Enterprise Architecture Handbook part 5

This post is an expanded version of a part that is going to be presented at the Enterprise Architecture Conference Europe 2014.

After value chain design, we must move to the next level, business processes design foundation (the detail about how activities will be executed do not fit in this level [1]). The main error in this phase is to document and model processes . What is at stake, is far above if the process model is accurate or not. What matters are the architectural principles on which the process will be designed. It’s a matter of choices. For example, if you lead a development team to build a new car model, choices must be made regarding if the car is going to run with petrol only, it will be a hybrid or a plug-in hybrid. In the end a car will roll out from the factory independently of the kind of propulsion that was chosen in the early design stages, but the way it is built and the fit for the market where it will be introduced is a result of the designing choices that were made.

For many years we have heard how BPM eliminates silos within companies, because when designing a process it goes through the various departments and the communication barriers are broken, as also, the formal reporting and hierarchical pyramids tend to fade. I tend sometimes to believe this harmonic operation (I am fooling myself), but as soon the organization overcomes the organizational silo syndrome it starts to suffer from the process silo type. The old organizational silos, became  the new process silos.

Imagine the following scenario in a bank about how process silos emerge:

You are dealing with a mortgage process. The process have a super system that can control important process aspects like bottlenecks, particularly when there are too many reviews of credit proposals because internally there is no agreement on the nature of the proposal or based on customer feedback that rejects and requires revision; the time it takes to submit a proposal to the customer in order not to let the customer frustrated, waiting with the sensation that was let down and goes to talk to another bank. There is also a self service portal that allows customers familiar with this new kind of interaction, submit the mortgage application. Risk assessment is automatic, proposal assembly is also automatic. Human intervention only occurs when it’s necessary to approve mortgages above predefined amount and to carry the evaluation of the asset.

Under a process silo perspective, this approach is perfect. Under the principles of Viable System Model (VSM) is not conducive to good results. Why? Because in a mortgage process, even if “supposedly” implements an effective risk policy that turns in higher than expected customer default it cannot be seen with a unique, single problem of a debt management process. When that is the kind of vision that managers have, the company is suffering from the process silo effect. The two processes are intimately dependent, particularly when a breach occurred during the risk assessment. There are certainly exogenous factors that determine the default existence and these can be identified in the specific process external environment, which in accordance with the principles of VSM lies in the horizontal dimension of the system 1 (operations). At this particular time, yet due to the economic instability of the euro zone, people, companies, had a solid financial health, equity and collateral, were deprived of their sources of income, earnings and enter into oblivion. Something unpredictable that would never be detected at the time of risk assessment was carried, particularly if it had been conducted circa 2005. It is interesting that in the banking sector, there are those who implement what Michael Rosemann designates as positive deviants. In personal loan business, account managers that are part of the province braches are more attentive to the actual financial health of companies where people work. They talk directly with the company managers, they stay in site, they see the trucks coming in and out, they know where the goods are being shipped to. If the company’s financial health is questionable or even are aware that the same company will relocate and close doors, this kind of managers will not expose the bank to risks and offer credit, whatever risk assessment tells them to do. It is curious that some years ago, a manager of a very big chemical company labeled the fellows from the corporate risk management unit “the guys from the office”. For those who have sufficient professional experience, clearly understand how these people can lack the sensors necessary to make good decisions like the bank managers that belong to province branches.

In this sense, the basic principles to design a business process that does not undergo into the process silo syndrome are as follows :

1. It must have a purpose. This is the most important principle. A process must deliver a result (a result is not an output). In a process like opening a bank account, the customer wants to be able to execute account operations independently of the channels he wants to interact with when he made a choice during signing the papers necessary to open the account. From the perspective of a bank these results should be identical, which adds for example not allowing opening an account for the purpose of money laundering.

2 . It must have a proper environment. What part of the external environment of the organization can tell you about the particular process? What external forces affect its operation?

3 . It must have defined boundaries. Who is addicted to process design, tends to think that setting boundaries is the same as defining the scope of the process (which in project oriented organizations is recorded in a improvement project “Business Case Template”) . Boundaries unfold in two dimensions :

  • Horizontal Dimension: What are the stakeholders in the process?
  • Vertical Dimension : What are the processes with which there should be interaction?

4 . The process have feedback mechanisms, regulation and control. Performance measures that matter. Measurement results are available to stakeholders? How to prevent lack of transparency communicating results outside the organization (what organizations typically like to communicate to regulators but hide from the customers). What is the “algedonic” channel? How to prevent critical information that puts into the organization in jeopardy, because is hidden and filtered by the hierarchical structure?

5 . What resources are needed ? Human , systems , equipment, facilities ? How they are qualified to perform ? Who is responsible for performing certain activities ? What are the goals? How to evaluate if the resources exists to achieve those goals ?

These are the basic principles needed to assure process viability, within the maximum recursion level as VSM defines (from process, sub process, activity and tasks).

Let’s concentrate on the example we have been working from the previous post, The Engineering Council.

One of the important aspects when modeling architecture is reflecting in the high-level diagrams that were previously created. In this perspective, we see that within the realm of “Membership” service, the value expected to be achieved is that engineers are “de-facto” engineers . This is our purpose. In this sense, lets dwell on the Admission and qualification management of members process.

1. On purpose. This process is responsible for assigning the title of Engineer or “de-facto Engineer”, i.e. , have the skills necessary to design and build bridges or designing information systems that are responsible for the management of nuclear plants. The way the skills assessment is carried is very detailed and we will not expose it here (it can be formalized in a BPMN diagram if you like), just to provide some insight includes among others, after receiving the application for admission: Evaluate the completion of the degree of Engineer; Undertake a traineeship, Present a traineeship thesis; Create technical reviews, etc.

2 . On a proper environment. This particular process has a very unique environment. It is the society. Very few organizations whose own environment is so vast and simultaneously as critical. In the field of engineering, we can be dealing about risks of human life. A poorly designed bridge falls. A poorly designed critical system, can cause an explosion. A poorly designed automobile can cause accidents. Within this large specific environment, candidates are members within each specialty colleges (mechanics, electricity, construction, biology, etc).

3 . On the boundaries.

  • Horizontal boundaries. The horizontal boundaries are about the nature of interaction with stakeholders . One of the biggest mistakes of process design is to ignore who are the real stakeholders. There is a tendency to ignore them, if there is no direct interaction in execution mode, for example, in the particular circumstances of the case “Admission and qualification management of members” there not a single activity to interact directly with the headquarters of the Engineering Council, since the local branches have total autonomy. However, the headquarters exercises control mechanisms in terms of applicable polices and internal regulation (some are adaptation of national laws) under VSM system 2, and has particular interest in the number of new admissions and “desertions”, as also it have a particular interest to constitute technical groups that provide services to enterprises or government agencies. The stakeholders of this process are:
    • Members ;
    • Technical committee that evaluate the proposals;
    • Entities that offer the possibility to perform an traineeship;
    • The Board of the local branches and the Board of the National Engineering Council.

 

  • Vertical boundaries. The vertical boundaries are about the nature of interaction with other processes , whether internal or external to the organization . As mentioned earlier in this article  we have to eliminate the risk of the silo effect. If you have already set the high-level architecture of services and the value chain, it is easy to define the interactions with other processes . In the case of process “Admission and qualification management of members” interactions are:
    • Partnerships Management. Because after the admission of the member, you are offered the possibility of obtaining a package of services offered by external entities under preferential conditions.
    • Training Management. The Engineering Council offers a catalog of specialized training in that members may be interested in signing up . This catalog of training is normally open to members and non-members, hence for the purposes of assigning specific qualifications related to acts of engineering , it is important to intimate relationship between the process of training management before, during and after the candidate has been admitted.
    • Internship Management. In some cases, it may be envisaged that the candidate has to undertake an internship, particularly if it’s getting out of high school and does not have professional experience.
    • Management of information and complaints requests. The member can complain about decisions made during the application process.
    • Management of disciplinary matters. Before, during or after the admission of a new member, questions about the profession can be raised . It is important that if complaints about fraudulent acts, prevent the member admission or accelerate member demoting.
    • Quality Management. The assessment of member satisfaction during the admission process is an important aspect of consultation about members needs and expectations.

4. Feedback mechanisms, regulation and control. Depending on the degree of maturity of the organization , there may be more , or fewer procedures , KPIs , and Dashboards . Who has experience implementing BPM programs, know that one of the paths that is normally used, starts by documenting the processes, formalizing them into flowcharts, describing and documenting it in the form of procedures and work instructions and identifying the applicable laws and regulations, then moving to think what kind of KPI’s are important to monitor process performance by communicating it via dashboards and reports. In some organizations the lack of rules and monitoring capacity and visibility is critical and must be given the relative importance of these aspects. However, and because in this case it had been adopted and implemented quality management system we will not dwell on this issue in particular. I ‘d say it’s more important to know how operations should be designed and make them happen as designed than to have documents and dashboards. The advantage lies in the execution With regard to control, what is truly important is setting the algedonic channel. In this case we are talking about the lack of applications for membership or membership cancellation. Being a member of the Engineering Council implies pay memberships fees. These fees are the main source of revenue of the organization (the other businesses that can be seen in the value chain (like advertising) are waste, if you delete the revenue coming from membership and perform an acid test [2] , the organization enter in bankrupt mode in the next day).

5. What resources are needed? Human , systems , equipment, facilities? The way VSM was conceived during the mid 50’s of last century fits in the budgeting process. Although this classical process still exists in the majority of organizations what is important here is to highlight more than having the right resources to run, is the qualification (skills and ability) authority (delegation of duties) to perform. Dietz [3], who worked around the Ψ theory, expressed clearly in the operation axiom about the three conditions that an actor must have to be able to play its role in a process and that based on what we already mentioned above:

  • Responsibility: By virtue of the values, culture and policies of the organization one represents, is expected to exert the granted authority in a responsible way.
  • Authority: The actor can perform a particular activity on behalf of an organization in a process. Authority can be delegated.
  • Competence: The actor has the necessary knowledge to perform the role? If it is a Controller, has a background in finance and accounting to understand whether the entries in the financial statements are correct?

These architectural principles of process that I leave here listed here are vital to achieve operational stability, eliminate the process silo effect and is headed towards system engineering thinking and ensure the viability of the organizations, instead at the expense of creating a company of heroes.

I leave here the principle of the vertical borders.

Vertical boundaries

Vertical boundaries

[1] It’s not a matter that it’s not important, but they are a product of the foundation decisions that will be taken. They can be a function of the channels the process will use to be executed, they can also be a function of decisions towards more structured or loosely coupled execution. The result is the important part, not how they will be detailed, hence there will not be any BPMN diagrams or alike.

[2] A critical financial indicator that determines whether a firm has enough short-term assets (money in the bank) to cover its immediate liabilities without selling inventory.

[3] Enterprise Ontology – Jan L.G. Dietz –  Springer – ISBN-10 3-540-29169-5

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2 thoughts on “Enterprise Architecture Handbook part 5

  1. Pingback: Enterprise Architecture Handbook part 6 | End to End BPM

  2. Pingback: Viable System Model meets Enterprise Architecture | End to End BPM

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