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BPMJ
19,6 Business process portfolio
selection in re-engineering
projects
892
Anna Darmani
Department of Financial Engineering,
Received 12 August 2011
Revised 25 October 2012 The University of Science and Culture, Tehran, Iran, and
Accepted 28 February 2013 Payam Hanafizadeh
School of Management and Accounting,
Allameh Tabataba’i University, Tehran, Iran

Abstract
Purpose – In today’s societies, work environment and customers’ expectations change on a daily
manner. Consequently, it is crucial for companies to find a way for adapting themselves to new
requirements. For this purpose, reengineering projects have been introduced and evolved in different
companies with different responsibilities over the past decades. However, the risk associated with
these projects is inevitable and is a huge obstacle on the way of their implementation. This study, in
line with previous studies, contributed in this context by proposing a new methodology for selecting
suitable processes and adopted best practices candidate for business process reengineering (BPR). The
proposed methodology aims to achieve lower risk and higher probability of success for BPR projects.
Design/methodology/approach – This objective is achieved by integration of the concept of
portfolio selection problems (PSP) into the organizational decision making concerning BPR project.
A model for selection of most appropriate reengineering scenarios, which is a combination of processes
and best practices, is adopted and proposed. This model by putting additional constraints on risks
associated with a BPR project and increasing its return identifies the most prosperous portfolio of
scenarios for a reengineering project. The proposed model is tested step-by-step through a case study
in order to validate its outcome and justify its practicality.
Findings – In this paper, a new methodology is proposed containing a model as a managerial tool for
conducting more successful reengineering projects. The applicability of the methodology is tested in one of
the largest metallurgical laboratory and research centers of Iran. Four strategic processes were selected
and several best practices customized, after screening all processes of the case study. Accordingly, in total,
15 different scenarios were explored for the reengineering project in which four of them identified by the
model as the processes with the highest possibility of success through the BPR project.
Originality/value – This methodology suggests a novel way to benefit from PSP for process selection
problems by putting additional control on implementation risk of reengineering project. While the urge of
using reengineering project exists within the current companies, the high level of risk of these projects is
considered as a huge obstacle in conducting this project. This study, by proposing a new method, aims to
address this issue as well as point to the practicality of integrating PSP model in organizational contexts.
Keywords Change management, Best practices, Optimization, Risk analysis, Reengineering risk,
Business process reengineering, Portfolio selection
Paper type Research paper

Business Process Management

Journal
Vol. 19 No. 6, 2013 The authors express their deep gratitude to Razi Metallurgical Research Center and
pp. 892-916 Ardalan Varahram for their support. Undoubtedly, implementation of this research was
q Emerald Group Publishing Limited
1463-7154
impossible without their cooperation. Also, the authors are thankful for the valuable comments
DOI 10.1108/BPMJ-08-2011-0052 of anonymous reviewers on the earlier version of this paper.
1. Introduction Business process
Customers, competition, and change have created a new world for business, such that portfolio
organizations designed to operate in one environment are inadequately equipped to
operate well in another (O’Neill and Sohal, 1999). This is what Drucker (1969) termed the selection
“Age of Discontinuity” or the challenge of the traditional assumptions of business. Since
the last decades of the twentieth century, reengineering project in the business process
has been introduced as a managerial tool of today to accomplish the effectiveness, 893
responsiveness and competition of processes (Davenport and Short, 1990; Hammer,
1990; Hammer and Champy, 1993; MacIntash, 2003; Terziovski et al., 2003). As the basis
of competition, many organizations consider business process reengineering (BPR)
project, which lead to changes from cost and quality to flexibility and responsiveness.
However, this process is an unreliable and painful and so far, most of reengineering
projects have been doomed to failure (Hammer and Champy, 1993). Roots of these
failures could be found in combination of hard and soft factors (Hanafizadeh and Osouli,
2011) that have been studied by majority of researchers (Purwadi et al., 1999; Al-Mashari
and Zairi, 2000). The purpose of most papers related to BPR has been to identify the main
uncertainty factors and the risk sources in order to suggest a solution for that
(Hanafizadeh and Osouli, 2011; Al-Mashari and Zairi, 1999). However, this study
reckoned that risk, as the possibility of deviation from the expected results, can be also
considered as an opportunity (Spaulding, 1997). Despite the number of papers probing
into the failure reasons of BPR project, there is still an issue that how and when a BPR
project becomes successful. Accordingly, the purpose of this paper is to introduce a new
methodology for constraining the risk of reengineering project by proposing a model for
selecting candidate process for reengineering, built upon a new definition for return and
risk of BPR projects.
Business process portfolio selection (BPPS), proposed in this paper, is a
methodology, which tries to impose additional control on risk of reengineering
projects with the purpose of aiding organizations to achieve their set goals. This
method provides decision makers with a tool for selecting candidate processes for
reengineering more rationally in order to cope with the subsequent challenges. The
proposed methodology will integrate the two main concepts of business process
re-engineering and portfolio selection. Portfolio selection is a known way of selecting a
group of projects and assets in a bigger group of opportunities, though its application
in the other context has been lagged behind. It is our conviction that applying portfolio
selection tool in process of reengineering could decrease the aligned risk and increase
the success chance. Concerning reengineering project, despite the available number of
techniques in the area of project portfolio selection, direct record of exploring BPPS has
not been performed.
In the following, we shall proceed as follows: In the next section the main
contribution of each two major concepts of “reengineering project” and “portfolio
selection” included in the proposed model are summed up. This primary analysis will
lead to Section 3 in which the research approach and methodology are described and
some necessary information about prior research of this study is discussed. In Section 4,
the practicality of our model is examined in a real case study carried out in
Razi Metallurgical Research Center (RMRC). The results are then discussed in Section 5
ending with the conclusion.
BPMJ 2. Literature review
19,6 2.1 Business process reengineering
BPR came into existence by Hammer (1990). He introduced the concept of reengineering
as “a radical redesign of business processes to achieve dramatic improvements on
critical measures of performance”. Davenport and Short (1990) defined BPR as analyzing
and designing work flows and processes within and between organizations. Davenport
894 (1993) changed the BPR definition to a procedure which interferes with organizational
boundaries. Talwar (1993) proposed the new definition of BPR as a procedure in which
value is created and delivered by focusing on reconsideration and concentration of
business structures, processes, methods of working, management systems and external
relationships.
Imposing change through business process improvement is recognized as one of the
first priorities of managerial approaches in 2009 (Auringer, 2009). In accordance,
advantages and drawbacks associated with process reengineering projects have been
studies through earlier studies (Al-Mashari and Zairi, 1999; Tarokh et al., 2008;
Silvestro and Westley, 2002; Hanafizadeh and Osouli, 2011) as well as improving the
change process (Zellner, 2011). It has been mentioned that several companies, such as
Ford Motor, were on the verge of collapsing before using the process reengineering
methods (Currie, 1999). Nevertheless, Hammer and Champy’s (1993) survey estimated
that approximately 70 percent of the companies could not achieve their desired results
through reengineering projects. Accordingly, the high rate of BPR failure is a
significant discouragement for undertaking them (Hammer and Champy, 1993;
Al-Mashari and Zairi, 1999). While BPR helps corporations in performing and
managing processes, it does not help with the way the aligned changes are managed.
Due to complexity and riskiness of BPR projects, many researchers devote their efforts
on recognition of the factors contributing to the success and failure of reengineering
projects, named “critical success” and “failure factors” (Currie, 1999). By far, numerous
success and failure factors have been identified (Carr and Johansson, 1995; Lee, 1995;
Tikkanen and Pölönen, 1996; Spaulding, 1997). Al-Mashari and Zairi (1999) conducted
a comprehensive research by reviewing more than a 100 related papers and classified
several hard and soft factors contributing to BPR failure and success. Following their
survey, Hanafizadeh and Osouli (2011), using factor analysis, extracted main change
factors resulting in the success or failure of reengineering project and proposed a
methodology to measure degree of change as a tool for risk assessment of BPR
projects. The aim of all these studies was to decrease the possibility of undesirable
outcome occurrence by recognizing the main roots of BPR failure.
Conspicuously, decreasing the risk of a project is not limited only to recognition of
failure reasons. However, when it comes to BPR risk assessment, the tools are very limited
specially for quantitative purposes (Crowe et al., 2002). Risk assessment was proposed by
Rowe (1977) as the process of conducting a qualitative and quantitative assessment which
had been investigated in different fields, i.e. business, biology and finance. Regarding BPR
projects, some surveys (Crowe et al., 2002; Hanafizadeh and Osouli, 2011) have proposed
tools and methods for quantitative risk assessment of BPR project, and some others
(Abdolvand et al., 2008) tried to minimize the risks of BPR implementation by measuring
readiness. Consequently, few ranges of tools have been explored so far; yet, they are
dependent on the risk’s category and context. BPR-associated risks, due to their nature,
can be categorized in three general groups of “business”, “financial” and “organization”
in which organizational risk – consisting of four dimensions of structure, Business process
culture, technology and human resource – plays a critical role in the associated risk of portfolio
BPR (Remenyi and Heafield, 1996). This classification is among the most comprehensive
ones that so far covered almost all risks of BPR projects. selection
On the other hand, the risk imposed to corporations might be due to the irrational
change scenarios developed for processes of a firm. The reference to change scenarios is to
be found in all BPR studies and based on that, many methods have been developed for 895
selecting the most suitable change scenario. Accordingly, a precise view of what is meant
by change scenario here is a necessity. In reengineering perspective, combination of a
change technique and a process would suggest a new scenario to a corporation. Each of the
developed scenarios has own remarks and risks. So far, selection and customization of the
best practices for the BPR project, on account of the high rate of their success report, are
considered among the best methods for solving the BPR setbacks (Mansar and Reijers,
2005; Reijers and Liman Mansar, 2005). Many researchers surveyed in this area and
proposed different types of the best practices according to different corporations’ strategy.
Since most public and private organizations develop a general strategic plan for their
corporation and because strategy is the main question of BPR, three strategies of cost
leadership, prompt response and differentiation are extracted and used for classifying the
best practices (Porter, 1998; Hambrick and Fredrickson, 2001). Hanafizadeh et al. (2009a)
reviewed 37 proposed best practices for redesigning processes by evaluating them in
each of the four categories of time, finance, quality and flexibility and prioritized them in
each of the three mentioned strategic groups.
The other major issue in developing change scenario is selecting the candidate
processes. Some studies indicated that corporations tend to achieve their expected
goals and results; hence, the investment should concentrate on strategic processes,
which directly lead to the achievement of corporation’s strategic goals (Hanafizadeh
and Osouli, 2011). Based on the proposed definitions, strategic processes selected from
the corporation’s processes are those that are directly involved in satisfying the
strategic goals of the corporation (Guha et al., 1993; Hanafizadeh and Moayer, 2008;
Hanafizadeh et al., 2009b). Note that these scenarios propose new approaches to the
management of processes, which, as claimed, cause radical improvements in
performance in parallel with severe changes. However, unlike the emphasis on the
benefits of aligning BPR with corporations’ goals and strategies, this does not happen
in practice and real life (Wu, 2002) which also lead to BPR risk and failure.
The model proposed in this study valuates the risk and return of each reengineering
scenario aiming at selecting a number of scenarios by adopting a portfolio selection
problem (PSP) in choosing high priority and suitable scenarios that reduce and control
the imposed risk of reengineering project. Noteworthy, even though the term of risk is
mostly considered as a negative factor in an organization, in many cases it can also be
defined as a relative concept rather than an absolute one (Spaulding, 1997). This is one of
the main arguments of this study, that is, it is not beneficial to omit the risky side of
reengineering project completely. Controlling and constraining risk of BPR is what is
reckoned to bring about more efficient results during the implementation of BPR project.

2.2 Portfolio selection

PSP was introduced by Markowitz (1952) for the first time. This problem has been
carried out on projects, securities and stocks since then with the aim of helping decision
BPMJ makers to choose the most optimal portfolio from among alternatives. The main
19,6 contribution of PSP is guaranteeing a given level of a return by limiting risk of a
portfolio and this is what motivates individuals and institutions to invest in a portfolio
rather than a single asset (Tolo and Roli, 2008). Accordingly, different models have
been generated for different contexts to reach the most optimal result.
Previous studies revealed that, for performing PSP, defining two keys terms
896 including risk and return, is essential for developing the PSP model and making
further progress (Markowitz, 1952; Roy, 1952; Grootvelda and Hallerbach, 1999;
Hirschberger et al., 2007; Huang, 2008a, b). These definitions are deeply dependent on
the context understudy and how we aim to reach it. Accordingly, different definitions
have been developed since then. Concerning risk, first, Markowitz (1952) considered
variance as a risk of a portfolio and tried to minimize it along with keeping the returns
in an acceptable level. Afterward, semi-variance in defining risk has been suggested as
an alternative for variance to quantify risk due to its accuracy and focus on the
undesirable portion of an outcome (Markowitz, 1952). Later on, this definition become
more complete and the possibility of bad outcomes was the third risk definition
introduced by Roy (1952). Huang (2008a, b) evolved the prior model and proposed the
fourth definition for risk by granting the fact that people make decisions based on both
the severity and possibility of undesirable outcomes. This new definition modeled and
considered factors, severity, and possibility (Huang, 2008a, b).
On the other hand, return of the portfolio changed its definition during the evolution
of the portfolio selection models as well. In the model proposed by Markowitz (1952),
return of the portfolio is considered as an exact value calculated by the mean value of the
securities’ return. Nevertheless, since researchers have no access to precise values and,
generally speaking, human interpretation was involved in acquiring information for
returns, fuzzy models substitute the exact ones for solving optimization problems.
Watada (1997) was the first individual to use fuzzy numbers in PSP which evolved
through the years by follower researchers (Tanaka and Guo, 1999; Tanaka et al., 2000;
Carlsson et al., 2002; Zhang and Nie, 2004). Estimation of the expected return by a fuzzy
number and approximation of risk value based on both the severity and possibility of the
risk had been considered in a few proposed models (Huang, 2007, 2008a, b). In some
fuzzy models proposed, credibility measure substituted the possibility measurement of
fuzzy portfolio models, as this measure gives more accurate estimation of the possibility
of a fuzzy event (Liu, 2006).
According to the papers reviewed, implementation of PSP in corporations for
choosing a portfolio of processes and scenarios has not been investigated so far.

3. Research approach and methodology

3.1 Designed algorithm for the study
The aim of the proposed methodology here is to apply the concept of portfolio selections
in selecting candidate scenarios for a reengineering project. Scenarios, in the scope of
this study, are defined as the combinations of one strategic process and adoption of a
suitable best practice for that. Whereas the high failure rate of reengineering project led
to reluctance for undertaking these projects, customers’ relentless expectations for
quality, services and prices have influences many managerial assumptions of early
management and forced them to revise their systems (Drucker, 1954). The objective of
the study is to decrease the failure rate of BPR project by performing a quantitative risk
analysis of BPR projects and develop a tool for assisting decision makers to choose Business process
scenarios more cautiously. In this respect, the methodology has been followed though portfolio
four phases, including:
selection
(1) selection of strategic processes;
(2) determining best practices for selected strategic processes;
(3) definition of risk and return and measuring degree of change for each designed 897
scenario; and
(4) BPPS.

It is not within the scope of this study to design all the steps from the scratch. Here, it is
aimed to utilize the findings of prior studies described in each phase with the aim of
developing a new methodology by integration and completion of earlier efforts through
generating a process portfolio selection model. The method and tools utilized in each
phase are described in detail in below. This aim will be supported by step-by-step
implementation of methodology and result evaluation.
3.1.1 Phase A: selection of the strategic processes. All types of organizational
resources are limited to some extent. Consequently, before the implementation of any
project, including BPR project, available resources should be estimated and evaluated
accurately. Concentrating on the strategic processes helps corporations to achieve their
objectives and strategic goals. As discussed earlier, a methodology has been proposed
for determining the strategic processes of a company (Hanafizadeh and Moayer, 2008).
The proposed methodology includes three main steps which are followed for the
purpose of this study. First of all, a list of all company processes is extracted and
categorized into four perspectives of the balance score card (BSC), including internal
processes, financial, innovation and learning, and customers. The BSC, by providing a
language of communication between mission and strategy, proposes information
leading to the measurement of performance against the business strategy (Kaplan and
Norton, 2000). The four perspectives of the BSC, financial, customer, internal process
and learning and growth, guarantee a balance between short and long-term objectives
of company (Hanafizadeh and Moayer, 2008). Second, by means of a questionnaire
using likert scale, the importance of each process is evaluated. Lastly, the processes are
valuated and ranked by a multiple-criteria decision making method (MCDM). In this
study, technique for order preference by similarity to ideal solution (TOPSIS) one of
MCDM methods is used in the last stage for prioritizing the processes. TOPSIS was
chosen as an alternative that should have the shortest distance from the positive-ideal
solution (PIS) and the farthest from the negative-ideal solution (NIS). The implemented
methodology has resulted the four selected processes, named strategic processes,
which are ranked first in each perspective of BSC.
3.1.2 Phase B: determining strategic best practices. In this phase, best strategic
practices adopted for each strategic process selected in the earlier stage is determined by
business process redesign approach. How and why a best practice is chosen for
redesigning a process depends on variety of variables, significantly, company’s
strategy. A developed list of best practices compatible with different strategies of
corporation could be found in the surveys done by Hanafizadeh et al. (2009).
In this approach, first the corporation’s main strategies are defined and categorized
in three main classes of differentiation, cost leadership, and prompt response.
BPMJ Then, the appropriate and effective best practices for each strategy are customized,
19,6 accomplished, and prioritized. Table I indicates the prioritized best practices based on
the strategic consideration of companies.
3.1.3 Phase C: defining and evaluating risk and return in a reengineering project.
Based on the designed scenarios, combination of selected processes and adopted best
practices, the risk and return associated with each of the scenarios are estimated in this
898 phase. As argued, BPR project imposes changes to companies. These changes are
resulted from the movement of the organization from the current condition to the
improved ones. It is considered these alterations, to the extent that a company can
endure them, can enhance its performance and could be considered as a “return” of
reengineering project. However, after reaching a specific point, named “maximum
degree of change” of a company, it is considered as the “risk” of a BPR project. Several
change factors are recognized and introduced in different contexts indicating the
changes root during a company’s transition toward a more efficient condition. In the
framework of this study, due to the similarity of contexts, the same change factors as of
Hanafizadeh and Osouli (2011), are adopted and applied. These factors are utilized for
approximation degree of change and measurement of risk and return of BPR project
through the procedures explained below.
3.1.3.1 Perceived degree of change. The first attempt for exploring the change factors
conducted through an in-depth literature review and by using experts’ ideas
(Hanafizadeh and Osouli, 2011). This effort led to identification of five dimensions,
24 change factors and 46 corresponding indicators. Using factor analysis survey and
integrating expert opinion, these parameters were reduced to 19 factors and 44 indicators
and a questionnaire was developed based on them (Table II). In subsequence a
questionnaire was developed in order to measure perceived degree of change after each
BPR, using expert opinion. The designed questionnaire consisted of 44 questions as the
indicators of 19 detected change factors. For the purpose of calculation, the
dimensions’ weights used in the survey were equal to average opinions of the experts.

Organization strategy
Differentiation Prompt response Cost leadership

First priority 1. Interfacing 1. Centralization 1. Interfacing

2. Flexible assignment 2. Outsourcing 2. Re-composition
3. Task composition 3. Interfacing 3. Triage
4. Triage 4. Task composition
Second priority 5. Task automation 4. Re-composition 5. Empower
6. Exception 5. Flexible assignment 6. Integration
7. Contact reduction 6. Contact reduction 7. Control addition
7. Task elimination 8. Task elimination
8. Empower
9. Task automation
Third priority 8. Re-composition 10. Integral technology 9. Order types
9. Extra resources 11. Parallelism 10. Trusted party
10. Integration 12. Order-based work 11. Outsourcing
11. Case manager 12. Knock-out
12. Control relocation
Table I.
Best strategic practices Source: Hanafizadeh et al. (2009a, b, p. 621)
 Business process
Dimension Factors Weight
portfolio
Soft Change 1 1. Revision of motivations and rewards systems 1.67 10 selection
dimension management 2 2. Communications systems 1.67
3 3. Empowerment 1.67
4 4. People involvement 1.67
5 5. Training and education 1.67 899
6 6. Organizational culture 1.67
Management 7 1. Committed and strong leadership 3.33 10
competence 8 2. Championship and sponsorship 3.33
9 3. Management of risk 3.33
Hard Organizational 10 1. Adequate job integration approach 3 9
dimension structure 11 2. Effective BPR teams 3
12 3. Appropriate jobs definition and responsibilities 3
allocation
BPR project 13 1. Project management 4 8
management 14 2. Effective process redesign 4
IT infrastructure 15 1. Proper IS integration 1.8 9
16 2. Adequate IT investment and sourcing decisions 1.8
17 3. IT function competency 1.8
18 4. Effective IT infrastructure 1.8
19 5. Adequate alignment of IT infrastructure and 1.8
BPR strategy Table II.
Change
Source: Hanafizadeh and Osouli (2011) dimensions – factors

To exemplify, the higher total weight of one dimension was the indicator of higher
importance of that dimension from expert’s point of view, which is scaled between
0 and 10. In order to calculate the weighted value of factors, the following two steps
were taken for calculation purpose. In this study, the same procedure is used for
calculating the weighted value of the factors in each condition (i.e. existing
condition, after consideration of strategic best practice). To avoid any mistake, same
dimensions’ weights have been considered. For further information, refer to
Hanafizadeh and Osouli (2011) (0 – not applicable, 1 – very low, 3 – low, 5 – modest,
7 – high, 9 – very high).
Step 1. Calculation of the weights of the factors and indicators:

wab ¼ wj =na £ nb ð1Þ

wj ¼ (the) weight of the jth dimension.

na ¼ (the) number of factors related to each dimension.
nb ¼ (the) number of indicators related to each factor.
Step 2. Calculation of the dimensions (jj):
X
Ii yj £ wab ð2Þ

Where yj is the value of the indicators given by the experts in the questionnaire.
BPMJ Finally, the sum of five dimensions is given in the weighted value of each scenario:
19,6 I i ¼ I 1 þ I 2 þ I 3 þ I 4 þ I5 ð3Þ
Table II presents the dimension, factors and weight of each factor used in this study.
3.1.3.2 BPR risk and return measurement. Risk and return of BPR project was
calculated by the developed questionnaire. The questionnaire included two sections
900 where the first section calculates scores for the current condition and condition after
reengineering. Given the proposed definitions, BPR return is equal to the subtraction of
the weighted value of current condition and the condition after the implementation of
the strategic best practices, which is referred to as “perceived degree of change”:
Perceived degree of change ðjÞ ¼ ðexiting conditionÞ
ð4Þ
2 ðcondition after reengineeringÞ
The second section of questionnaire aims to approximate the maximum degree of
change endurable by the company which leads to calculation of the risk of BPR
selected portfolio.
3.1.4 Phase D: BPPS. In the last phase, process portfolio selection model was
developed. In the adopted model, while problem objectives attempt to increase the
improvement by each scenario, return of a portfolio, the constraint limits the possibility
and severity of the changes happening by each of them. Due to the high rate of BPR
failure, this definition perfectly suits reengineering problem in order to reduce the
probability of risk occurrence.
Through the proposed methodology, humans’ point of view is the inevitable part of
this study. Accordingly, in order to raise the validity of the study as well as indicated
diversity of experts’ views, fuzzy numbers, instead of exact ones, are considered for
illustrating the obtained data and scores as the return of portfolio. In accordance, fuzzy
calculation and fuzzy portfolio selection model are applied and customized. The lowest
score scenario received by a participant, the highest, and the weighted average are
shown by three triplets of triangular fuzzy number (TFN) (a1, a3, a2), respectively. For
further information regarding the conceptual as well as mathematical context of fuzzy
number refer to Appendix.
Deliberating on all of the above mentioned considerations, model (5) is formulated
for this study:
Max : E½j11 x11 þ j12 x12 þ · · · þ jij xij

St.
Cr{ððj11 x11 þ j12 x12 þ · · · þ jij xij Þ 2 bi Þ $ r} # aðrÞ for i ¼ 1; 2; 3; 4 ð5Þ
X
xij ¼ 1 for i ¼ 1; 2; 3; 4
x11 ; x12 ; . . . ; xij ¼ 0; 1
In this model “jij” indicates the perceived degree of change of the process i by the best
practice j. “b” represents maximum change tolerance of the company. Based on the
definition assumed for parameters, (jij 2 bi) calculates loss of the portfolio. Unlike
the definition of loss in securities’ portfolio selection that equals to subtraction of
the expected return of investor from the portfolio return, (bi 2 jij) (Huang, 2008), in this
study passing over the maximum change resistance of the company is what defines Business process
loss, (jij 2 bi). On the other side, “r” denotes the severity indicator of undesirable
outcomes, and a(r) is the company’s confidence curve. The risk curve is designed by
portfolio
company management based on the criteria such as the organization’s age, training selection
level of the staff, organizational culture and structure, which contributes to the
organization’s flexibility. The factors contributing to the flexibility of the organization
are dependent on the type of organization, general activities, organizational risk factors 901
and managers’ perspective.
The overall schematic diagram of steps forming the proposed methodology is
shown in Figure 1.

3.2 Data collection method

The study was conducted and validated through a case study. The questionnaires were
distributed among managers or experts involved in the selected process for reengineering
in the organization in two stages. To ensure the consistency of the results, the participants
were pre-screened and those who mainly responded to questions based on their analysis
and experience were selected. Time limit or reluctance to fill the form would prevent the
respondents from putting all their attention and concerns on the questionnaire.

Business Process Porifolio Selection

Document Evaluation and Interviewing

Determining processes of Company
the Experts
Phase A
1- Determining the processes
Defining Strategic Processes 2- Creating Flow diagrams
3- Categorizing processes by
BSC/ISO framework
4- Evaluating and Ranking the
Phase B process by TOPSIS

Selecting best strategic practices for BPR 1- Determining the organization’s

2- Collecting and categorizing the
best strategy practices
3- Selecting the best practices
Phase C
Evaluation of Risk and Remarks 1- Defining the risk
2- Defining the return
3- Scoring the parameters

Model:
1. Customizing the Model
2. Valuation of parameters
Phase D
Process Portfolio Selection BPPS Stages
1- Strategic considerations
2- Individual process evaluation
Figure 1.
3- Portfolio selection Research framework
BPMJ In the first stage, the developed questionnaires were distributed equally among
19,6 staffs involved in the different processes of the company who have more than five years of
experience. Since TOPSIS method was chosen to be implemented, no specific criteria for the
participant’s position were considered. At the end, 40 participants contributed to the first
survey. The second stage of the survey was carried out by a questionnaire which consisted
of two sections. In the first section the participants were asked to measure factors of degree
902 of change proposed by Hanafizadeh and Osouli (2011) through a questionnaire developed
by the authors for each selected process. In the second section, they replied to a question
which measured the maximum degree of change tolerance in each risk dimension of
reengineering project proposed by Remenyi and Heafield (1996). The second questionnaire,
as there were more professional questions, was merely distributed among managers or
senior experts with more than of five years of working experience responsible for “human
resource management”, “public relation”, “process management”, “information
technology”, “financial management”, “process controlling and scheduling”. They were
working in the candidate processes for reengineering and were willing to participate.
Consequently, for each process, 15 people responded to the questionnaire.

3.3 Data reliability

Cronbach’s a method was utilized for testing the reliability of the questionnaire by
calculating the convergence of measurement instrument. a coefficients obtained in all
distributed questionnaires, shown in Table III, were greater than 0.7, confirming the
reliability of the tests (Terziovski et al. 2003).

4. Survey and data analysis

The validity of the model was tested step by step by implementing it in the RMRC.

4.1 Case study

RMRC is one of the largest and the most acclaimed metallurgical laboratories and
research centers of Iran. RMRC is an R&D Center and Materials Engineering Service,
laboratory specialized in metals, polymers, ceramics and software engineering. The
center has over 20-years of local and international experiences in casting processing
design. RMRC is known for acquiring different quality certificates and adopting new
procedures to raising their activities’ performance. This implies that improvement is one
of the main concerns of this company. Therefore, RMRC, based on its broad functioning,
diverse type of processes and activities and their constant improvement effort is a
unique opportunity and option for this survey. Their major activities include research
and development project, laboratory services, consulting projects and conducting
common projects related to material sciences. According to the company’s vision,

Questionnaire number Number of respondents Cronbach’s a

1 40 0.795
1 15 0.843
2 15 0.793
Table III. 2 3 15 0.858
Calculated Cronbach’s a 4 15 0.812
“RMRC vision is to become the most well-known company in the area of the material Business process
science working on research, development and training.” Based on the vision and portfolio
mission of RMRC, the strategy of differentiation has been chosen to achieve the strategic
goals of the company. selection
4.1.1 Phase A. Based on the documents and interviews with the experts of the
company, the 20 processes of the company are recognized as candidates for
reengineering. 20 processes were categorized into four perspectives of the balance 903
score-card. By means of a questionnaire, a group of 40 staffs of RMRC was asked to
indicate the importance level of each process. This questionnaire consists of 20 questions
resembling each process of the company for which five options of 1-2-3-4-5 (likert scale)
is given to illustrate the importance of each process (Hanafizadeh et al., 2009a, b).
This group was selected under similar criteria, which are already discussed for the
first experiment under Section 2.2. TOPSIS method was implemented and can be seen
in the results. “Training”, “recruitment”, “contacting” and “laboratory services” were
chosen as strategic processes, due to acquiring the highest score in each BSC’s
classified perspective. The underlying assumption for performing TOPSIS in this
study is that the manager responses receive importance of 3, those of the senior experts
receive 2, and those of the experts receive 1. Table IV exhibits the 20 processes of the
company, their position in the BSC perspectives and acquired scores and ranks.
In Table IV, each row indicates one of the 20 recognized processes of RMRC. The
score’s columns under labels of TOPSIS and questionnaire indicate the acquired score
by each process, considering their particular way of calculation. The rank of each
process with respect to others, based on its obtained scores, is determined under the
label “rank”. This column is divided into two sub-columns to clarify the position of
each process in total and in each BSC perspective. Strategic process selection is based
on the ranks obtained through the TOPSIS calculation confirming the strategic
position of the four selected processes in comparison to others.
In the rest of this phase, the current procedure and setbacks of each candidate
process are discussed briefly.
Strategic process (1) training.
(a) Procedure. When every company tries to keep up with the world changes,
training is considered among the most important processes of the company. At RMRC,
in case a department realizes the need for a new field of training, the process executive
declares their urge to training department manager. Based on the notification, the
training team defines a training plan and began to conduct it. After the course is
finished, the training teams evaluate its performance and outcomes.
(b) Setbacks. Although this process is designed step-wise by the experts, some flaws
are attributed to it as following. First, the need for new training is recognized only by
specific people. Second, training plan written by training team does not cover all needs
of the staffs as they might have limited- and possibly not enough- knowledge of the
subject. Third, appraisal is not as effective and precise as it should be. Finally,
participants are not usually selected rationally, based on a distinct plan.
Strategic process (2) recruitment.
(a) Procedure. This process is normally carried out once a year before the evaluation
of the total budget needed for the next working year, unless there is an emergency in the
department for recruiting a new staff. In the existing condition, the company declares its
need for human resources in newspapers. After reviewing applicants’ resume submitted
BPMJ
TOPSIS Questionnaire
19,6 Rank Score Rank Score
Within Within
BSC BSC BSC
Row Process perspective perspective Total Score perspective Total Score

904 1 Laboratory services, Customers 1 4 0.6686 1 3 139

customer reception
2 Technical support and Customers 2 8 0.5611 2 8 127
services
3 CRM services Customers 3 11 0.435 3 11 109
4 Financial management Financial 3 12 0.4232 3 12 108
5 Asset management Financial 2 9 0.524 2 9 122
6 Contracting Financial 1 5 0.6157 1 5 135
7 Outsourcing Financial 4 20 0.085 4 18 72
8 Organizational Innovation 2 6 0.6133 2 7 128
improvement and and
maturity management learning
9 Training Innovation 1 1 0.8952 1 1 163
and
learning
10 Market management Innovation 3 16 0.1783 3 15 85
and
learning
11 Recruitment Internal 1 2 0.7132 1 2 147
process
12 Risk management Internal 8 17 0.1441 9 19 71
process
13 Health and safety Internal 10 19 0.0981 10 20 61
management process
14 Human resource Internal 7 15 0.1995 7 16 85
management process
15 Information system and Internal 4 10 0.4393 4 10 120
technology process
16 Performance appraisal Internal 5 13 0.331 5 13 97
process
17 Research and Internal 3 7 0.6106 3 6 129
development process
18 Strategic planning Internal 6 14 0.277 6 14 94
Table IV. process
The ranks of TOPSIS 19 Public relation Internal 9 18 0.1339 8 17 77
method determine process
strategic processes 20 Common project Internal 2 3 0.6887 2 4 136
of RMRC execution process

to the company by each individual, the company requires applicants to be present at the
company at a time set for an interview. It is also possible for an applicant to be
appraised and interviewed for more than one times by different authorities. Finally,
after assessing the outcomes, CFO receives the applications who have passed the initial
evaluation. The experimental working period of the new employee begins only when
their application is approved by CFO.
(b) Setbacks. Although this form is known as one of the most common ways of Business process
running the process, it does have some weak points. First of all, the company portfolio
announces its need for human resource by publishing it on a newspaper which might
not be the best way of proclamation. In addition, not all skills and capabilities of the selection
applicants can be captured and reflected through the formal application papers (i.e. CV,
company’s application forms). Moreover, expecting the applicant to be present in the
company for several times is very time-consuming for both sides, staffs and applicants. 905
Finally, the company does not have an organized system to keep the data of all
applicants who have not been accepted for the future purposes.
Strategic process (3) laboratory services.
(a) Procedure. The selected process, laboratory services, is among the most
important processes of the company and plays a critical role in company’s earning. In
this process, customers are registered at the entrance of the organization by the warden
and then are guided to the reception department. At the reception department, they
receive a number and stay in queue for giving their samples. Upon the call, a customer
gives their sample to the receptionist and receives a receipt in which the price and due
time of the results are illustrated. After paying the bill, samples are delivered to the
responsible department and the procedure continues. On the due date, customers
attend the company and receive the results.
(b) Setbacks. Nevertheless, this process has many drawbacks, too. First, customers
are registered in two stages: one by the warden and the other by the receptionist both
of which being time consuming. Moreover, it is possible that the clients’ samples might
not be ready by the due date. Besides, it takes a long time for most of these tests to
proceed. It can even be worse as many of these tests are being performed sequentially.
What is noticeable in this process is that the company treats all its customers in a
similar way, either those working with the company frequently or those that might be
only for once.
Strategic process (4) contracting.
(a) Procedure. Since the company makes its largest revenue from the contracts, this
process is vital for the company. According to the process action plan, after receiving a
work contract proposal, project department conducts a feasibility study on it to decide
about its practicality and profitability. After evaluation of the contract in several
sections, provided that it has been admitted, the project plan will be sent to CFO to
make the final decision; then it notifies the client about it. Scheduling and performing
the project afterward is considered as an internal process at each department.
(b) Setbacks. As stated, the process is crucial to the company and any impediments
have a huge effect on the company’s outcome. Like reception process, this process
does not consider any difference between their loyal customers and others, which in
this challenging world is significantly important. Besides, the feasibility study
and the following procedure of the proposed project generally take a long time.
In addition, refusal reasons of a project are not documented in any archives for more
investigations.
4.1.2 Phase B. The four strategic processes consisting of “training”, “recruitment”,
“contacting” and “laboratory services” selected in the previous phase were analyzed
and surveyed for implementing the reengineering project. The procedure details
of each process were derived by RMRC approved official action plan and precise
observation. The observations and interviews with the responsible authorities of each
BPMJ process led us to recognition of the current setbacks. Possible solution for solving the
19,6 current issue of the selected processes was extracted from the list of the best practices
categorized based on strategic perspective of the organization and consulting with the
experts. As discussed, the best practices implemented in this phase are aligned with
company’s strategy and are aimed at resolving the current issues of the selected
process (Hanafizadeh et al., 2009a, b). In this step, corresponding to each process of four
906 selected strategic processes, several best practices that resolve their current issues are
adopted and discussed leading to overall 15 different scenarios. In this study,
differentiation is used to prioritize the best practices.
Strategic process (1) training.
Outsourcing. After recognition of the training needed in a department, recruitment of
a professional company expert in the given area to plan a step-wise program and
conduct the training plan by the staffs and instructors at the organization is the main
perspective of this best practice.
Re-sequencing. Currently, the training requisite is identified under the supervision of
training team and head of training department from the beginning up to the end of the
process. In this best practice, the aim is to select skillful person in each department who
has the ability to recognize the needs, prepare plans, and choose participants based on
their needs according to their experiences.
Case manager. Specifying one expert in the training department, responsible for each
training procedure from the beginning to the end of the plan, is the practice
implemented by this best practice. This person’s responsibility is to works on only one
training plan at a time. In each plan, the corporate makes plans for the procedure,
monitors the whole process, and evaluates and controls the quality of the procedure
execution, and assures its consistency and efficiency.
Strategic process (2) recruitment.
Contact reduction. As mentioned earlier, in this process, applicants are obliged to
present themselves to the company in several stages. Replacing the current
method with a less demanding one in which applicants are allowed to fill out the
forms online or are interviewed only once is the goal and perspective of this best
practice.
Re-sequencing. Assigning the execution phase to one responsible person instead of
many at each department, who is familiar with department’s requirements and
regulations. Full responsibility of appraisal and recruitment is what is gained by these
best practices, which are likely to enhance the way of performing the process.
Task automation. Equipping the company with a central automation and a
developed technology which helps the company from the very first day of the
procedure to the last is the main goal of this procedure. Its contribution begins with the
announcement of human resource needs by publishing it on the web site and collecting
applications. This system continues by helping the company to solve its daily
problems and implementations and lasts until the time when it helps the company to
solve the current problems and implementations in this best practice.
Task composition. As stated, this process is conducted through several stages and
by involving different responsible persons. Combining these stages and responsible
people into a one defined stage, would impact the time, number of contacts, and
consequently, cost of this procedure.
 Strategic process (3) laboratory services. Business process
Exception. Cost reduction, customer consent and time saving are among the first
achievements of considering a different procedure for different clients of laboratory
portfolio
services, which is the goal of this best practice. Obviously, customer satisfaction selection
contributes to a higher rate of services and more efficient performance of the company.
Task automation. A central automation system resolves many setbacks of current
procedure. Giving the customers a tracking number capable of being traced from 907
everywhere by a central site, showing the status of the tests, the prices, and the due
date bring uniformity between clients and department.
Parallelism. As tests requested by customers for the samples are usually more than
one and very time consuming, altering the current procedure to the one that runs these
tests in parallel to each other would reduce the time of operation to a great extent.
Interfacing. Establishing a standardized interaction with customers is the goal of
these best practices. A standardized interaction would benefit both organization and
customers by considering practical issues.
Strategic process (4) contracting.
Exception. Classifying customers in a different group and defining a distinct
procedure for each group are the main context of this process. Giving frequent
customers facilities and bonus is an advertisement for the company and will encourage
other clients for more cooperation.
Case manager. One professional person responsible for each contract, monitoring the
process and the execution steps would have a huge impact on the time spent in feasibility
study section and other departments of company and way of performing the process.
Control addition. Increasing the level of controlling this process, which has direct
impact on the company’s performance and outcome, is the aim of the selected practice.
This control can be supervised by the project department. Each stage of the process
can be designed cautiously by this department. Additional control on documentation of
this process is performed by the same department in this best practice as well.
Task elimination. Several stages designed for performing this process results in the
long process time, significant cost, and customer dissatisfaction. Elimination of avoidable
department and responsible people is one of the practices considered for this process.
4.1.3 Phase C. The selected BPR scenarios have been evaluated via questionnaires
through the method discussed in Section 3.1.1. As explained, the questionnaire consists
of two sections. The first section consists of 44 questions resembling each indicator of
19 extracted change factors. Overall, 15 people participated in the survey who had the
option of choosing between five different alternatives of “not applicable”, “very low”,
“low”, “modest”, “high” and “very high”. For calculation purposes, to avoid any
confusion, numbers were scaled on 0-9 basis. The three triplets of TFN a1, a3, a2
indicated the lowest, highest and weighted average scores given by participant and all
scaled on the 0-9 basis. For calculating the weighted average, the explained method in
Section 3.1.2 was applied. Table V demonstrates the weighted values of the existing
conditions, condition after reengineering as well as the perceived degree of change
resulted by each scenario all in TFN (0 – not applicable, 1 – very low, 3 – low, 5 –
modest, 7 – high, 9 – very high).
Each row of Table V resembles one of the 15 designed scenarios whose condition
is evaluated in two different situations. The first three sub-columns entitled
BPMJ
Scores
19,6 Information Total
Existing Condition after Perceived degree
Process Row Best practice name condition reengineering of change

Laboratory 1.1 Integral technology 1.59 4.07 6.85 4.49 6.66 8.77 22.35 2.58 7.18
908 services 1.2 Exception 1.59 4.07 6.85 4.10 6.29 8.68 22.74 2.22 7.09
1.3 Parallelism 1.59 4.07 6.85 1.97 5.19 8.59 24.87 1.12 7.00
1.4 Interfacing 1.59 4.07 6.85 4.43 6.50 8.44 22.41 2.43 6.85
Recruitment 2.1 Task composition 0.00 3.73 7.00 1.80 4.75 8.07 25.20 1.01 8.07
2.2 Task automation 0.00 3.73 7.00 2.16 5.17 8.28 24.84 1.44 8.28
2.3 Re-composition 0.00 3.73 7.00 2.11 5.49 8.82 24.89 1.76 8.82
2.4 Contact reduction 0.00 3.73 7.00 2.70 6.04 8.65 24.30 2.30 8.65
Contracting 3.1 Exception 1.63 4.11 6.85 4.46 6.69 8.81 22.39 2.58 7.18
3.2 Control addition 1.63 4.11 6.85 3.97 6.31 8.76 22.88 2.19 7.13
3.3 Task elimination 1.63 4.11 6.85 1.82 5.28 8.72 25.03 1.17 7.08
Table V. 3.4 Case manager 1.63 4.11 6.85 4.04 6.48 8.52 22.81 2.37 6.88
Strategic scenarios Training 4.1 Outsourcing 1.54 4.06 6.80 4.01 6.65 9.00 22.79 2.59 7.46
(process-best practices) 4.2 Case manager 1.54 4.06 6.80 2.76 5.93 8.65 24.03 1.87 7.10
weighted value 4.3 Re-composition 1.54 4.06 6.80 1.83 5.24 8.59 24.97 1.18 7.04

“existing condition” show the lowest, weighted and highest value of each pre-defined
condition assigned by respondents estimating performance of the process in the given
condition. In the second three sub-columns labeled as “the condition after
reengineering”, like prior one, the lowest, weighted and highest scores are indicated
for each scenario. The last three ones, “the perceived degree of change” are calculated by
subtracting the TFN of two previous conditions from each other, using fuzzy operation.
To illustrate, for the first scenario, implementation of integral technology best practice
for laboratory services process, the current condition evaluated by participants could be
shown by (1.59, 4.07, 6.85). As the result indicated, consideration of integral technology
would raise the process performance to (4.49, 6.66, 8.77). Accordingly, the perceived
degree of change is equal to: (1.59, 4.07, 6.85) 2 (4.49, 6.66, 8.77) ¼ (22.35, 2.58, 7.18).
In the second part of the questionnaire, to calculate the threshold value, participants
were asked about their flexibilities and their change tolerance from the pre- to
post-reengineering condition in each of the five main dimensions of reengineering
project risk, i.e. “business”, “finance”, “technology”, “people”, “structure” and “culture”
(Remenyi and Heafield, 1996). The contributors chose between six options of “not
applicable”, “very limited”, “limited”, “moderate”, “adverse” and “unlimited”. Given
equal weight to each these dimensions, final flexibility was calculated for each process.
Table VI illustrates the final results obtained for “maximum change tolerance of the
company” for each process. For each process the result of each of the six dimensions
and the mean value is calculated. The results are indicator of highest flexibility in
recruitment process and lowest one in the training process. Whereas the values
differences are minor, the total flexibility of company could be estimated between
“limited” and “moderate” status (0 – not applicable, 1 – very limited, 3 – limited,
5 – modest, 7 – adverse, 9 – unlimited).
4.1.4 Phase D. In order to achieve the final goals of this paper, a customized
portfolio selection model consistent with the objectives and constraints (model 5) was
tested with the results and data obtained from RMRC. In this model, the intention is to Business process
optimize the status of processes without crossing the boundaries and limitation of the portfolio
company change tolerance (i.e. technology flexibility, cultural acceptance, and cost).
The objective of this model is to increase perceived degree of change (j) inflicted by selection
each scenario, indicating the process degree of change from current situation to more
efficient way after reengineering. The constraint assures that j for each of four selected
process raises to the company’s maximum resistance level. Due to the fact that 909
different processes of the company are carried out by different groups of human
resources who have their own way of performing, proceeding, and distinct structure,
each of the selected scenarios have been confined by a separate constraint. The
constraint controls both severity and possibility of the risk.
The extracted results, shown in Tables V and VI, in accordance with designing a
risk curve for RMRC, have been used for testing the developed business process
portfolio model and acquiring final results.
The first outcomes are indicated: while RMRC is moving toward sustainable
development and intending to be a pioneer in performing material science services,
company’s managers have moderate attitude toward changes. As a consequence,
crossing the maximum flexibility degree of corporation, proposed by contributors, is
permitted to a limited extent. Determination of several risk points for RMRC and using
regression approach led to designing the adopted risk curve shown in Figure 2. To
exemplify, assuming perceived degree of change to be about 10 percent higher than
maximum change tolerance of corporation, the risk probability could be utmost 0.25 and
when it reaches to 20 percent, the probability must decline to 0.10. Increasing risk to

Information Dimension
Process Business Financial Cultural Structural Technical People Mean

Laboratory services 4.60 4.27 4.33 4.60 4.33 4.73 4.48

Recruitment 0.00 5.40 5.00 4.60 4.47 4.73 4.84 Table VI.
Contracting 4.47 4.00 4.33 3.80 4.33 4.87 4.30 Maximum change
Training 0.00 4.60 4.00 4.07 4.07 3.00 3.95 tolerance of RMRC

α(r) = 1/(1 + r)2 (6)

α (r)

Figure 2.
r Adopted risk curve
BPMJ 30 percent should be coincided with adverse decreasing in the occurrence probability.
19,6 Accordingly, in this case the probability should not be more than 0.05. During designing
this risk curve, noteworthy, the prior phases of research provided managers with some
information to enable them to decide more cautiously on their flexibility and change
acceptance. This imposed risk is compensated by rewards and premiums.
Due to the nature of the model and since variants can take either 0 or 1 values,
910 gaining the exact results was assured and they were generated by simulations ran in
MATLAB program.
The MATLAB code was used to compute the enumeration of all 192 possible
solutions. Results indicated feasibility of 64 solutions within the limits of the constraints.
As the results showed, in order to maximize the expected value of reengineering project,
the corporation should perform the scenarios according to Table VII.
The objective of the designed model is to maximize the perceived degree of change
toward improvement within the limits the company’s constraints. Table VII indicates
all 15 adopted scenarios for the strategic process of RMRC in which the best practice
for each process chosen by the algorithm, named scenario, is indicated. The
corresponding maximum expected return of the selected portfolio is 8.26. As data
showed, scenarios 2.3, 2.4 and 4.1 have higher perceived degree of change than the
chosen ones, which imply that they contribute to more improvement in the strategic
processes. However, since they have not been following the constraint limitation and
feasibility status, they have been omitted. This implies that the constraints of the
generated model consider the omitted scenarios as risky options, and the changes
imposed by them might not be endurable by organization.
The step-by-step implementation of the proposed methodology indicated the
applicability of it for the understudy subject as well as implying its practicality for it as
well as other ones. Despite the fact that proposed methodology was the first attempt of
implementing PSP in process selection of BPR project, it revealed the possibility of
benefiting from the financial modeling in organizational study. Many situations in an
organization required decision makers to select few candidates out of a group of units
such as process, discussed in paper, projects, resources and human recourse which the

Process Row Best practices Results

Laboratory services 1.1 Integral technology U

1.2 Exception
1.3 Parallelism
1.4 Interfacing
Recruitment 2.1 Task composition
2.2 Task automation U
2.3 Re-composition
2.4 Contact reduction
Contracting 3.1 Exception U
3.2 Control addition
3.3 Task elimination
3.4 Case manager
Table VII. Training 4.1 Outsourcing
Selected scenarios for the 4.2 Case manager U
reengineering project 4.3 Re-composition
proposed model aims to be a new venue for selection procedures. However, like other Business process
mathematical models, this procedure was aligned with some difficulties, which should portfolio
be taken into consideration for the sake of result validity. To exemplify, during the
implementation of methodology, the acquired numbers and results for some processes selection
was relatively close to each other. This issue in some cases might lead the
impracticality of the model in distinguishing comparatively small differences in
changes, which, if needed, for instance can be compensated with larger scale number. 911
On the other hand, human resources might over estimate their capabilities and skills,
accordingly, interfering some qualitative parameters in model constraints might be
necessary.

5. Conclusion
Despite the raising attention to reengineering project as a need of recent decades,
significant failure rate of these projects is a huge obstacle on the way of their
evolvement. BPPS, developed in this paper, is a new methodology which aims to
propose a new way for achieving and conducting successful BPR projects by
constraining changes of reengineering projects during its early stages.
A business process portfolio is a group of processes and adopted best practices
candidate for reengineering and improvement. To develop the model for this problem
in the first step, risk and returns of reengineering project were defined. For this
purpose, the failure reasons of reengineering projects were investigated and plurality
dimensions and factors were identified. The outcome was indicated: most of the
extracted factors leading to unsuccessful reengineering project cause failure since the
company could not resist against the pressure and alteration of the aligned changes.
Based on this argument, in this study, any movement toward the improved condition
before crossing a threshold point, named “maximum tolerance of degree of change”, is
defined as return and any alteration after that is considered as the risk of reengineering
project. Information for estimating the above values was derived from experts’ opinion
by mean of questionnaires, interview and technical data. Since the respondents’ views
are fuzzy rather than exact, TFN and fuzzy concept were integrated in the model to
enhance the validity of results. Considering the definition of risk and return, a fuzzy
portfolio selection model was developed and proposed in this paper. So far in the
literature, numerous techniques in the area of project portfolio selection have been
proposed; however, direct records exploring BPPS have not been applied.
The presented model was implemented at RMRC for testing the consistency and
validity of the model. The model was carried out in the company in four phases;
namely, determination of the strategic processes, selection of the best practices,
evaluation of the risk and remarks based on the risk, return, and perceived degree of
change definition, and implementing the portfolio selection model. Despite testing the
methodology step by step through the selected case study, this paper, like other
studies, suffers from some limitations and considering them in the future researches
will improve what was tried to establish in this paper. First of all, the data used in this
study in different phases have been mostly gathered by questionnaire and are based on
experts’ ideas which accordingly, involve human interpretation and biasness. Since
fuzzy number are applied in this study to decrease the negative impact of this method,
applying other methodology and comparing the results are recommended and might
provide us with valuable results. On the other hand, in order to improve the proposed
BPMJ model, consideration of other limited resources for each scenario such as time and
19,6 budget could be suggested. Last but not least, the proposed methodology should be
repeated in other contexts and fields in order to provide the opportunity for comparing
the results to make a generalized assumption for the different types of organizations.
Although the model only tested in one case study for selecting processes for a
reengineering project, the methodology implies its practicality for other similar issues
912 including selection of group of units, such as resources, projects and tools. Overall,
the proposed methodology is the first attempt of implementing PSP in reengineering
project as an organizational problem. This could be a new venue of research that
integrates the financial modeling into probable organizational issues.

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Appendix. Preliminaries Business process
1. Fuzzy sets and fuzzy numbers
Fuzzy logic was introduced by Zadeh (1975, 1973) when he stated: portfolio
[. . .] the key elements in human thinking are not numbers, but labels of fuzzy sets, that is,
selection
classes of objects in which the transition from membership to non-membership is gradual
rather than abrupt.
It is obvious that human thinking and reasoning is a gradual and approximate process rather 915
than a distinct and precise one (Kaufmann and Gupta, 1988).
There are several special types of fuzzy numbers. TFN is among the most common ones. TFN
is represented by (a1, a2, a3) in which a1 # a2 # a3. Figure A1 shows membership function of
each of these numbers.
Since the contributors in this study are humans and accordingly, the collected data are based
on approximate reasoning and are fuzzy in nature, TFNs are more appropriate to estimate the
degree of the success/failure of BPR efforts (Crowe et al., 2002).
There are few algebraic fuzzy operations used in this survey, including sum and subtraction
of triangular fuzzy numbers shown below (Kaufmann and Gupta, 1988):

A þ B ¼ ða1 ; a2 ; a3 Þ þ ðb1 ; b2 ; b3 Þ ¼ ða1 þ b1 ; a2 þ b2 ; a3 þ b3 Þ

ðA1Þ
A 2 B ¼ ða1 ; a2 ; a3 Þ 2 ðb1 ; b2 ; b3 Þ ¼ ða1 2 b3 ; a2 2 b2 ; a3 2 b1 Þ

2. Credibility measures
In the model developed for BPPS problem, the definition of credibility is used instead of
possibility (Huang, 2007). The concept of possibility for fuzzy events is not self-dual which is
very important both in theory and practice (Liu, 2006). Accordingly, credibility measure is a good
alternative for measuring the possibility, as this measure gives more accurate estimation of the
possibility of a fuzzy event (Liu, 2006); for further information, refer to Huang (2007) and Liu
(2006).
The credibility of a fuzzy event in which the fuzzy variable j with membership
function m takes a value less than or equal to r, when u and r are real numbers is computed as
following:

1
Sup Sup

Cr{z $ r} ¼ u.r mðuÞ þ 1 2 u,r mðuÞ ðA2Þ
2
Accordingly, for a triangular fuzzy number (a1,a2,a3), the credibility of an event is measured as
below:

1
Membership
function

Figure A1.
Triangular fuzzy number
a1 a2 a3 x
 8
BPMJ >
>
>
1; r # a1
> a1 2 2a2 þ r
>
19,6 >
< 2ða 2 a Þ ; a1 # r # a2
1 2
Cr{j $ r} ¼ r 2 a3 ðA3Þ
>
> ; a2 # r # a3
>
> 2ða2 2 a3 Þ
>
>
: 0; r $ a3 :
916 The second measure used in the proposed model of this study is the “mean value” of the j which
denotes the return of the portfolio and is a TFN. A wide range of models can be found on
estimation of the mean value. Here, in order to enhance the compatibility of the proposed model
with the credibility definition, the model defined by Liu and Liu (2002) is considered:
Z 1 Z 0
E½j
¼ Cr{j $ r}dr 2 Cr{j # r}dr ðA4Þ
0 21
Considering z as a triangular fuzzy number, we will have E[j] ¼ (a1 þ 2a2 þ a3)/4.
In the model proposed by Huang (2007) (b 2 j), is considered as the potential loss of the
portfolio, and r indicates severity of the loss modeled below. The greater value for r results in the
higher level of risk for the portfolio (Huang, 2007):
Cr{ðbi 2 ðj11 x11 þ j12 x12 þ · · · þ jij xij ÞÞ $ r} # aðrÞ ðA5Þ
Assuming j(a1, a2, a3) to be a TFN, model 6 indicates the risk curve of j:
8
> 1; if b 2 a3 . r $ 0
>
>
>
> a3 2 2a2 þ b 2 r ;
>
> if b 2 a2 . r $ b 2 a3
< 2ða3 2 a2 Þ
f ðrÞ ¼ Cr{b 2 j $ r} ¼
>
> b 2 a1 2 r ; if b 2 a1 . r $ b 2 a2
>
> 2ða2 2 a1 Þ
>
>
>
: 0; otherwise:

About the authors

Anna Darmani holds a BSc in industrial engineering from University of Tehran, Tehran, Iran,
and a Master’s degree in financial engineering from Science and Culture University, Tehran,
Iran. Her research interests include business process management, change management,
business process portfolio selection and modelling.
Payam Hanafizadeh is an Assistant Professor of industrial management at
Allameh Tabataba’i University in Tehran, Iran and a member of the Design Optimization
under Uncertainty Group at the University of Waterloo, Canada. He was a visiting research
fellow at the Faculty of Business and Government, University of Canberra, Australia in 2010 and
a Visiting Scholar at the Department of Systems Design Engineering, University of Waterloo,
Canada in 2004. He received his MSc and PhD in industrial engineering from Tehran
Polytechnic University and pursues his research in information systems and decision making
under Uncertainty. He has published more than 50 articles in reputable journals such as The
Information Society, Journal of Global Information Management, Telecommunications Policy,
Internet Research, Systemic Practice and Action Research, Energy Policy, Management Decision,
Journal of Information Technology Research, Higher Education Policy, Mathematical and
Computer Modeling, Expert Systems with Applications, International Journal of Information
Management, among others. Payam Hanafizadeh is the corresponding author and can be
contacted at: hanafizadeh@gmail.com

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