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
The BP map in organizations
Porter’s value chain
An overall enterprise framework (OFE)
Porter’s value chain (1985)
Firm Infrastructure
Human Resource Management
Technology Development
Service
Marketing &
Sales
Outbound
Logistics
Operations
Inbound
Logistics
Procurement
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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
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An overall enterprise framework (OFE) *
•
•
– Management BP : Organization
Governance
– Primary BP: Value Creation
– Support BP : Services to the
Organization
BUSINESS
PROCESSES
•
MANAGEM
ENT
PRIMARY
Integrates and extends Porter’s Value
Chain
Identifies three overall BP classes
SUPPORT
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, 2009
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The overall enterprise framework (OFE)
BUSINESS PROCESSES
MANAGEMENT
STRATEGIC
PLANNING
PRIMARY
MANUFACTURING
MANAGEMENT
CONTROL
SUPPORT
LEGAL & BUSINESS
ACCOUNTING
HUMAN RESOURCES
MANAGEMENT
DEVELOP PRODUCTS
OPERATIONS
CONTROL
IT SERVICES
SOURCE MATERIALS
PLANT MAINTENANCE
MAKE PRODUCTS
PUBLIC RELATIONS
SELL & DELIVER
PRODUCTS
INTERNATIONAL
RELATIONS
SERVICE PRODUCTS
AFTER SALE
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The overall enterprise framework (OFE) :
primary BP change across industries
GOVERNMENT
PRIMARY BP
MANUFACTURING
PRIMARY BP
TELECOMMUNICATIONS 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
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The map of enterprise support processes
Accounting
Human Resources
IT services
Hierarchy of enterprise support processes
Support processes
Accounting
Human
Resources
IT Services
Primary Ledgers
Human Resources
Planning
IT Planning
Management
Accounting
Human Resources
Management
Demand Management
Legal Accounting
Human Resources
Administration
Projects
Industrial Relations
Other Services
Other
Processes
Operations
Performance
Management
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Accounting (summary)
•
•
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:
Primary Ledgers
Management
Accounting
Legal Accounting
•
•
•
•
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”).
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Human Resources (summary)
Human
Resources
Human Resources
Planning
•
•
–
–
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
–
–
–
–
–
Human Resources
Management
Human Resources
Administration
Planning : quantitative and qualitative staffing requirements.
Management
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.:
Industrial Relations
–
Other Services
–
–
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.)
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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
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The map of enterprise management
processes
Anthony’s pyramid
The decision perspective
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.
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Interaction between control and
execution flow (information or
commands)
Activity sequence
The management control cycle
CONTROL
Define
(define
objectives)
Appraise
Adjust
(monitor
performances;
review &
analyze results)
(plan
adjustments;
execute
adjustments)
EXECUTION
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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
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The management control cycle:
a calendar of control process
Dec
Gap
Analysis
Gap
Analysis
Gap
Analysis
Gap
Analysis
Gap
Analysis
Adjustments
Adjustments
Adjustments
Gap
Analysis
Gap
Analysis
Gap
Analysis
Adjustments
Adjustments
Adjustments
Adjustments
Gap
Analysis
Gap
Analysis
Revised Budget
Gap
Analysis
Approved budget
Preliminary
budget
Adjustments
Adjustments
Gap
Analysis
Adjustments
Nov
Final Budget
Oct
Jul
Mar
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Business analysis & service design - 2011-12 - Gianmario Motta
Sep
Jun
Aug
May
Feb
Apr
Jan
Dec
Nov
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).
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Management processes and information
INFORMATION
PROFILE
MANAGEMENT LAYERS
OPERATIONS
MANAGEMENT
STRATEGIC
CONTROL
CONTROL
PLANNING
Detail
Structure
Frequency
Granular data
Predefined
Continuous
Source
Internal
Summarized data
Predefined
Periodical (e.g.
monthly)
Mainly Internal
Variable
Variable
Variable
Mainly External
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The decision perspective
Decision structure
degree
Structured
Semi-structured
Unstructured
Management layer
Operations Control
Management
Strategic Planning
Control
Stock replenishment Budget of customer Plant localization
care
Securities trading
Budget of sales
Project financing
Select newspaper
Select managers
R& D strategy
heading
• 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.
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Decision perspective :
decisions and computers
•
Limited decision
computerization
(e.g.: ship
building)
Intensive
decision
comput erizat ion
(e.g.: inventory
replenishment )
Marginal t o null
computerization
(e.g. t o style a
product)
Marginal
information
comput erizat ion
(e.g. to hire a
manager)
•
ITC development
I nf or m at ion st r uct ure
High
Low
Decision st ruct ure
High
Low
•
•
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.
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The map of enterprise primary processes
Introduction
Blumenthal
Nolan
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
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Blumenthal
Operations
Control
Finished
Products
Raw Materials
Finance
(Money)
Equipment
Personnel
Procurement
Sales
Installation
Payables/
Receivables
Hiring
Inbound
Logistics
Outbound
Logistics
Operation
Legal
Accounting
Training and
Education
Production
….
Maintenance
Management
Accounting
…..
….
…..
…..
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Blumenthal
Operations
Control
Finished
Products
Raw Materials
Finance
(Money)
Equipment
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
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Nolan’s applications portfolio
Strategic Planning
Management Control
Payroll
Human Resources Management
Receivables
Payables
General Ledger
Equipment Maintenance
After Sales Service
Distribution & Outbound Logistics
Sales & Marketing
Production Planning
Materials Management
Procurement & Purchasing
Product Development
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Nolan’s applications portfolio
•
•
Strategic Planning
Management Control
Payroll
Human Resources Management
Receivables
Payables
General Ledger
Equipment Maintenance
After Sales Service
Distribution & Outbound Logistics
Sales & Marketing
Production Planning
Materials Management
Product Development
Procurement & Purchasing
•
•
•
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.
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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
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