Process Management

In the last column, I explored the basics of business process management (BPM)what it is and why organizations have become so interested in it. In this column, I thought it would be helpful to extend the exploration of BPM with a little history lesson and a look into the future of BPM. A few years ago, many organizations turned to BPM for straightforward improvements in their business processes through automation and integration. At the time, they were looking for the next step beyond traditional integration solutions or EAI productssomething with more of a process-orientation. But in most cases, organizations were considering BPM as an alternative to enterprise application integration solutions, which tended to be optimized for system-to-system problems and frequently did not provide business-oriented approaches for dealing with human input or exception handling. Thus, many of the early BPM implementations were companies looking for increased automation of the processes, but from a business perspective, not simply a systems-level orientation. As a result, the focus of the integration efforts shifted from pure system-to-system towards a business process level that frequently involved users, exception handling or human input. Today, Im still seeing many companies considering BPM and BPM solutions as an alternative or incremental approach to traditional system- or application-oriented integration solutions. But we have also seen the rise of companies that are looking to deploy BPM solutions for additional benefits beyond integration or automation goals, and the companies that have already deployed BPM solutions who are looking to gain incremental advantages from their initial deployments. For example, many companies are looking to BPM to help them solve a range of problems that go beyond the original scope of integration or automation found in many first-generation BPM projects. Todays companies are deploying BPM technologies to address issues such as regulatory compliance, process optimization and increased business agility. Theyre also looking to leverage BPM and service orchestration to drive new SOA-based applications and services. Using BPM in conjunction with SOA enables organizations to respond faster to changing business requirements. For example, an organization that is growing through acquisition and has the need to integrate diverse applications or process steps into an integrated process could potentially benefit from BPM running on top of an SOA. For many companies, SOA is becoming an important foundation for BPM, since it supports the rapid assembly and coordination of process components and services into larger components that address an entire business process.

The Future of Business Process Management

By David A. Kelly, Analyst, ebizQ , 10/02/2005 Print this article Email this article Talk Back! Write to Editor

Process optimization is also a big driver for todays companies, as organizations are using BPM technologies to drive process improvement through more precise process metrics, easier

management, and the ability to alter and adjust processes or business rules in response to business requirements.

From a regulatory perspective, BPM solutions enable companies to enforce policies and procedures and provide a method for organizations to define, manage and audit their critical processes. This can be particularly effective when combined with business rule engines. But theres also a future perspective to BPM. I believe that over the next few years, were going to see companies build on the benefits Ive outlined abovefrom using BPM for basic integration and automation of business processes or steps through using it for regulatory compliance, process optimization and business agility. As more and more companies deploy BPM solutions, and as solutions become more advanced, I believe well see increased focus on the process optimization and simulation capabilities. With the focus of BPM increasingly on enabling line-of-business managers to monitor and manage the business processes, providing them with a way of visually monitoring activity is a natural fit. I expect many BPM products to make advances in creating more business-usable and businessrelevant products. Without adequate (and easy-to-use) business process monitoring capabilities and reporting options, BPM turns into simply business process automation. And simply automating processes, without enabling dynamic, rapid change to business processes will not deliver the results that organizations are looking for from BPM. About the Author David Kelly - With twenty years at the cutting edge of enterprise infrastructure, David A. Kelly is ebizQ's Community Manager for Optimizing Business/IT Management. This category includes IT governance, SOA governance,and compliance, risk management, ITIL, business service management,registries and more. As Community Manager, David will blog and podcast to keep the ebizQ community fully informed on all the important news and breakthroughs relevant to enterprise governance. David will also be responsible for publishing press releases, taking briefings, and overseeing vendor submitted feature articles to run on ebizQ. In addition, each week, David will compile the week's most important news and views in a newsletter emailed out to ebizQ's ever-growing Governance community. David Kelly is ideally suited to be ebizQ's Governing the Infrastructure Community

Manager as he has been involved with application development, project management, and product development for over twenty years. As a technology and business analyst, David has been researching, writing and speaking on governance-related topics for over a decade. David is an expert in Web services, application development, and enterprise infrastructures. As the former Senior VP of Analyst Services at Hurwitz Group, he has extensive experience in translating the implications of new application development, deployment, and management technologies into practical recommendations for enterprise customers. He's written articles for Computerworld, Software Magazine, the New York Times, and other publications, and spoken at conferences such as Comdex, Software Development, and Internet World. With expertise ranging from application development to enterprise management to integration/B2B services to IP networking and VPNs, Kelly can help companies profit from the diversity of a changing technology landscape. More by David A. Kelly About ebizQ

ebizQ is the insiders guide to next-generation business process management. We offer a growing collection of independent editorial articles on BPM trends, issues, challenges and solutions, all targeted to business and IT BPM professionals. We cover BPM standards, governance, technology and continuous process improvement, as well as process discovery, modeling, simulation and optimization, among many other areas. We follow case management, decision management, business rules management, operational intelligence, complex event processing and other related topics. We closely track important trends such as the rise of social BPM, mobile BPM and BPM in the cloud. We also explore BPMs use in functional areas, such as supply chain and customer management, and in key verticals, such as financial services, health care, insurance and government. ebizQ's other BPM-oriented content includes podcasts, webcasts, webinars, white papers, a variety of expert blogs, a lively online forum and much more.

Business capability defined

A business capability is WHAT a company needs to be able to do to execute its business strategy (e.g., Enable ePayments, tailor solutions at point of sale, demonstrate product concepts with customers, combine elastic and non-elastic materials side by side, etc.).

Another way to think about capabilities is they are a collection or container of people, process and technology that is addressable for a specific purpose.
[1]

Capability management is an approach that

uses the organization's customer value proposition to establish performance goals for capabilities based on value contribution. It helps drive out inefficiencies in capabilities that contribute low customer impact and focus efficiencies in areas with high financial leverage; while preserving or investing in capabilities for growth. [edit]Capability [edit]Capability

management topics

vs. process

A process is HOW the capability is executed. Much of the reengineering revolution or Business process reengineering focused on HOW to redesign business processes. [edit]Business

vs. organizational capability

An organization capability refers to the way people in the organization work together to get things done.
[2]

The way leaders foster shared mindset, orchestrate talent, encourage speed of change,

collaboration across boundaries, learn and hold each other accountable define the company's culture and leadership edge. [edit]Capability

vs. competency
[3]

Although often used interchangeably, "capability" and "competency" are quite different.

makes a

distinction between capabilities and competencies: individuals have competencies while organizations have capabilities. Both competencies and capabilities have technical and social elements. Individual Organization

Technical Functional Competencies Business Capabilities

Social

Leadership Competencies Organizational Capabilities

At the individual-technical intersection, employees in the firm bring functional skills and competencies such as C++ programming, cost accounting, electrical engineering, etc. At the individual-social intersection, leaders also have a set of competencies or skills such as setting the strategic agenda, championing change and building relationships. Moving to the intersection of organizational and technical, are business capabilities. In short, they are the technical things or what the firm must know how to do to execute strategy. For example, a financial service firm must know how to manage risk and design innovative products. Finally, we have organization capabilities such a talent management, collaboration, and accountability. According to Ulrich, they are the underlying DNA, culture, and personality of the firm. They integrate all the other parts of the firm and bring it together. When a group of leaders have mastered certain competencies, organization capabilities become visible. For

example, when a group of leaders master "turning vision in to action" and "aligning the organization," the organization a whole shows more "accountability." [edit]History

of capability modeling in business

Capability management's earlier ancestors include the value chain, also known as value chain analysis, first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance. In 1990, The core competencies of the corporation defined core competency as a cluster of extraordinary abilities or related 'excellences' that a firm acquires from its founders, after consistent striving over the years, and which cannot be easily imitated. Core competencies (also called core capabilities) are what give a company one or more competitive advantages in creating and delivering value to its customers in its chosen field. Lee Perry, Randall Stott and Norm Smallwood[4] added to the capabilities body of work the concepts of strategic options based on Customer Value Proposition and Business Focus which characterized work as either:  Unit of competitive advantage (UCA) the work and capabilities that create distinctiveness for the business in the marketplace Value-added support work the work and capabilities that facilitate the UCA Essential support work the work that doesn't support UCA or facilitate it but must be done to operate the business Building on earlier themes, the concept of dynamic capabilities was introduced in 2000. The basic assumption of the dynamic capabilities framework is that in fast changing markets, firms need to respond quickly and innovatively. Around the same time, Richard Lynch, John Diezemann and James Dowling extended the concepts above in The Capable Company: Building the capabilities that make strategy work.
[6] [5]

and Types of Work

 

Key additions to

the body of work were tools to translate strategic shifts to new sets of capabilities required whether these were core competencies or not. Building on the Types of Work ideas, the authors added performance target setting based on the capability value contribution. When compared to actual performance, the method outlined an approach to identify capability gaps and priorities. They also laid out a framework to continually align capabilities based on strategy shifts and external changes through the project agenda. The first full Capability Model was built by the authors in 2001 as the framework for the demerger of Intercontinental Hotels Group (then known as Six Continents) from the parent Six Continents PLC (formerly Bass & Co Brewery).
[7]

The model included thee levels of

capabilities, value contribution, performance targets, capability gaps, recommended actions and sourcing decisions.

In 2004, the UK Ministry of Defence released its enterprise architecture framework, MODAF. This framework extended the existing DoDAF specification by adding views for capability planning. These views were standard ways to represent how the enterprise was expected to perform over time, expressed in terms of capabilities. Other important contributions include the concept of value maps for detailing the customer proposition and more recently the profit proposition to identify capabilities that will help create Blue Ocean. Value Maps extend the work of real-time strategy and the capable company by depicting a strategy canvas and providing an action framework to capture markets. In the mid 2000s team at Microsoft, in concert with Accelare, developed the Motion Methodology a capability-based framework.
[8]

In 2008, Ric

Merrifield, Jack Calhoun and Dennis Stevens, in the Next Revolution in Productivity added the use of SOA and its role in supporting capability delivery at breakthrough cost and speed. was the use of heats maps for capability analyses. [edit]Capability
[9]

Also introduced

management frameworks
[10]

A complete picture of the capabilities is the enterprise capability model.

It is a blueprint for the

business expressed in terms of the capabilities necessary to execute strategy including delivery of services. Capabilities are described in levels of abstraction; usually three levels of details.    Family of capabilities; often shown as chevrons Groups of capabilities; illustrated in the health care provider diagram Specific capabilities; the level of detail to assess capabilities

At the higher level, are the attributes of ownership, location, and project road maps. The lower level is where the action is and where performance targets are set, performance assessed and gaps noted. It is at this level sourcing decisions are made or projects established to close gaps. The framework includes strategic, core and enabling capabilities.   Strategic capabilities: capabilities in organizational planning, strategy, and investment Core capabilities: the inventory of business capabilities that are identified as delivering the products and services that an organization offers to its market.  Enabling capabilities: the inventory of business capabilities that are required to support the but not sold or offered to the market [edit]Strategic

planning
[11]

Companies like Harvard Pilgrim Health Care

and Intercontinental Hotels Group

[12]

have used

capabilities to focus on where to take out costs and outsource non strategic capabilities while improving service and adding brands. [edit]ITbusiness

alignment

Microsoft is using capability models to enter into conversations with clients to identify capability and process pain points to better align IT solutions to the business.[1]

[edit]New

growth platforms
[13]

Capabilities are also being used in new growth platform development.

[14]

Platforms are a foundation

that spawns multiple products and/or services that, by themselves, are eventually the size of a business unit. These innovations result from identifying new domains created at the intersection of

enablers or "unstoppable trends" and customer dynamics, linked to an essential set of core capabilities called the platform logic: those capabilities that are unique, valuable, and portable. [edit]Capability

value contribution

Building of the earlier type of work logic, Accelare added a distinction in assessment of the capabilities necessary to operative the business by examining the financial impact as well as the customer impact.
[15]

Figure 3: Capability value contribution to strategy

Some capabilities directly contribute to the customer value proposition and have a high impact on company financials. These "advantage capabilities" are shown in the upper right. Value contribution is assured when performance is among the best in peer organizations at acceptable cost. Keep them inside and protect the intellectual property. Moving to the top left quadrant, strategic support capabilities have high contribution in direct support of advantage capabilities. Keep them close. Value contribution is assured when performed above industry parity at competitive cost. Other capabilities shown in the bottom right are essential. They may not be visible to the customer but contribute to company's business focus and have a big impact on the bottom line. Focus on efficiency improvement; especially in high volume work. Value contribution is assured when performed at industry parity performance below competitors' cost. Other capabilities are "business necessity." Value contribution is assured when performed at industry parity performance below competitors' cost. They can be candidates for alternate sourcing.

Definition The activities associated with running a company, such as controlling, leading, monitoring, organizing, and planning. Read more: http://www.businessdictionary.com/definition/businessmanagement.html#ixzz1lqMDjxw0

business management system Set of policies, practices, procedures, and processes used in developing and deploying strategies, their execution, and all associated management activity. Read more: http://www.businessdictionary.com/definition/business-managementsystem.html#ixzz1lqMpWRC

business markets Definition Marketplaces where organizations purchase raw materials, natural resources and components of other products for their resale or for use in manufacturing another product. Business markets are generally made up of businesses which buy products and raw materials for their own operation. business matter annotation Read more: http://www.businessdictionary.com/definition/business-markets.html#ixzz1lqMxqxcd

Definition Comments marked on a record in the process of handling a business matter (that requires use of the record) which register the action(s) taken after the creation of the record. Read more: http://www.businessdictionary.com/definition/business-matterannotation.html#ixzz1lqNJmLJl

business mix Definition The combination of different types of business activities that a single firm is engaged in. An example would be a company that produces and sells cars, but also operates a financing wing to help

customers finance automobile purchases. A company with a complex business mix may have a complicated financial structure, and accurate valuation of the company may be difficult.

Read more: http://www.businessdictionary.com/definition/business-mix.html#ixzz1lqNTPihc business model

Definition Description of means and methods a firm employs to earn the revenue projected in its plans. It views the business as a system and answers the question, "How are we going to make money to survive and grow?" Read more: http://www.businessdictionary.com/definition/business-model.html#ixzz1lqNaBlmR

business name

Definitions (2) 1. Title under which a sole-proprietorship (sole trader) or a partnership carries on its business. 2. Combination of words or symbols that uniquely identifies a business or firm instead of a good or service. Also called trade name. See also company name. Read more: http://www.businessdictionary.com/definition/business-name.html#ixzz1lqOOrkuR

business necessity

Definition Management's defense of an employment related decision (which disproportionately affects a particular group) that it is based on the genuine requirements of the firm and is consistent with other such decisions.

Read more: http://www.businessdictionary.com/definition/business-necessity.html#ixzz1lqOaE74K

business needs

Definition Requirements that a private or public organization must follow, such as proper recording of its material activities and transactions, proper maintenance and auditing of these records, and proper access to them by the authorized parties.

Read more: http://www.businessdictionary.com/definition/business-needs.html#ixzz1lqOhnPP2

business operation Definition Activities involved in the day to day functions of the business conducted for the purpose of generating profits.

Read more: http://www.businessdictionary.com/definition/business-operation.html#ixzz1lqOmuc7P

business opportunity

Definition Ongoing opportunity to generate income as an independent representative of a network marketing company.

Read more: http://www.businessdictionary.com/definition/businessopportunity.html#ixzz1lqOuSx26

business owner

Definition Individual or entity who owns a business entity in an attempt to profit from the successful operations of the company. Generally has decision making abilities and first right to profit

Read more: http://www.businessdictionary.com/definition/business-owner.html#ixzz1lqP0EhoY business owner's policy Definition A policy that provides liability and property coverage for small businesses.

Read more: http://www.businessdictionary.com/definition/business-owner-spolicy.html#ixzz1lqP5oiLu

business partner

Definition An individual or company who has some degree of involvement with another entity's business dealings. The term business partner' can have a wide range of meanings, with one of the most frequent being a person who, along with another person, plays a significant role in owning, managing, or creating a company (two best friends who start a business together would consider themselves business partners). The term is also frequently used for two businesses that cooperate, to any degree, such as a computer manufacturer who works exclusively with another company who supplies them with parts.

Read more: http://www.businessdictionary.com/definition/business-partner.html#ixzz1lqPObIo4

business performance management (BPM)

Definition

A business management approach which looks at the business as a whole instead of on a division level. Business performance management entails reviewing the overall business performance and determining how the business can better reach its goals. This requires the alignment of strategic and operational objectives and the business' set of activities in order to manage performance. Because BPM seeks to aggregate available information, managers are more informed about the company's position and are able to make better decisions. Also called corporate performance management.

Read more: http://www.businessdictionary.com/definition/business-performance-managementBPM.html#ixzz1lqPX2zHd business personal property

Definition Building, equipment, fixtures, furniture, merchandise, etc., identified in an insurance policy as owned by the insured and used in his or her business. Also called contents.

Read more: http://www.businessdictionary.com/definition/business-personalproperty.html#ixzz1lqPdvUXU

business philosophy Definition Theory used to determine how a business handles different areas of operation. How a company is formed and operates in areas such as accounting, management, training, public relations, marketing and business operations.

Read more: http://www.businessdictionary.com/definition/business-philosophy.html#ixzz1lqPqZx7F

business plan

Definition Set of documents prepared by a firm's management to summarize its operational and financial objectives for the near future (usually one to three years) and to show how they will be achieved. It serves as a blueprint to guide the firm's policies and strategies, and is continually modified as conditions change and new opportunities and/or threats emerge. When prepared for external audience (lenders, prospective investors) it details the past, present, and forecasted performance of the firm. And usually also contains pro-forma balance sheet, income statement, and cash flow statement, to illustrate how the financing being sought will affect the firm's financial position.

Read more: http://www.businessdictionary.com/definition/business-plan.html#ixzz1lqQAtoq5 business planning Definition The process of determining a commercial enterprise's objectives, strategies and projected actions in order to promote its survival and development within a given time frame. Business planning typically has two key aspects, one focused on making profits and the other focused on dealing with risks that might negatively impact the business.

Read more: http://www.businessdictionary.com/definition/business-planning.html#ixzz1lqQKUFJC business portfolio Definition The collection of products and services provided by a company. Many businesses will engage in business portfolio analysis as part of their strategic planning efforts by categorizing the products they offer by relative competitive position and rate of sales growth.

Read more: http://www.businessdictionary.com/definition/business-portfolio.html#ixzz1lqQaX0YQ business portfolio Definition

The collection of products and services provided by a company. Many businesses will engage in business portfolio analysis as part of their strategic planning efforts by categorizing the products they offer by relative competitive position and rate of sales growth.

Read more: http://www.businessdictionary.com/definition/business-portfolio.html#ixzz1lqQaX0YQ business practice

Definition A method, procedure, process, or rule employed or followed by a company in the pursuit of its objectives. Business practice may also refer to these collectively.

Read more: http://www.businessdictionary.com/definition/business-practice.html#ixzz1lqQwh5Lv