reference models can facilitate the creation and governance of Enterprise Process Models.
Case Study: IT Processes, Travis Perkins UK
Problem
Travis Perkins, a Northampton-based British builders’ merchant and home improvement company, decided to sell off their plumbing and heating sector several years ago. Travis Perkins’ IT leadership requested an evaluation of the division’s IT environment prior to that divestment. Travis Perkins, a multi-brand firm, depended on an intricate IT environment that had developed organically over many years. The state of its IT was “not how you would have built it” if it were designed from scratch today. The company prioritized raising customer expectations and enhancing the user experience, which their current IT environment could not support. The first issue they had to deal with was the lack of or inadequate maintenance of a large portion of the data required to organize and carry out the modernization process.
How Enterprise Process Modeling helped
The organization established a system of record for its numerous IT assets, achieving standardization, a unified language for many components, and clear ownership and user details. Travis Perkins also recognized that it required a model backed by data, such as application ownership, to facilitate proper analysis. As such, it adopted an enterprise process modelling tool, enabling it to consolidate process models and data management in one location. This tool facilitated the integration of enterprise architecture data with process data, allowing easy identification of who owned and used various programs and in what processes they were involved.
Travis Perkins also managed to link technology and processes to business capabilities. Given the complexity of their business capability map due to the multitude of brands under the Travis Perkins umbrella, this integration was crucial. It allowed the organization to ensure sensible relationships between business capabilities, technology, and processes, streamline these relationships when necessary, and establish them on robust data.
However, this exercise revealed a disarray of information about Travis Perkins’ processes. Workshops were subsequently held with business stakeholders to deeply understand the processes and their broader context within a larger ecosystem of processes, applications, and data sources.
The modeling process was revealing, as it uncovered “black boxes” in current processes—areas where business stakeholders were uncertain about data origins or destinations, which the company was subsequently able to address.
Results
First, the organization now has a clear understanding of the current state of its IT and process landscape, with a central place for accessing information about process ownership, interactions, and supporting applications (which was previously lacking).
Second, they have begun implementing standards for how processes should visually appear and guidelines for collecting and storing IT and process data. The process documentation autonomy of its subsidiary brands (which had previously been permitted) resulted in uncoordinated chaos. However, process documentation standardization served as a foundation for innovation across the organization.
Finally, the groundwork laid by this exercise bolstered the organization’s efforts to overhaul and replace its ERP system. Attempts at this overhaul had previously failed; however, the process architecture has subsequently enabled the organization to plan and implement transformations consistently and methodically.
Source: leanix.net
Exercise 2.2
Course Manual 3: Reference Models
3.1. Introduction
In the previous course manual, we explored the interrelationship between processes and how they enable the creation of an Enterprise Process Model. However, many analysts struggle to identify their company’s enterprise processes to create their organizational EPM. Additionally, after an organization has produced their EPM, reviewing it for completeness is often challenging. This course manual will examine reference models, which are invaluable for creating and reviewing EPMs. We will also discuss a seven-step process for creating an EPM using reference models and the governance of EPMs to ensure they remain accurate and relevant.
3.2. Understanding Reference Models
A reference model in business process management is a standard or framework that provides best practices and guidelines for structuring an organization’s processes. These models serve as a blueprint, offering a tested and proven foundation upon which an enterprise can build its unique process architecture.
The rationale for using reference models as a starting point in developing an enterprise process model is multifaceted:
o Industry Commonalities: Many industries share a set of common processes, such as human resources, procurement, IT management, and others. Reference models encapsulate these universal process requirements, providing a solid starting point that is applicable across various industries.
● Preventing Reinvention of the Wheel: Organizations can avoid the time-consuming and resource-intensive task of developing process frameworks from scratch by adopting established reference models. These models provide a tried and tested structure, reducing the risk of overlooking critical process elements.
● Leveraging Industry Best Practices: Reference models often encapsulate industry-wide best practices. They provide insights into efficient process management, honed through collective experience and expertise.
Adopting reference models in developing enterprise process models offers several benefits, such as:
● Expedited Process Development: Reference models provide a ready-to-use framework, significantly reducing the time required to develop and implement an enterprise process model.
● Ensures Completeness: Given their comprehensive nature, reference models help ensure that all critical process elements are considered and integrated into the enterprise model.
● Standardization and Consistency: Using an established reference model fosters standardization across the organization’s processes. This standardization aids in maintaining consistency, reducing errors, and simplifying training and compliance requirements.
● Improved Efficiency and Effectiveness: Reference models are optimized for efficiency and effectiveness, having evolved through extensive use and refinement. Adopting these models can lead to improved operational performance and service quality.
● Facilitates Benchmarking and Continuous Improvement: With a reference model, organizations can benchmark their processes against industry standards, identifying areas for improvement and fostering a culture of continuous process enhancement.
● Enhanced Adaptability and Scalability: Reference models are typically designed to be adaptable and scalable, accommodating the growth and evolving needs of the organization.
A well-known example of a reference model is the Information Technology Infrastructure Library (ITIL), a widely recognized set of practices for IT service management (ITSM) that focuses on aligning IT services with the needs of the business. ITIL is an exemplary reference model that can be used to structure and improve an organization’s IT processes. An organization looking to enhance its IT service management can adopt ITIL as the basis for its enterprise process model. By doing so, it aligns its IT services with a globally recognized framework, ensuring its processes align with the best practices in IT service delivery and management.
Other examples of reference models are the Supply Chain Operations Reference Model (SCOR), created to facilitate efficient communication amongst supply chain participants and the Process Classification Framework (PCF), a classification system for enterprise processes that enable organizations to measure and compare their performance with organizations in any industry.
Table 3.1 below shows an example drilldown from Level 1-5 of a selected enterprise process group.
The PCF can be downloaded from the following links:
● Excel format: https://www.apqc.org/system/files/resource-file/2023-11/K012571_PCF_CrossIndustry_v7.3.1_November%202023_0.xlsx
● PDF format: https://www.apqc.org/resource-library/resource-listing/apqc-process-classification-framework-pcf-cross-industry-pdf-11
● Note that Enterprise Process Groups (L1 processes) are referred to as Process Categories and Enterprise Processes (L2 processes) are referred to as Process Groups
Exercise 3.1
3.3. Creating A Process Landscape Model
As discussed earlier, the Process Landscape Model (.i.e. EPM Level 1 processes) is an overarching representation of an organization’s processes, illustrating how they interconnect and contribute to the overall business strategy. This model provides a macro view of organizational processes, aiding in understanding, managing, and improving how various business functions work together.
Dumas et al detail a seven-step process for creating a process landscape model as described below:
1. Define Key Terms: Start by clarifying all important terms for the process landscape model, using an existing organizational glossary or reference models for consistency. This ensures everyone understands the terms uniformly. We recommend using the Process Classification Framework for this process as it covers a wide range of enterprise processes as opposed to ITIL and SCOR, which are focused on ITSM and Supply Chain, respectively.
2. Map Out End-to-End Processes: Identify comprehensive processes that start and end with customer or supplier interaction, using product and service types, channels, and customer types as guides. These processes highlight the organization’s value chains.
3. Break Down Processes: Segment each end-to-end process into its sequential steps, considering different perspectives like product lifecycle, customer relationship stages, supply chain steps, transaction stages, and any significant changes in business objects.
4. Identify Support Processes: For every business process, determine necessary management and support functions, such as personnel, finances, information, and materials management. Some support processes might be central to the business model. PCF L1 processes 7 to 13 are support processes.
5. Further Detail Business Processes: Subdivide business processes into more specific tasks, where each can be independently managed, considering manageability and the potential impact of process improvements.
6. Develop Process Profiles: Document each process in detail, outlining its scope, objectives, performance metrics, resources, and assigned process owner, which helps guide management and improvement efforts. The template below can be used for this purpose.
7.
8. Validate the Model: Ensure the process landscape is complete and consistent by comparing it with reference models, verifying terminology consistency, and aligning processes with organizational functional units. This should include reviewing the developed process landscape with stakeholders to validate its accuracy and completeness. This collaborative review may reveal additional insights and necessitate refinements to the model.
In conclusion, by following the seven-step design model, organizations can develop a process landscape that enhances understanding of their operational dynamics, supports strategic planning, and guides process improvement initiatives. This model is a map of how processes are currently executed and a framework for envisioning and implementing future organizational improvements.
In the final section, we explore how to ensure the EPM meets the requisite standard and remains relevant after creation.
3.4. EPM Governance
In the context of enterprise process models, governance ensures that an organization’s processes continue to align with its strategic goals, comply with regulations, and manage risks effectively. A robust governance framework ensures that the EPM remains accurate and fit for purpose. Below, we delve into the critical elements of governance for an enterprise process model, focusing on periodic recertification, reporting, monitoring, effective controls, and management metrics.
3.4.1. Governance Elements
Periodic Recertification
Periodic recertification ensures that the EPM remains accurate and that any changes are captured. Process owners are typically responsible for this activity, which involves the annual assessment and validation of the EPM. Recertification processes should be systematically scheduled and enforced to reflect changes in roles, regulations, and business operations. It serves as a check to ensure that processes are still adequate, effective, and in line with the current business objectives and compliance requirements.
Reporting
EPM Reporting is essential for an organization’s transparency, accountability, and informed decision-making. Effective governance requires establishing a structured reporting mechanism that provides insights into performance, risks, compliance status, and areas requiring improvement. Reports should be tailored to the needs of different stakeholders, including management, regulatory bodies, and auditors, ensuring they contain relevant, accurate, and timely information. EPM reports could include recertification status and the number of updates made to the EPM in that period, among others. Organizations can facilitate real-time decision-making and ensure stakeholders are well-informed about the governance health of the EPM by using reporting tools and dashboards,.
Monitoring
Continuous monitoring facilitates the timely identification of deviations from expected process performances and emerging risks. This proactive approach enables organizations to address issues before they escalate, ensuring that processes operate as designed and within the set risk tolerance levels. Monitoring encompasses a range of activities, including analysing key performance indicators (KPIs), audit logs, and exception reports. It should be integrated with the organization’s risk management framework to view operational and compliance risks comprehensively. In the next workshop, we will discuss process mining, which facilitates the near-real time monitoring of processes across the organization.
Effective Controls
In the context of EPM governance, controls are preventive, detective, and corrective measures that organizations implement to ensure the integrity of the EPM. Common controls include logical access controls to ensure that only designated employees can create and edit relevant processes. It should also include the segregation of duties, for example, a rule that only the Process Owner or a delegate can sign off on a process model and that a person cannot sign off on a model they created. Audits and reviews should be performed on these controls to assess them regularly, and adjustments should be made in response to changes in the operational environment or risk landscape.
Management Metrics
Management metrics provide a quantitative basis for evaluating the performance and effectiveness of governance activities. Key metrics should align with the organization’s strategic objectives and risk appetite, allowing management to gauge how well governance processes control risks and achieve desired outcomes. Typical metrics include compliance rates, time to resolve incidents, cost of governance activities, and stakeholder satisfaction levels. These metrics should be regularly reviewed and refined to ensure they remain relevant and drive continuous improvement in governance practices.
3.4.2. Governance Roles
The governance of the EPM requires clear roles and responsibilities to ensure efficiency, compliance, and alignment with the organization’s strategic goals. The Process Owner plays a pivotal role in governance by ensuring that L3 processes are well managed. However, additional roles are required to facilitate the governance of the framework at higher levels (.i.e. L1 and 2). Typically, these higher-level processes are managed by the Enterprise Process Management Centre of Excellence (CoE) and the Enterprise Process Owner. These roles are instrumental in establishing a robust governance structure that enhances operational effectiveness, drives continuous improvement, and manages risks. Below, we explore the roles and responsibilities of these two key positions.
Enterprise Process Management Centre of Excellence (CoE)
The Enterprise Process Management Centre of Excellence (CoE) is the central hub for the organization’s enterprise process management expertise, best practices, tools, and governance standards. It plays a strategic role in fostering a culture of continuous improvement and operational excellence across the enterprise. The responsibilities of the Enterprise Process Management CoE include:
● Standardization and Methodology Development: Developing and maintaining standardized process management methodologies, tools, and best practices. This includes creating templates, guidelines, and policies that ensure consistency and efficiency in enterprise process design, implementation, and improvement.
● Training and Support: Providing training and support to process owners and teams across the organization, which involves disseminating knowledge about best practices, coaching teams on process improvement methodologies, and offering advice on solving process-related challenges.
● Performance Monitoring and Reporting: Establishing and overseeing the monitoring of key performance indicators (KPIs) to evaluate the effectiveness of enterprise processes across the organization. The CoE is responsible for compiling and analyzing performance data to identify trends, opportunities for improvement, and areas of concern.
● Governance and Compliance: Ensuring processes comply with internal policies and external regulations, which involves regular audits, reviews, and process updates to align with changing regulatory requirements and business objectives.
● Innovation and Improvement Initiatives: Leading and coordinating cross-functional improvement initiatives that drive operational excellence and innovation. The CoE acts as a catalyst for change, encouraging the adoption of new technologies, methodologies, and approaches to enhance process efficiency and effectiveness.
Enterprise Process Owner
The Enterprise Process Owner (also called a Global Process Owner) is responsible for the end-to-end management of a specific enterprise process or set of processes. This role ensures the enterprise process achieves its intended outcomes, supports the organization’s strategic objectives, and operates within the defined risk tolerance levels. Key responsibilities include:
● Strategic Alignment: Ensuring the enterprise process aligns with the organization’s strategic goals and objectives. The process owner works closely with senior management to define and refine the vision and objectives for the process.
● Performance Management: Defining key performance indicators (KPIs) for the process and monitoring its performance against these metrics, including regular reporting on process effectiveness, efficiency, and compliance. They work closely with the various process owners to ensure the enterprise process performs optimally.
● Risk Management: Identifying, assessing, and mitigating risks associated with the enterprise process. This involves developing and implementing controls to manage process risks effectively.
● Continuous Improvement: Continuously seeking opportunities to improve the enterprise process, which entails analyzing process performance, soliciting feedback from stakeholders, and implementing improvement initiatives to enhance process outcomes.
● Stakeholder Management: Engaging with and managing relationships with key stakeholders involved in or affected by the enterprise process, including communication and collaboration with process owners, users, beneficiaries, and support teams to ensure that the process meets their needs and expectations.
In conclusion, EPM governance is a multifaceted discipline that requires a balanced approach to recertification, reporting, monitoring, effective controls, and management metrics. In the following course manual, we will explore how the EPM can facilitate managing and mitigating operational risks.
Case Study: Concentra Analytics, United Kingdom
Problem
Concentra Analytics, a commercial SaaS data products and services firm headquartered in the UK, specializes in developing, marketing, and supporting various modeling and analysis tools. This organization has a workforce of 220 and maintains offices in Philadelphia, the Hague, Hong Kong, and London. Its clientele are located across the United Kingdom, Canada, Australia, the Middle East, and South Africa. To accelerate its international growth, Concentra secured investment. The company recognized that its expansion journey would be significantly impaired without clearly established processes, roles, and responsibilities. The organization also realized that its expansion would require the introduction of entirely new roles and functions while opening offices in new locations.
How Reference Models Helped
Faced with these challenges, the company chose to map its processes and taxonomies to understand its operations better and identify improvement opportunities. The organization selected the PCF as its reference model, which allowed it to delineate each function’s responsibilities and provide access to existing taxonomy and operational definitions. Concentra’s iterative approach involved incorporating feedback from key internal stakeholders to define, map, and assign responsibilities.
Representatives from each department, acting as subject matter experts, contributed to refining the taxonomy, adapting the PCF to meet the company’s specific needs, and clearly defining each role’s contribution. Adopting this continuous refinement and modeling process was vital as it evolved with their growing understanding of the business and its foundational operations.
The company established a resource utilization baseline for each activity and assessed the associated costs, time, and current responsibilities, providing enhanced transparency. This evaluation led to the identification of several opportunities for process optimization. For example, the company discovered that approving a new contract involved coordination across seven activities and three approval levels. It was agreed that this process included many non-value-adding activities, revealing its inefficiency and lack of scalability.
The PCF was instrumental in clarifying each role’s scope. By mapping activities to roles using the PCF, the company created a “give-get” matrix, which “clarified those responsibilities distinctly.” This matrix helps define what each role contributes to and receives from others and the key interaction points across departments.
Result
Concentra’s annual direct recurring revenue (a key performance indicator) grew by 70% following this exercise. Furthermore, the company’s net subscription revenue retention rate exceeded 100%, indicating that customers stayed and tended to increase their purchases.
While the success in revenue growth was not solely attributed to the baselining and process improvements, this initiative was crucial for the company’s continued expansion.
Source:apqc.org
Exercise 3.2
Course Manual 4: Operational Risk Management
4.1. Introduction
Operational Risk Management (ORM) refers to the continuous process of identifying, analyzing, evaluating, and controlling the risk of loss resulting from inadequate or failed internal processes, people, systems, or external events. These risks, which are interconnected, are present in all organizations. The primary goal of ORM is to minimize losses related to these risks and to optimize the organization’s risk-return profile. In this course manual, we will examine the nature of operational risk events and how the EPM can facilitate the identification and management of operational risks.
4.2. Operation Risk Events
Operational risk events can significantly impact an organization’s stability and financial performance, making their management a critical component of overall risk management strategies. Below, we will discuss various categories of operational risks: internal process risks, people risks, systems risks, external risks, and legal risks, providing definitions and examples for each.
4.2.1. Internal Process Risks
Internal process risks arise from the failure of internal organizational procedures. These risks are often associated with the organization’s core business processes and arise from processing or documentation errors and a lack of process controls. Due to a transposition error made by one of its traders, UBS Warburg, a Swiss bank, lost an estimated USD 50 million in November 2001. Instead of selling 16 shares at 610,000 yen apiece, the Tokyo-based trader sold 610,000 shares mistakenly for 16 yen each. The automated trading system questioned the order, but a gap in operational controls permitted the trade to be released.
4.2.2. People Risks
People risks are associated with errors or intentional actions by employees that lead to losses. These can include fraud, lack of competence, failure to follow procedures, or even the absence of key personnel. An illustrative example is the case of Barings Bank, where a single trader’s unauthorized speculative trading led to the bank’s collapse in 1995, underscoring the importance of effective personnel management, training, and a robust organizational culture emphasizing ethical behavior and compliance with established processes.
4.2.3. Systems Risks
Systems risks refer to the failures in the information technology systems that support business processes. These risks can be due to system outages, cyber-attacks, data breaches, or software defects. An example is the 2017 Equifax data breach, where a vulnerability in a web application led to the exposure of personal data of approximately 147 million people. This incident highlights the critical need for robust cybersecurity measures, regular system updates, and comprehensive data protection strategies, as discussed in Workshop 2 Course Manual 2.
4.2.4. External Risks
External risks originate from outside the organization, including natural disasters, terrorism, geopolitical events, or pandemics. For instance, the global spread of COVID-19 in 2020 posed significant operational challenges for many businesses, disrupting supply chains, forcing changes in workplace operations, and impacting customer demand. The pandemic underscored the importance of contingency planning, flexibility, and resilience in operations to mitigate the impacts of external shocks.
4.2.5. Legal Risks
Legal risks are associated with the potential for lawsuits, regulatory actions, or breaches of contracts that could lead to financial losses or reputational damage. An example of legal risk is the litigation faced by Volkswagen following the emissions scandal, where software that manipulated emissions testing results led to billions in fines and settlements. This case highlights the need for legal compliance and the potential financial and reputational consequences of legal entanglements.
In conclusion, effective management of operational risks requires a comprehensive understanding of the various risk categories and the implementation of robust risk management frameworks. Organizations must invest in internal controls, training, technology, and contingency planning to mitigate these risks. Furthermore, fostering a culture of risk awareness and ethical behavior is crucial in minimizing the occurrence and impact of operational risk events.
The following section will discuss the risk management process and examine how the EPM can facilitate risk identification and management.
Exercise 4.1
4.3. Risk Management Process
As earlier established, operational risk management enables organizations to navigate the complex landscape of risks that can impact their daily operations. This multifaceted approach involves identifying, assessing, measuring, mitigating, monitoring, and reporting risks to minimize operational losses. Each stage of this process is interconnected, forming a dynamic framework that aids in the proactive management of potential threats and opportunities (see Figure 4.1).
Below, we discuss in detail each step in the process:
4.3.1. Risk Identification
The first step in operational risk management is risk identification, which involves recognizing the various risks that could harm an organization’s operational capabilities. These risks can be internal (e.g., system failures or employee errors), or external (e.g., regulatory changes or natural disasters). Effective risk identification is achieved through various methods, including:
● Process Reviews: Examining the steps in critical processes to identify vulnerabilities. The Failure Modes of the FMEA (see Workshop 2, Course Manual 3, Section 3..4.3) are helpful in this regards as failure modes often lead to risks.
● Historical Analysis: Reviewing past incidents to identify patterns or recurring issues.
● Scenario Analysis: Imagining possible risk scenarios based on various factors.
Other tools, such as audits, interviews and causal networks, can assist with risk identification. The goal is to create a comprehensive list of risks that could impact the organization without evaluating their severity or likelihood.
The identified risks should be recorded in a risk register that serves as a comprehensive repository of all identified risks, along with information about their assessment, control measures, and monitoring.
A typical risk register includes the following elements for each risk:
● Risk Description: A detailed explanation of the risk, including its source and potential impact.
● Risk Category: Risk classification (e.g., strategic, operational, financial).
● Risk Assessment: Evaluation of the risk in terms of likelihood and impact.
● Risk Owner: Identification of the individual or team responsible for managing the risk.
● Control Measures: Strategies implemented to mitigate or manage the risk.
● Risk Status: Current risk status (e.g., active, mitigated, closed).
Below is a template for an operational risk register
4.3.2. Risk Assessment
Once risks are identified, the next step is assessment. Risk assessment evaluates the potential impact and likelihood of each identified risk. This process helps organizations prioritize their focus based on the severity and probability of risks.
The assessment process typically involves:
● Risk Scoring: Assigning values to risks based on their severity and likelihood.
● Impact Analysis: Evaluating each risk’s potential financial, reputational, and operational impacts.
● Likelihood Estimation: Determining the probability of each risk occurring.
Techniques like risk matrices plot the impact against likelihood, and qualitative assessments, which provide narrative descriptions of risks, are commonly used. The Effects and Analysis section of the FMEA can also assist with risk assessment.
The outcome of this phase is a prioritized list of risks that require further analysis and management.
4.3.3. Risk Measurement
Risk measurement quantifies the potential impact of identified risks on the organization, which involves assigning numerical values to the impact and likelihood of risks, using statistical models and historical data. The aim is to understand the potential loss or disruption each risk could cause, providing a basis for comparison and prioritization. This step is critical for resource allocation, ensuring that the most significant risks are addressed with appropriate urgency and resources.
4.3.4. Risk Mitigation
Mitigation strategies are developed to reduce the likelihood and impact of risks. This involves choosing the most appropriate response for each risk, including avoiding, accepting, transferring, or reducing the risk. Risk mitigation plans are tailored to the organization’s objectives, risk appetite, and operational capabilities. Effective mitigation requires continuous review and adaptation to changing circumstances and emerging risks, typically involving:
● Select Mitigation Strategies: Develop plans to reduce the impact or likelihood of risks.
● Implement Controls: Risk controls are preventive, detective or corrective measures that help manage identified risks, which could involve enhancing security measures, implementing new software for data protection, or revising operational procedures. The effectiveness of these controls is crucial for reducing the operational risk to an acceptable level. Examples of controls include physical and logical access controls to IT systems or office locations, segregation of duties and automated checks within IT systems.
4.3.5. Risk Monitoring
Continuous monitoring ensures that risk management strategies remain effective over time, involving regularly reviewing the risk environment, control measures, and the outcomes of mitigation strategies. Monitoring helps identify new risks and assess the effectiveness of risk management efforts, allowing for timely adjustments. Monitoring techniques include regular audits, performance reviews, and key risk indicators (KRIs) that signal the need for action.
4.3.6. Risk Reporting
The final stage of operational risk management is reporting. Effective reporting provides all stakeholders, from management to employees, clear, concise, and relevant information about the organization’s risk profile. This includes details on identified risks, assessments, mitigation efforts, and monitoring results. Reporting ensures transparency, aids decision-making, and supports regulatory compliance by documenting the organization’s commitment to managing operational risks.
In conclusion, operational risk management is a cyclical and ongoing process that enables organizations to navigate the complexities of operational risks. Organizations can enhance their resilience, protect their assets, and achieve their strategic objectives by systematically identifying, assessing, measuring, mitigating, controlling, monitoring, and reporting risks. This comprehensive approach safeguards against potential threats and identifies opportunities for improvement and growth, ultimately contributing to the organization’s success and sustainability.
4.4. How the EPM facilitates ORM
An oganization’s Enterprise Process Model (EPM) plays a pivotal role in managing operational risks by providing a detailed, visual representation of its processes coupled with metadata. This model can facilitate identifying, assessing, and mitigating risks associated with various business processes. In this section, we will explore how EPM aids in operational risk management, the role of risk metadata in associating risks with activities, and how process mining contributes to measuring risk probability and occurrence.
The EPM facilitates ORM in the following ways:
● Increased Transparency and Understanding of Processes: The EPM offers a clear view of the internal workings of an organization. By understanding how processes flow and interconnect, managers can identify potential risk areas more accurately.
● Identification of Risk Points: Through process models, organizations can pinpoint specific stages in a process where risks are likely to occur. For example, in a supply chain process, EPM can highlight stages like procurement or logistics, where delays or failures can pose significant risks.
● Facilitation of Risk Analysis: EPM allows for a more structured risk analysis by providing a framework to assess the impact and likelihood of risks at different process stages. For example, when MUFG (formerly Bank of Tokyo-Mitsubishi UFG) needed to identify and quantify operational risk events, the organization examined its internal business processes and, based on historical data, created operational risk management and measurement strategies.
● Provision of Risk Metadata: In course manual 2, we established that it is good practice to document process risks and controls against the relevant activities in the process model. This data can form the basis of risk metadata in the EPM, which refers to data that describes and quantifies the risks associated with particular processes. It includes details about the nature of risks, their potential impact, and the controls in place to mitigate them.
This metadata is crucial for several reasons:
i. Associating Risks with Activities: Risk metadata helps associate specific risks with particular activities within a process. For instance, in a financial process model, an activity like “process transaction” can be linked with risks like “fraud” or “data transposition errors”. This data can be queried to answer questions such as “Which activities are associated with data transposition errors?”
ii. Impact and Control Association: This data also helps associate potential impacts and controls with risks. For example, the risk of a data breach in an IT process can be linked to its impact on data integrity and control measures like encryption or access controls.
iii. Prioritization of Risks: By providing a clear view of risks, their impacts, and controls, risk metadata enables organizations to prioritize risks based on their severity and the effectiveness of existing controls.
The following course manual will examine how process mining can accelerate the identification and analysis of operational risk events and the effectiveness of associated controls.
We conclude this course manual by discussing several use cases across various sectors:
Banking Sector: In banking, the EPM can assist financial services organizations to satisfy regulatory requirements by demonstrating that they effectively control their risks. Risk metadata can enable banks to understand how operational risks can magnify other risk types (e.g., credit and market risk).
In the event of a system outage, querying the process metadata can enable the prompt identification of the affected activities, products and services, resulting in more effective Business Continuity Management (BCM). The same also applies when regulatory change occurs, facilitating the assessment of the change’s impact and enabling better management.
Process mining can also analyze transaction data to predict the likelihood of fraud empirically.
Healthcare Sector: In healthcare, EPM can be used to document patient care processes. Risk metadata can associate medication administration with risks of errors or obtaining patient blood samples with mislabelling errors (see Workshop 1, Course Manual 3 case study). Additionally, process mining can analyze patient data to identify patterns that might lead to increased risks of misdiagnosis or medication errors.
Manufacturing Sector: The EPM’s risk metadata can link stages like raw material procurement with supply chain risks for a manufacturing company. For example, suppose a natural disaster disrupts the supply chain. In that case, the process metadata can be queried to identify which activities are adversely impacted, resulting in better operational resilience (see Course Manual 1 case study). Process mining can analyze production data to predict equipment failure risks.
In conclusion, Enterprise Process Modeling, enriched with risk metadata, provides a foundational framework for managing operational risks in a structured and effective manner. Process mining complements this by offering data-driven insights into risk probability and occurrence, allowing for more informed decision-making. Together, these tools enable organizations to identify and assess risks and mitigate them proactively.
Case Study: MOL Group
Problem
MOL Group, a leading oil and gas (O&G) firm in Central and Eastern Europe, employs 26,000 people globally and operates in over 30 countries. MOL Group is involved in several industries, such as consumer retail, downstream petrochemical production and refining, midstream transmission and logistics, and upstream extraction and production. Handling highly reactive substances at high pressures and temperatures daily, the company operates in inherently explosive, flammable, and hazardous conditions. Despite having robust risk assessment processes, MOL Group relied on outdated and disjointed systems—Excel files located on separate hard drives—to manage and track risk assessment results across its widespread operations.
How Enterprise Risk Management (ERM) Helped
The ERM team worked with key organizational stakeholders to develop new business processes and implement a tailored risk management application by drawing on their expertise in technical risk and digital solutions. This solution was piloted at five downstream production facilities in Hungary, Slovakia, and Croatia. The integration of process and risk data enabled the inclusion of operational risk assessment outcomes into the enterprise risk management framework. A 5×5 risk matrix was used to evaluate discrete process safety advice and insights for each refinery production unit, which was subsequently linked to a communal operational risk registry.
The Enterprise Risk Management approach then consolidated these registries to summarize process safety risks at both the site and corporate levels. The organization now has the ability to allocate resources and prioritize initiatives based on risk intelligence by acting on specific risk assessment findings or recommendations and categorizing them by potential risk reduction.
Results
The new risk-process methodology has provided MOL with full traceability of risk levels and actions throughout the company and near real-time insight into all operational risks at the corporate level. Furthermore, the scalable and adaptable framework enables MOL to broaden this comprehensive risk management strategy in the future by incorporating additional sites, inputs, and organizational risk categories. The initiative was a finalist for an industry innovation award and won another.
Source: erm.com
Exercise 4.2
Course Manual 5: Process Prioritization
5.1. Introduction
As earlier established in Workshop 2, organizations must make choices regarding the optimization scope and order for their processes due to the scarcity of resources required to optimize these processes. In this course manual, we will examine how the process catalog can be derived from the EPM, selection criteria can be applied against the catalog and how a process portfolio process facilitates the prioritization and selection of processes for optimization.
The following section examines the process catalog, including its definition and how to create it.
5.2. The Process Catalog
A process catalog (also known as a process library or service catalog) acts as a centralized reference point, documenting all the processes within an organization. This centralization is crucial for maintaining an overview of operational processes and for ensuring that all employees have a common understanding of these. The process catalog is derived from listing all the L3 processes (and optionally L4 subprocesses) from the EPM. Tables 5.1 and 5.2 display a couple of variants of process catalogs. These examples show that process catalogs can be customised by enriching it with additional information, e.g. risks and controls for regulatory reporting purposes
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The process catalog provides the following benefits:
● Facilitates Process Standardization and Optimization: As we shall later establish in this course manual, the process catalog forms the basis for process prioritization, ensuring that the most impactful processes are optimized first. Furthermore, organizations can identify redundancies, inconsistencies, and inefficiencies by cataloging their processes, leading to improved performance and reduced operational costs.
● Enhances Transparency and Accountability: A well-maintained detailed process catalog enhances transparency by clarifying the responsibilities and subprocesses associated with each process (See Table 5.2). This transparency, in turn, fosters accountability within the organization.
● Supports Compliance and Risk Management: With regulatory requirements becoming increasingly stringent, a process catalog can assist in ensuring compliance by clearly outlining process controls and audit trails. It also aids in identifying and managing potential risks associated with various processes.
Various Enterprise Business Process Analysis (EPBA) software tools are available to assist in creating a process catalog. These tools, which often come with templates and guides based on standard reference models, provide the capability to export the process catalog from an existing EPM. Course Manual 7 will explore some of these tools in additional detail.
Alternatively, an organization may manually create its process catalog based on its existing EPM.
A process catalog is not a static document but a dynamic tool that should evolve with the organization. As established in Course Manual 3 (see Section 3.4.1.), regular reviews and updates are necessary to ensure it remains up-to-date, relevant and effective.
In the following section, we will explore how the process catalog can be enriched with information that enables processes to be prioritized for optimization.
Exercise 5.1
5.3. Balanced Scorecard
Developed by Robert Kaplan and David Norton in the early 1990s, the balanced scorecard is a strategic planning and management tool which provides a framework for measuring organizational performance using a more balanced set of perspectives. Unlike traditional financial reporting systems, the balanced scorecard includes non-financial aspects of performance to provide a more comprehensive view of an organization’s health. The scorecard allows managers to look at the business from four essential perspectives: Financial, Customer, Internal Business Processes, and Learning and Growth, thus ensuring a balanced view of organizational performance. The scorecard broadly aligns with the various stakeholder perspectives discussed in Workshop 1.
These four components are explored in further detail below:
1. Financial Perspective
This perspective evaluates an organization’s financial performance, which is fundamental to its success. Key Performance Indicators (KPIs) in this quadrant might include net income, return on investment, or revenue growth rate. The objective is to measure whether the company’s strategy, implementation, and execution contribute to bottom-line improvement.
2. Customer Perspective
This area focuses on customer satisfaction and market share goals. Metrics here could include customer satisfaction scores, percentage of market share, customer retention rates, and customer loyalty indices. The aim is to assess the organization’s success from the viewpoint of those who consume its products or services.
3. Internal Business Processes Perspective
This perspective looks at internal operational goals and measures the efficiencies of these processes, which lead to satisfying customer expectations and financial objectives. Common metrics include process completion times, production efficiencies, and quality indicators. The goal is to identify and improve critical processes that add value to the final product or service.
4. Learning and Growth Perspective
The final perspective concentrates on the intangible drivers of future success, such as employee satisfaction, organizational culture, training, and development. Metrics might include employee turnover rates, training hours per employee, and employee satisfaction scores. The focus is on creating a culture that supports organizational improvement and innovation.
This scorecard has several practical applications as outlined below:
Strategic Alignment
Organizations use the balanced scorecard to align business activities to the vision and strategy of the organization, improve communication between various segments of the business, and monitor performance against strategic targets. Through its holistic approach, the scorecard helps firms translate a business’s vision and strategy into coherent performance measures.
Performance Management
The balanced scorecard can be employed as a performance management tool that helps managers monitor and adjust controls as needed. It provides a framework that includes strategic management metrics and operational control indicators. This dual function makes the balanced scorecard a vital tool for continuous improvement.
In the following section, we will explore how the principles underlying the balanced scorecard can be combined with the process catalog to prioritize processes for optimization.
Decision Making
The balanced scorecard supports better decision-making by integrating financial and non-financial data in one report. It allows managers to look at the business from multiple dimensions, which leads to more balanced and comprehensive analyses. Decisions based on this integrated approach are more likely to achieve strategic objectives.
In conclusion, the balanced scorecard has significantly influenced how many businesses manage and measure success, providing a versatile framework that includes financial metrics and emphasizes the importance of customer satisfaction, internal process efficiency, and organizational growth and learning. In the following section, we extend the principles encapsulated in the balanced scorecard to process prioritization.
5.4. Prioritization Criteria
Bringing together the learnings from the two previous sections, we detail below a process for prioritizing processes. The following three criteria (derived from the balanced scorecard) should be applied to each process in the catalog to determine the order in which to optimize processes.
Below, we explore each of these criteria in detail:
Strategic Importance
The extent to which a process contributes to an organization’s strategic objectives is a primary criterion for prioritization. Processes that are directly linked to the organization’s mission, vision, and long-term goals are often given higher priority. Additionally, the following sub-criteria help to determine the strategic importance of a process
● Impact on Other Processes: As previously established, processes are often interconnected; thus, the impact of one process on others is a critical criterion for prioritization. Processes that significantly impact other critical processes are often given higher priority.
● Customer Impact: Aligning with the customer quadrant of the balanced scorecard, processes that directly affect customer satisfaction and experience are prioritized. The logic is straightforward: keeping customers satisfied is crucial for the business’s success.
● Cost-Benefit Analysis: Processes are also prioritized based on the potential return on investment. Processes that promise significant benefits at a relatively lower cost are often prioritized in keeping with the financial quadrant of the balanced scorecard.
● Regulatory Compliance: Processes essential for maintaining compliance with legal and regulatory requirements often receive high priority due to non-compliance’s potential legal and financial repercussions.
● Innovation and Future Readiness: In line with the learning and growth quadrant of the balanced scorecard, pivotal processes for innovation and preparing the organization for future challenges are also considered high priority. This often includes processes that involve adopting new technologies or methodologies.
Health of the Process
This involves evaluating the current performance of a process. Processes that are underperforming or have significant issues require immediate attention and are often prioritized for optimization.
These include processes that are inefficient, costly, error-prone, or have a negative impact on service quality or customer experience. These processes may be identified through process audits, feedback mechanisms (e.g. Voice of the Customer surveys), and performance analysis.
The information presented in Workshop 1 (see Course Manual 2, Section 2.2.3) and Workshop 2 (see Course Manual 4, Section 4.4.2) can assist in performing a gap analysis to compare current process performance against desired outcomes or best practices, which will help diagnose each process’s health.
Feasibility
The ease with which a process can be improved or implemented is also a crucial optimization criterion. Processes that require minimal effort for significant gains should be prioritized. For example, if there is frequent regulatory or organization change or the change culture in the function that is primarily responsible for the process is change-resistant (see Workshop 1, Course Manual 11, Section 11.3), the optimization feasibility for the process would be low.
Feasibility also considers factors like resource availability, technological requirements, and time constraints.
Each of the three criteria above should be scored on a scale of 1 to 10, with 1 indicating that a process is of the lowest strategic importance, health or feasibility and 10 indicating the opposite. Table 5.1 shows a snapshot of a process catalog enriched with the scores for each criterion.
In conclusion, prioritizing processes for optimization in an organization is a nuanced and dynamic task, which is not a one-time activity but an iterative process that involves continuous monitoring and adaptation in response to changes in both the external business environment and the internal organizational structure. In the following section, we will examine how the enriched process catalog enables the creation of a process portfolio which facilitates identification of the order in which processes should be optimized.
5.5. Process Portfolio
A process portfolio is a tool used in business management that offers a holistic view of the various processes within an organization. By visualizing processes according to specific criteria, a process portfolio enables decision-makers to assess, prioritize, and manage these processes effectively. Below, we examine how it serves as an aid to selecting which processes to focus on for optimization
The process portfolio facilitates process prioritization by:
● Strategic Alignment: By visualizing processes based on their importance, organizations can ensure that their process management efforts align with their overall strategic objectives, facilitating prioritizing processes that directly contribute to achieving business goals.
● Resource Allocation: A process portfolio assists in identifying which processes are resource-intensive (i.e., feasibility and health), enabling better allocation of resources to critical processes or higher return on investment.
● Risk Management: By categorizing processes based on risk factors, organizations can focus on processes that pose the most significant risk and implement risk mitigation strategies effectively.
● Process Improvement Opportunities: The portfolio can highlight underperforming or inefficient processes, thus guiding decision-makers on where process improvement initiatives should be concentrated.
● Balancing Operational and Innovative Processes: The portfolio helps maintain a balance between processes that ensure smooth day-to-day operations and those that drive innovation and growth.
● Change Management: It aids in identifying processes that will be impacted by organizational changes, thereby facilitating better change management planning.
● Compliance and Regulatory Focus: For heavily regulated industries, the portfolio can highlight processes crucial for compliance, ensuring that they are given adequate attention.
The criteria recommended for visualizing the portfolio are the three mentioned in the previous section – strategic importance, health and feasibility. The visualization is typically done using two-dimensional matrix charts or digital dashboards, which clearly and concisely represent each process relative to others.
The matrix typically has strategic importance on the vertical axis and the health of the process on the horizontal axis. These axes are both divided at the midpoint to create four quadrants. Each process from the process catalog is then placed at the appropriate position on the matrix.
To indicate feasibility, the feasibility rating is discretized with rating between 1 and 3 rated low, 4-6 rated medium and 7-10 rated high. Subsequently, the discretized ratings are then assigned a colour which indicates the feasibility rating on the process portfolio
Figure 5.2 shows an example of a process portfolio for the process catalog from the previous section.
Processes of high strategic importance – poor health quadrants should be selected first for optimization as these will deliver the most significant benefits. However, it is not advisable to choose the least healthy processes and lowest feasibility processes at the start of the initiative as these are relatively risky to deliver. Instead, strategically important processes that are reasonably healthy (but could do with some improvement) and high feasibility processes should be selected as the first processes to optimize. Subsequently, the learnings from these projects will help optimize less healthy and low feasibility processes. In Figure 5.2 above, good candidates for the initial set of optimization projects include Issue-to-resolution and Job application-to-hire processes (though the former should be optimized first) based on the preceding discussion.
In conclusion, it is worth highlighting that the process portfolio is not a static tool; it requires regular updating and revision. Changes in the external business environment, such as market dynamics, technological advancements, regulatory changes, and internal organizational shifts, necessitate continuous monitoring and adaptation of the process portfolio, ensuring that the organization remains agile and responsive to change.
Case Study: Enterprise Process Management, Dubai Health Authority (DHA)
Problem
Upon its establishment, the Dubai Health Authority (DHA) committed to elevating Dubai’s healthcare standards to match the highest international levels and best practices. DHA focused on fostering innovation, providing universal healthcare access, and promoting public health and preventive measures to achieve this objective. As Dubai’s population grows, the demand for healthcare services continues to rise. Events such as COVID-19, which disrupted the healthcare landscape, highlighted the need for increased process maturity to enhance healthcare services across the United Arab Emirates. As such, DHA sought to embrace a more “open” culture of process excellence”. However, the lack of uniform process data made obtaining a unified view of the organization’s process maturity challenging. Obtaining this view is essential as DHA aims to achieve an ambitious process maturity level of 4 out of 5 across the organization.
How a Process Prioritization Framework Helped
Starting in 2018, DHA began to assess its process maturity by evaluating each business process individually against a specific set of maturity criteria. However, this approach proved to be impractical for two main reasons: the ongoing need to adapt process structures for post-COVID-19 robustness and the absence of consistent data to support evaluations. Furthermore, the organization was dealing with thousands of different processes, each utilizing a variety of scripts and standards.
DHA’s Corporate Quality and Excellence Department introduced a revolutionary framework in 2022 that redefined how process maturity is assessed across all business units. This new method utilized the capabilities of an Enterprise Business Process Analysis (EPBA) tool to set specific rules and scripts, allowing business units to be evaluated based on process characteristics rather than rigid data.
DHA has since developed a framework providing a horizontal, integrated, and comprehensive view of process management within its business units. The framework consists of six domains or pillars: performance (health), flexibility (feasibility), deployment, modeling, strategic fit (importance), and optimization, supported by 25 specific criteria (see Figure 5.3). This framework enables business units to be compared, enhances control over processes, identifies gaps, and uncovers opportunities to improve process capabilities.
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Benefits
Notable benefits from this initiative include:
● the creation of a tailored Process Maturity Framework in under nine weeks
● the setup of a Process Maturity Index (see Figure 5.4)
● an elevated status of DHA in alignment with the Dubai Government Excellence initiative
● the establishment of a recognized culture of process excellence and the achievement of the organization-wide goal of LEVEL 4 for critical business operations
Source: softwareag.com
Exercise 5.2
Course Manual 6: Process Orchestration
6.1. Introduction
Process Orchestration (also referred to as Business Process Orchestration) is a systematic approach that focuses on coordinating the various elements of an end-to-end process (or multiple processes) into a cohesive, well-structured, and efficient workflow. The concept of orchestration is well illustrated by an orchestra conductor who guides an ensemble of musicians to harmonize different instruments and create a symphony. Just as the conductor ensures each instrument contributes to the overall harmony, process orchestration ensures the process performers, systems and devices involved in the process (also referred to as endpoints) seamlessly integrate and align with others to achieve business goals. This integration is achieved through the use of software and technologies that enable different processes, systems, and people to work together cohesively.
Key characteristics of process orchestration include:
● Integration of Systems and Processes: BPO involves combining various automated tasks and systems to work as a unified whole.
● Centralized Control and Monitoring: It provides a single point of control for managing various processes, enabling better monitoring and reporting.
● Dynamic Process Management: BPO adapts to changing business conditions, allowing dynamic modification of processes in response to external or internal factors.
6.2. Importance of Process Orchestration
The landscape of technology enablers for a business process is often diverse and varied. For example, a typical banking payment process might present a web-based front-end for collecting information, which is stored in a database on a legacy mainframe system.
Organizations choose to maintain legacy systems for many reasons – replacing them can be very disruptive (especially if they support mission-critical processes), and in some cases, these systems (e.g. mainframes) are the most suitable for large-scale transaction processing and supporting a large number of concurrent users.
However, as with an orchestra where the risk exists that the various instruments will fail to harmonize, the disparity between these multiple technology enablers carries the risk of a lack of integration. As the conductor directs various musicians in an orchestra (each playing a different instrument) to perform in synchrony and harmony, similarly, a process orchestration engine ensures that various process endpoints and business rules are coordinated to ensure they function harmoniously towards achieving the organization’s overall objectives.
Lack of process orchestration results in problems such as broken end-to-end automation, opaque processes, difficulty tracking important metrics and a lack of agility due to the difficulties of altering multiple IT systems to implement change.
6.3. How Orchestration Differs from Automation
While some of the activities and sub-processes coordinated by a process orchestration engine may be wholly or fully automated, orchestration and automation are not synonymous. Automation refers to using technology to perform tasks without human intervention. It often involves repetitive, automated tasks to increase efficiency and reduce errors.
In contrast, process orchestration is a concerned with integrating and managing both automated and non-automated activities to ensure consistently positive outcomes.
Key differences include:
● Scope: Automation is task-oriented, focusing on individual tasks or activities. Orchestration is process-oriented, emphasizing the integration and management of entire workflows.
● Flexibility: Automation is typically rigid and rule-driven, while orchestration offers flexibility to adjust processes dynamically.
● Objective: Automation aims to increase efficiency at a task level, while orchestration aims to optimize and streamline entire business processes.
6.4. Benefits of Process Orchestration
Process orchestration offers several benefits, such as:
● Efficiency and Productivity: Orchestration streamlines business processes, eliminating redundancies and unnecessary steps, leading to more efficient operations, saving time and resources, and ultimately enhancing productivity.
● Improved Customer Experience: By ensuring all processes are aligned and integrated, orchestration can significantly improve customer experience. For instance, a customer’s journey from product inquiry to purchase and after-sales service can be made smoother and more responsive.
● Enhanced Decision Making: With orchestration, decision-making becomes more data-driven. As processes are integrated, the flow of information becomes more seamless, providing organizational leaders with comprehensive insights to make informed decisions.
● Scalability and Flexibility: Orchestration allows organizations to scale operations efficiently. As business grows, processes can be adjusted, or new ones added without disrupting the existing system, providing flexibility.
● Risk Management and Compliance: With orchestration, organizations can better manage risks and ensure compliance with regulations. Automated processes reduce human errors, and integrated systems ensure legal and regulatory standards adherence.
● Competitive Advantage: In a competitive business landscape, rapidly adapting and optimizing operations is critical. Companies that effectively orchestrate their business processes often gain a competitive edge as they operate more efficiently and respond quicker to market changes.
6.4. When to Consider Process Orchestration
An orchestra can play harmoniously without a conductor, provided the music is not too complex or demanding. Similarly, not all processes require orchestration.
The following guidelines outline the conditions under which an organization should consider orchestrating its processes.
6.4.1. Complex Process Patterns
In Workshop 1, Course Manual 2, the concept of process definition and the Business Process Modeling Notation (BPMN) were introduced. However, additional BPMN symbols exist to denote more complex activities and events, as detailed below. When an organization detects processes with these patterns, it should consider orchestrating them:
i. Multi-Activity Instances
Multi-activity instances (also referred to as “multi-instance activities”) represent activities that are repeated multiple times. These activities or subprocesses need to be executed for each item in a collection or until a specific condition is met. The symbol for a multi-instance activity is three small vertical lines added to the bottom center of the activity icon, distinguishing it from a standard task or subprocess.
To illustrate, consider the Credit Check Request-to-Report sub-process (see Workshop 1 Course Manual 3), where a bank needs to verify each applicant’s credit history. Where the process definition specifies that a credit report is obtained from multiple credit agencies (or bureaus), the task of fetching and evaluating credit history can be modeled as a multi-instance activity, executed once for each credit agency.
ii. Ad Hoc Sub-Processes
Ad hoc sub-processes are used to model a set of activities that are executed in a flexible and non-sequential order. The exact flow of these activities is not predetermined but is decided during runtime based on the context and conditions. The symbol for an ad hoc sub-process is a rounded rectangle with a dashed border and a tilde (~) marker at the bottom center.
For example, in an incident management process, an ad hoc sub-process can represent the investigation phase where the sequence of investigative tasks (such as interviewing witnesses, reviewing surveillance footage, and checking system logs) is not fixed and depends on the specifics of the incident.
iii. Racing Events
Racing events refer to situations where multiple events compete to trigger or influence the flow of a process. BPMN often represents this using event-based gateways that lead to different paths based on which event occurs first.
To illustrate, in an order fulfilment process, an event-based gateway can be used to model a racing event where the process waits for either a “Payment Received” message event or a “Cancel Order” signal event. The path of the process will depend on which event occurs first (see Figure 6.1).
iv. End Terminate Event
The end terminate event signifies the immediate termination of all activities in a process instance. A thick black circle with a filled circle in the center represents this event. When triggered, it stops all ongoing activities and subprocesses within the process.
For example, in a project management process, an end terminate event can be used to model the abrupt end of a project due to unforeseen circumstances, such as the loss of funding or a critical project resource, leading to the immediate cessation of all project activities.
v. Error Events
Error events are used to model exceptions and handle errors within a process. An intermediate error event can be attached to the boundary of an activity or subprocess to catch errors that occur within it. The symbol for an error event is a circle with a lightning bolt icon.
To illustrate, an error event can be attached to a subprocess handling electronic payments in a payment process. If an error occurs (e.g., network failure, invalid account details), the error event is triggered, leading the process to a path where corrective actions or error notifications are handled.
6.4.2. Diverse Endpoints
As mentioned earlier, many processes are supported by diverse technology enablers. When there is a need to integrate various systems and devices to enable a process to deliver positive outcomes, the process is ripe for orchestration.
A particular scenario where this is the case is when a process is hyper-automated. Hyper-automation involves the use of multiple technologies, tools, or platforms, including but not limited to Artificial Intelligence (AI), Machine Learning (ML), Robotic Process Automation (RPA) and intelligent business process management suites (iBPMS) to automate the execution of activities.
The essence of hyper-automation lies in its ability to bring together different forms of automation tools and technologies to enhance the automation of work. This approach acknowledges that no single tool can effectively automate activities; instead, it requires a suite of automation tools to do so.
Examples of Hyper-Automation
i. Automated Customer Support: Using AI-powered chatbots and virtual assistants to handle customer inquiries, support tickets, and live chat sessions. These systems can understand and process natural language, responding to common questions and escalating more complex issues to human agents.
ii. Intelligent Document Processing (IDP): Leveraging AI and ML to extract and process information from documents in various formats (PDFs, emails, scanned documents). This technology can automate data entry tasks, validate data against predefined rules, and integrate extracted data into business processes, significantly reducing manual work and improving accuracy.
iii. RPA for Administrative Tasks: Using robotic process automation to handle repetitive, rule-based tasks such as data entry, invoice processing, or payroll updates. RPA bots can mimic human actions to interact with digital systems, thus speeding up processes and reducing errors.
Hyper-automation represents a significant shift in how businesses approach automation, moving from isolated and tactical automation efforts to a strategic, comprehensive approach that integrates various technologies. By doing so, organizations can unlock significant value, improving efficiency, agility, and decision-making capabilities while also providing enhanced customer experiences and operational excellence.
6.4.3. Scalability and Dynamic Requirements
In Workshop 1, Course Manual 3, the concept of process flexibility was introduced, which describes its resilience, i.e., its ability to adapt and effectively respond to changes such as a spike in demand or reduction in the number of process performers. Organizations for which resilience is a crucial process metric should consider orchestrating such processes as it enables them to scale operations without exponentially increasing complexity.
Additionally, organizations operating in environments that require rapid adaptation to market or regulatory changes, or which rely heavily on data from various sources that need to be consolidated, should consider process orchestration.
Exercise 6.1
6.5. How Process Orchestration Engine Works
A process orchestration engine is a sophisticated system designed to manage, integrate, and streamline complex business processes across various organizational departments and systems. It functions as the central nervous system for process management, ensuring that each component of a business process works in harmony with others to achieve specific organizational goals. It is worth noting that, just as the conductor in an orchestra coordinates but does not play the musical instrument, the orchestra coordinates the various activities in a process but is not responsible for their execution.
The orchestration engine works through several key components:
i. Process Modelling and Design: This involves creating models of business processes defining steps, rules, and workflows, and providing a blueprint for how different tasks within a process should interact and be executed.
ii. Integration Layer: A crucial part of an orchestration engine is its ability to integrate with various systems and applications. This layer ensures that different software systems can communicate and work together seamlessly.
iii. Workflow Engine: This is the core of the process orchestration engine. It manages the flow of processes according to the predefined models. It coordinates activities, assigns resources, and ensures that each process step is executed in the correct order and context.
iv. Rules Engine: The rules engine allows the orchestration engine to make decisions based on predefined rules and logic involving routing decisions, approval workflows, or any other conditional logic required.
v. Monitoring and Analytics: The orchestration engine provides tools for monitoring the performance of various processes, including tracking efficiency, identifying bottlenecks, and providing data for analytics and improvement.
vi. User Interface: A user-friendly interface is provided for administrators and users to interact with the system, set up new processes, monitor existing ones, and analyze data.
vii. Exception Handling: The system can handle exceptions and errors by automatic adjustments or alerting human supervisors for intervention.
Case Study: Branded Reseller Processes, Vodafone Germany
Problem
Vodafone is a subsidiary of one of the biggest telecom conglomerates globally, Vodafone Group.
Its branded reseller processes were executed on various technologies, including legacy technology that was difficult to maintain and use. These processes supported its partners, or resellers, with campaigns, product offerings, and sales, which resulted in high operating and maintenance expenses, a protracted time to market for new products, and an inconsistent customer experience.
Vodafone also lacked timely information regarding the status and performance of these procedures.
How Process Orchestration Helped
Vodafone started by analysing process messages and events to obtain the current state definition of these processes. In addition, IT personnel interviewed subject-matter experts to understand each process’s execution from a business standpoint. Each process was documented using the selected orchestration engine’s process modeler, resulting in a visually appealing process model that was simple to comprehend for IT and business users.
During this discovery phase, Vodafone discovered several “concealed” activities that left little to no communication traces. When activity definitions were unclear, the organization reverse-engineered processes by combining existing communications traces with expert knowledge.
Vodafone gained quick insight and transparency into business processes through this discovery activity and subsequently documented these.
Vodafone had to ensure that there was no interruption to business operations during the migration to the orchestration engine due to the mission-critical nature of its services. As such, each activity was migrated individually and then process by process, guaranteeing customer continuity.
Due to the agility and scalability brought about by this vertical migration, Vodafone was able to respond quickly when significant changes to regulatory compliance had to be made during the migration.
Just as moving home provides an opportunity to declutter and reconfigure, the migration to a process orchestration platform allowed Vodafone to perform process improvement.
Results
The response time of the IT systems that support the branded reseller processes improved by 40% as a result of process optimization. In addition, performance insights from ongoing process monitoring and improvement allowed for ongoing fine-tuning, ensuring that processes are constantly operating at their best.
Automation and optimization of the entire customer lifecycle (sales, service, retention) has resulted in significant time savings for customer service professionals, allowing them to focus on customers and value-added activities.
Case Study: camunda.com
Exercise 6.2
Course Manual 7: Enterprise Business Process Analysis Tools
7.1. Introduction
Organizations often handle thousands of manual, automated, or outsourced processes spanning various business units, departments, and teams. This complexity can lead to unnecessary redundancies, duplications, and inefficiencies. Enterprise Business Process Analysis (EBPA) pinpoints and remedies these inefficiencies. Gartner, which originated the term, describes EBPA as an in-depth approach to business and process modeling that focuses on transforming and boosting business performance. It integrates perspectives from strategy, analysis, architecture, and automation in a cross-functional manner to bolster both strategic and operational goals. EBPA empowers enterprise architecture and technology innovation leaders to enhance business outcomes and foster resilient growth.
In this course manual, we will explore the drivers and capabilities of these tools and provide an introduction to some tools we will be using throughout the remainder of this training program.
7.2. Tool Drivers and Capabilities
Two critical factors primarily drive the adoption of Enterprise Business Process Analysis (EBPA) tools. Firstly, there is an increasing necessity to ensure that business operations are well-orchestrated within the framework of an organization’s operational model, which includes aligning these processes with the broader business ecosystems to which they belong. Secondly, the aim is to foster resilience in business operations. This resilience is crucial as it aids in making the transition to digital business models smoother and more effective.
The market for EBPA tools is diverse, encompassing four primary use cases: strategy to execution, business process analysis, enterprise architecture, and process automation. Each use case serves different stakeholders, has distinct roles, and objectives, and demands specific product features and functionality.
1. Strategy to Execution: This use case links organizational strategy directly with operational execution, ensuring that strategic objectives are translated into actionable tasks. These capabilities enable organizations to deploy strategic decisions as discussed in Course Manual 1.
Business change and digital transformation initiatives often come under this use case, capturing the intended value organizations will create and deliver to customers or constituents and how this will be achieved.
2. Business Process Analysis: These tools emphasize understanding and optimizing current business processes to enhance efficiency and effectiveness. Tools with this capability allow analysts to go beyond simple process modelling; instead, they enable business process architects to document, analyze and streamline complex processes at a conceptual and logical level, thus facilitating a more agile and effective business.
3. Enterprise Architecture: In this context, EBPA tools help design and implement a structured IT environment that supports business processes. Several of these tools also provide the capability to create an Enterprise Process Model across the five EPM levels, as detailed in Course Manual 2.
The process architecture serves as an input to the overall business architecture viewpoint within the enterprise architecture, enhancing the understanding of how essential business processes work in the overall business context. These tools facilitate the creation of a process catalog connected to relevant information, technology, solution, and security architecture.
4. Process Automation: This use case involves using technology to automate routine business processes, reducing the need for manual intervention and increasing reliability. These tools enable the creation of business process models and decision rules that drive process execution and real-time optimization. In this capacity, EBPA tools enable digital business optimization and facilitate transformation initiatives.
Beyond these foundational capabilities, EBPA tools often include advanced features such as support for continuous intelligence, process mining, and model-driven execution. These features extend the functionality beyond process modeling to a more comprehensive alignment of internal business operations with external customer interactions and facilitate continuous improvement and adaptability in changing business environments.
Exercise 7.1
7.3. Choosing the Right Tool
EBPA tools currently on the market each have their strengths and weaknesses in their capabilities based on product decisions made by software providers. This section offers several recommendations to assist organizations seeking to adopt EPBA tools. These are as follows:
1. Identify Relevant Stakeholders
EBPA tools are particularly relevant to a broad spectrum of business and IT roles that transform or optimise business processes. As such, it is critical to identify who benefits from their use. Key roles include business leaders, business architects, enterprise architects, process architects, process analysts, and process owners. Unlike traditional business process analysis tools, EBPA tools are not only for the professional modeling community, such as process architects and analysts but also for the general workforce. This accessibility supports the democratization of process improvement and fosters wider knowledge discovery and dissemination.
2. Identify Essential Features
Subsequently, the organization should determine the essential features of EBPA tools and align the stakeholder objectives with the tools’s capabilities.
Organizations such as Gartner provide a list of EBPA tool vendors, including their features and customer reviewers. From an internal perspective, the organization should decide which use cases above are most important to meeting their goals.
3. Select the Appropriate Product
It is essential to choose the right EBPA tool by assessing the breadth and depth of the required use case(s). Given that these use cases can evolve, flexibility and adaptability in the chosen tool are crucial.
Multi-criteria decision analysis (MCDA) can assist in evaluating and prioritizing multiple EPBA tools based on the relevant criteria. This method is particularly useful in decision-making scenarios where decisions must be made across different attributes that are often conflicting.
To perform MCDA, start by identifying the decision criteria relevant to the problem at hand. These criteria are then weighted according to their importance to the decision-maker, reflecting the relative priority of each criterion. Next, each alternative is scored on how well it satisfies each criterion. These scores are multiplied by the weights of their corresponding criteria and summed to derive a composite score for each alternative. The alternative with the highest composite score is typically considered the optimal choice. The steps taken to create the Prioritization Matrix (see Workshop 2, Course Manual 5 Section 5.2.2.) exemplify performing MCDA.
MCDA helps make transparent, structured, and justifiable decisions by clearly outlining the reasons for choosing one option over others.
4. Focus on Customer Centricity and Ecosystem Alignment
Finally, the chosen tool should be used to enhance customer centricity and align with the organizational ecosystem. This involves creating greater visibility and insights into processes that affect customers, partners, suppliers, and other external entities, thus ensuring a comprehensive and cohesive business strategy.
The following section will dive deep into using three EPBA tools. These tools were selected as they seamlessly integrate business process analysis (especially process mining), creation of the process architecture, low-code process automation and machine learning capabilities, topics which shall be explored in the remainder of the training program.
7.4. Tools DeepDIve
Below, we introduce the three selected tools, focusing on how they support the creation of the process catalog:
7.4.1. Celonis Process Repository
Celonis, established in 2011, is a prominent player in the process mining sector. The company has developed a reputation for its innovative Process Intelligence platform, which leverages process mining technology and AI to create a digital twin of an organization’s processes. This technology provides businesses with a comprehensive view of their operations, helping identify inefficiencies and improvement areas. Celonis operates globally, with headquarters in Munich and New York, and it serves over 5,000 enterprise customers across various industries.
Celonis excels in several areas, making it a leader in the process mining industry:
● Comprehensive Process Insights: Celonis’ platform provides deep insights into business processes, allowing companies to uncover inefficiencies and optimize operations. This capability is valuable for complex, large-scale operations in manufacturing, healthcare, and the public sector.
● Strong Customer Base and Case Studies: The company boasts significant implementations across Fortune 500 companies, delivering tangible benefits like improved cash flow and reduced operational costs for major clients, including PepsiCo and Deutsche Telekom.
● Innovative Technology: Celonis is at the forefront of integrating AI with process mining, enhancing its platform’s ability to provide actionable insights and automate processes effectively (Celonis).
● Educational and Community Initiatives: The firm actively supports its community through initiatives like the Celonis Academy and partnerships with academic institutions, which help spread knowledge about process mining and nurture a skilled workforce.
Despite its strengths, Celonis faces certain challenges:
● Complexity and User Experience: Some users, particularly those without a technical background, find the Celonis platform complex to navigate. This complexity can hinder the broader adoption of process mining tools within an organization.
● Integration Challenges: Although Celonis provides extensive integration capabilities, the initial setup and integration with existing IT infrastructures can be challenging for some businesses, particularly for companies with older or highly customized systems.
● Cost Considerations: Implementing Celonis can be a barrier for smaller companies or those with limited budgets. The return on investment, while potentially significant, requires a clear understanding and management of initial costs.
In conclusion, Celonis is a powerful solution for businesses looking to enhance their efficiency through innovative process mining technology. While it offers robust capabilities and significant benefits to large enterprises, potential users must consider the complexities and costs associated with its implementation. As the market for process mining continues to evolve, Celonis remains a key player, driving forward the integration of AI and detailed process analytics into everyday business operations.
7.4.2. Creating the Process Architecture – Celonis Process Repository
The Process Repository is a comprehensive, centralized platform designed to support creating and managing business process models. This tool enables the documentation of existing and projected processes, facilitating their integration into process mining projects.
Key functionalities of the Process Repository include:
● Documentation and Versioning: It allows for documenting current and future processes, maintaining detailed models and related information in a unified, version-controlled environment.
● Exporting Capabilities: Users can export automatically discovered processes directly from the process mining tool to the Process Repository in both BPMN and PNG formats.
● Model Retrieval for Conformance Checking: It is possible to pull process models from the repository to the Conformance Checker to evaluate how the documented (as-is) processes compare against target (to-be) models.
● Integration with BPM Tools: Celonis can be seamlessly connected to existing BPM tools to synchronize process models and mining data automatically.
Navigating the Process Repository is straightforward; users can access it by selecting “More” followed by “Process Repository” from the main menu (see Figure 7.1 below)
The repository itself is organized into several primary sections:
Home: Displays an activity summary and shortcuts to various categories (see Figure 7.2).
Categories and Sub-categories: Facilitates the organization of process diagrams into themes or business sectors, with customizable management options (see Figure 7.3).
Figure 7.4 shows the hierarchical decomposition of an enterprise process group from L1-3 in the process repository. Note that the EPM reference for each process group and process is prefixed to its name.
Process Models: As previously established in Course Manual 2, Section 2.3.4, Level 3 of the EPM provides a detailed, graphical representation of the workflows, activities, and decision points within each process.
The process repository offers the capability to create or import BPMN process models.
To create a process model using the process:
Select the relevant L3 process. In Figure 7.5, 2.1.1 Process RFQ is selected (1). Toggle Edit Mode (2), select the Process Models tab (3) and click New Model (4).
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The option is subsequently presented to upload an existing model (1) or create a new model using the Process Modeler (see Figure 7.6)
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If the process modeler is selected, use the various BPMN symbols (e.g., events, activities, gateways, etc) in the left panel to define the process model (1). As each symbol is added, a prompt pops up providing the opportunity to append addiitonal symbols or change the symbol type (2; See Figure 7.7)
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When process categories are linked to a data model (for process mining), corresponding activities appear and are utilized in any compliance checks for the process (1). When the process model is completed, press Save (2; see Figure 7.8).
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Attributes: Process Repository allows adding a detailed summary of all attributes associated with a chosen category or process, including links, attachments, records, and comments. This is the section where the process metadata discussed in Course Manual 2 should be recorded (see 1; Figure 7.9)
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Process Repository also offers APIs enabling various tools, such as BPM providers, to establish an interface with the Celonis Process Repository for bulk uploading and retrieving process models.
Celonis also offers the ability to link the process repository with automatically discovered process models from process mining, eliminating or reducing the effort associated with manual process discovery.
For further info, navigate to https://academy.celonis.com/, register and take the course entitled “Process Repository”
7.4.3. Microsoft Visio
Microsoft is a leading global technology company headquartered in Redmond, Washington. With over 220,000 employees worldwide, Microsoft develops, manufactures, licenses, supports, and sells various software products and services. Its diverse product line includes the Windows operating system, the Microsoft Office suite, Azure cloud services, and various personal computing products such as Surface devices.
Strengths of Microsoft Visio
● Diagramming and Visualization Capabilities: Microsoft Visio is a powerful tool that effectively communicates complex ideas, processes, and data through diagramming and visualization.
● Versatility and Range of Features: The tool offers a wide range of features and templates suitable for creating diagrams, flowcharts, organizational charts, floor plans, network diagrams, and more, making it essential for various business use cases such as project management, process modeling, network designs, and data visualization.
● Utility Across Departments: It is excellent for creating flowcharts and process diagrams that can be utilized across different organizational departments.
● Integration with Microsoft Products: Visio integrates seamlessly with Microsoft products (e.g. Excel, SharePoint, Word, etc), which are widely adopted across many organizations. This is also likely to reduce the time needed to adopt the tool.
Weaknesses of Microsoft Visio
● Complex Licensing Cost: The licensing structure can be complicated, similar to other Microsoft products, which can be a barrier for some users.
● Limited Free Version Features: While a free version exists, it offers very limited features, which diminishes its utility.
● Platform Dependency: Primarily designed for Windows, it is challenging to use in cross-platform environments. The macOS version does not perform as well as the Windows version, limiting its use on non-Windows systems.
7.4.4. Creating the Process Architecture – Visio
Follow the steps below to recreate a representation of the EPM from Section 7.4.2:
Navigating to the Visio home page and click the ‘+’ symbol to create a new blank drawing page (see Figure 7.10 below)
Right-click the default page and select ‘Rename’ (see Figure 7.11a)
Select an appropriate name for this page. This will typically be the process landscape; however, for this example, we focus on Source-to-Pay processes (see Figure 7.11b)
Select and drag across a rectangle from the ‘Shapes’ panel to the page (see Figure 7.12).
Add the EPM reference and name of the enterprise process group to the shape. Optionally, change the color of the shape.
Using the ‘+’ button at the bottom tab, add a page for each enterprise process (L2) and process (L3; see Figure 7.13).
Right-click on each enterprise process and select ‘Link’ (see Figure 7.14a).
From the ‘Link To’ dropdown, select ‘Page in this File’ (1) and in the second dropdown, select ‘the appropriate page for the enterprise process (see Figure 7.14b)
On the relevant pages, decompose (or define) the enterprise process or process (as required)
The link explains how to create BPMN-compliant process models for EPM L3 processes: https://support.microsoft.com/en-gb/office/create-bpmn-compliant-processes-fff03563-1df0-4586-b753-2970b1f81bfa
7.4.5. QPR Enterprise Architect
QPR Software is a distinguished provider of management software solutions, focusing on process mining, performance management, and enterprise architecture. Founded on the principles of quality, productivity, and results—embodied by its name—QPR is committed to enhancing organizational efficiency through its innovative software offerings. The company serves a diverse clientele globally, empowering organizations to streamline their operations, improve performance metrics, and align their strategies with operational execution. By delivering tools that provide visibility into and across business processes, QPR aids companies in making informed decisions that drive success.
Strengths of QPR Enterprise Architect
● Resourcefulness: QPR Enterprise Architect is equipped with a variety of symbols, icons, and formatting options.
● User Interactivity: The software is highly intutive for users and does not require intensive technical knowledge.
● High-Quality Outputs: Designs can be printed in high-resolution, ensuring clarity in presentations and reports.
● Comprehensive Coverage: It performs excellently in gap analysis, performance management, and governance, covering all layers of enterprise architecture effectively.
● Operational Monitoring and Digital Transformation: It supports operational monitoring and process mining, transforming event logs into actionable insights.
Weaknesses of QPR Enterprise Architect
● Data to Action Conversion: The process of converting event data into actionable insights with specific activity timestamps and instances is slower than desired and could see significant improvement.
● Modeling Tool Performance: Modeling tool performance can be slow.
Though the tool supports high-quality printing, exporting diagrams into images or other formats is difficult.
● Dated User Interface: Some users consider the user interface outdated and slow.
7.4.6. Creating the Process Architecture – QPR Enterprise Architect
The QPR Enterprise Architect Client’s ribbon organizes tools for creating and viewing models into easily accessible tab sets within the user interface (See Figure 7.15 below). To navigate to a specific tab, click its title. To activate a command, select the corresponding button on the ribbon.
The Navigator view allows for a comprehensive overview of the model and facilitates the discovery of relationships between model elements (See Figure 7.16 below). This enables the hierarchical decomposition of an enterprise process group (see Figure 7.4 for a similar decompositiopn)
To open a new navigator, click the “Navigator View” button on the ribbon’s View tab (See Figure 7.17 below).
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To create a new folder, right-click within the Navigator View Explorer and choose New Folder. This folder will be established at the root level unless a different folder is selected, in which case the new folder will be positioned under the chosen one. A new folder should be created for each enterprise process group and process.
To generate a new Navigator view, select a desired folder in the Navigator View Explorer, right-click, and choose New Navigator View. The Navigator View Settings dialog will then appear. The new view will be placed at the root level if no folder is chosen.
To change the name of a folder or view, right-click in the Navigator View Explorer and select Rename, or use the F2 key. The folder should be renamed with the EPM reference and the process name
Folders or views can be relocated by dragging them to the intended area. If moved over a view’s name, the item will be positioned beneath that view; if over a folder’s name, it will be inserted into that folder as the last item. A blue curved arrow indicates the new placement in the hierarchy, while a yellow arrow shows insertion into a folder. Note that moving a folder also moves its sub-items and cannot be moved to its direct or nested subfolders.
To remove a folder or view (except default ones which cannot be deleted), right-click in the Navigator View Explorer and choose Delete, or press the Delete key. Deleting a folder causes its views to be reassigned to the parent level, with a confirmation prompt before deletion.
To create a new model at L3 or below, click the New button on the Quick Access Toolbar in the top left corner of the QPR Enterprise Architect Client window or select New -> File Model / Server model in the Application Menu (see Figure 7.18).
Subsequently, to create the new model based on a template, we recommend selecting thre OMG BPMN 2.0 Process Modeling Template (see Figure 7.19)
To save a model, click the Save button on the Quick Access toolbar or press Ctrl+S to save the model.
QPR Enterprise Architect also offers the capability to search process metadata and automate certain modeling operations, e.g,—bulk upload of existing models.
For more information about creating the tools capabilities is available at : https://kb.qpr.com/qpr2022-1/index.html
7.4.7. Alternative EPBA Tools
We conclude by presenting a couple of tools with more robust enterprise architecture capabilities for balance.
ARIS Enterprise
ARIS Enterprise is a dynamic business process management (BPM) tool designed to adapt and scale according to the evolving needs of any business. This platform is equipped with sophisticated tools and features that streamline process management and facilitate organizational transformation from strategy to execution. Here are some of the notable tools, features, and benefits of ARIS Enterprise:
Tools and Features
● Role-Based Access: Ensures that sensitive process information is safeguarded and only accessible to users according to their roles within the organization.
● Easy Publication & Collaboration: Allows for the straightforward sharing and co-editing of process models, promoting teamwork and efficient communication across the company.
● Focused Management Dashboards: Provides tailored dashboards that help managers monitor and control various aspects of business processes effectively.
● Process Modeling Languages: Supports multiple modeling languages such as EPC (Event-driven Process Chain) and BPMN (Business Process Model and Notation), offering flexibility to use the most suitable language for specific needs.
● Digital Confirmation Management: Automates the process of rolling out changes across the organization, ensuring that all adjustments are properly documented and confirmed digitally.
Benefits
● Scalability: ARIS Enterprise is designed to grow with businesses, providing scalable solutions to meet changing requirements.
● Enhanced Transparency: The easy-to-understand dashboards and powerful data visualization tools help increase transparency within the organization, making it easier for stakeholders to understand and make informed decisions.
● Improved Efficiency: ARIS Enterprise helps optimize workflow and productivity by enabling new and more efficient processes, reducing costs and increasing profitability.
● Governance and Alignment: Helps manage and govern enterprise processes by providing end-to-end visibility, including providing up-to-date work instructions, policies, and guidelines to all employees.
● Strategic Execution: Facilitates a comprehensive approach to organizational transformation, helping companies to move from strategy to execution with clarity and precision effectively.
Additional information about the tool can be obtained from: https://aris.com/aris-enterprise/
SAP Signavio Process Manager
SAP Signavio Process Manager offers an intuitive and comprehensive platform that facilitates the capture and improvement of business processes and efficiently scales these improvements across the enterprise.
Core Features and Benefits of SAP Signavio Process Manager
● Intuitive Business Process Modeling: SAP Signavio Process Manager is designed to be user-friendly, enabling businesses to model and map out their processes quickly. This modeling platform helps visualize complex workflows, simplifying the management and continuous improvement of these processes.
● Increased Transparency: The platform significantly enhances the transparency of an organization’s process landscape. It reduces operational ambiguity by serving as a single source of truth for recording and maintaining processes. It also ensures all stakeholders have a clear understanding and alignment.
● Guidance and Explanations for Users: The tool offers detailed explanations and guidance for stakeholders and employees, facilitating a shared understanding and complete alignment across the organization and enhancing collaborative efforts.
● Process Excellence: With SAP Signavio Process Manager, companies can define and continuously manage process performance. This tool helps identify and eliminate inefficiencies, thus enabling businesses to decrease costs and improve areas that significantly impact the organization.
● Improved Process Compliance: The tool aids in meeting process compliance requirements more efficiently by establishing and documenting standard processes, conventions, and regulations. It also enables faster identification and rectification of non-compliant processes, thus minimizing risks.
● Enhanced Business Development Agility: SAP Signavio Process Manager allows companies to drive transformation agility. It supports innovation and sustainable growth by making processes more responsive to changes, thus improving business agility.
Further details about the tool can be obtained from: https://www.signavio.com/products/process-manager/
Case Study: Enterprise Processes, Tesco, UK
Problem
Tesco plc, a global grocery retailer based in Hertfordshire, England, ranks as the world’s third-largest in terms of gross revenue and operates 6,800 stores across ten countries, employing about 450,000 people. As consumer demand for digital and contactless shopping increased, Tesco needed to enhance its agility.
However, the lack of process visibility was a significant barrier, preventing the organization from becoming more agile. Tesco repeatedly encountered inefficiencies and discrepancies in its processes, and it was heavily reliant on manual corrections. Processes were manually discovered in workshops and disseminated via Excel spreadsheets, PowerPoint presentations, and SharePoint sites, which led to frequent revisions and a lack of sufficient oversight or direction.
How EPBA Tools Helped
The process architecture team at Tesco was established as part of Tesco’s Global Finance Transformation Program (GFTP) and Business Operating Model Review, driven by senior leadership to shift Tesco towards being a process-driven entity.
The team identified the need to overhaul Tesco’s service model architecture, establishing a unified source of truth for process design. By adopting a single process design/SOP platform, Tesco would achieve complete process visibility and control globally, enhancing transparency across its operations and reducing risks and costs.
For this initiative, Tesco utilized an EPBA tool to provide an integrated perspective of its processes from start to finish, thereby developing a business operating model that significantly boosted its efficiency. Tesco initiated the program with five designers and 20 viewers. Following a successful cloud implementation for GFTP, the organization expanded the tool to its human resources department and, two years later, designated the tool as the default enterprise management system for its worldwide service model transformation, incorporating Risk & Compliance Management and task mining through Robotic Process Discovery.
The tool was deployed extensively over the subsequent months, with the small process architecture team completing the setup in four months.
Result
Tesco has developed an exceptionally robust global process platform that continues to evolve, providing comprehensive visibility and management of its operations. The platform supports 160 active designers, 300 trained staff, and 1,200 viewers involved in business operations.
Tesco plans to extend this system to include thousands of viewers down to the store operations level to maintain a consistent and efficient customer experience delivered to customer-facing teams via a store portal. Furthermore, there are plans to integrate Internet of Things (IoT) technology to collect actual process data automatically.
Source: softwareag.com
Exercise 7.2
Course Manual 8: Systems Lens
8.1. Introduction
Following on from the workshop’s theme, which takes an enterprise (or macro) view of processes, the remainder of the workshop will examine dynamic systems within the context of organizations broadly and business processes more specifically. This course manual will define dynamic systems and explore the importance of adopting a system lens when dealing with enterprise processes. We will conclude by discussing the characteristics and structure of dynamic systems and how to capture these details in a systems diagram.
8.2. Dynamic Systems Defined
A dynamic system is essentially a set of elements that interact with each other over time to achieve a specific purpose. These systems can range from natural ecosystems to complex human-centric social structures. The key characteristic that defines a dynamic system is its ability to evolve based on the interactions between its components (see Section 8.4). Examples of systems from an organizational setting include social systems such as a human resources (HR) system, a supply chain system, a financial system, and a customer service system. In this section, we unpack the intricate nature of dynamic systems, explaining their components, relationships and purpose.
A dynamic system comprises of three primary components: elements, connectedness, and purpose.
● Elements: These are the basic building blocks of any system. The HR system’s elements would include employees, relevant IT systems, remuneration funds, and organizational structures, while the elements of the supply chain system would include suppliers, goods, inventory IT systems, and funds for paying suppliers.
● Connectedness: This refers to how the elements within the system are linked. These connections determine how information, energy, or materials flow through the system. For instance, connectedness can be seen in the organizational chart or the IT systems that facilitate communication for the HR system.
● Purpose: This is the ultimate goal or function that the system is designed to achieve. It drives the system’s behavior and often provides a lens through which to interpret the actions of its elements. For example, the stated purpose of the HR system might be to recruit and retain top talent while maintaining a positive and productive working environment.
However, it must be noted that while the stated purpose of a system offers insight, the true purpose is often deduced by observing behavior over time. For instance, a corporation might claim its purpose is to contribute positively to the community, but a closer examination of its resource allocation and external interactions might show profit maximization as its actual driving force. This discrepancy often makes the true purpose challenging to detect but crucial for understanding the system’s real impact.
It is also worth noting that modifying the elements of a dynamic system does not necessarily lead to substantial changes in the system itself. For example, replacing one employee with another or upgrading a software system might not significantly alter the business’s performance. However, changing the relationships within the system or its overarching purpose can dramatically transform the entire system. Altering the communication structure within a company, such as moving from a hierarchical to a flat organizational structure or redefining its purpose from profit maximization to sustainability and community impact, can fundamentally change how the organization operates and behaves.
In the following section, we will consider the importance of adopting a systems lens in problem-solving.
Exercise 8.1
Note: each group should select different systems
8.3. Importance Of The Systems Lens
The system lens extends the process lens (explored in Workshop 2) by inviting us to view processes as part of larger systems and as a collection of subsystems, thereby facilitating a better understanding of the factors that may impede or enhance process optimization. Adopting a systems lens is critical because it prevents a piecemeal approach to problem-solving that can lead to unintended consequences. When problems are viewed in isolation, solutions may inadvertently create new issues or exacerbate existing ones. For example, a company focused solely on cutting costs might streamline its processes in a way that impacts product quality or employee morale, ultimately harming the business.
Using a systems lens when addressing problems is essential for several compelling reasons. This approach allows individuals, teams, and organizations to understand complex issues better, anticipate consequences, and achieve more sustainable solutions.
Below are several reasons why adopting a systems perspective is so beneficial:
1. Holistic Understanding
A systems lens encourages looking at problems in their entirety, including all relevant factors and their interactions, rather than isolating individual components. For instance, in addressing pollution in a city, a systems approach would consider industrial activities, transportation, regulatory policies, and public health data together rather than focusing on just one aspect. This comprehensive view helps identify the root causes of problems and not just the symptoms.
2. Interconnections and Dependencies
Problems are often not standalone but interconnected with other issues through complex networks of cause and effect. A systems approach helps to map these connections and understand how changing one part of the system might impact others. For example, improving the quality of public transportation in a city might reduce traffic congestion and pollution, thereby improving public health and reducing healthcare costs.
3. Avoiding Unintended Consequences
Solving one problem without considering the system as a whole can lead to unintended consequences. A well-known example is the use of DDT to control mosquito populations, which initially seemed successful but eventually led to environmental damage and health issues, illustrating the importance of foreseeing potential adverse outcomes. A systems lens helps predict and mitigate these risks by considering how different system elements interact.
4. Sustainability of Solutions
By understanding the full context and the dynamic interactions within a system, solutions can be designed to be more sustainable over the long term. For instance, a business might find that addressing employee satisfaction improves productivity, reduces turnover, and enhances brand reputation, all contributing to long-term success.
5. Leveraging Synergies
A systems approach can identify synergies where efforts in one area can benefit others. For example, urban planning that promotes green spaces enhances urban aesthetics and can support biodiversity, reduce city heat, and improve mental health among residents.
6. Adaptability and Resilience
Systems thinking facilitates adaptability and resilience by helping organizations and societies better prepare for unexpected changes. Understanding how different parts of a system can absorb and adapt to shocks can be crucial in times of crisis, such as economic downturns or natural disasters.
7. Innovation Through Integration
A systems lens encourages innovation by showing how integrating solutions across domains can simultaneously address multiple challenges. For instance, a technology company might integrate AI with environmental science to develop smart agricultural systems that increase crop yield while minimizing water use and environmental impact.
8. Managing Nonlinear Interactions
Finally, traditional linear thinking in management is often inadequate for addressing the nonlinear interactions within complex systems. Leaders must adopt a systems thinking approach, which involves looking beyond individual elements of the business to understand the broader patterns and interactions that drive system behaviors. This includes fostering environments that encourage beneficial behaviors, such as innovation and adaption while mitigating undesirable ones like silo mentalities and rigid bureaucracies (as discussed in Workshop 1)
In conclusion, dynamic systems are complex, multifaceted, and influenced by their components, connections, and purposes. Understanding these systems holistically allows for more effective and sustainable decision-making, especially in business organizations and social structures. It enables leaders and process analysts better to anticipate the outcomes of their actions and recommendations, fostering systems that survive and thrive in changing environments.
In the next section, we will discuss dynamic systems’ characteristics (or properties).
8.4. Characteristics of Dynamic Systems
Dynamic systems exhibit fascinating characteristics that enable them to function effectively and adaptively in changing environments. These systems are not static; they evolve, adapt, and sometimes transform completely in response to internal and external stimuli. Understanding the properties of dynamic systems—such as their ability to self-organize, self-heal, inherent hierarchy, and resilience—provides valuable insights into how complex systems operate and sustain themselves. Below, we explore these key characteristics and their implications.
8.4.1. Self-Organization
Self-organization is a hallmark of dynamic systems and refers to the ability of a system to structure itself without external guidance. This property is critical in enabling systems to develop and maintain complexity. This principle was highlighted in Workshop 2 (Course Manuals 9 & 10), where effective scrum teams are expected to self-organize, manage their workload and collaboratively decide how to achieve the sprint’s goal, resulting in an empowered team with increased motivation and satisfaction. This characteristic is also present in ecological systems, where patterns such as flocking in birds or schooling in fish occur without a central controller; instead, these patterns emerge from local interactions among the system’s agents following simple rules. In technological contexts, algorithms designed for distributed computing demonstrate self-organization by processing tasks efficiently across multiple nodes, adjusting dynamically as nodes become available or go offline.
8.4.2. Self-Healing
Self-healing is the capability of a system to detect and repair damage to itself autonomously. This characteristic is essential for maintaining the system’s functionality and preventing failures from cascading through the system. An example of Scrum teams demonstrating this characteristic was called out in Workshop 2, as their members naturally hold each other accountable, and performance issues are often addressed internally without needing external management intervention. Other examples can be seen in modern infrastructure systems, like smart grids, which can isolate and manage failures locally, such as automatically rerouting power around damaged areas to prevent widespread outages.
8.4.3. Hierarchy
Many dynamic systems are structured hierarchically, meaning they are composed of nested subsystems that are dynamic systems in their own right. This hierarchical organization can be observed in corporate structures, where the corporation comprises various departments (each with its own sub-systems of teams). Hierarchical structuring helps manage complexity by localizing concerns to different “levels” of the system, allowing for specialization and scalability.
8.4.4. Resilience
Resilience in dynamic systems refers to their ability to withstand shocks and stresses and to continue functioning. This does not necessarily mean the system returns to its original state; instead, it evolves to maintain core functions. Resilience is crucial for systems exposed to variable conditions. For instance, coral reefs show resilience by adapting to varying temperatures and water conditions, though severe changes can still exceed their capacity to adapt.
8.4.5. Adaptability
Dynamic systems often exhibit adaptability—the capacity to change in response to the environment. This characteristic was demonstrated by the production team, which was the focus of the case study for Course Manual 5 in Workshop 1, who found innovative ways to improvise and overcome challenges they faced as they implemented their improvements, e.g., using trolleys from the local supermarket as a production cart to move required inventory. Adaptability might mean altering strategic directions based on market research and emerging trends to maintain competitiveness.
8.4.6. Emergence
Emergent properties refer to outcomes that cannot be deduced by merely analysing the individual components of a system. These properties emerge only when the components interact in a specific context. In business contexts, emergent properties can be seen in the organizational culture and innovation capabilities.
As established in Workshop 1, organizational culture arises from employee interactions, management styles, organizational values, and external influences. For instance, an organization’s culture is not solely the product of its hiring practices, management style, or operational procedures alone. Instead, it is a synergy of all these elements interacting within the unique context of its unique ecosystem. This culture facilitates a dynamic system where new ideas and innovative practices may flourish or be stifled, influencing employee satisfaction and the company’s overall market performance.
Similarly, innovation within companies often manifests as an emergent property, as observed in companies like 3M and Apple, where cross-functional teams collaborate in a conducive environment, blending their discrete knowledge and skills to create groundbreaking products. The emergence of products like Post-it Notes and the iPhone were not merely the result of linear developments in adhesive and technology, respectively, but were outcomes of dynamic interactions among various components of their respective organizations.
8.5. System Structure
Dynamic systems possess structures that explain their behaviour and facilitate both stability and change. Understanding system attributes such as stocks, flows, information flows, convertors/constants, and sources/sinks is crucial to comprehend how these systems operate and evolve. Additionally, concepts like feedback loops and system boundaries play significant roles in defining and influencing system structure. Below, we explore these system attributes and their application in organizational and business contexts.
8.5.1. Stocks and Flows
At the heart of any dynamic system are its stocks and flows. Stocks are the elements or resources accumulated, depleted, and modified over time within the system. Examples of stocks in an organizational context are the workforce for the HR system and the available cash in company accounts for the financial system. Flows refer to the rates at which stocks are added (inflows) or subtracted (outflows). Hiring (employee inflow) and attrition due to resignations, layoffs, etc (employee outflow) are examples for the HR system. Sales revenue (cash inflow) and expenditure (cash pitflow) are examples of the financial system flows.
8.5.2. Information Flows
Information flows are equally critical and refer to the transfer of information within a system. These flows help coordinate actions and update statuses across different parts of the system. In a corporate setting, information flows can be seen in the communication between a company’s headquarters and its branches, enabling coordinated decisions based on real-time data from across the organization.
8.5.3. Converters and Constants
Converters and constants are functions or parameters that modify flows or influence how stocks change over time. Converters transform inputs into outputs through processes, while constants are fixed values that define these transformations. For instance, a production efficiency rate (a constant) might dictate how quickly raw materials (stock) are converted into finished products (output) in a manufacturing process.
8.5.4. Sources and Sinks
Every system has sources and sinks: points where resources (material, energy, or information) enter or leave the system, respectively. In business, a source could be a supplier of raw materials, while a sink might be the consumer market where products are sold and leave the economic system of the company.
8.5.5. Feedback Loops
Feedback loops are mechanisms within a system that regulate system behavior. They can be balancing, which aims to stabilize the system by counteracting changes, or reinforcing, which amplifies changes, potentially leading to exponential growth or decline. For example, in a business process context, a balancing feedback loop could be a quality control process that ensures product defects do not exceed a certain level, thereby maintaining product quality and customer satisfaction. Conversely, a reinforcing feedback loop might be seen where increased market share leads to greater economies of scale, further reducing costs and boosting profitability and market share even further.
8.5.6. System Boundaries
Understanding system boundaries is crucial in defining what is considered part of the system and what lies outside it. This demarcation helps identify which elements can be controlled or influenced. In a business environment, the boundary might be the extent of organizational control or influence, encompassing internal processes but not external market conditions or global economic factors.
8.5.7. Constraints
System constraints are limitations or restrictions within a system that influence its behavior. These constraints can take various forms in organizations and business processes, such as limited resources, regulatory requirements, or technological capacities. For instance, a manufacturing company may face production constraints due to limited factory floor space, which restricts the volume of goods that can be produced, or it may be constrained by supply chain limitations that affect the availability of raw materials. Similarly, a software development firm could be hindered by existing technological infrastructure that cannot support the latest software updates or innovations, affecting product development and customer satisfaction. Regulatory constraints are also common, as businesses must comply with laws and regulations that can limit how data is used or how products are developed. By identifying and understanding these constraints, organizations can better strategize to mitigate their impacts or find innovative ways to work within or around them to optimize system performance.
It is also worth introducing the concept of boundary values, which refers to conditions set at the limits or edges of the system that determine or constrain how the system operates. These values define the scope and behavior of the system under certain constraints and play a crucial role in shaping the outputs or outcomes of the system.
For example, the budget and deadline set for a new project act as a boundary value. It limits the resources that can be allocated for project tasks such as research, development, marketing, and personnel, as well as the time available. This budgetary constraint shapes the project manager’s decisions and strategies—dictating which initiatives are feasible, how resources are allocated, and the quality or scope of the project’s deliverables.
8.5.8. Delays
A system delay refers to the time lag between an event and its visible effect within the system. These delays can be inherent due to physical, operational, or informational constraints and can vary significantly in duration depending on the system’s complexity and the processes involved.
Common types of delays in a system include:
● Information Delays: These occur when there is a lag in the time it takes for information to be collected, processed, and acted upon. For example, in a large corporation, gathering sales data from various regions and compiling it into a report that influences production decisions can significantly impact responsiveness to market changes.
● Material Delays: These involve the physical movement of goods or materials. An example can be found in manufacturing, where the delay between ordering raw materials and their delivery can affect production schedules.
● Decision Delays: These arise from the time it takes for decisions to be made within an organizational structure. In bureaucratic systems, for example, decision delays can be lengthy due to the need for multiple levels of approvals.
To illustrate the system attributes above, consider a company like a large retailer. Its stocks include inventory in warehouses and money in bank accounts. Flows involve cash flows and inventory shipments, which are crucial for daily operations. Convertors in this context might be the logistics systems that manage inventory levels based on predictive analytics—a complex converter that uses constants like historical sales data and seasonal trends.
Information flows are vital, as data moving between departments (e.g., purchasing, warehousing, and sales) ensures that the retailer operates efficiently. The feedback loops could include customer feedback mechanisms that adjust product offerings (balancing) and aggressive marketing campaigns that increase brand loyalty and customer base (reinforcing).
Table 8.1 shows the attributes for a scrum process optimization project system.
8.6. Systems Diagrams
Systems diagrams are powerful tools for visualizing and understanding the complexities of dynamic systems. These diagrams help stakeholders grasp the intricate relationships and processes within a system. Below, we present a step-by-step guide on how to draw and interpret two types of systems diagrams: causal loop diagrams and stock-and-flow diagrams.
8.6.1. Causal Loop Diagrams
A causal loop diagram visualises the feedback loops within a system that either reinforce or balance the system’s behavior. This diagrammatic representation facilitates the understanding of how different system variables are interrelated and influence one another over time.
Below are the steps for creating such a diagram:
1. Define the Purpose of the Diagram
The first step in creating a systems diagram is clearly defining its purpose. What specific aspect of the system are we trying to understand or communicate? Are we trying to identify potential problems, understand a workflow, or predict the effects of changes within the system? A clearly defined purpose will guide the selection of elements to include in the diagram and influence its layout.
2. Identify the System Boundaries
Once the purpose is established, determine the boundaries of the system. This involves deciding which elements are part of the system and which are external but influential. System boundaries help focus the diagram on relevant elements, simplifying complex relationships and making the diagram more understandable.
3. List All Relevant Elements
With the system boundaries set, list all the elements within those boundaries. These elements could include people, processes, resources, and external factors influencing the system. This might include departments, assets, workflows, and market forces in a business context.
4. Establish Relationships Between Elements
The next step is identifying and establishing the relationships between the listed elements, involving understanding how each element interacts with others. If a particular element is believed to influence another, an arrow is drawn from the causal element to the other. Drawing these relationships will often involve arrows to indicate the direction of influence or flow.
5. Identify Feedback Loops
Identify and indicate any feedback loops—both reinforcing and balancing. Feedback loops are crucial for understanding system dynamics as they show how actions within the system can lead to reactions that either stabilize or amplify system behavior.
Figure 8.2 shows the causal loop diagram for the project management system example from the previous section (see Table 8.1).
Note that Current Date and Deadline are considered boundary values that are outside the system’s control but constrain it. For example, the deadline influences Remaining Time. The ‘+’ symbol (or polarity) indicates that the more time remains, the further away the deadline. In contrast, the ‘-’ polarity between Current Date and Remaining Time indicates that the remaining time decreases as the current date advances.
The same principle applies to the other elements in the systems. For example, the greater the Schedule Pressure, the greater the Productivity, increasing the Completion Rate, reducing the number of Open Tasks and reducing Schedule Pressure. This is an example of a balancing loop, hence the ‘(B)’ in the middle of that loop.
The system lens encourages an active search for feedback loops, which drive a system to gradually alter its behavior—often in unanticipated ways.
Note that while there are no reinforcing loops in this diagram, these are identified by an ‘(R)’ or ‘(+)’ symbol at the center of the loop.
A heuristic for determining whether a loop is balancing or reinforcing is by ‘walking’ the loop and applying the rules governing the multiplication of positive and negative numbers (see Table 8.2). When the walk ends (.i.e., the starting element from which it was started is reached), if the result is a positive (+) polarity, the loop is reinforcing otherwise it is a balancing loop if the result is a negative (-) polarity
Figure 8.3 illustrates how this principle is applied to the balancing loop discussed earlier. Note that for the walk, though Schedule Pressure has a negative polarity (based on its relationship with Remaining Time) and a positive polarity (based on its relationship with Open Tasks), the positive polarity is selected as this is the relation in the feedback loop under analysis. In other words, the former relationship (i.e. with Remaining Time) is outside the feedback loop and hence is excluded from the feedback loop analysis.
8.6.2. Stock and Flow Diagram
A stock-and-flow diagram’s primary purpose is to depict a system’s quantitative structure. It visualizes how different “stocks” (accumulations or reservoirs of resources such as capital, population, or inventory) change over time through flows (the rates at which these stocks increase or decrease).
It differs from causal loop diagrams (CLDs), which are qualitative tools which do not typically include specific numerical values or rates but instead highlight how variables interconnect and influence each other through reinforcing (positive) or balancing (negative) feedback loops, as discussed above.
Below are the steps for creating a stock-and-flow diagram:
1. Choose the Right Symbols
Systems diagrams often use specific symbols to represent different types of elements and relationships:
● Ovals or boxes can represent stocks or accumulations of resources.
● Arrows indicate flows, showing the direction of material, energy, or information transfer.
● Dashed lines represent less tangible interactions, such as influences or feedback loops.
● Circles denote converters.
● Clouds indicate sources and sinks which are outside the system boundary.
● Delays are often depicted as small hourglasses beside the arrows that connect different system components, clearly indicating where delays occur in the flow of information, materials, or decisions.
● Alternative conventions for denoting delays are annotated arrows with annotations indicating the length of delay (e.g., “2 weeks”, “3 days”, etc.) or segmented lines / dashed arrows, distinguishing them from immediate interactions, which are usually shown with solid lines.
Whichever symbol is adopted for delays, it is important to be consistent with these symbols to maintain clarity and ease of understanding.
2. Add Converters and Constants
Incorporate any converters or constants that affect the flows between stocks. As previously established, converters (like rate of production or efficiency) modify the flows, influencing how quickly elements change. Constants are parameters that remain unchanged but are crucial to the system’s dynamics, such as gravity in a physical system or regulatory limits in a business environment.
3. Label Everything Clearly
Label all elements and interactions clearly and concisely. This step is vital as it prevents confusion about what each symbol represents. Clear, descriptive labels make the diagram helpful to others who might not be as familiar with the system. Though each element should be associated with a quantity, showing this on the diagram is optional to prevent overly busy or cluttered diagrams
4. Validate and Iterate
Review the diagram with stakeholders or other knowledgeable individuals who can validate its accuracy and completeness. Be prepared to iterate on the diagram, adding or removing elements and relationships based on feedback.
5. Finalize and Present
Finalize the diagram with any necessary adjustments for clarity and aesthetics. Ensure that it is accurate, easy to read, and visually engaging. Present the diagram in a context that provides background and explanation for why it was created and how to interpret it.
Figure 8.4 shows a stock-and-flow diagram for the agile project management system discussed earlier.
Note that a model is often created based on the stock-and-flow diagram to simulate the system’s behavior. This simulation is helpful for exploring what-if scenarios, which facilitates decision-making. In Workshop 8, we will explore simulation to gain valuable insights into the impact of proposed process changes before their actual implementation.
In conclusion, drawing an effective systems diagram is a thoughtful process that requires understanding both the details and the larger objectives of a system. By systematically identifying elements, relationships, and boundaries, we can create a powerful tool that helps visualize complex systems, facilitating better communication, deeper understanding, and more informed decision-making.
Case Study: Multi-skeletal (MSK) elective surgery pathway, Norfolk and Waveney Integrated Care System (ICS), UK
Problem
Integrated care systems (ICSs) are partnerships among diverse organizations that aim to improve the lives of local inhabitants and workers by coordinating and providing health and care services more efficiently. The Norfolk and Waveney Integrated Care System (ICS) in England faced numerous challenges. This system includes two community providers, three acute hospitals, and a mental health trust. Before COVID-19, waiting times for elective care in the Norfolk and Waveney ICS were extending, and the quality of care was not meeting national standards, with some patients waiting over 52 weeks for planned treatments. Post-COVID-19, these delays in elective care worsened, contributing to one of the highest numbers of 104-week waits in the country.
How Dynamic Systems Analysis Helped
With the help of NHS England and Whole Systems Partnership, clinical and non-clinical colleagues developed three dynamic systems models, starting with the Trauma and Orthopaedics speciality within the Musculoskeletal (MSK) pathway and moving on to models for the Dermatology and Eye Care pathways to address the system’s challenges as a whole. The models were employed to evaluate various scenarios and determine the effects on patients throughout the Norfolk & Waveney ICS system of healthcare operational actions intended to lower the backlog of elective care.
A team of analysts from across the system first participated in stakeholder workshops with clinical and operational colleagues to identify the main problem, consider potential scenarios, and create a high-level conceptualization of the MSK pathway model.
The model was constructed modularly, with each component built independently of the others before being assembled. A user interface was developed to facilitate decision-making and help operational colleagues comprehend the model’s outputs. Operational colleagues utilized the interface to manipulate factors interactively, such as estimated demand, and view the projected effects on waiting lists and capacity.
The model could test the following “what if” scenarios:
How about if…
● unrestricted access to early self-management and self-referral was offered, along with guidance on holistic and lifestyle decisions to enhance final results and lessen the effect of delays brought on either directly or indirectly by the COVID pandemic?
● integrated IT tools were used to enable the multidisciplinary team of Advanced Clinical Practitioners (ACPs) to quickly route patients requiring additional care and triage those on long wait lists?
● safeguarded capacity (.i.e the ability to flow down the elective pathway in the event of trauma or unplanned care needs) was removed?
Following agreement on the top-level model conceptualization, analysts from across the system, who had started receiving technical training in the programme, created a prototype model. Each system analyst focused on modelling a distinct component of the system, and after these were completed, the components were combined to form the overall system model. The simplified view of the system is described in the stock and flow diagram below (see Figure 8.5).
Results
The development of the system model led to several key benefits and outcomes:
● The model enabled visualization and understanding of various scenarios.
● It democratized systems thinking as users could test their hypotheses and see how changes in one pathway affected others.
● Multiple insights were gathered through an iterative process involving diverse perspectives from those directly involved in service delivery.
● This analysis supported ongoing quality improvement and elective care recovery efforts within the Norfolk and Waveney ICS.
● Staff moved from working in isolation to engaging with the entire system.
● There are now more discussions about pathway alignments and the positioning of community hubs and diagnostic assessment centers.
● This methodology facilitates strategic discussions at the level of Integrated Care Boards.
● Analysts have acquired the technical skills necessary for system modeling.
● There is now a significantly stronger collaboration between analysts and doctors.
Source: systemdynamics.org
Exercise 8.2
Course Manual 9: System Behavior
9.1. Introduction
In the previous course manual, we introduced the concept of dynamic systems and established why it is essential to adopt a systems lens when managing enterprise processes. These systems exhibit behaviors critical to understanding their effective management and optimization. In this course manual, we explore the behavior of dynamic systems, starting with explaining system states, examining how system structure influences behavior and concluding with the concept of bounded rationality in decision-making.
9.2. System State
The state of a dynamic system refers to the complete set of relevant variables that define the system at any given moment. It can be considered a snapshot that captures all the details about the system’s various parts and how they function at that time. This concept is essential for understanding how the system behaves over time, how it responds to changes, and what could be expected in the future.
Below are examples of states for common organizational systems:
1. Inventory Management System
Consider a large retail store. The state of its inventory management system at any moment might include:
● Current stock levels of all products.
● Pending orders that are yet to be delivered.
● Rate of sales for each product.
Knowing the state of this inventory system facilitates informed decision-making, such as when to order more stock for popular products or setting up promotions to clear slow-moving items.
2. Human Resources (HR) System
For an HR department, the state might include:
● Number of employees in each department.
● Employee satisfaction levels based on the most recent surveys.
● Current recruitment drives and the number of vacancies.
This snapshot might help HR managers understand that if they need more staff, they should enhance their employee benefits to increase satisfaction or focus on training programs to improve skills.
3. Customer Service System
In a customer service department, the state could encompass:
● Number of open support tickets.
● Average resolution time for these tickets.
● Customer satisfaction ratings.
Knowing this state would help managers decide whether they need to hire more support staff, train current staff to improve resolution times, or update software tools to handle customer queries better.
4. Production Line System
Consider a manufacturing facility. The state of its production line system might include:
● Current production rate (e.g., units produced per hour).
● Machine efficiency rates.
● Inventory of raw materials.
This information allows factory managers to optimize production schedules, schedule maintenance to avoid machine breakdowns, and order materials to prevent shortages.
As established above, understanding the state of a system allows managers and decision-makers to:
● React appropriately to current conditions: For example, a manager can order more stock if inventory levels are low.
● Plan for the future: Knowing employee satisfaction helps plan future HR activities that improve company culture and employee retention.
● Troubleshoot and resolve issues: Understanding which machines are underperforming in production allows for targeted maintenance.
The state of a dynamic system in a business context is analogous to having a detailed map of what’s happening right now across different areas. Process metrics (see Workshop 2, Course Manual 4, Section 4.4.2) are useful in deciphering the state of a given system.
Exercise 9.1
9.3. System Behavior
Behavior in dynamic systems refers to the response or output of the system in reaction to external and internal stimuli, which could manifest as changes in output, fluctuations in system states, or the evolution of system structures over time. The behavior of a system is not just a product of the individual parts but also the interactions between these parts.
Below, we briefly discuss various factors that facilitate understanding of a system’s behavior:
1. System Structure
The structure of a system — including its elements, relationships, and feedback loops — fundamentally determines its behavior. For instance, a company’s organizational structure (hierarchical vs. flat) directly impacts communication flow and decision-making processes, affecting how the company responds to market changes. In ecological systems, the presence of certain species and their relationships (predator-prey dynamics) define the ecosystem’s response to environmental stresses. As highlighted in the previous section, feedback loops (especially reinforcing loops) can gradually alter system behavior in unforeseen ways, so the system change may not be easily detected. This topic will be explored in further detail in the following section
2. System Boundaries
Deciding system boundaries is essential for accurately understanding behavior. If boundaries are too narrow, important interactions and external factors might be overlooked, leading to incomplete or skewed insights. Conversely, a focus that is too broad can dilute the analysis, making it difficult to identify actionable insights. Effective boundary setting involves including all relevant elements that significantly impact the system’s behavior while excluding extraneous details that do not contribute to a deeper understanding.
3. Bounded Rationality
The concept of bounded rationality, introduced by Herbert Simon, suggests that individuals make ” rational ” decisions” within the limits of the information available to them. However, these decisions can lead to suboptimal outcomes at the system level due to externalities or impacts on parts of the system that are not visible to the decision-maker. For example, a factory manager might decide to increase output without considering the increased pollution, which may not impact the factory directly but affects the broader environmental system.
4. Holistic Analysis
To address and correct undesirable behaviors in systems — such as inefficiencies in a business process or unexpected outcomes in policy implementation — it is crucial not to focus merely on isolated events. Event analysis might tell us what went wrong but not why. Systems thinking encourages looking beyond events to understand the underlying structures and feedback loops that cause the observed behaviors. For example, recurring bottlenecks in a manufacturing process may be due to a poorly designed workflow rather than a particular employee’s mistake.
5. Relative Importance of System Components
As established in the previous course manual, altering the components of a system alters the behavior of the system to varying degrees. For example, introducing new actors (. i.e. elements) into a flawed system is unlikely to enhance its performance. If the system is poorly designed, new actors will likely replicate the existing inefficiencies or problems. Instead, changing the rules governing connections or the purpose of the system can lead to more significant improvements in system behavior.
To conclude this section, we provide some examples sourced from organizational settings with explanations of how the factors described above influence systems behaviors:
● Inventory Management System
Consider a scenario where a manufacturing company uses a just-in-time (JIT) inventory system. This system structure reduces inventory holding costs but makes the company highly susceptible to disruptions in the supply chain. The behavior of this system—rapid inventory turnover and reduced costs—directly stems from its structure. However, during a supply chain disruption (e.g., resulting from a pandemic or natural disaster), the behavior might become undesirable (stockouts and production halts – see Course Manual 1 case study). This example shows how the system’s structure (JIT) drives its behavior under different conditions.
● Customer Feedback Loops in Service Industries
A service company like a telecommunications provider might implement a customer feedback loop to improve service quality. This system includes structures for collecting feedback, analyzing data, and implementing changes based on customer complaints or suggestions. If the feedback loop is reinforcing, positive changes (like enhanced customer service protocols) can lead to increased customer satisfaction, which in turn promotes more positive feedback and higher customer loyalty. Conversely, if negative feedback is not adequately addressed, it can lead to a worsening spiral of service quality and customer dissatisfaction. The feedback loop structure, therefore, directly impacts the system’s behavior in responding to customer needs.
● Performance Management Systems
Consider a corporate performance management system that heavily emphasizes quantitative metrics (e.g., sales figures or unit production) for evaluating employee performance. This system’s structure might inadvertently encourage undesirable behaviors such as quality corners cutting or unethical practices to meet targets. The boundary of this system (focusing only on quantitative metrics) excludes other critical elements like employee well-being or ethical practices, which can lead to broader organizational issues. A broader system boundary that includes qualitative assessments, employee feedback, and ethical considerations might promote a more balanced and holistic behavior.
● Corporate Sustainability Initiatives
A company may introduce a sustainability initiative aiming to reduce its environmental footprint. The system designed to implement this initiative includes elements like sustainability teams, eco-friendly material procurement processes, and waste reduction techniques. If the structure includes strong feedback loops (such as regular sustainability audits and adjustments based on outcomes), the system behavior can significantly improve environmental performance. However, bounded rationality might limit the effectiveness if decision-makers focus only on immediate cost savings rather than long-term environmental benefits, leading to poor overall outcomes.
● Change Management Processes
When an organization undergoes a major transformation, such as digitalization or restructuring, the behavior of this change management system is critical. The structure of the system—how information is communicated, how employee feedback is integrated, and how changes are implemented—can determine whether the transition will be smooth or turbulent. Narrow system boundaries that fail to consider factors like organizational culture or employee resistance might lead to persistent problems and resistance, whereas inclusive systems that consider a wide range of internal and external factors can facilitate smoother transitions.
These examples demonstrate that the behavior of systems in business and organizational contexts is deeply influenced by their structure and boundaries. Organizations can better manage and predict system behaviors, leading to more effective and sustainable outcomes by carefully designing these systems with comprehensive boundaries and adaptive structures.
9.4. Impact of Feedback Loops and Delays on System Behavior
As established in the previous section, the structure of dynamic systems significantly influences its behavior. Feedback loops and delays are two critical structural components affecting system behavior. Feedback loops help systems self-regulate and maintain internal stability or change exponentially, while delays can dampen or amplify these effects. This section explores how different types of feedback loops and delays impact system behavior, using organizational and business processes as examples.
1. Balancing Loop with Delays
Consider a retail business that uses an automated inventory management system to maintain stock levels. The balancing feedback loop works as follows: When inventory levels drop below a certain threshold, an order is automatically placed to replenish the stock to maintain a steady level of products available for sale.
However, if there is a delay in the ordering process or in the delivery of new stock, the intended balance can be disrupted. For example, a delay in recognizing that stock levels have fallen below the threshold or processing the order can lead to stockouts, lost sales, and customer dissatisfaction. Conversely, delays in updating inventory data might lead to overstocking, increased holding costs, and reduced liquidity.
2. Reinforcing Loop with Delays
A reinforcing feedback loop can be seen in the relationship between marketing efforts and sales revenue in a business. Increased marketing efforts lead to higher brand awareness, resulting in increased sales; higher sales then justify more investment in marketing.
If there is a significant delay in the feedback from sales revenue to the marketing budget adjustment, the company might either underspend or overspend on marketing. Delayed recognition of revenue increases can prevent a company from capitalizing on the momentum of successful marketing campaigns. In contrast, delays in recognizing downturns can lead to wasteful spending that depletes resources.
The simple examples above highlight the need for organizations to carefully design and manage their systems to account for the effects of feedback loops and delays. It is worth noting that most real-world systems contain multiple feedback loops and are more complex than described above. However, the examples above facilitate understanding of the impact and can be extended to handle more complex structures.
Effective systems-led management includes:
● Timely Data Collection and Analysis: Reducing delays in information flow can help balance loops stabilize the system more effectively and allow reinforcing loops to scale up operations efficiently.
● Adaptive Control Mechanisms: Implementing adaptive control mechanisms that can adjust the feedback loops based on ongoing results and changing conditions within the system.
● Scenario Planning: Using scenario planning to anticipate potential delays and their impacts on system behavior, thus preparing strategies in advance to handle these disruptions.
In conclusion, understanding and managing feedback loops and delays can lead to more stable operations and sustainable growth. Organizations that effectively monitor and adjust their feedback mechanisms and minimize critical delays can enhance responsiveness and agility, thereby maintaining a competitive edge in the rapidly changing market environment.
In the concluding section of this course manual, we will discuss system archetypes and provide examples as well as strategies for managing these.
9.5. System Archetypes
System archetypes are recurring patterns of sub-optimal behavior that can be recognized in various dynamic systems. These archetypes provide a framework for diagnosing problems, predicting their development, and crafting interventions that can shift system behaviors towards more desirable outcomes. This section explores several key dynamic system archetypes, including rule beating, change (or policy) resistance, shifting the burden, eroding goals, escalation, tragedy of the commons, and competitive exclusion. Each archetype will be described, followed by real-world examples from organizations or business processes and strategies for altering system behaviors effectively.
1. Setting the Wrong Goal
This archetype occurs when the goals set by an organization do not align with its long-term health or sustainability, often due to an overly narrow focus that neglects broader impacts.
For example, a company may set a goal to maximize shareholder returns in the short term, leading to cost-cutting measures that reduce product quality and harm brand reputation over time.
To address this behavior, the organization should broaden goal-setting to include a wider range of stakeholder interests and longer-term impacts, ensuring immediate financial goals do not undermine future success.
2. Rule Beating
Rule beating occurs when individuals or groups find ways to circumvent or exploit the rules of a system to their advantage, often in ways that undermine the intent of the rules.
Rule beating is often seen in response to rigid corporate policies in organizational settings. For instance, if a company imposes strict procurement procedures to reduce spending, employees might rush purchases at the end of a financial period to exhaust budget allocations, defeating the policy’s purpose.
Organizations should design flexible policies that focus on outcomes rather than strict processes to mitigate rule beating. Involving employees in the creation of these rules can also ensure that the rules are realistic and aligned with the actual challenges they face.
3.Change (or Policy) Resistance
Change resistance happens when actions taken to solve a problem generate resistance from other parts of the system, resulting in minimal improvement or worsening conditions.
For example, a company may implement strict new work policies to enhance productivity, only to find that employee morale drops, leading to higher turnover rates and ultimately reducing productivity.
Addressing change resistance requires understanding the broader system and engaging all stakeholders in the solution, involving gathering comprehensive feedback before implementing new policies and making iterative adjustments based on real-world impacts.
4. Shifting the Burden
This archetype occurs when a solution addresses the symptoms of a problem rather than its root causes, potentially creating long-term dependency on the solution.
For example, an organization might use software to automate inefficient tasks due to outdated processes. While automation provides a temporary fix, it doesn’t solve the underlying inefficiencies and creates a dependency on maintaining the automation.
To overcome this issue, companies should focus on systemic solutions that address the root causes of identified problems. In the example above, the process reengineering techniques explored in Workshop 2 should facilitate optimization rather than merely automating flawed processes.
5. Eroding Goals
The archetype of eroding goals happens when the standards or goals of a system are gradually lowered to make them easier to achieve, avoiding the fundamental issues that prevent goal attainment.
For example, a sales team might reduce its quarterly targets after several periods of not meeting ambitious goals, which can gradually diminish the team’s performance capability.
Organizations should maintain high standards to mitigate eroding goals and invest in training and resources to support achievement. Regularly revisiting and rationalizing goals in the context of actual capabilities and market conditions can also help.
7. Escalation
In the escalation archetype, two or more parties continually outdo each other, leading to increasingly extreme behavior.
For example, two companies continuously undercutting each other’s prices to gain market share is a typical escalation scenario, potentially harming the industry’s profitability as a whole.
Breaking out of escalation loops can be achieved by changing competitive parameters, perhaps through innovation or seeking alternative markets, and by fostering cooperation where possible.
8. Tragedy of the Commons
This archetype occurs when multiple users exploit a shared resource to the point of depletion, harming all users’ long-term interests.
For example, several businesses sharing a server infrastructure might overuse resources without investing in upgrades, leading to performance degradation for all.
Implementing usage limits, encouraging responsible use through policies, and mutual investment in maintaining the shared resource can mitigate the tragedy of the commons.
9. Competitive Exclusion
Competitive exclusion (also known as ‘Success to the successful”) involves two competitors that cannot coexist in the same niche without one out-competing the other, often leading to the elimination of one by the other.
For example, two companies offering similar products in a small market might fight for the same customer base until one fails or is absorbed by the other.
Companies should differentiate their offerings, diversify into new markets, or redefine their niche to avoid direct conflicts leading to competitive exclusion.
In conclusion, understanding dynamic system archetypes allows organizations to diagnose and address complex problems more effectively. Leaders can devise strategies that prevent detrimental behaviors, promote sustainable and beneficial outcomes by recognizing these patterns. Each archetype presents unique challenges and requires tailored strategies to reshape system behaviors, ensuring long-term success and stability in the organization’s operations.
Case Study: Mastercard, US
Problem
MasterCard once held a dominant position in the U.S. credit card sector, with Visa as its sole significant competitor. However, after six consecutive years of falling sales and market share, they suddenly found themselves trailing. The company was at a standstill, with internal blame rampant. Despite numerous efforts, the decline continued and traditional strategies based on past experiences failed to stop the problem. Without a turnaround from the ongoing “death spiral,” the company faced potential closure within five years as attempts to halt or reverse the decline were unsuccessful.
How Dynamic Systems Analysis Helped
Mastercard engaged a consulting firm that adopted a systems approach to obtain insights into the changing market dynamics. Initial analysis revealed that internal conflicts within the company hindered progress, necessitating a holistic approach to the problem.
Another early insight from the analysis was the recognition of the organization’s precarious state. Credit card issuers (who were MasterCard’s potential clients), often overlooked the company in favor of promoting the current market leader, Visa. This was an example of the competitive exclusion (or “Success to the Successful”) system archetype and would potentially lead to the company’s demise if unaddressed.
MasterCard realized there was a limit to spending due to low repayment caps. Contrary to prevailing views, increasing the minimum repayment to allow for greater monthly expenditure emerged as the most effective solution.
A dynamic systems model encompassing the U.S. credit card market (including cardholders, their choices across different cards, and the merchants accepting them) was developed, built, and tested. This model simulated the performance of MasterCard and its main competitors, including Discover, Visa, and Amex.
While testing organization-wide ideas, none showed enduring or significant effectiveness. After extensive testing, it was discovered that combining certain strategies yielded significant, lasting market share gains. This strategy was soon labeled “co-branding,” a collaborative approach with businesses serving mutual customers.
Expert interviews, quantitative and qualitative analyses, and cultural insights shed light on the credit card system. However, the ability of dynamic system analysis to expand to encompass the entire credit card market and address its complexities set it apart from other techniques.
Results
Systems analysis revealed that traditional methods, such as increased advertising were ineffective, whereas strategies that enhanced issuer preference and added value proved most beneficial.
MasterCard regained 6% of the market share by being the pioneer in co-branding.
The success of co-branding was triple-fold: it benefited customers through substantial discounts via accumulated points, it increased loyalty among co-branding partners’ customers, and it significantly boosted MasterCard’s market share, aligning closely with the projections made by the system modeling.
Source: systemdynamics.org
Exercise 9.2
Course Manual 10: System Leverage
10.1. Introduction
System leverage points are places within a system where small, well-focused actions can produce significant, enduring benefits or changes. This concept, popularized by Donella Meadows in her seminal work on systems thinking, illustrates how understanding the deeper aspects of systems can provide powerful tools for effective change.
Small changes at leverage points can lead to disproportionately large impacts on the entire system. Hence, these points are the “keys” to understanding how complex systems can be controlled or transformed efficiently and effectively. However, leverage points are often counterintuitive; they are not usually where most people think to enact change. This characteristic makes them both powerful and dangerous. A small tweak at a leverage point can have massive effects, but without a deep understanding of the system, changes can also lead to unintended consequences. Moreover, once identified, there is a temptation to pull these levers in the wrong direction due to misjudgments about how system factors interact.
This course manual explores the nature of system leverage points, their characteristics, and how they manifest in various forms such as system parameters, buffers, delays, and system redesigns, with examples from organizational and business processes.
10.2. Lever Types
In this section, we explore some common leverage points in dynamic systems. Below, we detail some of the critical systems leverage points, particularly within organizational and business contexts, discussed from least to most impactful.
10.2.1. System Parameters
System parameters are the settings (typically numbers) that determine how a system operates, such as the size of inflows or outflows. As these are often very visible and relatively easy to change, they usually command most of the attention of decision-makers. However, changing these parameters does not significantly change the system’s behavior over the long term, except when they impact a more important lever. i.e. lower down this list
For example, a company may adjust its return policy to be more restrictive by reducing the time window a customer has to return items. This change is expected to reduce the inflow of returns. However, this change alone fails to address the underlying causes of returns (e.g. quality, customer behavior, etc), and as such is not likely to change the system behavior to achieve the desired system outcome sustainably.
Similarly, changing parameters like pricing might seem straightforward but can lead to complex customer behavior changes and brand perception shifts.
10.2.1. Buffers
Buffers are system elements that help stabilize it by absorbing fluctuations. Buffers in a business context might include inventory levels, cash reserves, or even excess staffing capacity.
To illustrate, a manufacturing firm may maintain a large buffer stock to ensure a steady supply chain despite supplier inconsistencies. However, too much inventory can tie up capital, reduce financial efficiency and result in system inflexibility.
However, buffers are often physical entities and are not easy to change. Even if they are, it is useful to understand the implications of the change. While it might seem prudent to increase buffers to prevent disruption and stabilize the system, excessive buffers can incur high costs and reduce responsiveness to market changes.
10.2.3. System Redesign
Redesigning the system involves fundamentally changing how parts of the system are organized or interact, which can be a highly effective leverage point.
For example, a company might restructure its organizational chart, decentralizing decision-making to increase agility and innovation. This systemic change can transform corporate culture and operational effectiveness.
However, redesigning a system is often the slowest and most expensive type of change to make in a system. This is especially the case in a physical system. Designing a system right in the first place is best; however, once a poorly designed system is ‘live’, the leverage lies in understanding its limitations and ensuring its capacity is not strained.
10.2.4. Delays
As earlier mentioned, delays in a system refer to the time lag between action and response. Modifying these delays can alter how a system responds to changes promptly and effectively.
For example, reducing the delay between a customer complaint and resolution in customer service can significantly enhance customer satisfaction and loyalty. Conversely, longer delays can exacerbate issues and harm brand reputation.
However, whilst delays are high leverage points, they are often difficult to change as certain elements cannot be sped up. However, suppose there are delays in the system that can be changed. In that case, it is essential to ensure that it is changed in the right direction, as changing it in the wrong direction can result in significant fluctuation in system behavior.
10.2.5. Changing Balancing Feedback Loops
Balancing feedback loops are designed to maintain a system at a certain level. Altering these loops can shift the equilibrium point to a more desired state.
To illustrate, a software development company uses a project management system to ensure that projects do not exceed budget. The balancing feedback loop involves regular budget reviews that trigger cost-cutting measures if spending exceeds forecasts. The company can maintain budget discipline while improving productivity by changing the loop to trigger cost-cutting and efficiency-enhancing measures when certain spending thresholds are approached.
The ability of a balancing loop to keep the system near the desired goal depends on factors such as its parameters and links, the accuracy and speed of monitoring, how quickly it responds and the size of corrective flows, among others. Some of these factors may provide opportunities for change, e.g., strengthening the balancing feedback loops by incorporating preventive measures and continuous improvement metrics that activate before thresholds are breached, maintaining system stability, and preventing crisis management.
10.2.6. Reinforcing Feedback Loops
Reinforcing loops promotes growth or decline within a system; adjusting these can amplify or dampen growth dynamics.
For example, in a sales team, a reinforcing loop might involve commission structures that increase sales volume, encouraging more sales. However, reinforcing feedback loops can become unchecked, which could result in the system self-harm. Extending the example above, the commission structure could result in sales becoming too aggressive, leading to poor customer service. Introducing an intervention to slow the growth is a powerful leverage point. This result could be achieved by modifying commissions to include customer satisfaction ratings, thus balancing sales volume with service quality.
Quality metrics should be integrated into growth incentives to ensure that growth is sustainable and does not compromise other system values like customer satisfaction.
10.2.7. Information Loops
Improving the flow and quality of information within an organization can enhance decision-making and system responsiveness.
To illustrate, a retail chain could improve its inventory management by enhancing information loops with real-time sales data, adjusting inventory orders automatically, and reducing stockouts and overstock situations. Missing information flows are a common cause of system malfunction; introducing these flows can act as powerful leverage points. The Visual Management systems (see Workshop 2, Course Manual 6, Section 6.1.4) can facilitate the introductions of these information loops.
Additionally, implementing advanced data analytics and real-time reporting systems improves the accuracy and timeliness of information, allowing information to get to the right place in an easily understood manner.
10.2.8. System Rules
System rules define the parameters within which a system operates. Changing these rules can redefine interactions within the system.
Utilizing this lever to achieve change should start with thoroughly analysing the behavior driven by the rules. For example, it might be observed that in a purchase-to-pay (P2P) process, a lot of maverick buying occurs when the purchase order is raised after the invoice. Subsequently, understanding why this rule-beating behavior (see Section 9.5) occurs is essential. Further investigation may reveal that the invoice approval process for low-value items is considered too stringent or that sufficient time is unavailable to approve invoices for certain high-value, time-critical purchases. This insight enables decision-makers to simplify or modify system rules to reduce complexity and increase efficiency, ensuring the rules align with current organization goals and objectives.
10.2.9. Goals
System goals guide the behavior of all elements within the system. Revising these goals can redirect efforts across the entire organization.
In Course Manual 9, Section 9.3, the point was made that introducing new actors into a flawed system is unlikely to enhance its performance. The exception to this principle is replacing system leaders as leaders who change the system’s goals can set the system in a different direction, providing a powerful leverage point.
To illustrate, if a tech company shifts its goal from “increase market share” to “become the leader in customer satisfaction,” all units from development to sales will need to align their strategies to enhance customer experience, which could redefine product features, support services, and marketing campaigns.
This highlights the importance of aligning subsystem goals with the whole system goals and monitoring these constantly to ensure that misalignment does not set in, which promotes long-term sustainability.
10.2.10. Paradigms
The deepest lever in any system is the paradigm (or deepest beliefs about how the world works) out of which the system arises. Paradigms encapsulate the mindset around which the system, its rules, structures and goals arise. For example, a company might be driven by a paradigm that market share growth at any cost is desirable.
A paradigm shift can fundamentally change how all stakeholders perceive and engage with the system. These paradigms are often unstated but are very important as key assumptions derive from them.
Paradigms are more challenging to change as organizations typically resist paradigm change fiercely. However, as highlighted in the book ‘Thinking in Systems’, paradigms can be changed if organizational leaders keep pointing at anomalies in the old paradigm, speak and act with assurance in the new paradigm, insert people with the new paradigm in positions of power and visibility and avoid being bogged down dealing with “reactionaries”.
In summary, changing the paradigm involves fostering a culture that embraces the new paradigm through leadership advocacy, comprehensive training programs, and aligning reward systems with new values.
Exercise 10.1
10.3. Solving Systems Problems
In this section, we bring together the learning from the systems section of the workshop and present a problem-solving approach that considers the intricacies of the system’s interactions and dynamics. Below, we outline how to tackle issues within dynamic systems, particularly in organizational contexts.
10.3.1. Identify the Problem Clearly
The first step in solving any problem is to define it clearly and precisely. In the context of a dynamic system, this means understanding not just the symptoms of the problem, but its root causes. For instance, if a business is experiencing declining sales, the immediate observation is the reduction in customer purchases. However, the underlying issue could be a variety of factors such as poor product quality, inadequate customer service, or changes in consumer preferences.
10.3.2. Map the System
Once the problem is identified, the next step is to map out the system that encompasses the issue, which involves identifying the components of the system, their relationships, and the flows of information, materials, or actions between them. Creating a visual diagram can be especially helpful. This map will provide a holistic view of how the problem fits within the larger system, helping to pinpoint interactions that may be contributing to the issue. Systems diagrams such as causal loop diagrams and stock-and-flow diagrams (see Section 8.6) can facilitate this mapping and make assumptions about the system transparent
10.3.3. Analyze System Behavior
Understanding how the system behaves over time is crucial. This involves looking at patterns, trends, and cycles within the system. For example, a business might analyze sales data over several years to identify seasonal fluctuations or trends that correlate with marketing campaigns or economic conditions. This step often requires collecting and analyzing data to fully understand the dynamics at play. The previous course manual provides extensive details on how to perform this analysis.
10.3.4. Identify Levers and Test Interventions
As previously established, a lever is a point within the system where a small change can lead to significant impacts. Once the system’s behavior is understood, identify potential levers. These could be goals, rules, information or feedback loops that could be adjusted to solve the problem. It’s essential to think about interventions in terms of their systemic impact — how will a change in one part of the system affect other parts?
Testing these interventions can be done through simulations, pilot projects, or phased rollouts, which allows the outcomes to be monitored and the approach tweaked as necessary. The steps outlined in Workshop 2 (see Course Manual 3, Section 3.4.5) can facilitate testing these interventions.
10.3.5. Implement Solutions
After testing, implement the solutions that have shown promise. This step should be managed carefully with attention to timing, scale, and potential side effects. Communicating clearly with all impacted stakeholders about the changes and their intended benefits is essential.
10.3.6. Monitor and Adjust
Finally, continuous monitoring of the system post-intervention is crucial. The dynamic nature of these systems means that they continually evolve, and solutions that work today may not be effective tomorrow. Regularly reviewing the system’s performance can help catch new issues early and provide data that may necessitate further intervention adjustments.
In conclusion, solving problems within dynamic systems is not about quick fixes but deep understanding and thoughtful intervention. This approach solves problems and enhances the system’s resilience and efficiency over time.
In the concluding section of this course manual and workshop, we will explore how to manage systems.
10.4. Managing Systems
Effectively managing complex systems requires a deep understanding of their components, dynamics, and the interdependencies that drive their behaviors. This section explores strategies for effective system management, focusing on understanding the system’s rhythm, transparent modeling and assumptions, the importance of data transparency, and enhancing organizational vocabulary, among others.
10.4.1. Study the Rhythm of the System
Understanding the “rhythm” of a system involves studying its operational tempo and cycles, including its historical data, to anticipate future behavior. This approach helps managers recognize patterns, predict outcomes, and plan interventions more effectively.
To illustrate, a retail chain analyzing sales data over several years will notice patterns corresponding to seasonal variations, economic conditions, and consumer trends. By understanding these rhythms, the chain can better manage inventory, adjust marketing strategies, and allocate resources optimally throughout the year.
The system’s rhythm can be uncovered by collecting and analysing historical data across different timescales to identify cycles and patterns. Additionally, predictive analytics can inform decision-making processes and facilitate effective adaptation to anticipated changes. Workshop 9 will explore how predictive process monitoring can provide practical operational support and ensure processes are completed with the desired outcome.
10.4.2. Make Systems Models Transparent
Transparency in modeling and clarity in assumptions are crucial for credible system management. This involves openly discussing the models used to predict and influence system behavior and being transparent about the assumptions underlying these models.
For example, in modeling its supply chain system, a company must be clear about the boundaries of the systems (e.g., suppliers, distributors), delays and the assumptions made. Clarity helps stakeholders understand the model’s structure and behavior and build trust in the modeling process.
System model transparency can be enabled by documenting and sharing systems diagrams with stakeholders and encouraging feedback and critique to refine models and assumptions continually.
10.4.3. Make Systems Information Transparent
Transparency in system information involves making data accessible and understandable to all stakeholders, which promotes accountability, empowers team members to make informed decisions and contributes to overall system health.
To illustrate, a software development company using agile methodologies might make its development progress visible through dashboards that show real-time metrics on code commits, build status, and bug reports. As established in Workshop 2, Course Manual 9, this transparency helps align the development team and stakeholders, facilitating timely adjustments and decisions.
Implementing tools and platforms that provide real-time access to system data and regularly updating all stakeholders about system status and progress through clear and accessible reports facilitate systems information transparency.
10.4.4. Enhance Language With System Concepts
Expanding the organization’s vocabulary to include system concepts can significantly influence understanding and perceptions of complex systems. For example, an organization that regularly includes concepts such as “feedback loops”, “systems resilience”, and “self-organization” in communications to its employees will likely discover that it drives them to think in terms of systems. Training courses and congruent leadership behavior will reinforce this thinking.
Additionally, precise and consistent terminology is essential to avoid misunderstandings and ensure that all stakeholders have a common understanding of these systems concepts.
In summary, organizational language can be enriched by introducing and consistently using systems terminology in internal communications. Train employees in its use and review it regularly to include new concepts and exclude outdated terms. Promote the use of these concepts in documentation, reports, and communications to maintain momentum in systems thinking across the organization.
10.4.5. Track What Is Important
Not all critical systems components are easily measurable. Values such as employee morale, brand reputation, and customer satisfaction often defy simple quantification but are crucial for the system’s long-term success.
To illustrate, a company may find it hard to measure employee satisfaction’s impact on productivity directly. However, ignoring staff welfare because it’s less tangible than sales figures can lead to high turnover rates, increased recruitment costs, and decreased productivity, undermining overall performance.
The example above highlights the importance of incorporating qualitative assessments and feedback mechanisms to capture the less tangible aspects of system health. Using surveys, focus groups, and one-on-one interviews can facilitate the collection of comprehensive insights that metrics alone might miss.
10.4.6. Maximize the Performance of the Whole System
Optimizing subsystems in isolation can sometimes lead to suboptimal outcomes for the entire system. A holistic approach ensures that improvements in one area do not detrimentally affect others.
For example, in an effort to cut costs, a company’s procurement department might source cheaper materials, but this could lead to a decline in product quality, affecting sales and damaging the brand’s reputation.
This example illustrates why decisions must be evaluated based on their impact on the entire system. Integrating performance metrics that account for interdependencies between subsystems (such as the balanced scorecard – see Section 5.3) to guide decision-making helps achieve this objective.
10.4.7. Locate Responsibility in the System
As previously established, dynamic systems often possess the ability to organize and repair themselves effectively. However, well-meaning interventions may undermine these system properties. Responsibility for resolving issues within a system should be delegated to the system’s structure and processes (rather than to individuals within the system), and system mechanisms to fix these issues should be activated. This approach promotes a healthier organizational culture and more effective problem-solving.
For example, if an agile process improvement project fails due to missed deadlines, instead of blaming individual team members, assess whether the project timelines were realistic and whether the team had the necessary resources and processes to succeed. For future projects, cross-functional teams should be organized with the autonomy to self-organize and apply the Scrum principles and practices discussed in Workshop 2.
Locating responsibility in the system involves implementing an approach that focuses on enhancing system structures rather than penalizing individuals for failures, fostering a more collaborative and supportive work environment.
10.4.8. Stay Humble and Learn
System management should be approached with humility and a readiness to learn. Systems are complex and constantly changing, and assumptions that once held true may no longer apply.
To illustrate, a business strategy that worked in the pre-digital age might fail in today’s digital-first environment. Leaders must be open to learning from new data and changing their strategy accordingly.
The servant leadership principles highlighted in Workshop 1, which facilitated the cultivation of a culture of continuous improvement and learning within the organization and encouraged experimentation and learning from failures, are closely related to this systems management principle.
10.4.9. Embrace Complexity
Rather than oversimplifying, managers should embrace the complexity of systems. This understanding can lead to more robust and adaptable strategies.
For example, recognizing that a complex set of factors influences customer behavior, a company would include all the relevant elements, relationships, feedback loops, etc., in its analysis to develop a deep, nuanced understanding of customer needs. Having said that, a balance must be drawn between overly complex system models that are challenging to understand. However, the simplest model that accurately captures the behavior of many real-world systems will include a degree of complexity.
Many software systems and applications on the market provide advanced analytical capability to manage and leverage complexity. We will discuss several of these tools in subsequent workshops.
10.4.10. Expand System Time Horizon
Long-term thinking is crucial for sustainability. Current organizational problems may have their root cause in decisions made a long time ago; hence, decisions currently being made should be evaluated for their future impacts and immediate outcomes.
To illustrate, an organization considering an investment in renewable energy should evaluate not just the immediate financial outlay but also the long-term savings and environmental impacts.
Extending the planning horizons, including future implications in the current decision-making processes, and utilizing scenario planning to understand potential future states are ways to expand the system time horizon. Additionally, the organization should develop robust strategies across a range of possible futures.
10.4.11. Monitor Feedback Loops
Feedback loops provide critical insights into system performance and dynamics. Monitoring these – whether intentionally developed or otherwise – can help anticipate problems before they become severe and adjust strategies in real-time.
Consider a company which predominantly hires employees who graduated from a handful of prestigious universities based on the belief that these universities produce the most qualified candidates. As employees from these universities dominate the workforce, they shape the company’s culture, values, and work norms according to their common background. Over time, the criteria for what makes a good employee become increasingly associated with graduating from these specific universities rather than based on a wide range of qualifications or diverse experiences. This homogenous workforce disadvantages the company as it lacks diverse perspectives necessary for innovation and adaptability, potentially harming long-term competitiveness. The company will continue to lack diversity without identifying this loop and intentional intervention to break this cycle, such as broadening hiring criteria, actively seeking diverse candidates, and valuing diverse perspectives.
Feedback loops can be monitored by establishing mechanisms to monitor and analyze system behavior and adjusting processes and strategies to optimize system outcomes. Additionally, the nature and strength of feedback loops should be monitored to understand how they impact system behavior.
Case Study: Lead Generation-to-Cash Processes, Refrigeration Sales Corp (RSC), US
Problem
Located in Ohio, USA, RSC is a third-generation, privately-held family business specialising in wholesale sales and maintenance of HVAC (heating, ventilation, air conditioning) and refrigeration units. The company’s operations have grown beyond equipment sales to include credit lending, technical support, and training for thousands of contractors throughout the state. The HVACR sector had experienced three decades of steady expansion at the time, and RSC experienced average yearly increases in sales of air conditioning (AC) units. However, these annual sales rates declined for the first time in many years. Customers and rivals of the company believed this was a “temporary lull” brought on by the overall state of the economy, and most of them were upbeat about the future. However, the company’s CEO (who had recently been trained in systems thinking), believed that these developments indicated a new phase in the market’s evolution and that this historic boom would inevitably slow down more permanently.
How Dynamic Systems Analysis Helped
The company used dynamic system analysis to provide long-term market projections, which was essential as its sales and earnings were directly correlated with the state of the market volume. This analysis was motivated by the idea that feedback originates within the system rather than outside sources.
The dynamic model enabled their organization’s managers to observe real-world developments and refine their understanding of the industry growth cycle’s fluctuations by quantifying the buildup of the installed base and incorporating the impact of declining first-time sales. Despite increased sales in the following years, RSC stuck to its forecasting strategy by streamlining the company and consolidating its warehouses and stock. Based on peak sales at the time and assumptions of continued growth, their suppliers and customers viewed these measures as myopic. However, RSC’s unconventional strategy would soon be justified when the expected market downturn occurred.
Systems analysis enabled RSC’s managers to regularly detach from the daily chaos of business operations and grasp the market’s fundamental trends. Additionally, systems modeling was necessary to understand market saturation trends’ measurable, time-sensitive impacts.
Results
Systems analysis enabled RSC to be deliberate and proactive in preparing for the industry downturn rather than responding spontaneously. As a result, the company was well-prepared to expand and seize market share from competitors who were reducing costs to remain viable. Market share and employees were gained from unprepared firms struggling to bounce back from the downturn. During the downturn, the AC market shrank by 30% in some areas, yet RSC saw a 25% increase in annual revenue and a 30% rise in sales locations in those regions.
Source: systemdynamics.org
Exercise 10.2
Project Studies
Project Study (Part 1) – Customer Service
The Head of this department is to provide a detailed report demonstrating that the learnings from Process Architecture have been implemented and are fully operational within their department. The report should describe how it was implemented, which resources were utilized, challenges that were encountered and how they were resolved, as well as implementation results.
1. Organizational Strategy
2. Enterprise Process Modeling
3. Reference Models
4. Operational Risk Management
5. Process Prioritization
6. Process Orchestration
7. Enterprise Business Process Analysis Tools
8. Systems Lens
9. System Behavior
10. System Leverage
Please include the results of the initial evaluation and assessment.
Project Study (Part 2) – Finance
The Head of this department is to provide a detailed report demonstrating that the learnings from Process Architecture have been implemented and are fully operational within their department. The report should describe how it was implemented, which resources were utilized, challenges that were encountered and how they were resolved, as well as implementation results.
1. Organizational Strategy
2. Enterprise Process Modeling
3. Reference Models
4. Operational Risk Management
5. Process Prioritization
6. Process Orchestration
7. Enterprise Business Process Analysis Tools
8. Systems Lens
9. System Behavior
10.System Leverage
Please include the results of the initial evaluation and assessment.
Project Study (Part 3) – Human Resources
The Head of this department is to provide a detailed report demonstrating that the learnings from Process Architecture have been implemented and are fully operational within their department. The report should describe how it was implemented, which resources were utilized, challenges that were encountered and how they were resolved, as well as implementation results.
1. Organizational Strategy
2. Enterprise Process Modeling
3. Reference Models
4. Operational Risk Management
5. Process Prioritization
6. Process Orchestration
7. Enterprise Business Process Analysis Tools
8. Systems Lens
9. System Behavior
10.System Leverage
Please include the results of the initial evaluation and assessment.
Project Study (Part 4) – Marketing
The Head of this department is to provide a detailed report demonstrating that the learnings from Process Architecture have been implemented and are fully operational within their department. The report should describe how it was implemented, which resources were utilized, challenges that were encountered and how they were resolved, as well as implementation results.
1. Organizational Strategy
2. Enterprise Process Modeling
3. Reference Models
4. Operational Risk Management
5. Process Prioritization
6. Process Orchestration
7. Enterprise Business Process Analysis Tools
8. Systems Lens
9. System Behavior
10.System Leverage
Please include the results of the initial evaluation and assessment.
Project Study (Part 5) – Information Technology
The Head of this department is to provide a detailed report demonstrating that the learnings from Process Architecture have been implemented and are fully operational within their department. The report should describe how it was implemented, which resources were utilized, challenges that were encountered and how they were resolved, as well as implementation results.
1. Organizational Strategy
2. Enterprise Process Modeling
3. Reference Models
4. Operational Risk Management
5. Process Prioritization
6. Process Orchestration
7. Enterprise Business Process Analysis Tools
8. Systems Lens
9. System Behavior
10.System Leverage
Please include the results of the initial evaluation and assessment.
Project Study (Part 6) – Operations
The Head of this department is to provide a detailed report demonstrating that the learnings from Process Architecture have been implemented and are fully operational within their department. The report should describe how it was implemented, which resources were utilized, challenges that were encountered and how they were resolved, as well as implementation results.
1. Organizational Strategy
2. Enterprise Process Modeling
3. Reference Models
4. Operational Risk Management
5. Process Prioritization
6. Process Orchestration
7. Enterprise Business Process Analysis Tools
8. Systems Lens
9. System Behavior
10.System Leverage
Please include the results of the initial evaluation and assessment.
Project Study (Part 7) – Management
The Head of this department is to provide a detailed report demonstrating that the learnings from Process Architecture have been implemented and are fully operational within their department. The report should describe how it was implemented, which resources were utilized, challenges that were encountered and how they were resolved, as well as implementation results.
1. Organizational Strategy
2. Enterprise Process Modeling
3. Reference Models
4. Operational Risk Management
5. Process Prioritization
6. Process Orchestration
7. Enterprise Business Process Analysis Tools
8. Systems Lens
9. System Behavior
10.System Leverage
Please include the results of the initial evaluation and assessment.
Project Study (Part 8) – Legal
The Head of this department is to provide a detailed report demonstrating that the learnings from Process Architecture have been implemented and are fully operational within their department. The report should describe how it was implemented, which resources were utilized, challenges that were encountered and how they were resolved, as well as implementation results.
1. Organizational Strategy
2. Enterprise Process Modeling
3. Reference Models
4. Operational Risk Management
5. Process Prioritization
6. Process Orchestration
7. Enterprise Business Process Analysis Tools
8. Systems Lens
9. System Behavior
10.System Leverage
Please include the results of the initial evaluation and assessment.
Project Study (Part 9) – Compliance
The Head of this department is to provide a detailed report demonstrating that the learnings from Process Architecture have been implemented and are fully operational within their department. The report should describe how it was implemented, which resources were utilized, challenges that were encountered and how they were resolved, as well as implementation results.
1. Organizational Strategy
2. Enterprise Process Modeling
3. Reference Models
4. Operational Risk Management
5. Process Prioritization
6. Process Orchestration
7. Enterprise Business Process Analysis Tools
8. Systems Lens
9. System Behavior
10.System Leverage
Please include the results of the initial evaluation and assessment.
Project Study (Part 10) – Strategy
The Head of this department is to provide a detailed report demonstrating that the learnings from Process Architecture have been implemented and are fully operational within their department. The report should describe how it was implemented, which resources were utilized, challenges that were encountered and how they were resolved, as well as implementation results.
1. Organizational Strategy
2. Enterprise Process Modeling
3. Reference Models
4. Operational Risk Management
5. Process Prioritization
6. Process Orchestration
7. Enterprise Business Process Analysis Tools
8. Systems Lens
9. System Behavior
10.System Leverage
Please include the results of the initial evaluation and assessment.
Program Benefits
Management
- Data-driven insights
- Operational transparency
- Performance optimization
- Cost reduction
- Process automation
- Risk mitigation
- Compliance assurance
- Resource allocation
- Decision support
- Continuous improvement
Finance
- Fraud detection
- Cash flow optimization
- Cost containment
- Financial compliance
- Revenue forecasting
- Working capital
- Expense analysis
- Invoice processing
- Financial visibility
- Budget control
Operations
- Process efficiency
- Bottleneck identification
- Resource optimization
- Lead time reduction
- Workforce productivity
- Quality improvement
- Inventory management
- Supplier collaboration
- Workflow automation
- Capacity planning
Client Telephone Conference (CTC)
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