To address the inter-relationship about organization structure, process, activities and information and how process management can improve the productivity.
www.mtech.com.hk
3. MTECH Consulting Services 2013
The Organization as a System
Business Environment
Geopolitical Regulatory / Legal Economy Natural Environment Culture
Resources
Capital
Market
Labor
Market
Suppliers
Technology
Provider
Financial
Stakeholders
Market
Management System
Competition
Products / Services
Customers
Customer orders, requirements and feedback
Return
Investment
Products
/Services
Capital
Human
Resources
Materials
Equipment
Technology
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Management
The Value Machine
$
$
$ $
$
$ $
$
$ $
Resources
Working System
Financial
Stakeholders
$$
Customer
s
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Level 1 – Enterprise / Business
Business Environment
Geopolitical Regulatory / Legal Economy Natural Environment Culture
Resources
Capital
Market
Labor
Market
Suppliers
Technology
Provider
Financial
Stakeholders
Management System
Market
Competition
Products / Services
Customers
Customer orders, requirements and feedback
Management System
Value Creation System
Return
Investment
Products
/Services
Capital
Human
Resources
Materials
Equipment
Technology
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Level 2 – Value Chain System
Product /
Service
Designed
Product /
Service Built
Product /
Service
Delivered
Product
/ Service
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Level 3 / 4 / 5 Processing Sub-system
Built DeliveredDesigned
Product /
Service
Portfolio
Managed
Product /
Service
Designed
Product /
Service
Production
planning
Product /
Service
Produced
& QC
Product /
Service
Shipped &
Invoiced
Product /
Service
Support
Open
Project
Engineer
Assigned
and
Scheduled
Product /
Service
Designed
Design
Review
Engineer Assigned and Scheduled
• Engineering Estimated
•Resources Availability
•Job Assigned and Scheduled
•Detail Job Plan Developed
•Design spec reviewed
•Required knowledge
needed
•Engineering hours
estimated
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Level 3
Processing
Sub-
System
Level 4
Process
Level 5
Sub-process / Task /
Sub-task
Level 2
Value
Creation
System
Level 1
Enterprise
/ Business
9. MTECH Consulting Services 2013
Organization, System & Process
Functional units describe the flow of authority
and responsibility.
Processes are sets of activities undertaken by
employees from functional units and managed by
managers within functional units.
Process describe the flow of work
Process thinking is just a subset of systems
thinking.
System thinking puts the emphasis on understanding the
organization as a whole.
Process thinking stresses thinking about the portion of
system that produces a specific set of results.
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Comparison of Functional and Process Measure
Department or
function
Typical departmental
measures
Typical process measures
Sales
department
Cost of sales
Revenue ($)
Timely and accurate submission of orders
Timely and accurate entry of new orders
Cost of processing orders
Production
department
Cost of inventory
Cost of labor
Cost of materials
Cost of shipping
Timely order scheduling
Timely and accurate production of orders
Timely shipment of orders
Cost of unit production and shipping costs
Finance
department
Percent of bad debt
Mean labor budget
Timely and accurate invoice preparation
Timely and accurate credit checks for new
accounts
Cost of processing an invoice
External
organizational
measures
Gross revenue
Cost of sales
Growth of customer base
Price of stock
Percent of on-time delivery
Percent of rejects
Customer satisfaction as measured on survey
or index
11. MTECH Consulting Services 2013
Business Process Terms
A collection of interrelated work tasks,
initiated in response to an event, that
achieves a specific result for the customer
of the process.
A process delivers a result to a customer.
Importance:
Result > Customer > Event > Work Tasks
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…that achieves a specific result…
The result must be individually identifiable
and countable.
A good process name clearly indicates the
result or end state of the process.
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Immature organizations
Significant differences in process
Reactionary and crisis-oriented
Quality compromised to meet unrealistic
budgets and schedules
Dependent on individual effort
Unpredictable quality in the product
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Mature organizations
Organizational commitment to process
Roles and responsibilities well defined
Significant management of the process
Quality continually monitored
Realistic budgets and schedules
Continuous innovation to avoid
bureaucracy
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Levels of Process Maturity
Level 1: Ad Hoc
Level 2: Rudimentary
Level 3: Organized and Repeatable
Level 4: Managed and Sustainable
Level 5: Optimizing
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Level 0: Oblivious
Anyone can write;
anyone can teach
Accuracy is all we
need
No one reads the
manuals anyway
They’ll learn it on
the job
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Level 1: Ad Hoc
Writers and
trainers manage
their own work
Style standards are
not enforced
Standard process
is not followed
Technical experts
are in control
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Level 2: Rudimentary
Management in
place
Style standards
begun
Process standards
begun
When the going
gets rough,
standards are
abandoned
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Level 3: Organized and Repeatable
Projects are
managed
Standards and
processes are
followed
New designs are
introduced
Time is available
for improvement
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Level 4: Managed and Sustainable
Processes are always
followed and improved
upon
Innovation is closely
linked to customer needs
Time is available for
quality
Bureaucracy is defeated
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Level 5: Optimizing
A continually
improving
organization
Quality
measurements are in
place
Innovations are part
of the process
Everyone is on the
team
#1
23. MTECH Consulting Services 2013
Organizations with a mature mastery of
their processes
The process is ad hoc. Few
activities are explicitly defined
and success depends on
individual effort and heroics.
Organizations at this level routinely expect managers
and employees to work together to improve process.
They understand their processes well enough that they
can conduct systematic experiments to determine if
changes will be useful or not
Only a few organizations have an organization-wide
understanding of how processes relate and have
their corporate strategies and goals aligned, via the
management hierarchy, to specific process
activities
Most organizations are between levels 2 and 3.
They have processes documented and
standardized, but in many cases management’s
goals are only loosely linked to process goals.
Continuous process
improvement is enabled by
quantitative feedback for the
process and from piloting
innovative new ideas and
technologies.
Detail measure of the process
and product quality are collected.
Both the process and products
are quantitatively understood and
controlled
Basic project management
processes are established to
track cost, schedule, and
functionality. The necessary
discipline is in place to repeat
earlier successes.
The process for both
management and engineering is
documented, standardized, and
integrated by an organization
methodology.
As organizations become more mature they
begin to conceptualize business processes
and seek to organize them, repeat
successes, and measure results
Entrepreneurial organizations and new
divisions do things any way they can to
get started.
Organizations with an immature mastery of their processes
Figure 1.4 The five levels of SEl’s Capability Maturity Model (CMM)
1. Initial
5. Optimizing
4. Managed
3. Defined
2. Repeatable
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Drivers of CMM
Manager monitor the quality of products and process
that produce them.
Schedules and budgets are based on historical
performance and are realistic
The mature organization follows a disciplined process
consistently because all the participants understand
the value of doing so, and the necessary
infrastructure exists to support the process.
To structure processes and activities to guarantee
that employees would function effectively.
The only way to overcome those interdepartmental
problems is to conceptualize and manage processes
as wholes.
When the ball is hit, every player reacts in a discipline
manner.
25. MTECH Consulting Services 2013
Performance Framework
Goals and
measures
Design and
implementation
Management
Organizational
level
Organizational
goals and measures
of organizational
success
Organizational design
and implementation
Organizational
management
Process level
Process goals and
measures of
process success
Process design and
implementation
Process
management
Activity or
performance
level
Activity goals and
measures of activity
success
Activity design and
implementation
Activity
management
26. MTECH Consulting Services 2013
Levels of System / Process Analysis
Competition
Social and Regulatory Environment
Resources
CustomersandMarket
Management
Engineering Production Finance Marketing Sales &
Support
An Organization
Functions or
Groups inside a
Department
Level 1. The Organization and Its
Environment
Level 1 begins with a supersystem
view that includes the external
environment and then zeros in on the
functions within the organization.
Level 2. Value Chains Process and
Subprocesses
Level 2 begins with the value chains
and core business processes and then
zeros in on processes and
subprocesses. The lowest level
process we analyze is an activity.
Level 3. Activities and
Performance
Level 3 begins with the activities and
divides them into roles performed by
employees, software components,
and activities that combine people
and software systems.
Activity
Subprocess
Value Chain or Core Business Process
Process
27. MTECH Consulting Services 2013
Function vs Process
Management
Engineering Production Finance Marketing Sales &
Support
An Organization
Functions or
Groups inside a
Department
•Function
•A Function is a kind of work, or
a field, which typically involves
similar skills and tools, and has
its own languages.
•Work method will be defined for
the benefit of the individual
function, not to optimize the
manner in which work flows
through the functions.
Level
1
Level
2
Level
N
Processes
•Process
•A collection of interrelated work
tasks, initiated in response to an
event, that achieves a specific
result for the customer of the
process.
•A process delivers a result to a
customer.
•Importance: Result > Customer
> Event > Work Tasks
28. MTECH Consulting Services 2013
Process / Workflow Management
Innovation Selection Detail Design
Concept
Business
Cases
Study
Mechanical
Engineering
Market
Informatio
n
Financial
Information
Product
performance
Information
ProcessActivitiesInformation
ChallengeofBestPractices:
Coordination,Corporation,Co-decision,
Synchronization&Optimization
People
29. MTECH Consulting Services 2013
A Process Supported By Six Enablers
Process
Enabler:
workflow
design
Enabler:
information
technology
Enabler:
collaboration
culture
Enabler:
human
resources
Enabler:
policies &
rules
Enabler:
facilities
and
others
A. Sharp, P. Mcdermott (2000),”Workflow
Modeling”, Atech House., pp.34, Fig.3.1.
30. MTECH Consulting Services 2013
Factors Affecting the Performance of
an Activity
Activity Consequences
Input Output
Feedback
2. Activity Support
•Can the performer easily recognize
the input requiring action?
•Can the activity be done without
interference from other activities?
•Are adequate resources available
for performance (time, tools, staff,
information)?
1. Activity Standards
•Do activity standard exist?
•Does the performer know the desire output
and standards?
•Do performers consider the standard
attainable?
3. Skill, Knowledge and Capability
•Do the performers have the necessary
skills and knowledge to perform?
•Do the performers know why desired
performance is important?
•Are the performers physically, mentally,
and emotionally able to perform?
4. Feedback
•Do performers receive information
about their performance
•Is the information they receive
•Relevant?
•Accurate?
•Timely?
•Specific?
•Easy to understand?
5. Consequences
•Are consequences aligned to
support the desired performance?
•Are consequences meaningful
from the performer’s
perspective?
•Are consequences timely?
Figure 6.4 Factors affecting the performance
of an activity. (Modified after Rummler and
Brache, Improving Performance)
31. MTECH Consulting Services 2013
A Closer look at a Manager’s Job
Job Functions of Manager Responsible for the Process
Plan Process
Set goals and expectations
Establish plans and budget
Provide resources and staff
Implement process
PROCESS EXECUTED
Control Process
Monitor process
Reinforce success
Diagnose deviations
Take necessary corrective actions
Changes in Goads and Plans
Goals/ Measures
Expectations, Plans,
and Resources
Feedback Data about
results
Process
Output
Measures
①
Inputs Results
32. MTECH Consulting Services 2013
Managing and Measuring Business
Process (Example: Sales)
Organization
Output
Department
Output
Business
process
Outputs
Process
Outputs
Subprocess
Outputs
Task
Outputs
Activity
Outputs
Organizati
onalLevel
Whose
concern
CEO
VP of sales
Sales Manager
Software systems
designer
Human
Resource
Measures
forSales
Profits
Sales
Revenue
Customer
Order
1. Leads qualified
2. Appointment obtained
3. Opportunities identified
4. Proposal requested
5. Proposal submitted
1. Information gathered
2. Needs identified
3. Decision makers identified
4. Constraints identified
5. Credibility established
1. Relevant data sources
identified
2. Interviews scheduled
3. Interviews conducted
4. Conclusion reached and
recorded
1. Interview objectives established
2. Questions asked
3. Examples collected
4. Points restated and qualified
5. Interviewee reinforced for
talking
6. State how interview was helpful
7. Repeat how data will be used
8. Interviewee thanked
33. MTECH Consulting Services 2013
Performance Matrix
Goals and measures Design and implementation Management
Organizational goals and measures
of organizational success
Has the organization’s strategy / direction
been articulated and communicated?
Does this strategy make sense, in terms
of the external threats and opportunities
and the internal strengths and weaknesses?
Given this strategy, have the required
outputs of the organization and the level of
performance expected from each output
been determined and communicated?
Organizational design and
implementation
Are all relevant departments and value chains
described in a process architecture?
Are all departments and processes necessary?
Is the current flow of inputs and outputs
between departments, value chains, and key
processes appropriate?
Does the formal organization structure
support the strategy and enhance the
efficiency of the system?
Organizational management
Have appropriate department goals been
set?
Is relevant performance measured?
Are resources appropriately allocated?
Are the interfaces between departments
being managed?
Process goals and measures of
process success
Are goals for key value chains, processes,
and subprocesses linked to each other and
to customer / organization goals?
Process design and implementation
Are value chains and business processes
decomposed into logical and efficient
processes and subprocesses?
Are these the most efficient and effective
value chain, process or subprocess for
accomplishing the goals assigned?
Process management
Have appropriate process subgoals been
set?
Is process performance managed?
Are sufficient resources allocated to each
process?
Are the interfaces between subprocesses
and activities being managed?
Activity goals and measures of
activity success
Are activity outputs and standards linked
to process requirement (Which are in turn
linked to customer and organization
requirements?)
Activity design and implementation
Are activity requirements reflected in system
or job descriptions of people assigned to the
activity?
Are activity steps in a logical sequence? Have
superlative policies and procedures been
developed?
Is the activity environment ergonomically
sound?
Activity management
Do the performers understand the activity
outputs and standards they are expected to
meet?
Do performers have resources, clear signal,
priorities, and a logical job design?
Do performers have the skill / knowledge t
meet goals ?
Do performers know if they are meeting
goals?
Are performers rewarded for achieving
activity goals?
OrganizationallevelProcesslevelActivitylevel
34. MTECH Consulting Services 2013
Activity
definition
Store all
descriptions in
repository
Create diagrams on computer
Figure 17.1 Key features of business process modeling tools
Subprocesses can be
defined for each process, etc.
Define, control & measure
each process, activity, and
relationship
Activity Description
Activity input
Activity output
Employees involved
Units per hour
Cost per hour
Defect per hour
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A Professional BP Modeling Tool
35. MTECH Consulting Services 2013
•Can the process be effectively and
efficiently performed?
•Can the process be effectively
managed?
•Does the design of the process offer
the potential for a competitive
advantage?
36. MTECH Consulting Services 2013 36……
Where is the
work space?
How does the
work flow?
When is the
deadline?
Question – Engineering Change Order
How can I know
other opinion?
What is the actual
happening?
What is the required
task?
Start
End
What is the supporting
document?