Business Agility Business Agility using using

Process FrameworksProcess FrameworksHerbert HeinzelHerbert HeinzelVice Chairman Value Chain GroupVice Chairman Value Chain GroupHH22O GmbHO GmbH

Overview

• Review our Primary Reference Model, VRM• What are the Business Needs for use of a Value Chain

Reference Model?• What have we learned so far?• How can VCOR be used?• Vision for Business Frameworks

VRM Value Proposition• Our VCG strategic imperative is to create an industry open standard

reference model for the value chain that gains wide acceptance and adoption.

– Coverage of all business domains and inter-company Collaboration– Support the ongoing evolution of business– Value Chain versus technology focus when introducing a new product to

the market or building a new supply chain

What the Value Chain Operations Reference (VRM) model enables:

– Integration of the three critical domains under one framework:

• Global Product Development.• Global Supply Network Integration.• Global Customer Success.

– Collaboration with a “common language, process-based”syntax and semantics.

– Global process integration.– Global “real benchmarking”– A foundation for a successful Service Oriented Architecture

game plan.

SuppliersSRM

Supply Network

Dev.

Customers

Value Collaboration

Value Collaboration

CRM Supply

Network Dev.

Business Mission & Strategy

Corporate GovernanceCore Business Processes

Support Business Processes

ProcessMang.

ProcessMang.

ProcessMang.

ProcessMang.

ProcessMang.

ProcessMang.

ProcessMang.

ProcessMang.

ProcessMang.

Market Research Develop Acquire Build Fulfill Brand Sell Support

The Enterprise Characterized by VRM

Information ManagementTechnology Development

Human Resource ManagementFinance & Accounting

Quality & Business ExcellenceSafety, Health & Environment

Strategic Level - Macro Processes

PLANOn the Strategic Level Plan is a overarching process aligning strategic objectives with tactical and execution abilities in the value chain working in a close relationship with the Strategic Level Govern and Execution Processes in the model

GOVERNOn the Strategic Level Govern is a overarching process supporting Strategic objectives and enabling the value chain to operate through rules, policies and procedures in a close relationship with the Strategic Level Plan and Execute Processes in the model.

EXECUTEThe Strategic Level Execute Process overarches all the execution processes in the model in a strategic context to support the value-adding processes related to a product or service to customer requirements. The Execute Process operates within the limits of the Management criteria from Govern and to the parameters defined by the Plan Processes Process.

The Tactical Level can be described being instituted for “Horizontal Value Chain Process Re-Engineering” encompassing all critical Business Domains

The VRM Tactical Level Processes

Market Brand

VRM enables a Systems Based ApproachGovern processes support objectives and enable the value chain to operate through rules, policies and procedures in a close relationship with the Plan and Execute Processes in the model.

Plan processes balance requirements with available resources to align objectives with tactical and execution abilities in the value chain working in a close relationship with the Govern and Execution Processes in the model

Govern Goals & Objectives

Plan

Rules, Metrics& Information

ExecuteExecuteINPUT OUTPUT

The Execute processes support value-adding related to a product or service to customer requirements. The Execute processes operate within the limits of the management criteria from Govern and to the parameters defined by the Plan processes.

VRM aligns Strategy and ICT Enablers

BUSINESS BUSINESS

STRATEGYSTRATEGY

Goals, Products, Goals, Products, CustomersCustomers

Organization of Value Chains and Organization of Value Chains and Lines of Business given priorities Lines of Business given priorities through Priority Dimensionsthrough Priority Dimensions

FillingFillingthetheGapGap

Aligned Aligned Business Business ProcessesProcesses

Frameworks and methodology forFrameworks and methodology fordefining and improving processes,defining and improving processes,subsub--processes and activitiesprocesses and activities

Measures tied to each specific Measures tied to each specific layer of processes. layer of processes.

Best Practices Tied to Each Best Practices Tied to Each Specific SubSpecific Sub--process or activityprocess or activity

IT APPLICATIONS

&

INFRASTRUCTURE

IT APPLICATIONSIT APPLICATIONS

& &

INFRASTRUCTUREINFRASTRUCTURESpecific ApplicationsSpecific ApplicationsInfrastructure OptionsInfrastructure Options

VRM Methodology Coverage

Strategic MethodologyThe ValueCard and all processes in Govern, Plan, and Execute in VCOR can be applied for gaining competitive advantage.

Tactical MethodologyThe second level of the model contains processes supporting the implementation of strategic goals through tactical decisions and configurations.

Operational MethodologyThe third level of the model establishes links between enterprise-specific activities and the value chain.

VRM Value Cards

External Partnerships Developed with the Network Value Card

Business Strategy

Internal Tactical and Operational Priorities Developed with the Enterprise Value Card

•Domain Value Cards•Tactical Configurationsand Improvements•Operational Improvements

Balanced Scorecards for Specific Domains

The need for Business Agility

• The world has changed dramatically in recent years• Organizations in the public and private sector are confronted with an

environment not seen before • New strategies, structures, and operating practices are required to

manage change and create and sustain advantage• Companies need to make faster, more informed decisions—

communicating and collaborating immediately and effectively• Companies need to better understand and serve their customers

globally – They need to seamlessly interact with suppliers and distributors– They need to seize market opportunities faster than their competitors– They need to be more efficient than ever

• Business agility can be achieved if BPM can – Accelerate new process deployment – Facilitate changes to existing processes.

Distributors & Resellers

Partner NetworkGetting More

Complex

Accelerated Quoting

Multiple Sales & Support

Channels

Reducedtime-to-market

Shorter ProductLife Cycles

Outsourced manufacturing &

fragmented inventory

Customized Solutions & Consignment

Contractors

Component SuppliersOEMs

AcceleratedTechnology

Advancement

Focus Shiftingto End

Customers

Globalization

PoliticalIntegration/

Disintegration

Regulationand Activism

NaturalResource

Availability

WildcardsLow Probability/

High Impact

Flexibility and agility to respond to changing business needs and to harness resources across global value chain partners

Industry Challenges

Increased Competition

Support / Retention

DistributedProduct Design

Strategic Alignment Links Organizational Goals and Activities

OperationalSystems

“People” Systems

Purpose

ManagementSystems

Results/Feedback

Purpose and StrategiesDrive Operational,Management and PeopleSystem Activities

Every Action Taken Is Linked to OtherRelated Senior Goalsand Actions

Business Strategy

Business ProcessesQuality Mgmt.

Performance PlansPerformance Mgmt.

SERVICEORIENTATION

Composite Apps

Federation

SOAData as Services

Apps as ServicesSOI

Legacy Legacy ContinuesContinues

New Usage and New New Usage and New Solution Architectures Solution Architectures

FlourishFlourish

Migrating to SOA is an Opportunity

StrategicStrategicInflection PointInflection Point(2005(2005--2008)2008)

Globalization, Mobility and Outsourcing Require Globalization, Mobility and Outsourcing Require Adaptive, Agile Computing & Communications Adaptive, Agile Computing & Communications ArchitecturesArchitectures

Value Streams* modeled in VRMwill help define Services

• Prospect to Customer• Order to Cash• Manufacturing to

Distribution• Request to Service• Insight to Strategy• Awareness to Prevention• Concept to Development• Initiative to Results• Forecast to Plan

• Relationship to Partnership

• Requisition to Payables• Resource Availability to

Consumption• Acquisition to

Obsolescence• Financial Close to

Reporting• Recruitment to

Retirement* Taken from Enterprise Business Architecture by Whittle and Myrick, CRC Press, 2005

Lessons Learned using VRM

• The common taxonomy minimizes risk of confusion amongst participants, especially as globalization of business continues and outsourcing practices grow

• Used as the common definition library for depicting life cycle process activities to accomplish simultaneous product and process design

• Used to consistently develop and protect intellectual property across a diverse and geographically dispersed supply base

• Used to evaluate competing suppliers using standard metrics

• Used to identify representative practices and metrics

Identifying Value Opportunities using Value Streams modeled in VRM

• This approach establish the criteria for what should or should not be considered a Service

– By leveraging the Enterprise Business Architecture to define the enterprise value streams, their relationships to all external entities and other enterprise value streams, and the events that trigger instantiation.

• Value is determined both subjectively (non-quantifiable) and objectively (quantifiable)

• Define value in context of decisions based on costs/benefits i.e. time, price, quality, innovation; show decision matrix

• Convert subjective knowledge of value into objective knowledge via data and metrics

• Value chain operations are inherent in the Extended Enterprise

• Understand the relationship between value and process

Frameworks to Enable Business Agility

Process Reference Model

Framework to Couple BPM and SOA

Federated Enterprise Reference Architecture

SOA Information Model

Business Frameworks

Value Streams

Framework for Stage-gated Processes

VC Information Model

Business Architecture

Framework to Establish Value Opportunities

Thank youThank you

Herbert HeinzelHerbert Heinzel