BUSINESS ARCHITECTURE (BA) Organization Structure

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1 BUSINESS ARCHITECTURE (BA) Organization Structure The organization chart Organization manual BP and organization structure Exercises Review questions

2 Organization Structure A BP may cross multiple organizations, and, in turn, an organization may be involved in multiple BPs. Organization may be described from a static or dynamic perspective Organizational dynamics describes the behavior of organizations under certain conditions, as change; this field is typical of social sciences Organization structure describes the static aspect. This field is typical of business sciences and management culture. A structure description is Organization Chart. Organization Chart is integrated by Organization Manual that describes details

conditions, as change; this field is typical of social sciences Organization structure describes the static aspect.

3 Organization Chart: first level (example) President & Chief Executive Officer (CEO) External Relations Legal & Security Internal Audit Human Resources Vice President Research & Development Vice President Production Vice President Sales (US) Vice President International Operations Vice President Finance Vice President Marketing

President Research & Development Vice President Production Vice President Sales

4 Organization Chart: organization levels (example) Regional Accounting VP Sales Region (8 regions in US) Branch (6-10 in a Region) Sales Support Sales Installations New Installations Service Regional Operations Repair Maintenance Level 1 (VP) Level 2 (Director) Level 3 (Manager) Level 4 Supervisor / Employee Level 5 Foreman/ Employee

Installations New Installations Service Regional Operations Repair Maintenance

5 Organization Chart: comments Vice President Research & Development VP Sales Vice President Production Region (8 regions in US) External Relations Internal Audit Vice President Sales (US) President & Chief Executive Officer (CEO) Branch (6-10 in a Region) Regional Operations Legal & Security Human Resources Vice President International Operations Vice President Finance Regional Accounting Sales Support Sales Installations Repair Vice President Marketing New Installations Service The chart defines the responsibility of each organization unit. President has the authority to decide the objectives of all Vice Presidents (VP). At a lower level, each VP plans and controls the objectives of organizational units that report to him or her. E.g. The VP of Sales plans and controls operations of the Regions that report to him, and each Region in turn plans and controls the actions of the operations and branches that report to the Region. Each first tier unit is further divided in smaller units, and the breakdown may include up to 5 levels, depending on the size and complexity of the units. Sales division is broken down in Regions, each in charge of an area (e.g. New York City, East Coast, etc.). Each Region includes staff (Regional Accounting, Sales Support), technicians and engineers in charge of installing, maintaining and repairing elevators, and local branches, with a small team of salesmen, in charge, respectively, of selling installations or service to installed elevators. Assuming that each region has an 8 branches, branches would be around 50. Maintenance 5

Support Sales Installations Repair Vice President Marketing New Installations Service The chart defines the responsibility of each organization unit.

6 Organization Manual Organization charts are often integrated by text comments, that state objectives, tasks, responsibility, authority of each organizational unit. Objectives define what the organizational unit (and its manager) should obtain. Tasks are the activities the unit should perform and ideally coincide with the activities of the business processes the unit is involved in. Responsibility is given by the results the unit is accountable for; e.g. a factory is responsible for the quality of products. Authority are the areas where the unit can decide. E.g. a factory manager is responsible for the quality but has no authority to decide on quality standards. The set of these descriptions make an organizational manual, that are also partially incorporated in ISO 9000 quality requirements. Organization Chart Organization Manual Objectives Authority Description of each organization unit / position Responsibility Tasks 6

Tasks are the activities the unit should perform and ideally coincide with the activities of the business processes the unit is involved in.

7 Forms of Organization Structure The structure of any large organization has to deal with diverse coordination dimensions: Geography, where departments are grouped by region, typical of banks, railways, post office etc. Function, where departments are grouped by competence, that are typical of small companies Product or Customer, where departments are grouped by the customers they serve or the product they deliver Program or Projects, where departments are grouped by projects they are working on Traditionally structures are classified in three main categories Step 1 Functional Step 2 Divisional Step 3 Matrix 7

Function, where departments are grouped by competence, that are typical of small companies Product or Customer, where departments are grouped by the

8 Functional structure: Railways (early times) CEO Staff Regional Operations Personnel Accounting Traffic Equipment Transport Region 1 Region Region n Functional structures have been historically the earliest organization form Railways in late Eighteen Hundred engineered a functional structure with central departments and a series of identical geographic structures The pure functional structure is rather rigid and hardly supports cross organizational BPs Personnel Accounting Traffic Equipment Transport Personnel Accounting Traffic Equipment Transport Personnel Accounting Traffic Equipment Transport 8

central departments and a series of identical geographic structures The pure functional structure is rather rigid and hardly supports cross

9 Divisional structure: Automotive Enterprise Divisional structures were born with large manufacturers In the example Divisions reflect the product life cycle from the design down to the service; each Division cover a phase of product life cycle The divisional structure is rather resilient structure and supports cross functional BPs R&D Division Design Test Lab Product Division A Personnel Legal, Audit etc. Marketing Product dev CEO Product Division B Finance IT Marketing Product dev Production Division Production Staff Plant A Plant B Plant C Sales & Service Div. USA & Canada EU FE (PRC, Japan etc.) Other Countries 9

supports cross functional BPs R&D Division Design Test Lab Product Division A Personnel Legal, Audit etc.

10 Complex Structures: Aerospace CEO Complex structures were born with high technology programs Typically the vendor is a systems integrator that assembles subsystems made by a variety of suppliers In the example Divisions reflect the breakdown of the program in work packages The program structure is resilient and supports cross enterprise BPs R&D Division Design Test Lab Program XXX QA Wings Personnel Legal, Audit etc. Program YYY QA Wings Finance IT Production Division Production Staff Plant A Sales Air Carriers Government and Military Service Spare part Central serviice Fuselage Fuselage Plant B Systems Systems Plant C Cockpit Cockpit Engine Engine Assembly & Test Assembly & Test 10

R&D Division Design Test Lab Program XXX QA Wings Personnel Legal, Audit etc.

11 Milan Municipality (2007) 11

12 The assembly line of Boeing 787 Source: The Boeing company: The Mooshine Shop, HBS,

13 Work packages in 787 programs Source: Boeing 787: The Dreamliner (B) 13

14 Organization Structure versus Business Processes A many-to-many relation occurs between BP and Organization Structure. Accordingly a BP may be Functional: segregated within the boundaries of an individual organization unit (it seldom happens) Cross-functional: across multiple units of the same organization Cross-organizational: across multiple organizations 14

Accordingly a BP may be Functional: segregated within the boundaries of an individual

15 Functional BP: example Corporate Dpts Info request Finance Dpt Gather data Publish report Report Analyze data 15

16 Cross-functional BP : example Corporate Dpts Production Planning Gather data Materials Mngt Expedite Plant Production request Production deliver y Execute 16

17 Cross-organizational BP: example Information Track Order Deliver Books Book request Order Books Control Credit Pick Books Book delivery Front-end Credit Organization Bookshop Courier 17

18 Review questions What is an organization structure? What is an organization chart? What is the content of an organization manual? What is the relation between organization structure and business processes? Describe: A functional BP A cross functional BP A cross organizations BP

19 Exercises Sketch and comment organization charts

20 Exercise 1: organization structure of UNIPV 20

21 Exercise 2: organization structure of MIT 21

22 Exercise 3: organization structure of IBM 22

BUSINESS ARCHITECTURE

TABLE OF CONTENTS BUSINESS ARCHITECTURE 1 Introduction... 6 2 Learning objectives... 6 3 An overview of Business Architecture... 6 3.1 Business model... 7 3.1.1 Business model definition... 7 3.1.2 Business