First of all I want to tell you that I am very happy about the various comments I received so far. This was really great inspiration and the discussions are a big benefit for me an all other interested readers. Thank you very much! And please don’t stop to publish your interesting questions and share your ideas about this approach!
Not just to have a higher number of hits but to refresh or review what has already been discussed about the Building Blocks of BPM Transformation I politely recommend to read SAP’s BPM Approach: The Building Blocks of BPM Transformation – Part 1, SAP’s BPM Approach: The Building Blocks of BPM Transformation – Part 2 and SAP’s BPM Approach: The Building Blocks of BPM Transformation – Part 3 of this blog series before. Otherwise I had to repeat many ideas again which would perhaps be boring for those of you that already know about the background.
SAP’s BPM Approach: The Building Blocks of BPM Transformation – Part 3 tried to explain, how the effectiveness and efficiency of processes depend on the behavior, motivation, skills, abilities and competency of the people that design, implement, run and monitor them. I picked the Building Block 2 “Human Capital Allocation” as an example for the area “People”.
Now let’s have a look at the area “Structures”. I’ll again try to give you some detailed examples about what has to be achieved to increase the respective level of process maturity for the Building Blocks located in this area.
The effectiveness and efficiency of processes depends on the organizational structures where it is embedded and executed. These structures encompass mainly
– the hierarchic structure of the company (divisions, departments, teams etc.),
– the assignment of tasks to roles or bodies (division of labor),
– how interaction and collaboration between them is organized (SLA’s, etc.),
– and how these tasks have to be fulfilled (standards & guidelines, policies, service regulations, etc.).
Perhaps it makes sense to mention briefly how the area “Structures” is interconnected with the area “People” (discussed in the former blog). People (Human Capital) can be seen as the “raw material” (sorry for that!) which is assigned to one or more role (and/or body). One role can also be shared by more than one person (job sharing). Roles and the assigned persons belong to a specific division, department or team. And bodies can belong to one or more organizational unit.
To give an example, let’s have a look at the first Building Block of this area, “Organizational Structures”.
Seen from a functional perspective companies normally are structured along R&D, Development, Production, Marketing/Sales, Accounting, etc. Next to these you find Service Units like HR, Controlling, IT, etc. Sometimes you may also find additional dimensions like regions or product lines on the lower levels. This kind of functional structure contributes to specialization and leads to various interfaces between these units to (re-)map the value chain of the company.
Seen from a process oriented view you may start with the value chain and the process domains of the company. A process domain can be characterized as a bundle of processes with a high degree of interaction between them. The processes of different process domains have a significantly lower degree of interaction.
Identifying these process domains leads to an alternative organizational set up and structure for a company. The need for interfaces between process domains is far lower than in a functional structure.
As we all know organizational structures are in parallel power structures. And therefore the transition of an existing company that is more or less organized in the classical way can’t be achieved in a single step. Transforming it into a process oriented company has to consider these power structures and has to anticipate the conflicts that will arise.
But these conflicts are necessary and you should not avoid them at all. Things can only change if process owners on the one hand side and functional managers on the other hand side have to fight for budget, cost allocation, headcount, responsibilities, and so on.
The resulting kind of matrix organization is perhaps not only an intermediate stage of the BPM transition, but can be a long term and successful end-result. And be aware that process oriented structures are not always the most beneficial set up for all parts of the company. There may be divisions and departments where the benefits of functional structures and specialization outweigh.
Need for changes:
Here my summarized recommendation of what has to be achieved for the Building Blocks in the “Structures” area to contribute to a higher level of process maturity (see SAP’s BPM Approach: The Building Blocks of BPM Transformation – Part 2 for an overview):
- Organizational Structure: 1. Establishment, extension or adaption of organizational units that have their main focus on BPM tasks. 2. The execution of business processes takes place within the boundaries of existing organizational structures. Optimizing an existing process or introducing a new process often indicates changes within the existing organizational structure. 3. Transition of functional structures into process domains where beneficial.
- Decision-Making: 1. Establishment of decision making bodies to prioritize and decide on process activities and general BPM items. 2. Decision making in a process oriented company takes place mainly along E2E processes and not within functional units.
- Roles and Tasks: 1. Establishment of BPM specific roles and definition of their tasks, responsibilities and competencies. 2. Definition and assignment of operational BPM roles with cross functional tasks, responsibilities and competencies. Especially the establishment of process owners is a prerequisite on our way towards a process driven company.
- Interaction of Corporate Units: Establishment of engagement models to drive cross functional coordination and interaction along E2E processes and to have regulations in the case of conflicts.
- Budget and cost allocation: Budget and cost allocation with focus on E2E processes instead of functional units.
- BPM Methods: One globally used procedure model about the handling of business processes during their whole lifecycle (PML – Process Management Lifecycle) , including methods for the analysis, design, implementation and execution & monitoring of all SAP business processes to ensure maximum efficiency and effectiveness of process projects and process execution on an enterprise level.
- Process Terminology: Clear and consistent definitions of BPM terms to ensure a common language which contributes to an improved interaction between employees. This leads to increased quality of project results, enhanced interconnection of corporate units, and between Business and IT.
- Tool Conventions: Establishment of standardized conventions that describe how business processes are formally documented are a prerequisite to enable cross area comparison and analysis of business processes and project results to identify reusable processes, harmonize processes and to realize synergies on an enterprise level.
- SAP Process Map: The Creation of a highly transparent, hierarchical landscape of SAP’s end-to-end business processes on defined levels of granularity and their interconnection contributes to an evolution towards process centric operations across organizational boundaries.
In the next blogs we’ll have a look at the other areas (Processes, Technology) and discuss some more examples. Looking forward to your comments!