BUSINESS ARCHITECTURE (BA) Business Process Taxonomy

Transcription

1 BUSINESS ARCHITECTURE (BA) Business Process Taxonomy The BP map in organizations The map of enterprise support processes The map of enterprise management processes The map of enterprise primary processes Review questions

2 The BP map in organizations Porter s value chain An overall enterprise framework (OFE)

3 Porter s value chain (1985) Firm Infrastructure Human Resource Management Technology Development Procurement 3 Inbound Logistics Operations Outbound Logistics Marketing & Sales Service

4 Porter s value chain (1985) It is the classic framework of enterprise management It defines how an enterprise creates value to customer Definitions: Value : the price a customer is willing to pay. Chain : the sequence of PRIMARY activities by which a product is made. Margin = Price to customer Cost to enterprise PRIMARY activities (vertical): create value SUPPORT activities (horizontal) provide services to primary activities add costs not value 4

5 An overall enterprise framework (OFE) * MANAGEM ENT BUSINESS PROCESSES PRIMARY SUPPORT Integrates and extends Porter s Value Chain Identifies three overall BP classes Management BP : Organization Governance Primary BP: Value Creation Support BP : Services to the Organization BP classes should be balanced; otherwise: Poor management: organizations miscarry Poor Primary BP: no value & no customers Poor Support BP: useless bureaucracy and high organization costs * An extension by University of Pavia,

6 The overall enterprise framework (OFE) BUSINESS PROCESSES MANAGEMENT PRIMARY SUPPORT STRATEGIC PLANNING MANAGEMENT CONTROL OPERATIONS CONTROL MANUFACTURING DEVELOP PRODUCTS SOURCE MATERIALS LEGAL & BUSINESS ACCOUNTING HUMAN RESOURCES MANAGEMENT IT SERVICES PLANT MAINTENANCE MAKE PRODUCTS SELL & DELIVER PRODUCTS SERVICE PRODUCTS AFTER SALE PUBLIC RELATIONS INTERNATIONAL RELATIONS 6

7 The overall enterprise framework (OFE) : primary BP change across industries GOVERNMENT PRIMARY BP MANUFACTURING PRIMARY BP TELECOMMUNICA- TIONS PRIMARY BP SERVICES TO CITIZEN DEVELOP PRODUCTS DEVELOPMENT OF TELECOM SERVICES SERVICES TO BUSINESS SOURCE MATERIALS SALES AND CUSTOMER MANAGEMENT CROSS GOVERNMENT SERVICES MAKE PRODUCTS PROVISION OF SERVICES SELL & DELIVER PRODUCTS OPERATIONS SERVICE PRPDUCTS AFTER SALE BILLING CUSTOMER CARE 7

8 The map of enterprise support processes Accounting Human Resources IT services

9 Hierarchy of enterprise support processes Support processes Accounting Human Resources IT Services Other Processes Primary Ledgers Human Resources Planning IT Planning Management Accounting Human Resources Management Demand Management Legal Accounting Human Resources Administration Projects Industrial Relations Operations Other Services Performance Management 9

10 Accounting (summary) Accounting Primary Ledgers Management Accounting Legal Accounting 1st accounting model by Luca Pacioli (Pacioli 1494) Nowadays: International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). Accounting processes are paperwork and, therefore, are fully computerized. Primary Ledgers : transactions with external entities: General Ledger : all transactions Receivables transactions with Customers Payables: transactions with Suppliers Etc Legal Accounting: reports, as balance sheet & related information, for corporate stakeholders (Shareholders, Revenue Service, Auditors, Analysts etc.) Management Accounting: income and cost of each organization unit ( cost center or responsibility center ). 10

11 Human Resources (summary) Human Resources Human Resources Planning Human Resources Management Human Resources Administration Industrial Relations Other Services Planning : quantitative and qualitative staffing requirements. Management Hiring / Selection Development: Analysis of performances and potential of individual resources; Career management that includes the development plan of each individual. Education and training. Administration Presence and absence data gathering (timesheet) Payroll and related procedures Tax accounting for employees (typical of EU) Healthcare accounting (typical of EU); Pension accounting (typical to EU) and/ or private pension funds. Industrial relations Services to employees ( Employee Relationship Management ) e.g.: Information to employees Corporate information Employees information management Employee care (it answers the questions raised by employees) Management of social activities and services (clubs, associations, groups) Utility services to employees (transportation, cafeteria, nursery etc.) 11

12 IT services IT Services IT Planning Demand Management Projects Operations IT planning: to-be architecture of BP, related projects and budget.. Demand Management: collection, planning of IT user needs + management of IT projects Systems projects (or Development ): software development & implementation IT operations Data centers Networks End User Computing Etc. IT performance management Management of Service Catalogue Management of SLA and of Operational Level Agreements (service level between the organization s departments) Monitoring & Reporting Performance Management 12

13 The map of enterprise management processes Anthony s pyramid The decision perspective

14 The Anthony s pyramid (1967) STRATEGIC PLANNING MANAGEMENT CONTROL OPERATIONS CONTROL EXECUTION An absolute foundation studied and practiced by millions of managers throughout the world Each layer of the management process handles different variable classes, respectively strategic decisions, resource allocation decisions execution decisions. The Execution layer is added to represent the interaction between management and execution. 14

15 The management control cycle CONTROL Adjust (plan adjustments; execute adjustments) Define (define objectives) Appraise (monitor performances; review & analyze results) EXECUTION 15 Activity sequence Interaction between control and execution flow (information or commands)

16 Phases and activities of a generic enterprise strategic planning process Decide overall objectives (market share, profit, other) Scan environment (inside & outside) Define strategy (products, markets, technology) Plan strategic initiatives (time, money, deadlines) Definition of objectives Appraisal Adjustment The dotted lines map the activities of strategic planning in the phases of definition of objectives, appraisal, adjustment A similar concept is PDCA (Plan Do Check Act) also known as the Deming circle/cycle/wheel, Shewhart cycle, control circle/cycle, or plan do study act (PDSA). Appraise initiatives (on deadlines) Adjust initiatives 16

17 The management control cycle: a calendar of control process Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Final Budget Revised Budget Approved budget Preliminary budget Gap Analysis Gap Analysis Gap Analysis Gap Analysis Gap Analysis Gap Analysis Gap Analysis Gap Analysis Gap Analysis Gap Analysis Gap Analysis Gap Analysis Adjustments Adjustments Adjustments Adjustments Adjustments Adjustments Adjustments Adjustments Adjustments Adjustments 17 Business analysis & service design Gianmario Motta

18 A schematic calendar of management control in a generic organization Budget is decided in the Fall of the previous year, based on evidence of results and on strategic actions, goes trough a discussion among managers, and it is finally approved. This is the first part of the objective definition phase in management control. After the budget is approved in December, managers analyze monthly results against the budget. This gap analysis (in the centre of the figure) is the appraisal phase of the management control layer. Based on the gap analysis, appropriate actions may be planned, which are shown by dotted lines; December and January are skipped because they are, respectively, too early and too late. These actions are the adjustment phase of management control process. During the year, objectives may be redefined, as it is shown by the Revised Budget, processed in May, and the Final Budget, issued in August. So the objective definition phase includes the two moments of initial planning (Approved Budget) and re-planning (Revised Budget and Final Budget). 18

19 Management processes and information INFORMATION PROFILE OPERATIONS CONTROL MANAGEMENT LAYERS MANAGEMENT CONTROL STRATEGIC PLANNING Detail Granular data Summarized data Variable Structure Predefined Predefined Variable Frequency Continuous Periodical (e.g. Variable monthly) Source Internal Mainly Internal Mainly External 19

20 The decision perspective Decision structure Management layer degree Operations Control Management Strategic Planning Control Structured Stock replenishment Budget of customer Plant localization care Semi-structured Securities trading Budget of sales Project financing Unstructured Select newspaper heading Select managers R& D strategy Gorry & Scott Morton merge Simon s decision theory and Anthony s framework and introduce a new decision type, called semi-structured decision. Simon conceives organization as a system on three levels, (a) physical processes of production and distribution (b) operational decisions on physical processes, and (c) decisions that assess outcomes of operational decisions and set their rules. 20

21 Decision perspective : decisions and computers Information structure Low High Decision structure Low High Limited decision computerization (e.g.: ship building) Marginal to null computerization (e.g. to style a product) Intensive decision comput erizat ion (e.g.: inventory replenishment) Marginal information comput erizat ion (e.g. to hire a manager) ITC development The core of computerization is structured information and structured decisions, as in inventory replenishment. Computers can support complex decisions. The ship building manager does not use a global formula for procurement ; nevertheless uses computer information. The weight of computer drops in emotional decisions. E.g. the decision of hiring a manager is largely based on reciprocal empathy and trust Computers are almost negligible when the decision is a matter of creativity, as with a new fashion product. 21

22 The map of enterprise primary processes Introduction Blumenthal Nolan

23 Introduction Maps for primary processes have grown in two main phases Phase 1 - Early frameworks in the Seventies and Eighties: growing computerization attracts the attention of management theoreticians e.g.: Phase 2 - From 1990, success of sw platforms as MRP II led industry consortia to define a common BP industry framework. We here illustrate frameworks of phase 1 Blumenthal 1969 Nolan 1973 Phase 2 frameworks will be illustrated in a separate session 23

24 Blumenthal Operations Control Raw Materials Finished Products Equipment Finance (Money) Personnel Procurement Sales Installation Payables/ Receivables Hiring Inbound Logistics Outbound Logistics Operation Legal Accounting Training and Education Production. Maintenance Management Accounting

25 Blumenthal Operations Control Raw Materials Finished Products Equipment Finance (Money) Personnel Procurement Sales Installation Payables/ Receivables Hiring Inbound Logistics Outbound Logistics Operation Legal Accounting Training and Education Production. Maintenance Management Accounting Blumenthal segments information systems by a function The first level reflects Blumenthal s original segmentation, according which each information system covers a given flow of resources within a given management process; Further detail (dotted lines) has been added by assuming a life cycle for each resource flow. Blumenthal s framework applies only to industrial organizations 25

26 Payroll Human Resources Management 26 Nolan s applications portfolio Strategic Planning Management Control Receivables Payables General Ledger Equipment Maintenance After Sales Service Distribution & Outbound Logistics Sales & Marketing Production Planning Materials Management Procurement & Purchasing Product Development

27 Nolan s applications portfolio Product Development Procurement & Purchasing Materials Management Production Planning Strategic Planning Management Control Equipment Maintenance After Sales Service Distribution & Outbound Logistics Sales & Marketing General Ledger Payables Receivables Human Resources Management Payroll The graph shows planned and current computerization of business processes in a generic automotive industry. Processes at operational level are segmented according to their functional domain, that is identified by empirical evidence ( interviews, organizational manuals and alike). Management control is unique for the whole enterprise. The degree of planned and actual computerization is measured by the filled part of each silos and it is defined by a qualitative assessment, e.g. by interviewing managers and comparative analysis of best practices. The degree of computerization shown in the graph reflects a realistic early stage of IT. 27

28 Review questions What is the purpose of support, primary processes, and management BPs? Explain the theoretical foundations of OFE (Overall Framework for the Enterprise) Describe support BPs Describe HR management Explain IT services Business Processes Describe management BPs Describe Anthony s map Describe the decision perspective Describe primary BPs and Nolan s and Blumenthals frameworks 28