Paul Harmon observed that over the past few decades, business process has gone though many changes. In the eighties, it was value chain analysis and process modeling. In the nineties, it was BPR, workflow and packaged applications, with the Internet and the push to create eBusiness applications coming in the late nineties. In the last few years, it has been Six Sigma, BPM and BPO. According to Harmon, the overall direction of all these initiatives is the same, leading toward the Process-Centric Company, which is organized, structured, measured and managed in terms of business processes.
Paul Harmon is a co-founder and Executive Editor of Business Process Trends, an Internet portal providing news and information concerning trends, directions and best practices in business process change, targeted at business managers, vendors and associations (www.bptrends.com). He is also a co-founder and Principal Consultant for Enterprise Alignment, a professional services company focused on end-user companies interested in understanding and implementing business process change, and vendors that develop, market and sell business process change products and services. Paul is a noted consultant, author and analyst concerned with applying new technologies to real-world business problems. He is the author of Business Process Change: A Manager’s Guide to Improving, Redesigning, and Automating Processes (2003).
A process-centric company is one whose management, “..thinks of the company as being made up of a set of processes and those processes can be used to organize everything else in the company. Rather than have IT do whatever it does, you have business processes, and each of those have IT applications and data supporting that process. You need to know which processes IT supports in your company, so if you want to outsource something, you would know what IT is no longer needed. This sounds trivial, but I talk to lots of companies and many of them do not have enough understanding of their processes or architecture to know the answer. Gartner says the first thing companies ask them when they outsource, is how do they figure the costs. This is how you figure costs.”
Harmon says it is important to have a good clean architectural pyramid with strategy and goals on top, and activities by people and IT below. The organization must always adjust to environmental threats and opportunities, so the challenge is to smoothly align processes and activities with the strategic goals and directions. The architecture has to be very flexible. Strategies also need to be general and prescriptive, with the corporate and process strategies aligned along the lines of the CMM levels. Harmon says that optimization of processes leads to at least a CMM level 4 company.
Harmon advocates a framework-based approach to architecture which includes an organization’s major processes and sub-processes, and the interfaces between them. It would also include measures, cost data, management plans for organizing and controlling each process, and the business rules.
Some companies develop their own architectures, but some use industry or process frameworks. These include eTOM (Telecom Industry Architecture), and SCOR, the Supply Chain Council framework for supply chain architecture. SCOR is the best example. Created in the past five years by a consortium of over 700 companies, it defines a top-down approach to organizing BP architecture for the corporate supply chain process. To follow SCOR, it is necessary to learn the vocabulary, define the supply chain strategy and chain processes, define measures and determine costs, and identify the benchmarks for improvement and best practices. Harmon went into detail on the SCOR framework, saying that it is so successful that it is being cloned for other industry verticals. He related that it helped a great deal when it was used across the company for the HP/Compaq merger and explained what they did.
Business rules determine how decisions are made. Some are very broad, such as corporate policies, while others are specific. The present movement is to capture and store all the rules in a depository, independent of their applications. If they are stored, they need to be in a good architectural context. The first-generation BP modeling tools treated every process as unique, while the second generation relies on a framework using measures and costs right from the start. Harmon said that with all that is available for BP, Simulation, Six Sigma, EAI, workflow products and packaged software tool vendors, the tool market is quite confusing and without common standards.
One of the challenges companies face is getting managers to adjust to the processes. Some companies use a Chief Process Officer to do this; others give line managers process responsibilities, use a Process Information Officer or process teams. For management, every process has an associated management process, something often missing from many process diagrams. Where is the manager in charge of this process? The SCOR framework includes a management component.
On the IT side, some activities are completely automated while most are partially automated with employees interacting with systems. The strategies include software development, packaged application suites, best-of-breed applications, IT or BP outsourcing or a combination of the above.
Harmon says there will be much more Business Process Outsourcing, because web services lends itself to outsourcing. This isn’t the outsourcing of automated processes, but the outsourcing of complete processes, including ownership and management.
Harmon says that interest in BPO is growing slowly but steadily among senior executives. Interest in the technical community also is very high.
In summary, Harmon said there is no right way to undertake business process change and that a process-centric approach provides a way of organizing all company efforts. A business process architecture is the key to everything else. Six Sigma, SCOR, MDA, BPEL, BPMN and BPO currently are the major initiatives.
