BPM Governance

1. BPM Governance Identifying methods for prioritizing, standardizing, measuring and controlling BPM efforts

2. Enterprise BPM Methodology “Managing the Process-Centric Organization”, presentation by Paul Harmon. Session 5 Session 4 Session 8 Sess. 3 Session 8 Session 9 BA 553: Process Improvement BA 553: Business Process Management

3. Governance: What, Why, When, How • What is governance? • Governance is derived from a Greek word which means “to steer” • System of policies, rules, and controls • Provides models and methods for direction, coordination, and control of the organization • Why is BPM governance important? • When is BPM governance needed? • When in the BPM lifecycle to implement governance • Governance during phases of process change • How is BPM governance implemented? • Governance critical success factors • Governance frameworks BA 553: Business Process Management

4. Why is BPM governance important? BA 553: Business Process Management

5. When is BPM governance needed? • Governance is required through all lifecycle phases of BPM in the company • Governance is required through all process change phases: • Business process strategy phase • Strategic plan • Value chain • KPIs and Business scorecards • Business process design phase • Process architecture • Process redesign project • Desired (“to be”) process performance targets • Business process implementation phase • Comprehensive process change implementation plan, including training and communications plans • Improved process implemented in the organization • Business process control phase • Process performance management system • Process performance measures, impacts on KPIs and strategy • Countermeasure plans to modify process performance Scheer, A-W. and Brabander, E. (2010), The Process of Business Process Management. In: vomBrocke, J. and Rosemann, M. (eds.) Handbook on business process management, vol. 2. Springer: Heidelberg. BA 553: Business Process Management

6. How is BPM governance implemented? BPM governance critical success factors: • Determine governance authorities and boundaries for each group, e.g., which group has authority over cross-functional processes, which group is responsible for standardizing tools and methods • Establish a schedule for how frequently various governance activities are conducted • Balance benefits of optimizing the performance of a process and optimizing the performance of the organization (don’t sub-optimize) • Align BPM governance approach with organizational management approach and organizational culture • Align the related lifecycles: • BPM lifecycle aligned with company lifecycle • Process lifecycles aligned with product/service lifecycles BA 553: Business Process Management

7. BPM Lifecycle: One Perspective Scheer, A-W. and Brabander, E. (2010), The Process of Business Process Management. In: vomBrocke, J. and Rosemann, M. (eds.) Handbook on business process management, vol. 2. Springer: Heidelberg. BA 553: Business Process Management

8. How is BPM governance implemented? (cont’d.) Selecting a BPM governance framework: • Assess the organization’s current process capability or maturity (session 10) • Determine the level of management structure that is appropriate for the organization’s culture • Determine the level of centralization that is appropriate for the organization’s culture (example on next slide) • Identify the level of resources (people and budget) the organization can dedicate to BPM at this time • Decide on a governance framework based upon the above items (examples in this presentation) • Establish a BPM growth model, if the current BPM approach is not at the desired level (session 10) BA 553: Business Process Management

9. Determining the Level of Centralization Localized Model Regional Model Business Unit Model EnterpriseModel • Description • Ultimate decision authority at the local level by process • Localities have lead process owners who make decisions for their locality • Consistency not maintained across the enterprise • Advantages • Enables nimble decision making • Localities have flexibility to design processes to meet their needs • Tradeoffs • Costly solution to build and maintain; loss of efficiencies • Loss of standardization benefits • Most difficult to manage business globally • Description • Ultimate decision authority is at the regional level by process • The regional process owners may meet to gain informal consistency across the enterprise • Local governance bodies make lower level decisions • Advantages • Provides flexibility for regions in process design • Decision making typically faster than Enterprise and BU Models • Tradeoffs • More difficult to manage enterprise globally • Some loss of flexibility to meet business unit needs within a given region • Description • Ultimate decision authority is at the Business Unit level by process • The BU process owners may meet to gain informal consistency across the enterprise • Regional level bodies make lower level decisions • Advantages • Provides flexibility for business units in process design • Decision making typically faster than Enterprise Model • Tradeoffs • Loss of cross Business Unit synergies • Some loss of local control • Description • Ultimate decision authority is at the Enterprise level by process • Enterprise governance body can be led by a single process owner or small board of owners • Regional and/or BU level bodies make lower level decisions • Advantages • Less costly to maintain • Full standardization benefits • Enables global management of the business • Tradeoffs • Some loss of flexibility to meet specific business needs • Greatest change challenge Open Strict • Typical Attributes • Exceptions granted as requested • Loose network of process experts (if any) • Local review boards manage exceptions • Decentralized decision making • Typical Attributes • Regional or BU business justified exceptions granted • Regional or BU process expert network • Decision making bodies • Typical Attributes • Exceptions typically granted only for compliance or significant benefit • Corporate process owners • Global review boards • Centralized decision making BA 553: Business Process Management Example from Chevron, as discussed in session 6.

10. Example Governance Model http://www.exigenservices.com/methodology/engagement-processwebsite, accessed 3 April 2010. BA 553: Business Process Management

11. Lean Sigma Governance Model Process Owner VP (or other designated leadership team member) Leadership Team (DRB for the deployment) Process Improvement Team Leader (Lean Sigma Process Advisor) Lean Sigma Advisory Council Project Facilitators (Black Belts and Green Belts) This slide and next: Internal Chevron presentation, 2005. BA 553: Business Process Management

12. UCL Avg LCL Lean Sigma Process Improvement Cycle STRATEGIC PLAN Output Metrics VOICE OF CUSTOMER Gap Identified BUSINESS UNIT SCORECARD Oper. Exc. BUSINESS OBJECTIVES Improved Metric Production Financials BUSINESS MEASURES VALUE STREAM Improve Control PROCESS FLOW Tools & Methodology PROCESS SCORECARD Analyze Process Metric UCL Define PROCESS MEASURES Avg Measure LCL Y's X's BA 553: Business Process Management

13. Process Organization Governance Model Leader CEO/President Catalyst Steering Committee Business Transformation Chief Process Officer Process Council Process Owner Process Office Process Team Source: Tom Colman, CPO/CIO Sloan Valve, 2006 BA 553: Business Process Management

14. Process Governance Roles Burlton, R. (2010), Delivering Business Strategy Through Process Management.In: vomBrocke, J. and Rosemann, M. (eds) Handbook on business process management, vol. 2. Springer: Heidelberg. BA 553: Business Process Management

15. Governance Model for a Large Organization Scheer, A-W. and Brabander, E. (2010), The Process of Business Process Management. In: vomBrocke, J. and Rosemann, M. (eds.) Handbook on business process management, vol. 2. Springer: Heidelberg. BA 553: Business Process Management