ISH2B3 - Business Process Modeling

1. Process Categories

Process Identification 2. Relationship Between Process

Part 1 3. Value Chain (from Business function

to Business Process)

Information System Department,

School of Industrial Engineering, Telkom University,
2023
 1
OUTPUT

Process The output of process

identification is a process

identification architecture, which represents the

processes and their
interrelations.

Process identification refers to

those management activities that
aim to systematically define the
2 FRAMEWORK

This process architecture serves as

a framework for defining the
set of business processes of an priorities and the scope of
organization and establish clear process modeling and redesign

criteria for selecting specific projects.

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processes for improvement. PRIORITY

Some processes need to receive

priority because they are of
strategic importance to an
organization’s survival.
2
 Balanced Scorecard
BALANCED
SCORECARD.
One prominent option is to define business goals using

the structure of a balanced scorecard.

The explicit representation of the strategy in such a way

is also often referred to as the business model of a

company.

Business processes build on

human, information, and organization capital and provide

the basis for the customer value proposition, which will

eventually result in financial success.

Implement
implementing the strategy requires transparency of

business processes and their contribution to strategic

goals.

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 FIRST

differentiate categories of processes.

Process SECOND
Architecture we describe different relationships between
processes that are important for a process
The aim of a process architecture is to provide a architecture.
representation of the processes that exist in an
organization.
THIRD

The definition of a process architecture has to face we present a method for defining the process

the complexity of the whole organization. There are landscape as a top-level representation of the

three way in order to approach this complexity in a process architecture.

systematic way.
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 Process Categories

One of the most influential categorization schemes is Porter’s Value Chain model. It originally distinguished two categories of
processes: core processes (called primary activities) and support processes (support activities). Management processes were added
as a third category.

CORE SUPPORT MANAGEMENT

PROCESSES PROCESSES PROCESSES

• Core processes cover the essential value • Support processes enable the execution • Management processes provide

creation of a company, is the production of these core processes. directions, rules, and practices for the

of goods and services for which customers core and support processes.

pay.
• include design and development, • include indirect procurement, human • include strategic planning, budgeting,

manufacturing, marketing and sales, resource management, information compliance and risk management, as well

delivery, after-sales, and direct technology management, accounting, as investors, suppliers, and partners

procurement financial management, and legal services. management.

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 Process Categories

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 LANDSCAPE
MODEL

landscape model, which describes the most abstract view

of the process architecture.

CORE PROCESSES
SYMBOL

chevron is symbol used for core processes and modeling

processes as a sequence of sub-processes shown as
chevrons is often called value-chain modeling.

POINTING
BLOCKS

For a better visual distinction, support processes can be

shown with upwards pointing blocks and management

• We will later call this type of representation a process processes with downwards pointing blocks.

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 Relationship Between Process

8
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 SEQUENC
E N
there is a logical sequence between
two processes.
horizontal relationship.
This means that one process
provides an output that the
other process takes as an
input.
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DECOMPOSITIO
there is a decomposition in which one
specific process is described in more
detail in one or more subprocesses.
vertical or hierarchical
relationship.
often used as the primary
relationship that defines the
structure of the process
architecture.
Each element of this process
landscape model is decomposed
into a more detailed process on
the next level.
SPECIALIZATIO
N
there exist several variants of a
generic process.
Instance, there might be a
generic process for handling
job applications in a multi-
national company.
Variants are not only defined
for different legal contexts,
but also for different
categories , services and types
of customers or suppliers.
Process Architecture
 VALUE CHAIN

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 Value Chain
“Value chains are a well-known approach in business administration to organize
the work that a company conducts to achieve its business goals.“

Michael Porter
“Value chains were developed to organize
high-level business functions and to relate
them to each other, providing an
understanding of how a company
operates.”
In order to fulfill their business goals, companies cooperate with
each other, that is, the value chains of these companies are related to
each other
The value chain is based on a functional organization of an enterprise, where
the activities that are conducted are organized into business functions.
Functional Decomposition 🡨 an important concept to capture and manage
complexity
The process of breaking down
a coarse-grained function into
finer-grained functions
The ordering of the value chains in a value system
loosely follow the overall impression the modeller
wants to communicate with the value system.

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 Value Chain
Value System Each value system consists of a number of value
The ecology of the value chains of cooperating enterprises. chains, each of which is associated with one
enterprise.

Value System Value System with interaction arcs

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 Value Chain

Secondary/Support Functions
provide the environment in which the
primary functions can be performed
efficiently.

Primary Functions contribute

directly to the competitive
advantage of the company.
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 Value Chain – Primary Function
Inbound Logistics
Business functions that collectively make sure the company receives raw material, goods and
information, required for performing its business. Inbound logistics interact significantly with business
partners to request quotations, to collect and select offers, to negotiate contracts, to organize
transportation, and to manage incoming goods and information.

Operations

Operations aggregate business functions responsible for producing added-value products that contribute
directly to the revenue of the company.

Outbound Logistics

Outbound logistics take care of distributing these products to warehouses or other distributing centers
so that they can be distributed to the customers.

Marketing and Sales

The business functions for marketing the company’s products and for selling them in a competitive
market are organized. The typical function in this primary business function is organizing and
conducting a campaign to market a new product.

Services

Once a product is sold, the company needs to keep in touch with buyers, both to
cater to problems with the sold product and to provide valuable customer information
for developing and marketing future products.

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 Organizational
Business Processes

17
 Business process reengineering is based on the understanding that the
products and services a company offers to the market are provided
Business Process through business processes, and a radical redesign of these processes is
the road to success.
Reengineering

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 Organizational Business Processes Diagram

The business process management space is influenced by the business

strategy of the enterprise (by the target markets, by business strategies
opening new opportunities, and, in general, by the overall strategic
goals of the enterprise).

Business process management is based on the resources of an

enterprise, most prominently its knowledge workers and information
systems.

Stakeholders are among the most important influential factors of

business process management.

Stakeholders have implications on the organizational business

processes, and vice versa.

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 Organizational Business Processes Diagram

The organizational business processes are influenced by a number of

activities that the company performs:
1. The management
2. The organization
3. The controlling
4. The optimization of business processes
Management and organization include activities for the identification of
business processes, as well as the selection of roles and persons responsible,
and the rollout of the implemented business processes in the enterprise.

Controlling develops methods to measure key performance indicators and to

actually install them in the operational business processes.

Valuable information on shortcomings of current business processes can be

found can be used to continuously improve and optimize it.

Each business process contributes to one or more

business goals,

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 A sample description of an organizational business process is shown in Figure 2.13, where a product development process is described.
This process takeas input and generates output that is of value to the enterprise. From this point of view, it is a valid characterization
of a business process.

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 Process Landscape Diagram

To represent the relationships between the organizational business

processes, their dependencies are depicted by a process landscape
diagram.

It contains each organizational business process as a block;

dependencies are represented by arrows. There are different
forms of dependencies, including information transfer and the
transfer of physical goods

A process landscape is represented in Figure 2.14,

showing the main business processes of a
manufacturing company and their dependencies

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 Business to Business
Processes

23
 Business to Business Processes

The business motivation behind interacting business processes stems from value systems, which represent collaborations between the
value chains of multiple companies.

These high-level collaborations are realized by interacting business processes, each of which is run by one company in a business
to business process scenario. This section studies interactions between business processes performed by different companies

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 Business to Business Processes
a high level of abstraction

This section uses an example from the area of order processing, described as
follows.

A buyer orders goods from a reseller, who acts as an intermediary. The reseller
sends a respective product request to a manufacturer, who delivers to product
to the buyer. In addition, the reseller asks a payment organization to take care
of the billing. The value chain of this business scenario is shown in Figure
2.15

For each value chain in the value system shown in Figure 2.15 there is a
participant in the business-to-business collaboration, detailing its internal
25 structure and its contribution to the collaboration.
 Workflow Management

26
 Workflow Management
“The developments in enterprise software architectures and in organization level
business process management led to workflow management.” “Today, most enterprise application systems, such as enterprise
resource planning systems, host a workflow component that
facilitates the flexible customization of business processes within
“The important achievement of workflow management is the explicit representation these systems.”
of process structures in process models and the controlled enactment of business
processes according to these models.”

WORKFLOW WORKFLOW MANAGEMENT SYSTEM

Workflow is the automation of a business process, in whole or in part, during A workflow management system is a software system that defines, creates, and
which documents, information, or tasks are passed from one participant to another manages the execution of workflows through the use of software, running on one or
for action, according to a set of procedural rules. more workflow engines, which is able to interpret the process definition, interact
with workflow participants, and, where required, invoke the use of IT tools and
applications
IMPROVE WORKFLOW TECHNOLOGY MEETINGS
Workflow technology is capable of supporting business processes within a given application system
TRAVELING IS LIFE NEWS TRAVELING IS LIFE NEWS
or between a set of application systems, effectively integrating these systems, can also be used to enact
FROM THE WORLD FROM
business processes in which humans are actively involved, thus improving the collaboration THE WORLD
between
knowledge workers.

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 Enterprise Service
Computing

28
 Service-Oriented Architectures (SOA)
“Service-oriented computing is one of the major trends both in business engineering and software technology. The main idea of
service orientation is to capture business relevant functionality as a service and provide sufficiently detailed information so that
customers can use it.”

Service-oriented
architectures (SOA)
General idea of service orientation is applied to services provided by software
systems
Services communicate over the Internet. This means that services are expected
to be used in business-to-business scenarios, where the participants are connected
by the Internet
- Are software architectures that provide an environment for
describing and finding software services, and for binding to
services.
- Important in environments where many services are available
and where the set of available services changes over time
- To work easily, flexibly, and well together, services must be
based on shared organizing principles that constitute a
service-oriented architecture.

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 Service-Oriented Architectures (SOA)

• The interactions between the three primary roles in service-

oriented architecture are publish, request/reply, and bind.

• The service provider publishes service specifications in a

service registry, and the service requestor searches the service
registry and finds suitable services.

• The service registry provides the service requestor with

information that allows the service requestor to bind to the
service and, eventually, invoke it

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 Enterprise Services

⮚ “Services need to be specified in a way that the specification of services is

decoupled from their implementation. Detailed specification of services
facilitates the flexible configuration of services by composing services to
achieve complex functionality.”

⮚ Service orientation is also one of the main influencing factors for enterprise
application integration.

⮚ Enterprise services architecture is based on the understanding that complex

applications will be increasingly built on top of existing functionality.

⮚ This functionality is provided by legacy systems, which are an important

asset of companies

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 There are a number of current trends that motivate the development of enterprise
Rise in the power of the
customer
Value-added services are
essential, because customers
can change suppliers easily,
without much effort.
Positive user experience is
important
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services:
Systems transparency
The Internet has brought
customers and suppliers inside a
company’s IT infrastructure.
Weak or missing integration of
enterprise application systems
will be immediately exposed to
the customer
Rise in computer mediated
interaction with customers Products as services Multi-tier applications
and suppliers
There is also a trend towards
Corporations are
Companies differentiate multi-tier applications, where
increasingly perceived by
themselves on their service
the set of services they each tier is provided by a
to their customers.
provide different enterprise.
 Business Process Management Landscape

33 Continued on next slide

 Business Process Management Landscape

34