Value Drivers in Corporate Business Danish_Defense_3Juni

7/30/2019 Value Drivers in Corporate Business Danish_Defense_3Juni

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Written by: Kim Peiter Jrgensen, Jens Theodor Nielsen, Torben Claus

Dahl and Mark von Rosing

Part II Template

1 Value Drivers in Corporate Businesses

ThischapteroffershelpinpromotingBPMasamanagementdisciplineandthusmakingitmorelikelyforawell-writtenBPMbusinesscasetoobtaintop

managementapproval.Thecentralinstrumentisanewmodelinwhichthe

interrelationshipofmanagementconcepts-likebusinessmodelling,

performancemanagement,valuemanagement,businessgovernanceis

describedandtheimportantroleandinterconnectionofBPMishighlighted.

TheworkonthemodelisinspiredbytheauthorsdailyworkattheDanish

DefenseCommandandtheknowledgeofthedefenseindustry.Howeverthe

modelitselfisdevelopedthroughdialogueinexternalnetworks,thereby

combiningbestpracticeknowledgeandprinciplesofdifferentindustriesas

wellasownpractice,allnecessary,tosupportandenableoneofthemost

complexIndustriesinexistencetoday.Forontheonehandamilitarybusiness

musthaveinsomeareasthemostcostefficientprocesspossible,whilein

otherareashavesomeofthemostinnovativeandcompetitiveprocesses.

Recognizingthatbeingsecondinthislineofbusinessjustnotaverydesirable

option.Hencebeingnumbertwo-meansthatyoulostandtheenemywon!

Insomewayitcanbearguedthatcompetitivenessandtherebyfocus,

flexibility,responsiveness,whilemaintainingrobustnessistheveryDNAofa

militarybusiness.Thereforetheprinciplesofhowtoidentifytherightvalue

driverstoalign,innovate,changeandtransformonesbusinessmodel,isvery

applicabletobothprofitandnon-profitorganizationsalike.

1.1 IntroductionWritingthischapterhasinmanywaysbeenchallenging,asittriestotackle

oneofthemostcomplexIndustries.InthisIndustrythepolitical,militaryand

technologicallandscapeputsgreateremphasisthaneverbeforeonthe

efficiency,effectivenessandcapabilityofdefenseorganizations.Thisrequires

morethaneverafocused,flexible,responsiveandrobustbusinessmodel,and


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availabilityofvitalinformation.IntheearlystagesoftheBusinessProcess

transformationintheDanishArmedForces,itbecameclearthatifprocesschangesweredeployedwithoutthecorrectbusinessmodelmanagementin

place,themodelsusedcouldnotdelivertherequiredbenefits.Thevery

natureofthedefenseindustry,aswellasrecentbroaderregulatory

legislation,suchastheSarbanes-OxleyAct,makesthemanagementof

Governance,Risk,andCompliance(GRC)notonlyimportantbutmandatory.

Governmentcomplianceregulationsimposedonthisindustrygofarbeyond

theregulationsimposedonmostotherindustries.

InternationalTrafficinArmsRegulations(ITAR);Registration,Evaluation,

AuthorizationofChemicals(REACH);ExportAdministrationRegulations(EAR);

anduniqueidentification(UID)andradiofrequencyidentification(RFID)

accountforjustafractionoftheadditionalregulationsandmandatesfor

whichthenationaldefenseorganizationsmustdemonstratecompliance.

AsapointofdeparturefortheanalysiswewilldefineBusinessGovernanceas

discussedbyProf.DrvonRosinginchapter1andaccordingtoCarlvon

ClausewitzasTheCentreofgravity.Thisconcepthasanorientationtowardstheoutsideaswellastotheinsidecoreofanorganization.Clausewitzhas

designedthefollowingexplanation:

Centreofgravityisthecharacteristics,thecapabilities,orthelocationsfrom

whichanorganizationderivesitsfreedomofaction,physicalstrength,orwill

tofightforthemarketsandearnmoney.

Atthestrategylevel,centreofgravitymightincludethestrength,analliance,

asetofcriticalcapabilitiesorfunctions,oranorganizationstrategyitself[DoD

Dictionary-2008]."

Italsopresentsaneedtochoosebetweencharacteristics,capabilityor

location,wheninrealityallthreeexistsimultaneouslyinmutualdependency.


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Anorganizationoperatinginagivenlocationisineffectivewithoutessential

characteristicsandcapabilities.Moreover,theuseoftermssuchasfoundation

ofcapability,hubofallpowerandmovementordominantcharacteristicsis

ambiguousenough.Andworse,theyareinvariablyaccompaniedbyan

expansivelistofexamplesthatincludealliances,communitiesofinterest,

publicopinion,and"Internationalrulesforgoodcommerce[Strange2003].

WhatmakesBusinessGovernanceinaDefenseorganizationchallengingisthatitincludesfarmorethanchoicesbetweencharacteristics,capabilityor

location.ABusinessGovernanceframeworkinadefenseorganization

includesthedecisionmakingprocess,thedirectmoneyflow,theprimary

processesaswellasthedirectandindirecttasksandtheoutcomeintermsof

results.

1.1.2 Description of a business modelThepurposeofabusinessmodelistodescribehowthecoreproduction

interactswiththeneedsofcompetenciesandtheneedofcapacityand

resources.Thebusinessmodelisseenasastrategytooltovisualizethebasic

strategyrelationsintheorganization.IntheDanishDefenseforcesthe

businessmodelhasathirdpurpose,toshowhowthedefenseshouldtransfer


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fromagovernmentalthinkingorganization,withmoneyasthedriverwhen

makingsolutions,toamoderngovernmentalorganization,havingitsfocusontheneedsofcompetencies,logistics,weaponplatforms,infrastructureandIT

foroptimalsolutions.Thebusinessmodeldevelopmentprojectbeganin1994

andtheresultingmodelisstillusedasguidelinesforfuturedevelopment.

Whyfocusoncompetences?Everybodyintheorganizationneedsunique

knowledgeanduniqueskillsfortheoptimizedproduction.Skillsand

knowledgecanbeacquiredintwodifferentways,youcanrecruittheright

peopleoryoucaneducateanddevelopyouremployees.Eitherwayyouneed

resources,capacityandtimetogettherightprofiles.

Intheglobalworldtimeisthemainparameter.Goodbusinesswillverysoon

getcompetitionfromotherplayersonthemarkets,soasthemoreefficient

theproductioncanbe,thehigheristhepossiblytostayinbusiness,aslongas

theprocessesisrunningeffectively.Forthatyouneedtherightcompetences.

BelowisanexampleofsuchadetailedBusinessModel[ vonRosing,2009].This

kindofmodelcanbeusedtodefineandplanthecompetitivenessandthe

valuecreationandrealizationneededinthebusiness.

BusinessModelingisnotthesoletooltodefininganddevelopingones

performanceindeployingarmedforcesforexample,ordefiningwhereand

howvaluecouldorshouldbecreatedandrealizedinthedifferentdefense

businesslines.

Thesecondmainparameteristoaligntheprocessesatallthetime.

Focushastobeonhowtomeasureimprovementinproduction

capacityandtheprocessessurroundingtheproduction.The

measurementorinformationisakindoflifelinetobusiness

governance,anditcreatesthevaluemanagement.TheValue

managementcreatesneedsofchangesandsometimesnew

implementationsoftechnology.

1.1.3 Business GovernanceItdoesntmatterwhetheryouhaveabigorasmalldefenseorganizationina

bigorasmallcountry,becauseinanycaseambitiousBusinessGovernance,in

additiontoeffectivemilitarycommandandcontrol,isrequiredtoachievethe

abovementionedgoalsandtoensuretherightconnectionbetweenbusiness


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modelmanagement(BMM)andbusinessprocessmanagement(BPM)inthe

organization[vonRosing,Dahl,Nielsen,2010] .

Corporatemanagementandtherestofthemanagementisresponsiblefor

makingsure,thatcontinuousinformationisproducedontheperformanceof

theorganization'scoreprocesses.ThiscanbeintheformofBusiness

Intelligencereportsorasupdatesaboutthedevelopmentoftechnological

capabilitiesthatcouldpossiblysupportproductiveandadministrativeneeds.

BusinessIntelligenceinformationcouldbeusedtoassesse.g.thepossibilityof

replacingmanpowerwithtechnologywithintheorganization,although

attentionshouldbedirectedtowardstheuniquebusinessneedsasthe

startingpoint-beforeanyattemptstoautomateproductionoradministrativeactivity.

1.1.4 Organization Leadership and ManagementIntermsofleadershipandmanagementadefenseorganizationisaunique

organization.Militaryandcivilianpersonnelworktogethertoensurethe

defenseforceiswellmanaged,welltrained,wellequippedandwellprepared

toprotectthecountryanditsnationalinterests,bothathomeandabroad.

Strongleadershipiscentraltoachievingthisgoalinbothoperationalandnon-

operationalenvironments.

Skillsinleadershipandmanagementarefundamentaltothesuccessofanydefenseorganizationanditsmissions.Defenseiscommittedtodevelopingthe

leadershipandmanagementskillsofallpersonnel,bothmilitaryandcivilian.

Theinterestingthingaboutadefenseorganizationisthatatsomepointin

theircareers,everyoneintheorganizationislikelytohaveleadership

responsibilitiesandmusthavethecapacitytoleadandmanageeffectively

fromtheirpositionwithintheorganization.Itcansomehowbesummedthat

leadershipinadefenseorganizationistheprocessofinfluencingothersto

gainwillingnesstoactonorders,withoutquestioningtheleadersdecisions.


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Asthefoundationforleadershipandmanagementactivitiesinadefense

organization,themanagementatExecutiveslevelhastoestablishthenecessaryLineManagementandfocusontasksintheorganizations.Senior

managementalsohastolookforleadershipandefficiencyinrelationstothe

processesandtheprocessmanagement.Inthetoolboxfordoingthisjob,one

willfindProcessManagement,ProcessDeploymentandProcess

Implementationastoolstomovetheorganizationtobemorecostfocused,

effectiveandefficient.

Nextstepwillbeasdescribedearlierinchapterone,tobuildupa

PerformanceandValueManagementsystemtoobtainessentialbusiness

information.AsProf.Dr.vonRosingalreadydescribes,ValueManagementisprobablyoneofthemostcommondilemmasandchallengesconfrontedby

companiestoday,regardlessoffactorssuchassize,revenue,industry,region

orbusinessmodel.Inanyorganization,butespeciallyinadefense

organization,thetimingforusingtheinformationisalsoessential.Assoonas

corporatemanagementrespondstotheinformationandhostsallchanges

throughthetransitionprocess,thechangesintheorganizationwillbe

simplifiedandthetimespentonchangewillbeshortened.

1.2 Organization and Value DriversWhentalkingvaluesinadefenseorganizationthiscanbeunderstoodinmultipleways.Asexample;thedefensesowninternalvaluesreflectthelong

traditionsanddistinctiveidentitiesofthetraditionalorganizationandits

mission.SomeofthesespecificdefensevaluescouldbeProfessionalism,

Loyalty,Integrity,Courage,InnovationorTeamwork.

Suchvaluesareestablishedtoprovideacommonandunifyingthreadforall

peopleworkingwithindefense.Developedbytheseniordefenseleadership

andtypicallyreaffirmedbyaparliamentarydefensecommittee,theDefense

Valuesareanimportantcomponentinguidingorganizationalbehavior.Ina

Defenseorganizationvalue-basedbehaviorisaboutindividualsatalllevelsin

defensebeingpreparedtoacceptresponsibilityandaccountabilityfortheir

missions,andtothinkclearlyabouttheeffectoftheiractionsonthemission,

projectortasks.Valuesarefundamentaltogoodperformance.

However,inthissectionthetermOrganizationValueDriversisnottobe

confusedwiththeaboveinternalvaluesofthedefenseorganization.The

phrase:OrganizationalValueDriverscoversmechanismsthatcouldhelp,for

instancetheDanishDefense,optimizecorebusinessoftheorganization

throughthedynamicimprovementofallprocesseswithinthemainprocesses


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spanningfromthemanagementprocessesovertheidentifiedcoreprocesses

andtothesupportingprocesses.ExamplesofsuchValueDriverswithindefensecouldbeseenintypicaldisciplineslike:

RealizationofDoctrines CapacityPlanning OperationalPlanning LifeCyclePlanning TechnologyDevelopment

Thedecisionitselftomakelarge-scaleinvestmentsinforinstanceIT-enabling

ofbusinessprocesses,aswellasthecomplexchallengesinensuringthatthe

investmentsareeffectiveandefficient,needtobemanaged.

Clearmanagementofthesechangeswillenabletheorganizationtoplanthe

valuetheywantcreatedinthedifferentlinesofbusinessandtherealizationof

thisvaluewithinthecontextoftheorganizationsoverallvisionandstrategies.

Havingstudiedcompaniesbehaviorinthisfieldwithascopedapproachon

theissuefromtheviewofadefenseandapublicsectororganization,wefind

itinterestingthatcompaniesspendsubstantialtimetryingtorealizevalue,

whichinitselfisquiteunderstandable,butatthesametimeexactlymaking

thatfatalmistakepointedoutinchapter1,whichisnottorealizethesimple

anddirectconnectionbetweenvalueplanning,valuecreationandvaluerealization[vonRosing,2009].

1.2.1 Value ManagementBythetermbusinessvaluecompaniesmustunderstandthevalueoftheir

investmentinordertostaycompetitiveintodaysrapidlychangingbusiness

World.Thegains,processcosts,revenuepotentialandpossiblevaluespots

areoftenhiddenandrarelyaddressed.


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Alsowithindefense,aprerequisiteforValueManagementcoveringthe

planning,thecreationaswellastherealizationofvalueinalllinesofbusiness

shouldbeseeninafulldefinitionofvaluedriversforallmainprocessareasin

theorganization(e.g.managementprocesses,coreprocessesandthe

supportingprocesses)aswellasinthesubsequentmonitoringofthesevalue

driverstobeabletoreactwhennecessary.

Suchanapproachtovaluerealizationrequirestheinvolvementofvarious

rolesandresponsibilitiesatdifferentlevelsoftheorganization[ vonRosing,

2010].Theinterrelationshipofrolescanbeillustratedbythefollowing

simplifiedrepresentationofrolesintheDanishDefense.


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Example: Roles and Responsibilities in Value Management

[vonRosing,Dahl,Nielsen,2010]

MinisterofDefense ValuePlanning:

Initiates Parliamentary DefenseCommissions

Sets strategic Business Objectives (SBOs)andtherebyPoliciesandobjectives

ValueCreation

NILValueRealization

EvaluatesperformancePermanentSecretaryof

StateforDefense

ValuePlanning:

SetsCriticalSuccessFactors(CSFs) Provideslegalfoundation Setsmanagementguidelines

ValueCreation

NILValueRealization

Oversees all the different joint conceptandvalidatesperformance

JointChiefofStaff ValuePlanning:


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DefinesKeyPerformanceIndicators(KPIs) GivesplanningguidanceValueCreation NIL

ValueRealization

Analyzesdifferent servicebudgets to seethatactivitiesandinitiativesarefundedin

budgetrequests

ChiefsofOperational

Commands

ValuePlanning:

BuildplansandbudgetsValueCreation

Initiateandconductsultimateoperationalactivity

ValueRealization

Reviewplans,budgetsandproductionOther ValuePlanning:

BuildplansandbudgetsValueCreation

ProducesupportforoperationalactivityValueRealization

Reviewplans,budgetsandproduction

InthefollowingparagraphwewillintroduceourValueDriverModel,a

modelaimedaclarifyingtheValueDriversandtheirinteractionwithinalllines

ofbusinessandfunctionalareas.Themodelisseentocoverthechallengesto

bemetinnotjustadefenseorganizationbutbasicallyinanyorganizationor

company.

1.2.2 The Value Driver ModelThevaluedriversinthemodelflowfromBusinessGovernance.Thereason

beingthatBusinessGovernanceisandalwayswillbethecentralhubof

everythingthatgoesonallaroundinacomplexorganizationlikeanational

defenseorganization[vonRosing,Dahl,Nielsen,2010] .ThepurposeoftheValue

DriverModelistoexplainthewaythevaluedriversnormallyflowthroughtheorganizationandsecondlytoshowhowthemappingofthosedriverscanbe

usedtocatchbusinessinformationfromtheprocesshierarchyandpresentit

fortheSeniorExecutivesfordecision.


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TheValueDrivermodelisbasedontwodimensions,SpheresandValueDriver

Fields(VDF).

Thespheres:

BusinessGovernance CoreBusiness(Organization,tasksandlimitation) BusinessProcessManagement TechnologyDelivery

TheVDF:

LineManagement ValueManagement TechnologyManagement Automation

Balancingthethreebusinessmanagementspheresinthemodelareallknown

topicsontodaysbusinessmanagementagendabutintegratingthemallinone

modeltogetherwiththedeliveryofTechnologyandITand,inparticular,

puttingBPMonmapasequalpartnertoCorporateGovernanceandLine


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Managementhighlightsnewinterfacestoanorganization.Theoverlapping

areasbetweenthespheresconstitutefieldsinwhichroomformaneuvercanbeallocatedtothevaluedriversidentified.

TheBusinessGovernancelooksinthreedirections: Market(viaManagementofBusinessopportunities) CoreBusiness(viaLinemanagement)and BusinessProcessManagement(viaValueManagement)

TheCoreBusinesslooksinthreedirections:

TechnologyDelivery(viaTechnologymanagement) BusinessProcessManagement(viaBalancing) BusinessGovernance(viaLinemanagement)

TheBusinessProcessManagementlooksinthreedirections:

TechnologyDelivery(viaAutomation) CoreBusiness(viaBalancing) BusinessGovernance(viaValuemanagement)

Inadefenseorganizationasystematicreadingofitsvaluedriversshould

provideBusinessGovernancewithbestpossibleperformancefeedbackprior

toanydecisiononchangesintheforcedeploymentplanningorexecution,

operation,manufacturingorlogisticactivitiesintheorganization.Inaddition,

BusinessGovernancemustensurethattheongoingprogramsandprojects,

justaswithinforcedeployment,worktoseekneworganizational

effectivenessandefficiency,atthelowestpossibleprice.

All companies have strategies, goals and some sort ofvaluedriversimpliedsimply bytheirexistence,butvery fewof themfollow value

drivers ina waythat ensuresthemostvalueformoney.Oneof the

maingoalsofthisstudyprojectattheDanishDefenseCommandwas

howthiscouldbechanged.Steponewastodescribetheflowofvalue

insidetheorganization.

Step two was to analyze how the flow and the processes in theorganizationcouldbeoptimized


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Step three was to describe how ongoing continuous improvementcould be implemented without losing adaptability, efficiency andflexibility.

OneoftheoutcomesofthestudyattheDanishDefenseCommandwasa

manualforprocessmanagementthatshouldhelpintroducecommon

standardsandfunctionasaguidetocontinuousprocessimprovement.

HistorytellsthatmanagementatExecutivelevelinacompanyingeneral

ignoresthepossibilitytoalignthecorporateprocessesandusethethorough

picturetomakedecisions.Bytakingadvantageofthefeedbackcomingfrom

allthespheresillustratedabove,BPMcouldbethetooltodothisbetter.Seen

frominsideanon-profitorganizationoraGovernmentAgency,the

understandingoftheneedtobebestinclass-istoalargeextentsimilar-to

thatofaprivateorganization.Basically,therequirementtoyourjobthewayit

hastobedoneintheeyesofthecustomer(inthepublicsectortoproducethe

kindofservicesthecitizensarewillingtopaytaxesfor)isthesame.Whenit

comestochangestakingplaceinpolitics,thesemayappearasquicklyas

changesinthemarket,andtheneedforagilityisacceptedinbothprivateand

publicsectors.

However,topmanagementinanorganizationoftenmakesdecisionsthatare

notnecessarilyinlinewiththeofficialcommitmenttoeffectivenessand

efficiency.Forinstance,numerousexamplesexistwherenewITsolutionsare

purchasedwithoutcheckingtheneedsinawiderprocessperspective,andthe

consequenceisoftenfailedimplementationwithincreasedcostandless

incometofollow.

Suchexamplescanalsobefoundinhighprofiledigitalizationinitiativesaimed

atmodernizingbusinessareas.ADanishexamplecouldforinstancebethatof

aMinistryofFinanceinitiativetocentralizeallITsupportinthegovernment

agencies.Afirststepwastobuildupacommonlearningmanagementsystem

to:

Storeallgovernmentalemployeescompetencies ProvideaplatformforE-learning ProvideanITsystemforbooking

Thebusinesscaseforthissystemwasnotbasedonananalysisofthe

organizationalenvironment.Asanexample,weintheDanishArmedForces

alreadyoperateanintegratedsystemtocatchuponallemployees


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competencies(SAPHR),andinthesamesystemthereisgoodfunctionalityfor

bookingandeventmanagement.PlatformsforE-learninghaveexistedinthearmedforcesforover15years,butthedefenseexperiencefromthisperiod

wasnotfullyincludedinthebusinesscase.

ThevisionforthecentralizationofgovernmentITistoestablishajoint

EnterpriseResourcePlanning(ERP)solution.Thistoowillbedifficultforthe

DefenseCommandasmostpublicservicesinDenmarkareusingthefinancial

modulesofMicrosoftNavision,whiletheagenciesofMinistryofDefenseuse

SAPwall-to-wall.

Withoutgoingintodetails,thekeyriskinsuchaone-size-fits-allapproach

fromtheviewoftheValueDriverModelisthattheinitiationofITdelivery

directlyfromtopgovernanceignoringtheCoreBusinessofthevarious

businessareas,withouthavingaunifiedprocessarchitectureinplaceand

withoutaValueManagementdriverinplacethatgoesbeyondfinancialbook-

keepingwillcausefragmentationindecisions,managementandpractical

operations.Basically,insuchanapproach,thereisnoconnectionfrom

BusinessGovernance,ITGovernanceandProcessGovernancetothe

PerformanceandValueGovernanceofAutomation.

InthefollowingchapterswewillgothroughtheValueDrivermodeldeveloped

byDahlandNielsenintheDanishArmedForcesandwewillfocuson

informationneededtoachievevalueeffectivenessandefficiencyandValue

maximizing.Todothiswehavetolookateachofabovefourspheres,their

internalconnectionsandthewaythevaluedriversturnaroundinthemodel

1.3 Core ProductionTheBusinessGovernancesphereis,throughthestrategyprocess,focusing

onbothexternalandinternalfactors.Theexternalviewshowsthemarket

potentialandtheinternalviewprovidesapictureofcoreproduction.Next

stepistoalignthecoreproductionwiththeorganizationandtheprerequisite

needsforcapacityandcompetenciesbeforethedecisionofbuildupan


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organization.

Theorganizationandtheavailableproductioncapacitygenerallylimitthe

productionbutotherlimitationscouldincludegovernmentalrules,

environmentalrulesetc.TheflowfromBusinessGovernancetoCore

Businessdescribesthedimensionsoftheproduction.Althoughthisdoesnot

bringvalueinitself,itisnecessaryforunderstandingtheentireprocessthat

manageslimitationsandconstraints.

InthedynamicCoreBusinesssphere,thefocusisshapedbytherelated

VDFs.TheVDFBalancingbetweenCoreBusinessandBusinessProcess

Managementisworkinginbothdirectionstofindabalance.Bothspheres

needtheotherspheretoprovidefeedbackandtolerance-levelandusethe

acquiredknowledgeforoptimizing.

ThevaluedriverfieldbetweenCoreBusinessandTechnologydelivery,

(technologymanagement)isnotmanagedconsciouslyinmanyorganizations.

Herebythecorebusinessmissesanareatobeoptimized,andtheevaluation

andrunningcostsbetweensystemandcoreBusinessisconsequently

unadjustedandoff-balanced.


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Typical challenges

Oftencurrentoperationsfollowwellknownorganizationalpatternsclingingtoalreadyknownandtriedpracticesonhowthingsaredone.

Thecostisunchangedandfollowsthepricedevelopmentinthe

market,themarketpotentialisdecreasingandtheExecutiveshave

threeoptions,oracombinationofthese:Dropoutofmarket

Usemoremoneyforcommercializing Optimizetheprocesses

Thecheapestwayisnormallytooptimize,butwithadynamiccorebusinessin

place,thishasprobablyalreadybeendone.Inadefenseorganizationthis

appliesindirectlyaswell.Insuchasituationfocusonoptimizingthecore

businessthroughBusinessProcessmanagementwillmakethechallenge

easierbyprovidingtherelevantbusinessvaluedriversandatthesametime

providetheopportunitytooptimizetherevenueearlyintheprocess.

1.4 Business Process ManagementCurrently,BusinessProcessManagement(BPM)asatermisoffered

substantialattentioninvariousbusinessenvironments.Numerousdiscussions

istakingplaceatseminarsallovertheglobe,injournalsandthroughweb-

basedmedia.However,terminologyanditsperceptionsvaryfromforumto

forumandtheoneauthoritativegoodimplementationexampletofollowis

stilloutstanding.Theanswertothemostbasicquestion,whatBPMreally

means,isinsomeorganizationsalsoleftalittleblurred,despiteparticipation

inseveralconferencesbybothmanagersandemployees.Therefore,some

companiesandorganizations,whetherprivateorgovernmental,face

problemsmovingfromdiscussiontofocusedaction.

TheconclusionthatBPMsimplyneedstimetomatureinanorganizationisonlynatural,andifthedirectionseemsattractive,thenhowarethefirststeps

upthematurityladdertaken?

1.4.1 Maturing BPM within the organization and top managementAttheDanishArmedForceswerealizedveryearlythatsupportinsomeform

atthetopmanagementisnecessaryforaBPMinitiativetosucceed.IfBPMas

aconceptisfullyintegratedwiththestrategyandthebusinessmodel,theway

aheadcangetclosetoatextbookroadmap,butiftheneedforBPMisnot


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clearlysupportedfromtopmanagement,evenwithawellpreparedcase,BPM

willbehardtobothsellandimplementinitsfullformat.

Trueitisthat,processesdosellthesedays,inparticularinlargegovernment

organizationswheremanyworkroutinesare,duetodigitallawrequirements

orcostreduction,ITsupported.Typicallyeven,inorganizationsusingERP

systemslikeSAPlocaloptimizationinitiativeswithinfunctionalareasarelikely

tobealreadyongoing.TheseactivitiescanprovideagoodplatformforBPMas

processimprovementinsuchasituationisgenerallysupported,andusually

alsopraisedwhenitincludessimplification,standardization,buildingnew

processrelations,optimizationandcuttingcosts.

Existingprocessprojectshowever,alsorepresentseriouschallengestothe

introductionofprocessmanagementasprojectstypicallyareinitiatedlocally

andhaveafunctionalfocusratherthanaprocessfocus.Typically,thisresults

inalackoffocusontheconceptofvaluebutaheavyfocusonfinancial

economics,theresultbeingtoomanyinvestmentinstanceswithlimitedvalue

formoney.Processdevelopmentprojectswithinnarrowfunctionalborders

areinriskofloosingthecross-organizationalperspectiveresultinginsub

optimization.Sadly,thisistypicallynotrecognized,neitherbymanagement

norintheorganizationitself.

A way forward with prospect of success

IftheidealstartingpointwithaclearBPMprojectsponsoredbytop

managementisnon-exist,theonlyrealalternativeisaslowerandmore

tacticalapproachtoitsestablishment.IfproperBPMistogaingroundinan

environmentasdescribedabove,thelogicalapproachistoworkonashow

case-basicallyaBPMinitiationproject.

ThebusinessunitresponsibleforBPM,theBPMteam,shouldestablishorfind

analreadyplannedbusinessimprovementprojectwithacrossfunctional

projectmandateandhavetheprocessteamworkcloselywiththatproject

team.Theprojectshouldgiveprioritytoasolidanalysisofbusinessprocesses

beforeeventualITfunctionalityisdeveloped.

TheBPMInitiationprojectmustalsoensuretoengagecorporatemanagement

inordertogetstrategicanchoringaswellasbusinessrepresentativesto

understandtheDefenseCoreProcesses[ vonRosing,Dahl,Nielsen,2010].


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Thisinvolvementoftopmanagementensuresatopdownapproach,whichby

defaultismostsuitableforsuchhighlyhierarchicalorganizationsandthe

integrationwiththeorganizationalvaluedrivers.

TheBPMteammustalsoensurethattheprocessflowismodeledforaswell

internalprojectpurposesasforexternalcommunicationpurposes.Graphics

oftenspeaklouderthanwords.

1.4.2 BPM and facilitating Value Driver FieldsBPMisstillanewmanagementdisciplineanditremainsachallengetoexplain

therealvalueofittothosemanagerswhobelieveitisjusthype.However,

onewaytopromoteBPMwouldbetoexplaintheValueDriverModeland

pointoutthoseVDFthatexistinthemodel,onlyduetotheexistenceofBPM.

WithoutawarenessofBPM,thesefieldswillnotbehandledproperly.

TherelationshipbetweenBPMandtheotherspheres,andtheworkinthe

VDFs,willbeexplainedinthefollowingparagraphs.


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1.4.3 BPM and Business GovernanceBPM,asillustratedintheValueDriverModel,constitutestheotherofthetwokeyBusinessSpheres.Wherethecorporateleadershipcanensurethedelivery

ofintendedoutputsinCoreBusinessthroughtraditionallinemanagement,

theVDFtobeusedtoensurethattheorganizationworkswithaslittlevalue

drainaspossible,isValueManagement.Accordingly,BPMisaimedat

ensuringthatoutcomesandproductsareproducedinthedesiredandbest

waythroughouttheorganization.

WithintheVDFValueManagementmanagementatExecutivesleveldirects

activitiesintheBPMsphere-whilethevaluefocusoftheBPMactivities

correspondinglyprovidesthebasisforfulfillingValueBasedManagementattheverytop.

Typical challenges

Toaverylargeextent,itishardtoconvinceseniormanagementthatthe

promisesofBPMaretrustworthy,andmanagement-accordinglyand

reasonablyenough-isreluctanttoallocatetoomuchmoneyforthepurpose

andimplementabiggerchange.Hencetheneedforashowcase

demonstratingthattheproposedprocessarchitectureandthe

interrelationshipbetweenbusinessprocessesarevalid.

AnothertypicalandlogicalreasonforfrictionisthefactthatmostArmed

forcedDefenseorganizationsarebynatureverycommandandstructural

driven.Withthat,membersofseniormanagementholdtheirauthoritydueto

aformalresponsibilityofafunctionalline/branchwithintheorganization.As

properBPMwillmovefocustowardsobtainingresultsandconsequentialcross

functionalprocessesandissues,BPMwillbeperceivedasathreattothis

establishedpowerpicture.Theperspectiveofafutureroleasaprocessowner

mighttosomedegreebeofinterest,butastheunderstandingofsucharole

willbealittleblurredattheearlystagesofBPM,itcannotcompetewithcore

business,orbusinessasusual.Againagradualapproachwithbreakdownof

managementprocesses,core(primary)andsupportingprocessesseemstobe

logical.

Measuring,andprovidingdata-basedinformationaboutprocessperformance,

isalsodifficult.BPMsuites(BPMS)marketthemselvesasbeingreadyout-of-

the-boxtoprovideprocessintelligence.However,itisunlikelythatsucha

BPMSisdeployedtoanylargeextendifBPMisnotalreadyongoingand


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processintelligenceisunlikelytoconvinceseniormanagementaboutthe

movetowardsBPM.ValueBasedManagementundersuchconditionsisbasicallynotinplace.

How the Value Driver Field Value Management could work

Justasdefinedinchapterone,CorporateManagementwillsetstrategic

businessobjectives(SBOs)exampleofthiscouldbe:cutdefensebudget

cost.Furthermoretargetsforbusinessperformanceindicator(BPI)couldin

suchacasebeforexample:tocutthedefensebudgetcostwithin6months

by30%.Atsuchahighlevelthiswouldhavetobebrokenmoredownto

CriticalSuccessFactors(CSFs)inordertobringitclosertoanoperationallevel.

Suchabreakdowncouldlikethefollowing[ vonRosing,Dahl,Nielsen,2010]. :

1. ReduceForceOperationandAdministrationCosts2. ReduceCostofForceDeployment3. ImproveCapitalDefenseManagement4. CapitalDefenseOptimization

Inordertohaveanoperationalunderstandingalloftheabovefourareas

wouldhavetobebrokendowntoKeyPerformanceIndicators(KPI).These


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KPIsarewhattheorganizationmustseektoachieve.Heresomeexamples:Critical Success Factors Key Performance Indicators

Consolidate or outsource defence procurement functions

Refine vendor strategies

Consolidate or outsource IT design and development functions

Consolidate or outsource IT design, development and deployment services

Consolidate or outsource IT end-user-support

Consolidate defence operations and maintenance services

Consolidate or outsource defense benefits administration functions

Consolidate or outsource Defense learning and development functions

Consolidate defence recruitment functions

Improve alignment of defence unit strategies with Corporate Armed Forces strategies

Improve alignment of defence structures with Defence Command strategies

Consolidate defence payroll functions

Consolidate or outsource defence property management functions

Improve alignment of political financial decisions/strategies with corporate defence

command strategies

Analyze enemy targeted markets and segments

Rationalize deployment portfolio

Analyze targeted force deployment segments

Select and enter sucessfull and exit non-sucessfull UN/EU defence projectsConsolidate defense order fulfillment functions

Increase focus on enemy insight and forward-looking information

Minimize recovery costs through self-healing recovery capabilities

Improve focus on higher-value defence capabilities

Increase use of lower-cost defence capabilities

Minimize recovery costs

Better alignment of operations deployement planning, management & reporting functions

Minimize costs related to external shocks

Better alignment of financial accounting & analysis functions

Consolidate defence real estate/facilities

Improve alignment of political allowed budgets and program plans with operations priorities

Increase use of lower-cost activiti es

Reduce fixed IT cost by paying for usage, not for availability

Strengthen defense-wide financial reporting standards

Design more ease-of-use/self-service operations

Improve emphasis on design for Force deployment packing/shipping effi ciency

Standardize catalogs

Consolidate defense service and support operations

Withdraw non-profitable defense projects.Improve emphasis on project quality and ease of service

Rationalize and/or refocus service portfolios

Retarget projects and services and manage project output

Consolidate billing operations

Manage procurement for MRO on a national defense basis

Rationalize/consolidate MRO vendor portfolio

Consolidate IT, defense Telecom and force deployement network equipment and facilities

Implement integrated applications across organizational boundaries

Rationalize IT application portfolio

Improve focus on military employee retention

Improve HR practices

Reduce Force Operation

and Administration Costs

TheBPMTaskforceorBPMCentreofExcellence(CoE),dependingonthe

processfocusandmaturityofthecompany,willbeabletobreakdownthese

KPItargetsintoProcessPerformanceIndicators(PPI)andtheconnectedIT

applicationareasinordertocombinevaluedriverswithIToperation.


23/39

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AfullyoperationalBPMCentreofExcellencewillbeabletoreportonthese

targetsandprovidecorporateleaderswithtimelyandreliableinformationon

howwell,orbad,theorganizationisperforming.Logically,theBPMtaskforce

orBPMCoEcanalsoevaluatetheprocessintelligencepictureandadviseon

wheretodirectmanagementawarenessorallocateinvestments.

TheconceptofValueBasedManagementmaybealmostaschallengingto

introduceinanorganizationasBPM,butitmightbepossibletoassistthe


24/39

introductionofbothbyexplainingthelinkbetweenthem.Thus,bothconcepts

maybeeasiertosellifthemessage;managementofvaluesandmanagementofprocessesgohand-in-hand,iscommunicatedwidely.

1.4.4 BPM and Line ProductionTheVDFwhichwillfacilitatetheconnectionbetweenLineProductionand

BPMisone-usuallynotgivenenoughattention.Actually,ithasnotreally

beengivenapropernameyet.AtermlikeBalancingissuggested,e.g.

makingsurethatpurposeandperformanceofintraorganizationactivitiescan

bemanagedinawaythatmakesitpossibletodelivertheendproducttoa

customeratapricethatcancompeteonthemarketanddeliversasmuch

profittotheorganizationaspossible.

Typical challenges

Asdescribedearlier,processoptimizationandinnovationprojectsanchoredin

afunctionalbusinessarearisklosingthecross-organizationperspectiveand

mayresultinsuboptimization.Toalertmanagementawarenesstotheserisks

isashardforBPMpromoterstodo,asitishardtochangebusinesstraditions

andconvincedecisionmakersoftheneedforanewapproach.Inparticularit

ishardtoselltheneedforcentrallyintroducedBPM,withitsnewterminology

andmethodology,whenallprocessinitiativessofarhavebeenfunctionaland

areperceivedassuccessful.If,inaddition,theorganizationisbeingrunonstrictbudgetsallocatedonlytofunctionalbusinessunits,fundingforcross-

functionalprojectswillalsobedifficulttoachieve.

Anotherwell-knownchallengeforBPMexpertsistoeliminatethe

misconceptionthatBPMisanITissue.Oftentheneedforprocess

optimizationisallocatedfortheITdivisiontohandle,ormaybetheperception

thatITresourcesarelimitedsimplybecomesacomfortableexcusefornot

runningoptimalprocessesinthebusinessunits.Thebusinessfoundation

proposedrepeatedlyinthisarticlethroughValueDriversiscriticalfor

successfulimplementationofBPMandtheunderlyingprocesses.

Whilereluctanceintheorganization,fortheabovereasons,mayslowdown

progressintheestablishingofBPMinitsownright,thegrowingawarenessof

thevalueofprocessoptimizationcan,afterall,beusedtogetsupportand

fundingfortheintendedfirstice-breakingcross-functionalBPMinitiation

project.Thosepeoplealreadyinvolvedinprocessworkintheorganization,

typicallypersonswithsomeITtasksinthejobdescription,shouldbegiventhe

opportunitytocontributetotheprojectsomewayoranother.Theywill,


25/39

eventually,befunctioningasimportantambassadorsfortheprocessapproach

intheirownunits.Thedialoguefacilitatedbythefirstinitiationprojectisvital,asitputstheconceptofcrossfunctionalBPMonthemapandpreparesthe

groundsfortheacceptanceoftheVDFBalancingbetweenBPMandCore

Business.

How the Value Driver Field Balancing could work

WhentheappropriateBPMstructureinanorganizationisestablished,andthe

processarchitectureismodeledanddocumented-monitoringofprocesses

cantakeplace.Theorganizationhasnowmovedanimportantstepupthe

maturityladder.TransparencyofprocessesandunderstandingofBPMwill

increaseandastheorganizationmatures,theconflictofinterestCore

BusinessandBPMwillalsofade.Balanceofinterestswilldevelop,andactors

inCoreBusinesswillrealizewhatsinitfortheminrelationtoBPM.

ThecrucialnextstepistoputproperBPMintoactionand,withverycareful

timing,toidentifyProcessOwners.Ofcourse,differentkindofpeoplewillbe

involvedinmanagingaparticularprocess,butonlyonepersonshouldholdthe

statusofaprocessowner,themostseniorofthepersonsinvolvedintheBPM

organization,andhopefullyamanagementboardmember.WhentheProcess

OwnerandtheBPMCoEisinplace,realBPMcanfunction.

Balancingindicates,ofcourse,thatinputisrequiredfrombothsidesofthe

pivotpoint.Forinstance,monitoringKPIsandPPIsandinterpretingthese

shouldbedoneinclosecooperation.Identificationofpossibleinterventionsto

remedyshortfallinaprocessshouldalsobedoneindialoguebetweenthe

BPMCoEandrepresentativesfromfunctionalbusinessareas.

Whenitcomestoidentifyingnewprocessimprovementprojects,however,

decisionontheprojectmandateshouldnotbedecidedwithinthisBalancing

VDF.Thegoodideasflowingfromjointmonitoringandanalysismustbe

presentedtotheprocessownerswhoraisetheissuesattheExecutiveslevel.

Inthemanagementboard,whereideallyallprocessownershaveaseat,the

portfolioofdevelopmentinitiativesshouldbedecided.Thus,asaresultofthe

BPMwork,newstrategicdevelopmentprogramsandprojectswillbelaunched

andtherelatedcontinuousimprovementwilltakeplacewithextensive

supportfromtheBPMCoE.

Ifspecificneedsforprocessoptimizationshouldbeidentifiedlocallyorwithin

functionalareas,forinstanceasaLeaninitiative,theinvolvementoftheBPM

CoEwillensurecoordinationandwillalsomakesurethatthefocusofthe


26/39

initiativescorrespondstothecompleteprocessarchitectureofthe

organizationandthatallrelevantaspectsarecommunicatedtotheprocessownerandotherinterestedparties.

TheBPMCoEgenerallyactsasasortofsecretariatfortheprocessownersand

providesthemwiththeservicestheirrolerequires.Withseniorlinemanagers

asProcessOwnersandaBPMstructureinplace,aprocessmature

organizationholdsagoodopportunityforkeepingthebalance.

1.4.5 BPM and Technology DeliveryTheVDFbetweenthespheresofBPMandTechnologyDeliveryis

Automation.Mostly,whentalkingprocesses,thatwillmeandeliveryofIT

andinparticularERPsystems.

Modelsaregoodforcommunicatingwithuppermanagementaswellaswith

linemanagersand,asdescribedinchapter1andsectionDescriptionofa

businessmodel

Thepurposeofabusinessmodelistodescribehowthecoreproduction

interactswiththeneedsofcompetenciesandtheneedofcapacityand

resources.Thebusinessmodelisseenasastrategytooltovisualizethebasic

strategyrelationsintheorganization.IntheDanishDefenseforcesthe

businessmodelhasathirdpurpose,toshowhowthedefenseshouldtransferfromagovernmentalthinkingorganization,withmoneyasthedriverwhen

makingsolutions,toamoderngovernmentalorganization,havingitsfocuson

theneedsofcompetencies,logistics,weaponplatforms,infrastructureandIT

foroptimalsolutions.Thebusinessmodeldevelopmentprojectbeganin1994

andtheresultingmodelisstillusedasguidelinesforfuturedevelopment.

Whyfocusoncompetences?Everybodyintheorganizationneedsunique

knowledgeanduniqueskillsfortheoptimizedproduction.Skillsand

knowledgecanbeacquiredintwodifferentways,youcanrecruittheright

peopleoryoucaneducateanddevelopyouremployees.Eitherwayyouneed

resources,capacityandtimetogettherightprofiles.

Intheglobalworldtimeisthemainparameter.Goodbusinesswillverysoon

getcompetitionfromotherplayersonthemarkets,soasthemoreefficient

theproductioncanbe,thehigheristhepossiblytostayinbusiness,aslongas

theprocessesisrunningeffectively.Forthatyouneedtherightcompetences.


27/39

BelowisanexampleofsuchadetailedBusinessModel[von Rosing,2009].This

kindofmodelcanbeusedtodefineandplanthecompetitivenessandthevaluecreationandrealizationneededinthebusiness.

BusinessModelingisnotthesoletooltodefininganddevelopingones

performanceindeployingarmedforcesforexample,ordefiningwhereand

howvaluecouldorshouldbecreatedandrealizedinthedifferentdefense

businesslines.

Thesecondmainparameteristoaligntheprocessesatallthetime.Focushas

tobeonhowtomeasureimprovementinproductioncapacityandtheprocessessurroundingtheproduction.Themeasurementorinformationisa

kindoflifelinetobusinessgovernance,anditcreatesthevaluemanagement.

TheValuemanagementcreatesneedsofchangesandsometimesnew

implementationsoftechnology.

Business Governanceofthischapter,theprimarymodelexecutivesworkwith

istheBusinessModel.ButtheBusinessModel,asexplainedinsectionCore

Production,hasafocusthatiscompetencebasedandnotprocessbased.

ToensuretheoptimalreferencemodelforBPManadditionalbusiness

processmodelandprocessarchitectureisneeded.Thisbusinessprocess

modelwillassistprocessownersintheirworkattoplevelandatthesame

time,throughthelogicalbreakdown,theoperationalawarenessofprocesses.

ThusitservesmanypurposesofprocessmanagementinsidetheCoEandin

addition,beingavisuallanguage,itisalsothemostpowerfultoolwhenit

comestothedefinitionandcommunicationofworkregulationsaswellasthe

developmentofendusermanualsetc.

TheBusinessModelandtheBusinessProcessModelcomplementeachother

andtogethertheyprovideaverycentralreferencebasisforbothmanagement

andwidercommunication.Even,whenitcomestoautomationoftheprocess

architecture,thebusinessmodelmayassistBPMinfindingkeystothe

simplification,standardization,developmentofnewflows,andBPMmay

inspireinnovationwhenitisimplemented-innovationunderstoodinthe

termsofoptimaluseofresources,capacitiesandtherebythecompetencesof

thebusiness.


28/39

However,forthepurposeofestablishingtheoptimalprocessautomationand

configurationoftheSAPERPsystem,itistheBusinessProcessarchitecturethatdoesthejob.

Typical challenges

Asmentionedearlier,processmanagementhastraditionallybeenclosely

linkedtoITandthisperceptionisstilltypicaloutsidetheBPMsphere.When

talkingabouttheVDFAutomation,thediscussionaboutprocess

managementtypicallytriggersaninitialpowerstruggleaboutwhoisinthe

lead,BPMorIT.

Theillustrationdemonstratesdifferencesbetweenaprocess(business)centric

perspectiveversusandIT-centricperspective

Nodoubt,businesscomesbeforeanyITagendas,butasBPMthinkingtoa

verylargeextendistheresultofthedevelopmentofERPandthetrainingof

processcompetenceswithinIT,theconflictisnotdifficulttounderstand.

Thesolutiontothisis,throughoutthematuritystages,tofacilitatecareful

interactionintheVDFAutomationandinvolvecompetentBPMinterested

resourcesthroughouttheorganization,includingandnotleastIT.Whena


29/39

properBPMstructureiseventuallyestablishedthedistinctroleoftechnology

expertiseshouldbereassessed.Astheusualestimationthatonlysome20-25%ofabusinessprocesscanbeautomatedprobablyholdswater,thereisno

doubtthatfurtherERPdevelopmentshouldbecontrolledbystrategic

developmentprogramssupportedbytheBPMCoE.

How the Value Driver Field Automation could work

ThedocumentationofanyITsystemshouldbelinkedtothebusinessprocess

modelwithallthedifferentprocesslevels,systematicallybrokendowntothe

lowestlevel.Thesynchronizationofe.g.theSAPSolutionManagerwitha

BPMSlikeARISonlymakessenseifthemodelingiscorrect.Theprospectof

achievinggenericuserinstructionsorthatofautomatedtestingmaybea

dreamintheearlierBPMstagesbutneithershoulditbeignored.

Theorganizationmusthaveaproductionversionofitsprocessmodelanda

setupforProcessModelControllingwhichcanassurethattheintegrityof

thefullprocessarchitecturerestwiththeBPMCoE.Thestandardsformodelingthetop3-4levelsshouldbedecidedinadialogueintheVDF

AutomationbuttherequirementsofBPMshouldcomefirst.Meetingthe

needswhenitcomestothelowerprocesslevelsrestswithITonly.Logically,

theroleasacustodianfortheBPMSshouldalsorestwithIT.

Toensurethecontinuousmaintenanceoftheprocessarchitectureasortof

permanentModelingBoardoraBPMSTaskForceisprobablyneeded.This

wouldalsoensureITexpertscontributiontobusinessprocessimprovement

initiativesandgenerallyfacilitatethedialogueintheVDFAutomation.

1.4.6 Terminology and conventionsBecauseofthefreeinterpretationofBPMasaconcept,anorganization

tryingtomakethemovetowardsBPMwillimmediatelyrecognizethatthe

establishmentofaprecisein-houseterminologyandacoherentmethodology

isofurgentnecessity.HowcouldabusinesscaseforBPMpossiblybe

presentedinawaythatappearssoundintheearsofnotjusttheconvinced

enthusiasts,butalsointhoseoftheseniormanagers,ifacommonlanguageis


30/39

notinplace?Thetextbelowsuggestshowsomeofthetypicalissuescanbe

arranged.

Process Levels

Themostessentialterminologytostandardizeisthatofprocesslevelsif

processmodelsaretobecompatible.Thetermbusinessprocessisvery

generalandisbeingusedbyalmostanyonebutatthesametimeitgenerates

differentassociations,andthedialoguebetweennewBPMadvocatesand

othermembersoftheorganizationisdoomedtobeunproductiveifthe

understandingofthegranularityandpurposeofthevariouslevelsarenot

common.

Differentdefinitionsoflevelsexistbutatypicalapproach,andtheonetobe

usedhere,includes5-6levelswherethemainprocessesoftheorganizationat

thetoplevel1arebrokendownsystematicallytotheextentitseems

reasonablefortheparticularprocess.

TheillustrationdepictstheProcessLevelsandthemaincontent

WithreferencetotheValueDrivermodelsuchabreakdownmakessenseasit

supportsthelogicoftheidentifiedBusinessSpheresandVDF[ vonRosing,Dahl,

Nielsen,2010].


31/39

Processlevel1,themainprocesses,makessurethatthereferencetothe

organizationsbusinessmodelremainsintactwhenitisinterpretedfroma

processview.

Processlevel2,theactualbusinessprocesses,shouldbeanidentificationof

relevantprocesses,groupedwithinmanagement,productionandsupport

processesandgivenaclearrelationtooneofthemainprocesses.Thenumber

ofprocesseswouldmostlikelybe70-80,anditwillbeatthislevelprocess

ownershipshouldbeidentifiedandoverallperformanceindicatorsassigned.

BusinessarchitectureatthislevelwillsupporttheVDFValueManagement.

Processlevel3representsthevaluechainofsubprocesseswithinthebusiness

process,aflowfromstarttoendandwiththepossibilityofassigningall

relevantinformation,includingPPIs,asobjectsintheBPMS.Theproperly

developedflowdescription,basedonconsultationsbetweeninterested

parties,becomesthereferenceformanaging,assessingandreportingonthe

businessprocesses.Atthislevel,subprocessesallhaveareferencetoa

primarylevel2processbutatthesametimesubprocesseswillalsoreoccurin

differentprocessflows.Visualizingtheseoccurrencescontributestobreaking

upthetraditionalfunctionalsiloapproachintheorganizationandfacilitates

theBalancingVDF.

Processlevel4breaksdownasubprocessintoanend-to-endactivityflow.If

thesubprocessistobeautomatedbytheSAPfunctionality,activitiesinthe

processflowcanbelinkedtoe.g.atransactioncodeindifferentSAP

applications.ThelinkbetweenbusinessandITisthencreatedandthecore

issueofVDFAutomationisputinplay.

SynchronizationofaBPMSandSolutionManagercantakeplaceand

documentationatlowerlevelswillalsohaveaclearreference.


32/39

Processlevel5willbeadescriptionofthestepsintheactivitiesandintheSAP

systemthecustomizationcanintheorybedocumented.AgainthisfitsintotheValueDriverModelsidentificationoftheSphereofTechnologydelivery.

Naming conventions

Thelogicalcontentoftheprocesslevelsshouldbereflectedinthenaming

standards.Manyanexternalconsultantisseengoingintoaprojectteaching

thatallprocesses,despitethelevel,shouldbenamedusingtheimperative

formofaverbfollowedbyanoun.Linguistically,thismakessenseatprocess

level4and5wheretheactivitiesareconditionedbyaprecedingeventif

this,thendothat.Atprocesslevel3,however,wheretheissueisabout

sequencingsubprocessesofageneralcharacter,suchanamingstandardis

awkward.

Itcouldbearguedthatthisdiscussionisjustaquestionofmerewordingand

thereforeirrelevant.However,experienceshowsthatpoorlanguageresultsin

poorcommunicationandwhatisneededforaBPMinitiativetosucceedis

goodcommunication,notbad.Manymodelsproducedinvariousproject

proofthatthegranularityoftheprocessisunclearandthattheprojecthas

enormousproblemsmakingtheimportantdistinctionbetweenprocesslevel3

and4.HavingabrieflookattheValueDriverModelconfirmsthatknowing

whereweareisimportantandittakesdifferenttoolstohandleprocesseswhetherweareintheVDFBalancingorVDFAutomation.Languagesare

differentbuttheuseofimperativesonlyatlevel4andbelow,is

recommended.

Havingaclearandfocusedterminologyispricelessinamodelingcontext,and

thedevelopmentofaprocessmanualwithstandardsismandatorybeforea

BPMinitiationprojectislaunched.

General

AsBPMisnewtomostpeopleandterminologyisnotalwaysagreed,processchampionsshouldbecarefultocontrolthereleaseofnewdefinitionsandonly

makeuseofterminologywhichisrequiredinacertaincontextandwhich

reflectsthematurityoftheorganization.

TheimportanceofProcessOwnersisoftenstressedintheliterature,butsome

concernshouldberaisedinrelationtotiming.Thustheprocessownership

shouldnotbeallocatedbeforetherolecanbegivenanyusefulpractical

content.Iffancytitlesandterminologyisbeingexcessivelyusedatanearly


33/39

stagewheretheorganizationisimmatureandthecontentispurelyacademic,

thetermswillbewornoutevenbeforetheyhavecomeintopracticaluse.AndthiswillundermineagoodcaseforBPM.

1.5 Technology DeliveryThoughtheTechnologyDeliverySphereiswiderthanmereITbaseddeliveries,

andmakingbestuseofe.g.anewsortofforkliftisbasicallythesameissueas

bestuseofanITapplication,thefocuswillbeonITinthiscontext.

1.5.1 Establishing the competencesTheneedforclarifyingtherolesandsettinguptherightstructureforhandling

theinterfacewithBPMhasbeencovered.Inthelightofthelatest

developmentsinSAPandBPMStheITdepartmentsroleinmaking

automationworkisboundtobeademandingone.KnowledgeofBPMS,IT

architecture,customizationsintheSAPsystemandupdatedinformation

aboutfuturereleasesoffunctionalitywillbeinhighdemand.Buildingupthe

necessarycompetenceswillprobablybeaseriouschallengeforthebusiness

sphereoftechnologyandIT.

ToensurethattherequiredservicescanbedeliveredtotheBPMCoEor

initiatedprogramsandprojects,amorefocusedgovernanceset-upintheVDF

TechnologyManagementislikelytoberequired.

1.5.2 Improving delivery of servicesThefunctionalITareaintheorganizationwillproducetherequiredIT

solutionstotheCoreBusinessandsupporttheday-to-dayoperationofthe

systems.Inadditiontotheseservices,ITshouldalsofeedintotherestofthe

organization,valuableinformationaboutstate-of-the-arttechnological

options.ThiswayITcontributestokeepingcompaniesontherighttrack,

technologically.Whileacknowledgingitsspecialstatusasahigh-techbusiness

unit,itmustbeacceptedthatITbasicallyremainsasupportingservice

deliveringthecapacitiesneededinCoreBusiness,justlikeotherfunctional

supportingbranches.

Typical challenges

BeforeestablishingBPMandsettingupastructurefortheprocess

optimizationinanorganization,theideasforoptimizationofbusiness

processesistypicallyinspiredbytheawarenessofnewITfunctionality.

Typically,thoseinvolvedinrunninganddevelopingtheSAPsystem,whether

attheITdepartmentorinCoreBusiness,willregularlypromoteideasofusing

aspecificfunctionalitytooptimizeprocesses.Asgoodastheseideasmight


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sound,italsoresultsinnarrowprojectmandatesandprojectsestablishedon

thisbackgroundwilleventuallyfocusonwaystouseatool,e.g.theSAPPSmodule,ratherthanimprovingaproperbusinessprocesslikeResource

Planning.

How the Value Driver Field Technology Management could work

AnoptimizedapproachtomanagingITthatreflectstheintroductionofBPM

andobservestheideasoftheValueDriverModelcouldbasicallybeawell

trimmedbusinessprocessitself,theprocessDevelopmentofproduction

capacity.

ThisbusinessprocessrunningwithintheVDFTechnologyManagementwillincludestagesintheSAPimplementation,lifecyclemanagement,upgrades,

trainingetc.butthecustomizationoftheSAPsystemwillnotbepartofit,as

thiswillbedealtwithintheVDFAutomationlinkingtheTechnologyDelivery

andBPMspheres.

VDFTechnologyManagementwilladjusttheITmanagementorganization

accordinglyandprobablybeaddressingmoreattentiontotheoverallIT

architectureandupgradeofinfrastructure,ratherthanbegeneratingnew

developmentprojects.ThischangewillcomplementtheworkintheBPM

sphereandthechancethatITwillactuallyendupsupportingbusiness

processeshasincreased.

ITwillnotbeleftfortheITDepartmenttobeinchargeofthecompleteIT

infrastructureautonomouslyandjustfeedsolutionsintotothecorebusiness,

butITasacapacitywillbedevelopedincooperationbetweenCoreBusiness

andITdelivery.

1.6 Implementation of changeImplementationofchangeintheorganizationsincludesanumberofdifferent

perspectives,andtheyallneedcarefullyplanning.Fieldstudies1haveshown

thatifalargergroupofemployeesfindsitnecessarytoconductchanges,then

theorganizationitselfwillreactmoreproactivelyduringtheimplementation.

1

ProfessorKotter,Eightsteps


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Basically,changesareawaytoreplacelessefficientpartoftheproduction

withmoreefficientones.Itcouldbethereplacementofatechnologysolutionsortheintroductionofamoreefficientprocessstructure.These

changeswillinfluencethepowerrelationshipbetweenemployees.Somewill

loose,andsomewillwin.Thewinnerwillwalkfasterthroughthetransition

processtothenewstructure,whiletheloosermayhaveanegativeeffecton

theworkinthenewstructure.Successfulchangethereforerequiresthe

establishmentofakindofaWin-Winsituationforeverybody.

Anotherfailureriskariseswhencorebusinessimplementsnewtechnology.

Therearealotofsituationswherethetopmanagershavemisunderstood

theirresponsibilityforadynamicchangeprocess.Inmostcasestheymakealearningprogram,whereemployeeslearntousethetechnology,andthen

BusinessGovernanceexpectsafastpayback.Normallytheywillhavetowait

quitelongbeforetherepay,duetothechallengesfoundwithinCoreBusiness

andBusinessProcessManagement

Therealchangesdependontheemployeeslevelofwillingnesstoaccepting

changes.

Thechallengeincontinuousimprovementis: Todothechangesfast Involveallemployedwhenyoustarttheproject Try to keep the internal power structure or you might loose good

employees

Buildupawin-winsituationfortheemployees Reallocateemployeesifitspossibleortrytohelpthemgettinganew

job

1.6.1 Development Management MethodologiesLargedevelopmentprojectsliketheonesconductedbothinthedefense

organizationsandelsewherearetypicallyconductedaslargerITandSAP

projects.Typicallytheyarejustthat,namelyITprojects-andnotbusinessdevelopmentprojects.Evenprojectsperfectlycompletedaccordingto

methodologieslikePRINCE2oftenturnouttohavefarlesseffectonbusiness

thanexpected.ThisofcoursereflectsthefactthattheITsphereinan

organizationissimplyjustanotherfunctionalsilointheorganization,butit

alsoillustratesthatallsignificantmodificationstothedesignorconfiguration

ofanSAPsystemneedsastrategicanchorratherthanafunctional.


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IfBPMisintroduced,suchastrategicanchorisprovided.Asillustratedwith

theValueDriverModelitbecomesclearthatITultimatelyservestheCorporateManagementthroughBPMmakinguseofVDFValue

ManagementandAutomation.

Thissituationalsorequiresnewmethodologicalapproaches,likeProgram

ManagementandPortfolioManagement.Highlyprofessionalproject

managementisnotenough.

TheexperienceintheDanishDefenseisthattheveryinitiativetointroduce

BPMintoourorganizationwouldbeagoodexampleofastrategicprogram

itself.Themediumtermperspectiveofaprogramfitsnicelywiththe

organizationsneedfortimetomaturetheorganizationandprepareforBPM

andtheprojectsundersuchaprogramwillcontributetothegradual

developmentoftheorganization.

1.7 ConclusionIntheprevioussectionsofthischapterwehavegonethroughthevalue

driversseenfromthepointofviewofaDefenseorganization.TheValue

DriverModelhasbeenpromotedasthewaytonotjustunderstandvarious

businessissues,butalsotoidentifytheprocessopportunitiesfor

improvementandinnovationinanorganization.

TheValueDriverModeltherebygivesanorganizationauniqueapproachto

identify,createandrealizethewishedgoalsandresults.Forthemostthisisin

themainareaofcostefficientandeffectiveprocesses,aswellasinnovateand

competitiveprocess.Onceinplace,BPMfulfillsitspurposethrough

interactionwithalltheotherBusinessSpheresintheValueDriverModel,

BusinessGovernance,CoreBusinessandTechnologyDelivery.

InaperfectworldValueDriverswillbebalanced,BPMcanmonitor

performanceandValueBasedManagementcanassisttheexecutivesin

keepingtheperspectiveoftheCoreBusinesswiderthanjustthefunctionalsilos.TheExecutiveswillalsothroughBPMbeabletoensurethatthe

professionallymanagedITcapacitiesresultinoptimalsupportofbusiness

processesthroughtheVDFAutomation.Thecontinuousimprovementof

businessprocesseswill,insmallerscale,behandledbyBPMasdaytoday

business-whilelargerprocesschanges,likeallotherbusinesschanges,willbe

handledthroughdevelopmentprogramswithinthefieldsofcorporate

Continuousimprovement.


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Ultimately,thesituationisestablishedinwhichcontinuouslyimproved

BusinessGovernancecanfunction,assistedbyBPMandprobablyalsobytheValueDriverModel.

AlltogetherthisshouldhelpconvincingcorporatemanagementthatBPMhas

averygoodbusinesscase.Inthisexcitingjourney,wehaveencounteredthe

followingbenefitsfromBPM:

Improved visibility of vital processes and thereby information,enabling enhanced operational effectiveness

Establishment of an enterprise-wide process methodology and aframework to identify the different value drivers and thereby the possibility todemonstrate value creation and realization for the different defense lines of

business

Improved operational effectiveness through the integration ofoperational processes that facilitate shared situation awareness

Potential savings of millions across the organization, derived fromprocess integration efficiencies

Sources:

Joint Publication 1-02, DoD Dictionary of Military and Associated Terms),

(Washington, DC:2008)

Strange, J, L., Understanding of Clausewitz, Joint Force Quarterly, summer

2003,

von Rosing, Mark. Business Value Management, a way to plan, create and

realize value (2009)

von Rosing, M., Dahl, C., Nielsen, J.T., Business Process Management i the

Defense Industry (2010)

TheAuthor

(Pleaseaddashortauthorbiohere,approximately80to100words.Itshould

includetitleandcurrentresponsibilities,careermilestones,aswellas

Universitydegreeifapplicable.Pleasealsoprovideaprofessionalpassport


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photographingoodresolution300dpiminimum.)


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