Improving Business Process Performance: Gain Agility, Create Value, and Achieve Success

336 Pages·2011·3.23 MB·English

by  Joseph Raynus

Improving Business
Process Performance
Gain Agility, Create Value,
and Achieve Success

Improving Business
Process Performance
Gain Agility, Create Value,
and Achieve Success
JOSEPH RAYNUS
CRC Press
Taylor & Francis Group
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© 2011 by Taylor & Francis Group, LLC
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Version Date: 20110504
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Contents
Foreword ........................................................................................................xi
Introduction ................................................................................................xiii
Why Value? ...............................................................................................xiii
References .................................................................................................xix
Acknowledgments ........................................................................................xxi
The Author ................................................................................................xxiii
1 The Paradigm .........................................................................................1
The Paradigm ...............................................................................................1
Criterion 1: Organization versus Structure .........................................4
Criterion 2: Process Focus ..................................................................5
More Process Focus: The Tale of Hora and Tempus ..................8
Business Performance Engineering and Management ..................................8
BPM and the Hot Hand ...................................................................10
Strategy, Strategic Management, and BPE ........................................11
Competition at the Crossroads .........................................................12
BPM: A Brief History .......................................................................13
References ..................................................................................................15
2 The Change ...........................................................................................17
Change ......................................................................................................17
CATWOE .................................................................................................18
The Business Perspective ............................................................................25
Do You Still Remember the Late 1990s? ....................................................27
References .................................................................................................34
3 Dynamic Balance of Strategy and Performance ...................................35
Dynamic Balance: The Way of Business Agility .........................................35
Danger and Opportunity ...........................................................................37
The Rules of Engagement Have Changed ..................................................38
Balanced Growth .......................................................................................39
v
vi  ◾  Contents
Balanced Change Management ........................................................39
Yin Yang, Big Bang ...........................................................................39
Balancing the S-Curve ......................................................................41
The Need for the Framework .....................................................................43
References .................................................................................................44
4 Impact Framework ...............................................................................45
IMPACT Model ........................................................................................45
Lessons Learned ................................................................................45
What Happened? ..............................................................................47
The Foundation of the IMPACT ......................................................48
Step 1: Strategy Mapping ..................................................................52
Step 2: Goal Setting ..........................................................................52
Step 3: Performance Measurement Framework Baseline ...................52
Step 4: Performance Management ....................................................52
Performance Management .........................................................................53
An Eight-Step Framework to Execute Your Business Process
Management Strategy ................................................................................60
Drive Strategy across All Levels of the Business ................................61
A Clearer Approach to Improving Processes .....................................61
Executing the Eight Simple Steps .....................................................62
Core versus Enabling Processes ..................................................................65
Business Process Goals ......................................................................65
A Closer Look at the Scorecard .................................................................66
Performance Measurements .......................................................................67
Do You Accept the Challenge? ...................................................................71
References ..................................................................................................73
5 Business: The Value Planning Domain ................................................75
The Logic Model ........................................................................................75
What Is the Logic Model?.................................................................76
Situation Analysis and Problem Definition .......................................80
How to Build a Logic Model ...........................................................84
Why Use the Logic Model?...............................................................85
A Value Stream Focus within the Enterprise ..............................................86
Process and Continuous Process Improvement ..........................................87
Step 1: Validate the Problem Using KPI ...........................................91
Step 2: Develop a Problem Statement ...............................................91
Which Problems First?.............................................................92
How to Craft a Problem Statement ..........................................93
Step 3: Set Improvement Objectives in Support of Goals..................93
Step 4: Determine Gaps in Value Stream Delivery Process ...............94
Contents  ◾  vii
Step 5: Apply Applicable Methodology and Toolboxes for Analysis ....95
Strategic Vision ........................................................................95
Tactical Targets .......................................................................95
CPI Management Tools .............................................................................96
LEAN ...............................................................................................96
5S .....................................................................................................98
5S and Its Environment ...........................................................98
Goals .........................................................................................................98
Principles behind GQM .................................................................104
GQM Process Details .....................................................................108
Step 1: Establishing Goals .....................................................108
Step 2: Generating Questions ................................................108
Step 3: Specifying the Measures ............................................109
Step 4: Preparing for Data Collection ....................................111
Step 5: Collecting, Validating, and Analyzing the Data
for Decision Making..............................................................112
Step 6: Analyzing the Data for Goal Attainment and
Learning ................................................................................113
Applying GQM at Varying Levels within an Organization ............113
References ................................................................................................116
6 Value Management Domain ...............................................................119
Strategic Planning ....................................................................................119
The Balanced Scorecard ...........................................................................121
Development of Strategies for Each Goal .................................................122
How to Formulate Strategy?Strategy Map Development ................123

Connection Strategy and Goals ......................................................123
Key Performance Indicators .....................................................................125
What Is a Key Performance Indicator? ............................................125
Definition .......................................................................................126
Purpose of the Key Performance Indicators ....................................126
Benefits of Key Performance Indicators .................................127
Category of Key Performance Indicators ........................................127
Types of KPIs: Which One Should I Use? ......................................127
Features Key Performance Indicators Should Encompass ...............127
How to Establish Effective KPIs for Your Organization .................128
Key Performance Indicator Measures Overview ............................130
Additional Key Facts: Lead and Lag Indicators...............................130
Definitions ...........................................................................130
KPI versus CSF ...............................................................................131
Leading Indicators ...................................................................................133
Performance Measures .............................................................................136
viii  ◾  Contents
Section 1: Understand Objectives ...................................................136
What Is Involved in This Step? ..............................................136
Why Is It Important? .............................................................137
How Do You Do It? ..............................................................137
Design Measures .............................................................................140
What Is Involved in This Step? ..............................................140
Why Is It Important? .............................................................141
How Do You Do It? ..............................................................141
Define Measures .............................................................................143
What Is Involved? ..................................................................143
Why It Is Important? .............................................................144
How Do You Carry It Out? ...................................................144
Implement and Evolve Measures .....................................................146
What Is Involved? ..................................................................146
Why It Is Important? .............................................................146
How Do You Carry It Out? ...................................................146
Risk Management and Logic Model ........................................................148
Risk Exposure Trends ..............................................................................149
Risk Handling Trends .............................................................................151
Risk Management ....................................................................................151
Purpose and Benefits of Risk Management .....................................153
Types of Risks and Management: Which One Should I Use? .........154
Risk Factors and Drivers .................................................................154
Associating with Process Improvement ...........................................155
Strategies, Tools and Techniques to Manage Risk in an
Organization ..................................................................................156
References ................................................................................................159
7 Value Sustainment Domain ................................................................161
Value Transformation Domain ................................................................161
How Are They Important to Your Business? ...................................165
How Do You Write a Good Critical Success Factor? .......................165
CSF as an Activity Statement .........................................................166
CSF as a Requirement ....................................................................166
Project Success: As Commonly Measured ................................................166
Project Success: A Different View ............................................................167
Project Success: New Metrics and Measurements ....................................167
Alignment Process Improvement with Business Goals .............................171
A Range of Strategic and Operational Measures ......................................172
A Framework for Designing a Set of Measures .........................................173
Metrics.....................................................................................................174
Customer-Oriented, Outcome-Based Metrics .................................174
Criteria for Evaluating Metrics .......................................................174
Contents  ◾  ix
Purpose of the Metrics ....................................................................175
Benefits ..................................................................................175
Types of Metrics: Which One Should I Use? ..................................176
Descriptions and Features Metrics Should Encompass ...................176
How to Establish Metrics for Your Organization ............................176
References ................................................................................................179
8 Business Process Management: It Is All about Strategy and
Outcomes!...........................................................................................181
The Value Dimension: Business ...............................................................184
Business Process Goals ....................................................................184
The Actionable Architecture ...........................................................185
Transformation Dimension: Processes and Business Process
Management ............................................................................................187
A Systems Model of a Business Firm ...............................................188
Basic Processes of the Physical Layer .....................................188
The Environment ...................................................................188
Environmental Interaction at the Physical Layer....................189
PDCA Quality Cycles ....................................................................191
Process Representation ....................................................................192
Why Measure Business Performance? .............................................193
Process Management ......................................................................194
Enabling Dimension: Management ........................................................200
Process Performance Monitoring and Metrics ................................202
Balanced Scorecard .........................................................................202
Process Improvement ...............................................................................203
Purpose of Process Improvement Techniques ................................204
Benefits of Continuous Process Improvement ................................204
Types of Process Improvements: Which One Should I Use? ..........204
Continuous Process and Performance Improvement Technique .....205
Techniques and Components of Process Improvement ..................206
Performance Improvement ...................................................206
Measuring Performance .......................................................206
Process Measurement Tools: ..................................................207
Measuring Performance for an Organization: .................................207
Summary ................................................................................................208
References ................................................................................................209
9 Tools of Probletunity ..........................................................................211
Value Analysis ..........................................................................................211
Performing a Value Stream Analysis ........................................................212
Root Cause Analysis ................................................................................213
Root Cause Analysis Technique: The Five Whys......................................215