MODULE 4 -

ORGANIZATION/ Dr. Tuan Truong

BUSINESS AND
PROCESS
 CONTENTS
Organization structure
Value chain model and Supply chain operation references (SCOR)
Business process architecture (BPA)
Process Identification
 WHY DO WE
NEED TO STUDY
ABOUT
ORGANIZATION
STRUCTURE AND
ARCHITECTURE
IN THIS CLASS?
 TWO TYPE OF
ORGANIZATIONAL Centralize vs decentralize

STRUCTURE
ORGANIZATION STRUCTURE –
HIERARCHY
An organizational structure is
a system that outlines how
certain activities are directed
in order to achieve the goals of
an organization. These
activities can include rules,
roles, and responsibilities. The
organizational structure also
determines how information
flows between levels within
the company.

Hierarchy structure
MATRIX STRUCTURE
In a Matrix organizational
structure, the reporting
relationships are set up as a
grid, or matrix, rather than in
the traditional hierarchy. It is a
type of organizational
management in which people
with similar skills are pooled
for work assignments,
resulting in more than one
manager to report to
FLAT STRUCTURE

This is an organizational chart type

mostly adopted by small companies
and start-ups in their early stage. It’s
almost impossible to use this model
for larger companies with many
projects and employees
NETWORK STRUCTURE

Network organizational
structure helps visualize
both internal and
external relationships
between managers and
top-level management.
DIVISIONAL STRUCTURE

Within a divisional types of

organizational charts has its
own division which
corresponds to either
products or geographies.
Each division contains the
necessary resources and
functions needed to support
the product line and
geography.
LINE STRUCTURE
Line organizational structure is one of
the simplest types of organizational
structures. Its authority flows from top
to bottom. Unlike other structures,
specialized and supportive services do
not take place in these organizations.

LINE-STAFF
STRUCTURE
FUNCTIONAL
STRUCTURE
TEAM-BASED
STRUCTURE

Team-based organizational structures are made of teams working towards a common goal while working on their individual tasks. They are
less hierarchical and they have flexible structures that reinforce problem-solving, decision-making and teamwork.
 MINI PROJECT– STAGE
1&2
This is a series assignment with 4 stages and 1 explanation
document!!!
Your group is about open a store
What are the specific tasks to be accomplished by your
shop’s employees?
How many employees do you need?
Draw an organization chart based on employee tasks (incl.
management tasks). Each position on the chart will perform
specific tasks or be responsible for particular outcomes.
Should the chart resemble a pyramid, a wheel with hub
and rim, or rather a network(use structure in previous
slide)? Why?
SO, WHAT IS A
BUSINESS SYSTEM
ARCHITECTURE
is a general description of a system. It identifies
its purpose, vital functions, active elements, and
critical processes and defines the nature of the
interaction among them.
 BUSINESS SYSTEM
ARCHITECTURE
MODEL
Value chain model – Michael Porter PRO3 Model
 BUSINESS SYSTEM
ARCHITECTURE MODEL

ZACHMAN Framework
[Link]
Read more about TOGAF model enterprise-architecture-background-description-and-utility-by-john-a-zachman
 Firm as series of activities that
add value to products or
services
Highlights activities where
competitive strategies can best
be applied: Primary activities
vs. support activities
At each stage, determine how
information systems can
improve operational efficiency
and improve customer and
supplier intimacy
Utilize benchmarking,
VALUE CHAIN industry best practices

MODEL
EXAMPLE
OF VALUE
CHAIN
 ANOTHER
EXAMPLE OF
ORGANIZATI
ONAL VALUE
CHAIN
BUSINESS
ARCHITECTU
RE MODELS
Supply chain operation
reference (SCOR) model - a
three-level model. They treated
the value chain as Level 0, and
treated a given supply chain as
Level 1. They subdivided a
supply chain into four major
subprocesses: source, make,
deliver, and return.
 Process architecture is the
structural design of
general process systems.
is a visual, hierarchical
model of the processes of an
organization. It is a critical
business blueprint that
guides decision-makers and
executes strategy

PROCESS
ARCHITECTURE
EXAMPLE OF PROCESS
ARCHITECTURE
 A GUIDELINE TO CREATE BPA
Identify the scope
Identify related stakeholders
Define lifecycle processes
Organizing and
consolidating level 2
processes
 Business process scorecard
 Multiple value streams

Comprehensive list of level

1 and 2 for an organization
 EXERCISE 4.1
Pick an organization and redraw its business process architecture (using the BPA
guidelines).
 PROCESS
IDENTIFICATION
 PROCESS
CATEGORIE
S Management Processes

Core processes cover the essential value Define Vision Develop Strategy Implement Manage Risk
creation of a company, that is the Strategy
production of goods and services for which
customers pay. These include design and
development, manufacturing, marketing
and sales, delivery, after-sales, and direct Core Processes
procurement (i.e., sourcing required for the
making of products or the delivery of Manage
services). Procure Procure Market Deliver
Customer
Materials Products Products Products
Support processes enable the execution of Service
these core processes. These include
indirect procurement (i.e., sourcing of
hardware, furniture, stationery, etc.), Support Processes
human resource management, information
technology management, accounting,
financial management, and legal services. Manage
Manage Personnel Information Manage Assets
Management processes provide
directions, rules, and practices for the core
and support processes. These include
strategic planning, budgeting, compliance
and risk management, as well as investors,
suppliers, and partners management.
UNDERSTAND
PROCESS
MANAGEMENT
could be made up of four
major subprocesses: plan
work, organize work,
communicate, and control
work.
Each of these subprocesses
in turn includes a variety of
different activities.
 PROCESS ARCHITECTURE
Process architecture as defined by
British Telecom in 2005

TOP-DOWN APPROACH
The starting point is the process landscape on Level 1 that shows the value Model structure, methodology and
Meta
chains of the company. Level
modelling standards

Defines business activities

Operations Levels Process Levels Business Levels

Level 2 provides a decomposition for each business process of the value Level A Distinguishes operational customer
oriented processes from management
chains. Business Activities and strategic process

Level 3 provides a further decomposition down to sub-processes and tasks. Level B Logical
Shows groups of related business
functions and standard end-to-end
processes (e.g. Service Streams)
Process Groupings Levels
Level 1 Level C Core processes that combine together to
deliver Service Streams and other end-
Core Processes
Process to-end processes

Landscape Level D Decomposition of core processes into

detailed ‘success model’ business
(incl. Value Chains) Business Process Flows process flows

Detailed operational process flows

Level 2 Level E Physical with error conditions and product and
Operational Process Flows geographical variants (where
Business Processes Levels required).

(e.g. BPMN) Level F Further decomposition of detailed

Detailed Process Flows operational where required
Level 3+
© British Telecommunications (2005)
Sub-processes and Tasks
(e.g. BPMN)
APQC PROCESS
CLASSIFICATIO
N
Is it a process at all?
• It must be possible to identify main action, which is applied to a category of cases.
• Name is of form verb + noun.

Can the process be controlled?

• Repetitive series of events and activities to execute individually observable cases.
• Without a clear case notion, process management is not feasible.
• Also, without any sense of repetition, a group of business activities may better qualify as a project than as a
business process.

PROCESS
Is the process important enough to manage?
• There is customer who is willing to pay for outcomes,

CHECKLIS
• Organization that carries out the process would be willing to pay another party for taking over, or
• Legal, mandatory framework compels an organization to execute it.

T
Is the scope of the process not too big?
• 1:1 relation between initial event and activities.

Is the scope of the process not too small?

• Rule of thumb: there should be at least three different actors – excluding the customer – involved.
• If there are no handoffs between multiple actors or systems, there is little that can be improved using BPM
methods.
 PROCESS
RELATIONS Sequence

HIP
Sequence (horizontal relationship): Procure Procure Market Deliver
Manage
Customer
This relationship describes that there is a Materials Products Products Products
Service
logical sequence between two processes.
This means that one process provides an
output that the other process takes as an Decomposition Specialization
input

Decomposition (vertical relationship): Procure Handle Job

This relationship describes that there is a
Products Application
decomposition in which one specific
process is described in more detail in
one or more subprocesses.

Specialization: This relationship

Handle Job Handle Job
describes that there exist several variants Process Assemble
of a generic process. Variants are not Application Application
Parts Parts
only defined for different legal contexts, (Austria) (Germany)
but also for different categories of
products or services and for different
types of customers or suppliers
 PROCESS LANDSCAPE MODEL:
EXAMPLE OF VIENNA PUBLIC
TRANSPORT
Management Processes

Manage Communicate Manage Manage Manage Risks and Manage

The model of the process Enterprise in and out Processes Quality Opportunities Innovation

architecture that covers the processes

on Level 1 is known Core Processes
as the process landscape model or Manage
Contact Manage Foster
Customer
simply the process architecture for Relationship
Customer Sales Relationship

Level 1 Operate Plan and Buy Maintain Check

Vehicles Vehicles Vehicles Vehicles

Transport Plan Customer Transport Evaluate

Customer Transport Customer Transport

Provide Plan Build Maintain Evaluate

Infrastructure Infrastructure Infrastructure Infrastructure Infrastructure

Support Processes

Manage Manage Manage Manage Manage Provide Winter

Personnel Financials Information Materials Disruptions Service
EXERCISE 4.2
What are core, support, and management
processes of a university?
Clarify terminology:
• Define key terms.
• Use organizational glossary.
• Use reference models.
• Ensure that stakeholders have a consistent understanding of process landscape model.

Identify end-to-end processes:

• Those processes interface with customers and suppliers.
• Goods and services that organization provides are good starting point.
• Properties help to distinguish processes, including: Product type, Service type, Channel,
Customer type. HOW TO
For each end-to-end process, identify its sequential processes:
• Identify the internal, intermediate outcomes of end-to-end process.
• Perspectives help set boundaries: Product lifecycle, Customer relationship, Supply chain,
DEFINE
Transaction stages, Change of business objects, Separation.

For each business process, identify its major management and support processes: PROCESS
• What is required to execute the previously identified processes.
• Typical support processes are management of personnel, financials, information, and
materials.
LANDSCA
PE MODEL
• However, these can be core processes if they are integral part of business model.
• Management processes are usually generic.

Slide 35
 HOW TO DEFINE PROCESS
LANDSCAPE MODEL
Decompose and specialize business Compile process profile: Check completeness and consistency:
processes:
Processes of process landscape should be further subdivided into abstract process on Level 2. Each of the identified processes should be described using process profile. Reference models can be used to check whether all major processes are included.
Further subdivision until processes can be managed autonomously by single process owner. Process profile supports definition of boundaries, vision performance indicators, resources, etc. Reference models can help to check consistency of terminology.
Considerations when this subdivision should stop: Manageability and Impact. Check whether all processes can be associated with functional units of organization chart and vice versa.

Slide 36
 Name of Process: Procure-to-Pay

PROCESS PROFILE Vision: The objective of the procurement process is to secure that the
entire range of external products and services becomes available on time
OF BUILDIT‘S and is at the required level of quality.

PROCURE-TO-PAY Process Owner: Chief Financial Officer (CFO)

PROCESS Customer of process:

 Requesting unit
Expectation of customer:
 Timely, economic and complete
provision

Outcome: Delivered products or provided services for the requested unit

Trigger: Need is identified

First activity: Submit Request

͙ ..
Last activity: Create Purchase Order
Interfaces inbound: Plan-to-Procure
Interfaces outbound: Construct-to-Complete

Required resources:
 Human resources:
Site Engineer, Clerk, Works Engineer
 Information, documents, know-how:
procurement guidelines, supplier rating, framework contract
 Work environment, materials, infrastructure:
Procurement information system

Process Performance Measures:

 Cycle Time
 Operational Costs
 Error Rate
Slide 37
EXAMPLE OF PROCESS MAP
Management Processes

Develop Vision Develop and Manage Business Market and Sell

and Strategy Manage Services Capabilities Services

Core Processes

Contract
Demand-to-Selection Selection-to-Bid Approval-to-Contract
Acquisition

Contract
Contract-to-Plan Plan-to-Completion Completion-to-Expiry
Execution

Support Processes

Manage Human Manage Financial Manage Risk and Manage External

Capital Manage IT Resources Manage Assets Compliance Relationships

Slide 38
EXAMPLE OF SAP PROCESS
MAP
Management Processes

ManageDefine, Operationalize, and Track Strategy Sales, Franchise, and Partner Management
Manage
Enterprise Innovation

Core Processes

Innovate Sell Deliver

Support Processes

Workplace and Corporate Finance Shareholder and

Procure to Pay
Attract, Develop, and Infrastructure and Operational Stakeholder
Retain Workforce Provision Compliance Management

Slide 39
Strategic Importance:

• Find out which processes have the greatest impact on the strategic goals.

PROCESS SELECTION
• Consider profitability, uniqueness, or contribution to competitive advantages.
• Select those processes for process management that relate to strategy.

CRITERIA
Health:

• Determine which processes are in deepest trouble.

• These processes may profit the most from BPM initiatives.

Feasibility:

• Determine how susceptible process is to BPM initiatives, incidentally or continuously.

• Culture and politics may be obstacles.
• BPM should focus on those processes where it is reasonable to achieve benefits.

Slide 40
PROCESS PORTFOLIO
High Selection Focus Feasibility
Loan Rating
Contract
Controlling Prepatation Low
Loan
Decision
Loan Market
Medium
Evaluation
Importance

Handling
High
Payments

Loan
Loan Planning
Application
Low

Poor Health Good

Slide 41
 Example
A restaurant has recently lost many customers due to poor
customer service. The management team has decided to
address this issue first of all by focusing on the delivery of
meals. The team gathered data by asking customers about
IDENTIFY how quickly they liked to receive their meals and what they
considered as an acceptable wait. The data suggested that half
PROCESS of the customers would prefer their meals to be served in 15
min or less. All customers agreed that a waiting time of 30
MEASURE min or more is unacceptable.

MENTS
 PROCESS PERFORMANCE
MEASURES Performance Objectives
Performance Measurments
Formulate performance objectives of the process at a high level, in
Time the form of a desirable state that the process should ideally reach,
e.g., customers should be served in less than 30 minutes.
Cost For each performance objective, identify the relevant performance
Quality dimension(s) and aggregation function(s), and from there, define
one or more performance measures for the objective in question,
Flexibility e.g., the percentage of customers served in less than 30 minutes. Let
us call this measure ST(30).
Define a more refined objective based on this performance
measure, such as
ST(30) >99%.

Slide 43
 A travel agency has recently lost several medium-sized and large corporate customers

EXERCISE due to complaints about poor customer service. The management team of the travel
agency decided to appoint a team of analysts to address this problem. The team gathered
data by conducting interviews and surveys with current and past corporate customers

4.3 - and also by gathering customer feedback data that the travel agency has recorded over
time. About 2% of customers complained about errors that had been made in their
bookings. In one occasion, a customer had requested a change to a flight booking. The

WHICH
travel agent wrote an email to the customer suggesting that the change had been made
and attached a modified travel itinerary. However, it later turned out that the modified
booking had not been confirmed in the flight reservation system. As a result, the

PROCESS
customer was not allowed to board the flight and this led to a series of severe
inconveniences for the customer. Similar problems had occurred when booking a flight
initially: the customer had asked for certain dates, but the flight tickets had been issued
for different dates. Additionally, customers complained of the long times it took to get

SHOULD responses to their requests for quotes and itineraries. In most cases, employees of the
travel agency replied to requests for quotes within 2–4 working hours, but in the case of
some complicated itinerary requests (about 10% of the requests), it took them up to 2

BE days. Finally, about 5% of customers also complained that the travel agents did not find
the best flight connections and prices for them. These customers essentially stated that
they had found better itineraries and prices on the Web by searching by themselves.

IMPROVED Answering the following question:

?
1. Which business processes should the travel agency select for improvement?

2. For each of the business processes you identified above, indicate which performance
measure the travel agency should improve
BALANCED
SCORECAR
DS WITH
CASCADIN
G
PROCESS
PERFORMA
NCE
MEASURES
Slide 45