2.0develop

and manage Products and

services

3.0market and sell

Products and services

4.0deliver

Productsand

services

5.0manage

customerservice

1.0develop visionand

strategy

> > > > > > > > > > > >

oPeraTIng Processes

managemenT and sUPPorT servIces

6.0 develop and manage human capital

7.0 manage Information Technology

8.0 manage Financial resources

9.0 acquire, construct, and manage assets

10.0 manage enterprise risk, compliance, and resiliency

11.0 manage external relationships

12.0 develop and manage Business capabilities

The Framework For Process ImProvemenTExperience shows that benchmarkings potential to drive dramatic improvement lies squarely in making out-of-the-box comparisons and searching for insights not typically found within intra-industry paradigms. To enable this type of beneficial benchmarking, the APQC Process Classification FrameworkSM (PCF) serves as a high-level, industry-neutral enterprise model that allows organizations to see their activities from a cross-industry process viewpoint.

The PCF enables organizations to understand their inner workings from a horizontal process perspective, rather than a vertical functional viewpoint. The PCF does not list all processes within a specific organization, and every process listed in the framework is not present in every organization.

Originally created in 1992 by APQC and a group of members, the framework has experienced more than twenty years of creative use by thousands of organizations worldwide. The PCF is supported by APQCs Open Standards Benchmarking research. It is continuously enhanced as APQCs Open Standards Benchmarking team further develops definitions, processes, and measures. Please visit APQCs web site periodically for updates. The PCF is available for organizations of all industries and sizes at no charge by visiting www.apqc.org/pcf.

hIsToryThe Process Classification Framework was originally envisioned as a taxonomy of business processes. The initial design involved more than 80 organizations from the United States and worldwide. Since its inception, the PCF has been updated several times to reflect changes in the way organizations do business.

In response to feedback from users of the PCF, APQC regularly engages practitioners, consultants, and academics to develop definitions based on real-world experience with the processes. That collaborative effort resulted in this document: a listing of processes with definitions and selected key performance indicators from APQCs Open Standards Benchmarking repository. This particular document was developed with assistance from IBM. The definitions contained in this document are to be considered in conjunction with the PCF. The content in this document will be updated according to research performed by APQC and subsequent updates to the PCF. This document was created using PCF version 6.0.0.

version 2.0.0

develoP vIsIon and sTraTegydeFInITIons and key measUres

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1.0 develop vision and strategy

2 Permission granted to photocopy for personal use. 2012 APQC. ALL RIGHTS RESERVED.

rIghTs and PermIssIons2012 APQC. ALL RIGHTS RESERVED.

APQC encourages the wide distribution, discussion, and use of the PCF and PCF definition documents for classifying and defining processes. APQC grants permission for use and adaptation of the PCF for internal use. For external use, APQC grants permission for publication, distribution, and use, provided that proper copyright acknowledgment is made to APQC. No modifications to the look or content should be made in external venues.

Please use the following text when reusing the PCF in external print or electronic content.

The PCF was developed by APQC and member companies as an open standard to facilitate improvement through process management and benchmarking regardless of industry, size, or geography. The PCF organizes operating and management processes into a number of enterprise-level categories, including categories, process groups, and over 1,000 processes and associated activities. The PCF and its associated measures and benchmarking surveys are available for download and completion at no charge at www.apqc.org.

1.0 develop vision and strategy definitions and key measures TaBle oF conTenTs

1.2.4 coordinate and align functional and process strategies _______________________5

1.2.5 create organizational design (structure, governance, reporting, etc.) _______________5

1.2.6 develop and set organizational goals ________5

1.2.7 Formulate business unit strategies __________5

1.3 manage strategic Initiatives _____________________6

1.3.1 develop strategic initiatives _______________6

1.3.2 evaluate strategic initiatives _______________6

1.3.3 select strategic initiatives _________________6

1.3.4 establish high-level measures ______________6

1.0 develop vision and strategy__________________ 3

key Performance Indicators _____________________3

1.1 defining the business concept and long-term vision _3

1.1.1 assess the external environment ___________3

1.1.2 survey market and determine customer needs and wants ________________________4

1.1.3 Perform internal analysis __________________4

1.1.4 establish strategic vision __________________4

1.2 develop business strategy ______________________4

1.2.1 develop overall mission statement _________4

1.2.2 evaluate strategic options to achieve the objectives __________________________5

1.2.3 select long-term business strategy __________5

aBoUT aPQcAPQC is a member-based nonprofit and one of the worlds leading proponents of knowledge management, benchmarking, and best practices business research. Working with more than 750 organizations worldwide in all industries, APQC provides organizations with the information they need to work smarter, faster, and with confidence. Visit www.apqc.org or call +1-713-681-4020 and learn how to Make Best Practices Your PracticesSM.

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1.1.1 assess the external environment (10017)

Assess the external environment involves establishing and developing the organizations insight into the operating framework. The purpose is to understand competitor moves, market economics, regulatory changes, technology developments, and emerging business opportunities and risks, while monitoring the effect of the market on the organization. This insight is then leveraged in management decision making.

Several concurrently running processes can help assess the environment. The market place should be identified, analyzed, and evaluated so that existing and emerging competitors aims, offerings, strengths, and weaknesses are understood. Economic trends and political/regulatory issues affecting the organization should be identified so that a view of the operating environment is established. Technological innovations in the field should be monitored and assessed to understand the different threats and opportunities they provide. It is also important to analyze demographic, social, and cultural changes and to understand their impact on the organization. Finally, ecological concerns/trends and their implications for the organization should be considered.

1.1 define the business concept and long-term vision (10014)

1.0 develop vision and strategy (10002)

Gross revenue Net income

Key Performance Indicators:

Process Insight:

The Define the business concept and long-term vision process group encompasses four processes related to developing an organizations strategy and business design. First, the organization assesses the external environment, which provides insight into the operating framework. Next, the organization surveys the market, which provides insight into business opportunities and customer desires. Third, there is an internal analysis of the organizations characteristics, which assesses how it matches market requirements and opportunities; this process results in the ability to define internal core capabilities. Finally, the organization defines a strategic vision that states long-term goals. This process group forms an organizations strategic direction.

Category 1.0 Develop vision and strategy establishes a direction and vision for an organization. It involves defining the business concept and long-term vision, as well as developing the business strategy and managing strategic initiatives. Processes in this category focus on creating a vision, a mission, and strategic objectives, and culminate in creating measures to ensure that the organization is moving in the desired direction.

These key performance indicators can be viewed per full-time equivalent employee (FTE), in year-over-year growth, or in a way that makes sense given the needs of the individual organization.

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( 1.2 Develop business concept and long term vision continued )

1.2 develop business strategy (10015)

1.2.1 develop overall mission statement (10037)

Develop overall mission statement focuses on creating a concise statement that summarizes the purpose of the organization, describes its daily activities, and states its core values. The process begins with defining the organizations current business and goals, and then the mission statement is formulated based on those goals. After the mission is documented, it is published and communicated to the organizations stakeholders.

The Develop business strategy process group encompasses the development of an organizations mission statement, strategy, and business design. The first step is to develop a mission statement that clarifies the reason for the organization. The next step is to define key steps in realizing the vision and develop strategic options to achieve objectives. Implications of strategic options should match the organizations internal capabilities, which are then transformed into a long-term business strategy. After the organizations strategy is defined, functional and process strategies are developed to coordinate with the overarching vision. Based on the requirements set through these processes, an organizational design is created and goals are defined. The formulation of business unit strategies is the final process in this group.

1.1.4 establish strategic vision (10020)

Establish strategic vision involves establishing a common view of the organizations direction and then developing a plan to achieve it. The process involves establishing the strategic intent of the organization that guides decision making. Then the organizations key leadership and stakeholders are aligned with the direction of the organization and the strategic vision is communicated to stakeholders.

1.1.3 Perform internal analysis (10019)

Perform internal analysis involves assessing an organizations internal characteristics and evaluating its strengths and weaknesses in an attempt understand how its existing capabilities address market requirements and respond to opportunities. The analysis starts with the organizations characteristics, such as organizational design, reporting structures, and culture. Then current processes are analyzed so that the current performance is understood and a baseline for identified development activities and existing systems/technology is established. The organizations financial position is analyzed so that its ability to invest and to organize its cost structure is understood. Finally, the organizations competencies are analyzed so that internal capabilities, knowledge, and skills, which can be extracted and leveraged in building the strategy, as detailed in 1.2 Develop business strategy are identified.

1.1.2 survey market and determine customer needs and wants (10018)

Survey market and determined customer needs and wants consists of establishing and developing insight into long-term business opportunities so that existing customers are better served and new ones are found. Approaches, methods, and tools can be similar to those found in process 3.1.1 Perform customer and market intelligence analysis, but the purpose and practices are different. This process consists of qualitative and quantitative market assessments that uncover conditions and trends affecting different opportunities. The process also includes capturing and assessing customer needs and wants in an effort to address changing expectations and identify opportunities.

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( 1.2 Develop business strategy continued )

1.2.2 evaluate strategic options to achieve the objectives (10038)

Evaluate strategic options to achieve the objectives focuses on defining and evaluating strategic options to steer an organization and manage its operations. The process begins with defining, assessing, and analyzing an organizations strategic options and understanding their impacts. Then the organization develops operational strategies, including a sustainability strategy that addresses environmental and social issues, global support, and shared services strategy. It also defines a Lean/continuous improvement strategy that focuses on operational efficiency and effectiveness.

1.2.3 select long-term business strategy (10039)

Select long-term business strategy involves defining how an organization will maximize its long-term value. During this process, an organization considers the evolution of its operational environment and the risks and benefits of the strategic options associated with the selected strategy. The long-term strategys fit with the organizations internal characteristics and capabilities should be considered.

1.2.4 coordinate and align functional and process strategies (10040)

Coordinate and align functional and process strategies ensures that an organizations vision aligns with the overarching business strategy and goals. This process involes ensuring that functional and process strategies follow common business principles.

1.2.5 create organizational design (structure, governance, reporting, etc.) (10041)

Create organizational design (structure, governance, reporting, etc.) is the process of selecting a business and operational strategy. This process consists of creating an organizational structure (units, processes); work groups (unit/teams structure); roles (responsibilities, relationships); integrated mechanisms (governance, communications); and performance measurement systems (measurement, reporting).

The process starts with an evaluation of the current structure to establish a baseline. Next, job-specific roles are mapped and analyzed to define their value to the organizations capabilities and goals. Activity diagrams are created to assess hand-off activities between roles and organizational units. Then, based on the strategic requirements and analysis of the current organization, redesign workshops redefine and develop roles, activities, and processes. After changes are defined, the implications of feasible alternatives are assessed and any required mitigation work is scoped. Finally, changes are implemented and the organization is migrated to the new organizational design.

1.2.6 develop and set organizational goals (10042)

Develop and set organizational goals consists of establishing performance goals. Measures are developed to steer both individual and organizational behavior towards the defined strategy. Measures should assess the organizations operational performance (e.g., production efficiency) and financial performance (e.g., profitability).

1.2.7 Formulate business unit strategies (10043)

Formulate business unit strategies consist of developing and setting goals at the business unit level. These strategies support the execution of overall organizational strategies and follow common business principles. This process follows the same general process as 1.2.3 Select long-term business strategy.

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1.3.2 evaluate strategic initiatives (10058)

The Evaluate strategic initiatives process involves evaluating proposed initiatives based on the risks and benefits associated with their execution.

1.3.3 select strategic initiatives (10059)

Select strategic initiatives involves choosing initiatives, establishing a timeframe, and executing the strategy. Selection is based upon estimated execution risk, expected size of the opportunity, estimated operational benefit, and estimated impact on performance if the initiative is not executed. Initiatives should be considered based on long-term goals and organizational need.

1.3.4 establish high-level measures (10060)

Establish high-level measures involves monitoring the progress and impact of executed initiatives. It should include the creation of an initiative tracking system.

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1.3.1 develop strategic initiatives (10057)

Develop strategic initiatives involves responding to organizational performance or changes in the operating environment. The process starts with an analysis of current performance and the identification of conditions that affect it. Based on the analysis, initiatives are developed so that identified issues or exploit opportunities are addressed.

Manage strategic initiatives focuses on actions, projects, or programs that enable an organization to realize its strategy and achieve goals. It includes analyzing the operating environment for the development of strategic initiatives. Strategic initiatives are evaluated and the most appropriate initiatives are selected for execution. It is critical to follow the progress of execution so that the impact of the initiatives is identified. Refer to 12.2 Manage portfolio, program, and project for additional information on managing strategic initiatives.

1.3 manage strategic initiatives (10016)