Business process management ± lessons from European business

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Business Process ManagementJournal, Vol. 5 No. 1, 1999, pp. 10-32.# MCB University Press, 1463-7154

Business processmanagement ± lessons from

European businessJean-Philip Pritchard and Colin Armistead

The Business School, Bournemouth University, UK

Keywords Organizational change, Organizational effectiveness, Process management, TQM

Abstract This paper reports on the findings of a survey and case study research into theunderstanding and application of business process management (BPM) in European companies.The process perspective is increasingly being seen as a mechanism for achieving competitiveadvantage through performance improvement and in response to market pressures, customerexpectations for better and more reliable service and increasing competition. We reveal the level ofimportance European companies attach to BPM, what it means to them and what they have donein practice. The paper draws on a postal survey conducted with quality directors and businessprocess managers in organisations which are members of the European Foundation for QualityManagement (EFQM) and case studies in a number of organisations regarded as being leadersin the adoption of BPM. The study has helped to highlight some interesting approaches and revealfeatures which are important for BPM to be successful.

IntroductionOne of the difficulties with business process management (BPM) is that ofterminology. The term process can be found in many disciplines whichcontribute to our understanding of organisations in the management literature.An operational view is seen in quality improvement (Deming, 1986), totalquality management (Oakland, 1989) and the concept of just-in-time (Harrison,1992). Systems thinking (Jenkins, 1971; Checkland, 1981), cybernetics (Beer,1966) and systems dynamics (Senge, 1990) give a richer meaning to the term.Organisational theorists have also talked in terms of social and organisationalprocesses (Burrell and Morgan, 1979; Monge, 1990). A useful review of theseantecedents has been provided by Peppard and Preece (1995).

The domain in which the current study is centred develops out of recentapproaches which seek to improve organisational effectiveness through theattachment of managerial thinking to Total Quality or Business Excellencemodels. These have been essentially practitioner driven and not grounded inacademic theory. Examples include the European Foundation for QualityManagement model (EFQM) (Hakes, 1995) and the Malcom Baldrige NationalQuality Award model (MBNQA) (George, 1992). While these models espousemulti-factorial and multi-constituency models of organisational effectivenessthey remain essentially goal-based (Cameron, 1986). They have also developedfrom a strong operational framework and often have absorbed the approaches of

We would like to thank Bob Dart, Simon Machin and Tony Grant from Royal Mail. We alsogratefully appreciate the assistance of the EFQM, Rank Xerox, British Telecom, TNT andNortel during the various stages of our research.

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business process re-engineering (Hammer, 1990). They have also been influencedby strategic thinking in the strong process orientation of the value chain analysis(Porter, 1985) and they accommodate the resources based view of the firm (Grant,1991). Use of the models may lead to questioning the design of an organisation ata strategic level by reassessing the value of functions in favour of processeswhich transcend functionality (Ghoshal and Bartlett, 1995; Galbraith, 1995).

However, neither the EFQM nor the MBNQA provide direct guidance on howto deploy BPM. Approaches often incorporate attempts to identify businessprocesses and to classify them as being operational, supporting or directionsetting. This activity is often facilitated by consultants using a range of methodsbut commonly including aspects of process mapping at least at the top level ofthe organisation. There is evidence that adopting the process paradigm isfavoured at least by senior managers (Garvin, 1995), although it is by no meansclear that this is a widely held opinion throughout organisations. While it ispossible to point to aspects of good practice in BPM, at least at an operationallevel (Armistead, 1996), we do not know how organisations apply the notion inpractice and what they have found to be the key components of a BPM approach.

MethodThe aim of the research has been to develop a better understanding of BPM andhow it can be applied as a route to achieving organisational effectiveness. Wehave been especially interested to find out how companies have used a businessprocess perspective as a way of managing their whole organisation, rather thanjust the application of process improvement techniques. In particular we havesought to explore the following questions:

. How important is BPM for European managers?

. Is there a common understanding of BPM among European organisations?

. How are European organisations implementing BPM in practice?

In addressing these questions we hope to shed light on how organisationsconceptualise BPM and draw on their experiences in order to enlighten othersboth in terms of strategy formulation and deployment. This paper discussesthe findings of the research and proposes lessons which can be learnt.

During our research we have built up a rich databank of case study material.The case studies have been compiled using an open-ended interview formatwhere senior executives (usually the quality director or business processmanager) have been invited to elaborate on their organisation's approach toBPM. The interviews were recorded and transcribed and a cognitive map wasdeveloped to identify concepts. In some cases data from the interviews weresupplemented by material used for internal self assessments against the EFQMmodel. Organisations were typically chosen because they were known to haveadopted BPM approaches. This paper refers specifically to case studies withRank Xerox, Nortel, British Telecom and TNT, all of whom have been winners insome form (either directly of through subsidiaries) of European Quality Awards.

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Our other main source of data is a survey conducted during the autumn of1996 of members of the EFQM. This built on earlier case study work. We usedthe EFQM as a target population for two main reasons. First, processes are at theheart of the EFQM's model of business excellence and therefore we felt that thiswould constitute a suitable practitioner group. Second, we were keen tosupplement specific data from our case studies with an indication of the attitudesand approaches to BPM of a broad cross-section of European organisations andthe EFQM's member profile served this purpose. The survey was first pilotedamong European companies and drew on themes identified in previous research.It did not seek to interrogate the process element of the EFQM model. Out of atotal of 556 members 30 percent agreed to participate in the survey, of which 55.4percent (16.5 percent of the total membership) responded. The target recipient forthe questionnaire was again a quality director or business process manager. Thesurvey produced both qualitative and quantitative data. By splitting the totalpopulation into two samples according to the perceived degree of progress atBPM (Early Stage v. Well Progressed), we were able to examine differences in themotivations of each sample, how they implemented BPM, the difficulties theyencountered and their perceived success.

Research findings1. How important is BPM for European managers?Figures derived from our survey of members of the EFQM suggestunequivocally that BPM is a major issue for European businesses. Eighty-twopercent of respondents cited BPM as being very important to their organisationor business unit and 15 percent said that it was fairly important.

The drivers for BPM and the benefits achieved (Table I) help to explain thelevel of importance attached to it. The need to work smarter, better and fasterin a rapidly changing market place appears as the motive in many cases. Thisis coupled with the realisation that traditional organisational structures andoperating procedures are ill-suited to doing this. The vision and commitment ofsenior management was also noted as being a key driver.

Given that processes are at the heart of the EFQM model it is perhaps notsurprising that the majority of respondents to our survey endorsed BPM as ameans to achieving business excellence. Our case study work has certainlyshown that BPM is a logical progression for those companies which have beeninvolved in TQM. In fact only 3 percent of survey respondents said that they hadnot yet started BPM (Table II). However, the majority of respondentorganisations proved to be at what we would describe as an early stage of BPM.

Three main drivers Three main benefits achieved

1. The need to improve responsiveness 1. Improved relationship with customers

2. The competitive threat 2. Better cross-functional working

3. The need to improve quality 3. A change in organisational culture

Table I.Drivers and benefits ofBPM


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Unfortunately the survey gave few real clues as to the type of organisationadopting BPM. There appeared to be little difference between public andprivate sector companies or between manufacturing and non-manufacturingindustry. Public sector interest in the EFQM model appears to be increasingrapidly, however, and although statistically insignificant, company size didappear to be a factor, with relatively few small organisations having muchexperience in BPM. In the absence of solid evidence we would propose thatBPM is most relevant for larger network organisations perhaps with long-established working practices. It may be less of an issue for small companies orthose just starting up, given their proximity to the market and more narrowlydefined product/service offerings. Perhaps the most interesting observationfrom the survey is that there appear to be few world class role models.Respondents disagreed on which organisations were best at BPM, althoughRank Xerox (9 percent) and Hewlett-Packard (7 percent) were most mentioned.

While our case study work focused on strategic approaches, the EFQMsurvey revealed the attitude of employees to BPM at different levels of theorganisation. This showed a generally more positive attitude among all levelsof those organisations which were well progressed at BPM (Table III). Amongorganisations which were still at an early stage of BPM, supervisory orfrontline employees expressed more negative attitudes.

The survey also revealed that the more progressed organisations had learntover time what it was they were trying to achieve and were clearer about thebenefits. On the other hand, some organisations appeared to be unclear aboutprecisely why they were pursuing BPM, other than that it appeared to be the'`right'' thing to do and they recognised that there was a danger of being leftbehind by the competition if they ignored it.

Employee groupEarly stage

%Well progressed

% Significance

Senior executive 83 (56) 100 (23) ±Middle manager 80 (54) 91 (21) ±Supervisory/frontline 56 (38) 78 (18) *

Note: [Significance: ± denotes no significance; * denotes significance at 0.05; ** denotessignificance at 0.025]

Table III.Positive attitude to

BPM

Population: All (92) SampleStage of BPM % %

Not started 3 (3) Early stageJust starting 16 (15) 73 (68)Some way progressed 54 (50)Well progressed 24 (22) Well progressedWorld class 1 (1) 25 (23)

Table II.Extent of progress

with BPM

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2. Is there a common understanding of BPM among European organisations?Our case studies reveal that for many organisations BPM has emerged out ofan initial experience of BPR (e.g. Nortel, BT) and such improvementprogrammes have focused particularly on operational processes. In someinstances this has had a significant bearing on the shape of BPM strategies.However, for some organisations BPR is not a part of their BPM approach:

We're not looking at business transformation, we're a very healthy company and the answeris to stay healthy and to continue the growth, reduce some of the waste and provide a betterservice.

Other interesting features identified during our research included the willingnessof organisations to pursue structural redesign as part of BPM (although this wasby no means common to all); the extent to which BPM was integrated withstrategic planning processes and change management programmes; the use ofnetworks and matrix structures as a dimension of BPM; and initiatives to tacklethe cultural issues associated with process management.

Perhaps the most revealing definition of BPM we have come across isencapsulated by Rank Xerox's approach to its business processes:

Business processes are designed to be customer-driven, cross-functional and value-based.They create knowledge, eliminate waste and abandon unproductive work, yielding world-class productivity and higher perceived service levels for our customers.

While it is difficult to generalise, a common view expressed was that BPM wasmore than a series of tools and techniques for one-off improvements in processperformance. Instead it was seen as a ``holistic'' approach to the way in whichorganisations are managed. This integrated the process perspective into allaspects of the business and implied a commitment to managing by process inthe long term.

Whereas the case study interviews allowed us to test the understanding ofBPM among practitioners, the EFQM survey was essentially oriented towardsactions and experiences. As such the survey revealed that lack ofunderstanding of BPM was regarded as the biggest difficulty for organisationsin the initial stages of adopting a process approach (Table VIII).

3. How are European organisations implementing BPM in practice?Detailed descriptions of how BPM is typically implemented by Europeanorganisations are contained within the body of the case studies in the Appendixto this paper. These are discussed in more depth later. However, the EFQMsurvey also revealed some interesting insights into issues of implementationand in particular the use of process owners and systems of reward andrecognition. In addition, it provided data on the extent of structural change andthe most frequent difficulties encountered with BPM.

Appointment of process ownersTables IV and V show that well progressed organisations seem to name ahigher proportion of process owners and that these are more often to be


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found at both a senior executive and supervisory/frontline level than is thecase for early stage organisations. An interesting link with the concept ofprocess owners is the level of process definition. Here we found that themajority of well progressed organisations identified no more than threeprocesses (at the highest level) for each of four categories of process,whereas those at an early stage referred to 3-10 for both operational andsupport processes.

Reward and recognition systemsTable VI shows the extent to which reward and recognition appear morecommonly linked to aspects of BPM for the well progressed sample than for theearly stagers.

Level of process ownersEarly stage

%Well progressed

% Significance

Senior executive 59 (40) 91 (21) **Middle manager 59 (40) 57 (13) ±Supervisory/frontline 24 (16) 48 (11) ±

Note: [Significance: ± denotes no significance; * denotes significance at 0.05;** denotes significance at 0.025] p � 0.05

Table V.Level at which process

owners are appointed

Process owners appointedEarly stage

%Well progressed

% Significance

Non appointed 13 (9) 4 (1) **Appointed for <1/2 ofprocesses 37 (25) 13 (3) **Appointed for >1/2 butnot all 26 (18) 26 (6) **Appointed for allprocesses 22 (15) 57 (13) **


Table IV.Appointment ofprocess owners

Organisational levelEarly stage

%Well progressed

% Significance

Senior executive 29 (20) 57 (13) ±Middle manager 31 (21) 48 (11) ±Supervisory/frontline 25 (17) 52 (12) ±


Table VI.Extent to which

reward and recognitionare linked to BPM

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Structural change as a result of BPMIt seems that well progressed organisations are more likely to have experiencedstructural change as a result of BPM than early stage organisations (Table VII).Structural changes imply alterations in the organisational structure to takeaccount of a process architecture

Difficulties encountered by organisations implementing BPMOf the total population surveyed the majority of respondents (36 percent)identified ``lack of understanding of BPM'' as the single most difficult factorthey had encountered in implementing a BPM approach. However, while theearly stage sample cited this as their main difficulty, the well progressed samplereferred to a ``lack of consistency in the approach to BPM across theorganisation'' and ``confusion or ambiguity between functions and processes''(Table VIII) as the most difficult factors.

DiscussionIn trying to make sense of the findings from both the case study research and ourEFQM survey we have sought firstly to identify the most common features ofBPM strategies (see following list). We have found it useful to address thesefeatures by thinking in terms of an organisational framework for BPM (Figures 1and 2) and we use this to discuss how organisations seem to be applying BPM.

The common features of BPM approaches are as follows:

(1) The organisation conducts an analysis of its external market valuechain and identifies its key business processes in relation to this.

(2) A process architecture is developed as a means of understanding theorganisation; this may involve the mapping of business processes.

Change of structureEarly stage

%Well progressed

% Significance

Yes 54 (37) 70 (16) ±No 32 (22) 22 (5) ±


Table VII.Has structural changetaken place as a resultof BPM?

Early stage Well progressed

Lack of understanding of BPM (40 percent) Lack of consistency of approach to BPMacross the organisation (39 percent)Confusion or ambiguity between functions andprocesses (39 percent)

Note: [Significance: no significance at 0.05]

Table VIII.Greatest difficultyencountered with BPM


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(3) Process owners are appointed with responsibility for the overall process.

(4) Process metrics and effectiveness criteria are established and cascadeddown to frontline teams.

(5) Performance monitoring is tailored to address the process dimension;

(6) Improvement opportunities are identified and actioned.

(7) The organisation plans, communicates and trains around the processmodel.

(8) In some cases the organisation's structure is altered to reflect theconcentration on processes e.g. through the establishment of separatetrading units or a matrix style of management.

Our research shows that BPM can have effects at different levels of organisations.When an organisation adopts a BPM approach it may be used to develop anarchitecture for the organisation around processes. This may be further translatedinto changes in organisational structures. We see that the way in which these

The Organisation

StrategicLevel

StrategicTrade-offs

Business Process Architectureand Criteria for Operational

Effectiveness

Business PlanProcess Targets

Breakthrough Plans

Process TeamsTask Level

Integrator

Figure 1.Organisational

framework for BPM ±generic levels of activity

The Organisation

Key Drivers for BPM:Falling Margins & Increased Competition (Nortel)Adoption of the EFQM Model (TNT)Need to Improve Quality, Productivity& Strategy Deployment (RX)Rising Operating Costs, Competitor &Regulator Activity (BT)

Organisation/EntitiesRe-structured (RX, BT, Nortel)Business Architecture (RX)Valve chain (BT)Key Process Cycles (TNT)Core Process Map (Nortel)

Xerox Management Model (RX)The Perfect Call (RX)Strategic Planning & Management Process (BT)Balanced Score Card (BT)The Perfect Transaction (TNT)Weekly KPI League Tables (TNT)Process Review Teams &‘Plan, Do, Check, Act’ cycle (Nortel)

Control of Process VariabilityKey Performance TargetsEmpowered Work TeamsTeam level Knowledge ManagementISO 9000 and work flows – specifyingthe ‘what’ rather than the ‘how’Developing a common understandingabout the processes at the front-line

StrategicTrade-offs

Business Process Architectureand Criteria for Operational

Effectiveness

Business PlanProcess Targets

Breakthrough Plans

Process Teams

Figure 2.Organisational

framework for BPM:what organisations do in

practice

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approaches are followed may be directly influenced by the strategic choices anorganisation makes. The choices will of themselves influence the choice of criteriafor assessment of organisational effectiveness. We can see this clearly in the case ofXerox. The use of BPM at the strategic level is one of the most significant aspectsof BPM. At the task level processes have always existed in a visible way,especially in the operational sense. However, what we are seeing is the possibilityfrom the BPM approach of being able to tie the deployment from the strategic levelto the task level in a more effective manner. A BPM approach makes this possibleby linking the business planning process to process goals and targets through anintegrator process. Figure 1 summarises this generic approach for BPM with thestrategic level being linked to the task processes through integrator activities.

We can develop the generic approach with the detail of the experience of theorganisations we have studies. Figure 2 draws out the detail from each of ourcase organisations. We can see the drivers for strategic change. For instance,Rank Xerox's drivers were to improve quality, productivity and strategy whileBT was responding in rising operating costs, competitors and the demands ofthe OFTEL regulator. The influence of BPM on the top level of the organisationis illustrated by the existence of processes within an architecture of keybusiness processes. These are often presented in the form of a market valuechain as can be seen in the example of BT. It is significant that as organisationsprogress in their use of BPM they refine the number of top level processes. Thisprocess architecture allows clear assigning.

. Typically organisations were driven in their adoption of a BPMapproach by certain strategic imperatives (e.g. Rank Xerox's driverswere to improve quality, productivity and strategy implementation).

. The initial emphasis was on introducing BPM at the top level of theorganisation.

. This level involved the identification of a business process architecture(e.g. the BT value chain). Our survey revealed that the majority of wellprogressed organisations identified fewer processes (at the highest level)than the early stage sample for both operational and support processes.

. Degrees of importance were attached to business processes, oftenthrough the appointment of process owners. A vision of the organisation± expressed in process terms ± was formulated and criteria foreffectiveness (e.g. key performance indicators in TNT) were selected inaccordance with the organisation's definition of effectiveness.

. Ultimately this led to changes at the ``task level'' where teams andindividuals operate. What ensured that this happened in the intended waywas the degree to which the organisation managed to integrate itsstrategy development with the reality of day to day operations. Typicallya combination of planning and performance measurement mechanismsfulfilled this role (e.g. Nortel's ``plan, do, check, act'' cycle.)


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. Some practitioners regarded the articulation of their approach tofrontline teams as of secondary importance: ``We haven't majored ontrying to get people at that level (frontline engineers) to understand thecomplete end to end process.'' However, this had shortcomings: ``In theearly days we would design a process change and launch it leaving localunits to modify the detailed work level procedures. The problem (was)that engineers tend to be very inventive and before long we had theprocess being operated in many different ways across the country.''

The boxes in our framework (Figure 1) therefore constitute generic levels whereBPM activity seems to occur. The common features described earlier constitutewhat that activity typically is. Finally, the cases provide examples of specificapproaches used by four practitioners and Figure 2 re-casts them against ourframework of the organisation to illustrate how they may be viewed.

Lessons to learnThis research would seem to suggest certain opportunities from which apractitioner audience could benefit. For instance:

(1) Link BPM into strategic programmes. The case studies suggest that BPMshould be tied in with some kind of change management process (e.g. aswith Nortel) if it is to survive. Organisations we researched were usingBPM as an integral part of their strategic management processes (e.g. BT),linking BPM with Business Excellence strategies or using businessprocesses as a key criterion of organisational effectiveness. In contrast,BPR exercises have often been unable to sustain their momentum so thatthe process perspective only provided short term benefit. Similarly,organisations undertaking extensive process mapping or documentation(perhaps as part of ISO registration) have often been unable to deliveranything other than minor incremental improvement.

(2) Ensure clarity of BPM approach. At the top of the organisation it iscrucial that senior managers are clear what they mean by BPM and howthey intend to use it. A definition of BPM which fits with this view canthen be used to help articulate the strategy more widely. Typically, inthe initial phase of BPM the business process view is confined to a veryfew senior managers e.g. process owners are often at director level. Theinability of an organisation to determine and communicate its view ofprocesses or the way it intends to use that perspective can create a levelof cynicism among its members which may be difficult to overcome bythe time they are asked to implement that strategy. While this clarity ofvision and intent from the top may be an obvious component of anystrategy development and deployment exercise (and therefore notunique to BPM), it is worth reiterating because of the confusion whichcan surround the process dimension.

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(3) Address style and context within BPM. A key point is clearly that BPMstrategies have to be developed to fit the particular organisation inquestion and they have to address the context in which that organisationoperates. As ever the devil is in the detail of implementation. While thereare obvious similarities between our case studies, it would be unrealisticto expect an approach adopted by one to be directly transferable toanother. For Rank Xerox BPM has essentially meant the replacement offunctions in favour of processes. In Nortel, however, there appears to be a``coincidence'' of function and process with no intention to move to eitherextreme. Meanwhile BT has adopted the matrix approach and TNT'sunits are driven by key performance indicators which are inputs to thehigh level review of processes.

(4) Allow time to acquire a process perspective. Cross-functional processesoften challenge accepted and entrenched ways of thinking. In seeking toactually adopt the process perspective as ``the way'' to manage thebusiness, senior managers are faced with achieving a paradigm shiftand this may be a long term objective. This can be difficult for managerswho are used to looking for the next quick fix or the latest corporate fad.

(5) Achieve focus. The initial identification of processes may lead to toomany business processes which in turn ``spawns'' a whole host of wellintended but ultimately diffuse activity.

(6) Integrate top level BPM strategy with team level activity. The ability tointegrate the top level understanding of business processes, processimperatives and strategy, with what happens on the ground at the tasklevel among teams and individuals is crucial. One component of this isthe strong link between BPM and business planning and performancemeasurement and review (e.g. BT's use of balanced scorecards and RankXerox's use of process metrics in the ``perfect call''). The achievement ofthe organisation's longer term strategic ambitions for its processes ismade possible by the translation and cascade of high level goals andobjectives right the way down through the business. Metrics can bedetermined in such a way that they provide global indicators ofperformance and monitoring and review mechanisms can be establishedat all levels to ensure that the information provided is acted on.

(7) Acquire new process competencies. While the tools of planning,measurement and review are potential integrators, they are themselvesareas in which organisations often have to develop new competencies. Aprocess perspective requires you to manage and understand a fargreater quantity of information than has traditionally been the case inmany functional entities. Process data creates complexity in themanagement of performance data and while the systems orinfrastructure often already exist or can be quickly developed to supportthis, what seems to take time is nurturing an understanding of therelationship between process measurement and other metrics. New


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performance indicators are often introduced without reference toexisting measures. Similarly, while organisations are often keen to adoptmatrix styles of management, these can prove difficult to operate inpractice. Even a willingness to continually re-structure the organisationto support new ways of working means that managers are faced withthe constant overhaul of their performance monitoring systems.

(8) Consider the impact of BPM strategy at team and task level. Strategicdecisions about business processes ultimately impact on individualemployees further down the line, even if it is only that the nature of thetasks they perform changes. Organisations also face the paradox oftrying to ensure standard service delivery on the one hand, whileintroducing more empowered working styles which create the greaterflexibility required to meet changing customer requirements. Thismeans that issues of organisational behaviour and informal groupworking also need to be considered. The lack of communication aboutBPM strategies and how they may effect individuals is a feature of muchof our research. Often what we see at the frontline level is an apparent``awareness'' of process but essentially expressed through the use ofprocedure. Individuals do need focus and clear points of reference. Thuswe increasingly see ISO9000 and work flows being used in a supportivemanner, specifying the ``what'' rather than the ``how''. This is linkedwith the preoccupation of many organisations with getting theiroperational processes ``right''.

(9) Train around business processes. Managing by process implies aknowledge of end to end process operations. This needs to be nurturedover time. Training is increasingly being used at the frontline level tointroduce the process and customer-supplier concepts. In the case ofTNT this also extends to subcontractors and follow-up programmesensure that the message is reinforced. In Rank Xerox teams of fieldservice engineers are trained in the use of basic problem solvingtechniques and provided with executive information systems throughwhich they can conduct instant analysis of process performance. RankXerox's ``empowered work groups'' also go through regular assessmentswhich allow them to take on increased responsibility for managing theirown processes.

(10) Build a knowledge base around processes. The ability to superimposeinformation flows and lines of communication which support knowledgecreation and information sharing throughout the process architectureappears to be a prerequisite for BPM and particularly so at the tasklevel. Organisations are also realising that knowledge is hard earnedand quickly lost when people move on and yet this is only to be expectedin the today's climate of rapid change.

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ConclusionBusiness process management is becoming a more widely accepted way ofmanaging organisations across Europe. While there is clearly still muchinterest in the process improvement dimension of BPM, increasingly it is beingused in a more holistic manner to manage all aspects of the business and as avaluable perspective to adopt in determining organisational effectiveness.While the majority of organisations consider BPM as being a major issue forthem, few stand out as being exemplary. However, those which perceivethemselves as having made most progress can be distinguished from lessexperienced practitioners. The experiences of both provide some usefulindicators of how to apply BPM in practice. An examination of BPM indifferent organisations suggests that there is no one way of doing it. However,there does appear to be a certain commonality of approach which can beunderstood by reference to different organisational levels. Nevertheless,differences of emphasis can be detected and much seems to depend on issues ofimplementation. Key considerations in the deployment of a BPM approachinclude the clear articulation of BPM intentions, the link between BPM andstrategic programmes, the acquisition of process competencies, skills andknowledge, and the willingness to address people issues as part of an overallBPM programme. Particular areas to address which would prove worthy offurther research include the way in which organisations ensure that their BPMstrategies are understood and implemented at a frontline level and the extent towhich softer considerations of organisational behaviour and team dynamicsare addressed within this.

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Hammer, M. (1990), ``Re-engineering work: don't automate, obliterate'', Harvard Business Review,June.

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Appendix. Mini-cases

BPM in Rank XeroxBackgroundRank Xerox is strategically positioned as ``The document company''. It produces, sells andservices copiers, scanners, storage, print and fax machines and an increasing range of systemsand software solutions. Approximately 26,000 people are employed at 40 sites across Europe,including the European HQ at Marlow in the UK.

StructureThe country businesses are organised into `èntities'' which are subdivided into customerbusiness units (responsible for service delivery) and business division units (responsible forservice strategy). An entity core enterprise conducts service support activities (legal, finance, HR,quality, service).

Key driversThree drivers for improving business results have consistently been applied:

(1) superior market-perceived quality;

(2) superior productivity across the value chain; and

(3) excellence in strategy implementation.

Approach to BPMSince, 1992 there has been a progression from ``Kaizen'' or continuous improvement through tothe sharing of internal best practices, process simplification, re-design and re-engineering andultimately to ``business re-invention''.

Process architectureRank Xerox ceased being functionally organised in, 1992. It operates through six core processes:time to market, integrated supply chain, market to collection, customer services, infrastructureand manage for results. These are classified into ``management'', `òperational'' and `ènabling''processes. Current processes are mapped. Future state processes reflecting the business goalsand mission are being developed.

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NetworksThe organisation is managed via a number of networks (e.g. the European Service Network)which formulate and implement strategy.

Process ownersProcess owners exist all the way down through the organisation e.g. the Customer ServiceDelivery process is defined to many sub-levels and these are operated by teams of engineerswithin ``empowered work groups''.

Process measurementMeasurement is a key activity. Within the Customer Service Delivery Process metrics have beendeveloped to capture the ``voice of the customer'' (via external surveys and market research) aswell as labour productivity and more common in process metrics. These are shown in the``perfect call'' which is the result of combining best practices (Figure A1).

Empowered work groupsEWGs are formed when groups exist within a process. They plan, control and improve their ownwork processes, schedule their own work, review the group's performance and determinetraining needs. As they mature they are empowered with more processes. They are rewarded forgood performance as a group.

XMM certificationEach year business units undertake self assessments against the Xerox Management Model.This embraces Leadership, Human Resource Management, Business Process Management,Customer and Market Focus, Technology & Quality Tools and Business Results. Each of theprocess areas is considered.

Embedding business process managementEvery individual has a booklet which identifies a team name, mission, goals, vital few and listsall those processes which they are empowered to operate, together with their key metrics. The

AgreeETA

PartsPrediction

The Perfect Call

CustomerCall

Receipt

RemoteCall Assistance

DiagnosisDispatch

ConfirmCustomerproblem

ETA

Customer Request for Service

On SiteDiagnostic &

Repair

• % Calls within 5 secs• % Abandoned calls

• Ease of contact

• % Call Avoidance

• TelephoneAssistance

• Response time/tails• % Repaired 1st time

• Response toemergency

• Time per call• % Broken calls• Parts Logistics

Call• ETA met

• Recall• Wtd effective calls per day

• Engineer attitude

Reporting via GSM Fax/Laptop

Call informationvia GSM/fax/laptop

• % ETA achieved

VOC

FWSS RX Welcome CentreEmpowered Work Group

• Reliability

© Rank Xerox Ltd 1997

Figure A1.The perfect call


25

goal for any process is that it should be ``in control'' and ``capable''. Teams are trained in processcontrol, what it means and how to recognise when a process is out of control. They use executiveinformation systems to help with problem solving. Attention is also paid to process capabilitythrough Planning for Quality (PFQ).

The futureThe vision is to tap into the massive repository of ``organisational knowledge'' by ensuring thatthe everyday solutions of people on the ground are fed back into the product design stage. Thisimplies a closed-loop knowledge renewal process.

This case was prepared by Colin Armistead, Simon Machin and Jean-Philip Pritchard and isnot meant to illustrate good or bad management practices. The case is produced by permission ofRank Xerox #1997.

BPM in British TelecomBackgroundBT offers a wide range of communications facilities from domestic telephones to advanced datatransmission via satellite. It was privatised in 1984. The UK regulator OFTEL sets standardsand imposes constraints on the pricing of principal services. BT has a workforce of 130,000.Ambitions for global expansion are dependent on the ability to link up with an appropriatecarrier in the North American market.

StructureIn 1990-91 ``Project Sovereign'' re-organised BT into three customer-facing divisions: NationalBusiness Communications (for UK business customers), Global Communications (formultinational business customers) and Personal Communications (for personal customers). Italso comprises Group Business Management, Group Personnel and Group Finance, and operatesin nine zones. BT has cut management levels and shed 115,000 staff over six years throughvoluntary redundancies.

Approach to process managementBPM emerged out of BT's experience of TQM. The initial focus of work was to ``define theactivities, procedures and computer systems necessary to run the core BT business''. This wassupported by a £25 billion investment in the network and operating systems. Processes wereidentified, defined and documented. An integrated, process-based Business Model of BTemerged. Process mapping was guided by a central Process Management Unit and the output ofthis was shared widely within the business and used to prioritise and target improvementactivity.

Project breakout``Breakout'' was launched in 1993 to deliver more radical improvement and tackle excessiveoperating costs identified through benchmarking. Major re-engineering of key processes wassupposed to realise some £1.3 billion worth of potential productivity improvements identifiedwithin the value chain. Activity based costing was used to assess priorities for improvement andto set financial targets for re-engineering. Figure A2 shows the BT value chain model.

Internal market strategyService level agreements were introduced in 1991 to manage processes which crossed divisionalboundaries. These operated to ISO 9001 standards and were supported by matrix management.By 1996 BT had introduced the ``trading unit'' concept of self-contained businesses with profitand loss accountability. Service provision agreements, which constitute a more commerciallyfocused contract for the provision of goods and services between different parts of the business,have replaced SLAs.

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The BT value chainMuch of the early work in BT was to document and standardise processes. The value chainshowed how processes fitted together and identified boundary issues. This prompted the use ofSLAs. BPM therefore created a concentration on core activities.

BPM linked to strategic planningBalanced scorecards help translate strategy into action. Scorecard objectives give equalimportance to four areas: customer/key stakeholder, organisational learning, shareholder/financial and processes. Divisions or trading units have their own scorecards. Specific objectivesand measures reflect the criticality of different processes and thus align improvement activitywith corporate priorities. BT's Group Business Management is responsible for and integratesbusiness planning, processes and strategy. Similarly the strategic planning and managementprocess takes inputs from EQA self-assessment feedback and involves the active review of keyand critical processes. Scorecard objectives are the output of this process and they drive changeat the operational end.

Process management handbookIn, 1992 a handbook gave specific guidance on how to set up groups to look at processes. Itencouraged their depiction in a diagrammatic form and the identification of key measurementpoints within them.

CultureBT has tried to introduce a change in organisational culture as well as specific changeprogrammes. The ``plan do'', initiative sought to empower people at the front end of the operationand to move away from the rigidity of procedure. Other initiatives included the use of processspecialists seconded from all over the business, working together under the guidance of a processowner and using a problem solving process. These teams undertook continuous improvement orre-engineering activities as needs arose. Some 500 people were involved in breakout on a full timebasis, with another 1,000 participating part time. When these individuals returned to their parentunits they contributed to the spread of process knowledge and experience within BT.

Matrix managementFormal networks are used to manage process change and ensure organisational cohesion. Amatrix is made up of both processes and business units.

ISO 9001ISO was pursued on commercial grounds but it often reinforced the tendency for procedurewriting. Group-wide certification carried a heavy support cost which BT has had to rationalise.

AddressCustomerNeeds &

Requirements

Design,Build &

Operate theNetwork

Sell to &Service

Customers

ProvideService

Repair &MaintainService

BillCustomers

&Collect

Payment

Provide Support & Manage People

Provide Information Management

Operator Service

Figure A2.The BT value chainmodel


27

ISO is now seen to have value in terms of allocating ownership for design and change-control andis moving towards the removal of local variations. Many ``national'' standards for operatingprocedures are being published on the BT Intranet, making issue control, management of locallibraries and update problems redundant.

Process development groupsProcess groups were set up with representatives from the divisions. They are led by directors asprocess owners and report to a Senior Executive Team which determines business priorities andresolves issues of resource allocation. Each group sets process goals and monitors improvementactivity. ``Virtual'' teams of process experts from across BT can be sponsored to analyse why theprocess is not delivering added value.

BPM in TNTBackgroundTNT is one of the largest transportation and distribution companies in the world, operating outof over 200 countries and employing 69,000 people (8,500 in the UK). At the end of 1996 the TNTGroup merged with the Dutch KPN NV. The UK business retains autonomy in the managementand day to day running of its core activities.

Structure of TNTWithin the UK, TNT comprises three major trading divisions which specialise in differentmarket sectors: TNT Express Delivery Services ± domestic parcels delivery, TNT Logistics ±specialist distribution management solutions for individual companies with complex supplychain requirements and TNT Newsfast ± newspaper and magazine distribution. This case refersto the UK parcels operation which operates via a hub and spoke system and uses ``on timedelivery'' as a key performance indicator.

Approach to process managementTNT's BPM approach emerged as a result of it's first self assessment against the EFQM model.This suggested a hitherto simplistic conceptualisation of process activity and led directly to theconstruction of a process model which listed TNT's key processes by means of cycles. Processcycles are series of linked sub-processes. This enabled TNT to rationalise process ownership andminimise interface issues (see Table AI).

Key process cyclesProcess identification and reviewTNT's key processes are reviewed by the CEO and the Board once a year at the annual strategymeeting. The list is modified to take account of feedback from a range of sources (keyperformance indicators, customer and people surveys, self assessments, budget performance)and in accordance with the ``SPOCK'' checklist of key elements to review (structure, priority,ownership, continuous improvement and KPIs). This ensures that TNT's key processes cansupport and deliver its policy and strategy (see Figure A3).

Process ownersFor each process cycle a senior manager is appointed ``process owner''. At lower levels the focusis on key performance indicators, although staff are empowered to make a certain number ofchanges within local processes in order to achieve KPIs.

The perfect transactionInitiatives such as the ``perfect transaction'' try to get the process concept across in animaginative way. By pulling critical elements together from the administration, sales andoperations functions, it acts as a global indicator of performance for a typical transaction. Itencourages a cross-functional and problem solving style of working. Results are reported weekly

BPMJ5,1

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Table AI.Process cycles andownership


29

to all units and incentives are associated. Conflicting functional issues are resolved throughappropriate lines of authority; first the depot general manager and, if necessary, escalated upthrough the region to process owners.

Elements of the perfect transaction

. consignment collected on time

. consignment delivered on time

. consignment delivered intact

. delivery documentation complete

. clean invoice issued

. payment received by due date

Process mapping and ISO certificationTNT obtained ISO9000 registration in 1990. This entailed documentation of work instructionsand monitoring, control and approval of processes and equipment, and standards forworkmanship. The emphasis has been to minimise bureaucracy and avoid relying on writtenprocedures. Although flowcharting techniques have been used, there has been relatively littleprocess mapping. The need for formal documentation under ISO has been combined with adefined but ``fluid'' management style.

Process improvementContinuous review and improvement of processes is the task of process owners and a qualitymanager. This makes use of an analyse, define, pilot and evaluate cycle. All processes areaudited. Subsequent audits check that improvements are actioned. KPIs are chosen to reflectbusiness priorities and are based on customer feedback. They are themselves reviewedperiodically for appropriateness. An improvement paradigm ± owned by the quality director ±distinguishes between incremental and breakthrough change. It determines whether the actionrequired entails retaining, modifying or creating new approaches and the degree of improvementto be expected. Improvements are then prioritised in accordance with their impact on customersatisfaction, people satisfaction, business results and other stakeholders.

Best practice sharing through performance league tablesTNT's depots operate as separate profit centres and produce weekly profit and loss accounts.Competition is encouraged and overall performance improvement is tracked by means of leaguetables. Five key performance indicators are used.

INPUT

Current List of Key ProcessesExisting Process Owners

DATAKPI

Customer SurveysPeople SurveysSelf AssessmentBudget v Actual

‘SPOCK’ Review Elements

OUTPUTs

Current List of Key ProcessesExisting Process Owners

To be ReviewedS tructureP riorityO wnershipC ontinuous improvementK Pls

Determine Factor– to effectively deliver process outputs– most customer sensitive activities– closest hands on involvement– how can the process be improved– suitability as success indicator

CEO & BoardAnnual Strategy

Review

Figure A3.Identification of key

processes

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Weekly ``best ever'' KPIs:

(1) deliveries on time;

(2) stop cost;

(3) linehaul on time;

(4) direct depot operating cost;

(5) stops per vehicle.

Each is the responsibility of a single named manager. Targets are set quarterly based on the bestfour of the previous 13 weeks' results. They aim to stretch team performance. By identifyinglocal best practice TNT drives overall performance up to the level of the best depots. Everyone isencouraged to ``beat their previous best''. Individuals can see the impact of their owncontribution on the depot's performance since KPI targets are set at team level. TNT's devolvedstructure has enabled teams to be empowered to make limited changes to the way they operatewithin defined areas. This has created a ``team spirit'' where individuals are committed tohelping their own team do well.

TrainingTraining has sought to highlight internal customer/supplier relationships and stress the impacton the external customer e.g. depot staff are occasionally brought into the hub to see the impactthat poorly loaded vehicles have on the task of those at the receiving end. Each employee's jobdescription identifies where he or she fits into a process. Training programmes are alsorelaunched to ensure attitudes get reinforced and such training is usually extended to agencystaff and subcontractors.

BPM in NortelBackgroundNortel is a communications solutions provider. It pioneered the commercial use of digitaltechnology in the telecommunications industry and designs, manufactures and suppliescomplete product portfolios for wireless, switching, enterprise and broadband networks forinformation, entertainment and communications. In 1995, 15 percent of revenue went on researchand development.

StructureManufacturing sites exist worldwide. Nortel Ltd and Nortel Europe provide services in Europe.Nortel Ltd is the sales, marketing and service entity for UK customers such as BT and Cable &Wireless. It employs 1,200 people and incorporates the management team of its subsidiary Netas,which manufactures and sells public switching, business communications, transmission andpower systems, terminal equipment and related services through a workforce of 1,500.

Key drivers for business process managementEuropean expansion began in the early 1990s. European operations were organised alongproduct lines. Major customers who wanted system solutions had to talk to different productgroups. Prices and profit margins were falling, new operators were entering the market, therewere long lead times in modifying the advanced US technology and equipment to work withEuropean standards and specialist staff were being poached by competitors. In response Nortellaunched a re-engineering programme coupled with involvement initiatives.

Approach to business process managementIn 1993 consultants Kepner Tregoe facilitated a strategic review. A high level, core process mapfollowed which is central to Nortel's BPM approach. This concentrated on the core value chainand the important steps from a customer viewpoint. The focus shifted from producing highly


31

complex, one-off systems and the service side of the business was developed. Improved rewardsystems, training, facilities, and strong leadership helped transform the business. Nortel alsoadopted business teams with accountability for winning new business through to delivery of thecompleted system. This ensured that teams did not over commit and led to real behaviouralchange (see Figure A4).

Process mappingSince reorganising in 1995, Nortel has worked on specifying the map beneath each of the coreprocesses in the high level map, while trying to keep people away from procedure writing. Theyuse the ICL process mapping tool, ProcessWise and refer to value steps and decision points withkey questions of: What value do we create? Who is involved? What are the decision points? Valuesteps help focus on outcomes. Decision points help manage boundaries within the organisation.Instead of specifying detailed procedures, they focus on boundary conditions i.e. criticalinformation to provide for making the decision. This avoids restricting the freedom ofindividuals to act. Three levels of process were identified before the level of procedure writing.These correspond to a corporate, regional and local business unit level. Mapping started withcustomer facing processes. Identification of processes includes objectives, measures andstandards. A one page management report for each process provides focus.

Managing processes and integration with business planningNortel's core processes do not explicitly include a ``management process''. This is implicit in theway they manage. Similarly marketing is seen as elements of other processes. The ``managingfor achievement'' process is the annual setting of team and individual performance objectives,which are reviewed quarterly. Nortel's senior management board or ``Cabinet'' has four selectcommittees with delegated powers e.g. the ``Organisational Business Re-engineering'' selectcommittee looks after the implementation of process management, pay and rewards, and internaland external communications. Select committees establish principles and policies in their areas,resolve conflicts and set priorities. They constitute process review teams. Each has at least oneprocess owner. As lower level processes are defined, sub-process owners are put into place. Allcabinet members are trained in BPM, which is defined through a ``plan, do, check, act'' cycle. The``plan'' step considers the definition of value steps and decision points, training, resourceavailability, process capability and target setting/ benchmarking. The ``do'' step is the contentpart ± the ``functional flow''. The ``check'' step is the event of the process review team meeting,reporting performance against the measures. The ``act'' step is the change function thatdetermines what needs to be done. If a change impacts across the process model, a changemanagement process is initiated. There are two kinds of change programme: one involving earlyvictory teams ± short projects, with small focused groups, working for six to eight weeks,

Customer Processes

7. EnablingProcesses

1. StrategyFormulation& Planning

Process

2. ProductDevelopment

Process

3. ContractAquisitionProcess

4. NewOperations

Process

5. RepeatOperations

Process

6. CustomerServiceProcess

Customer Relationship Process

Supplier Relationship Process

Supplier Processes

8. Change Management Process

Figure A4.Nortel process

management

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initiated by training; the other involving bigger changes, impacting across the organisation,following a re-engineering approach. In all cases a project management methodology is applied,appropriate to the style of project.

Implementing BPMImplementation of BPM is seen as an important source of competitive advantage. Coreprogrammes are initially funded by the quality director. Account directors then pay back asbenefits are accrued, ensuring that only potentially successful programmes are initiated. Changemanagers are resourced through the line and report to the quality director during their 18-24month assignments. This exposes them to new experiences, usually in a stand-alone role withoutstaff, and succeeding through their ability to influence others. They have visibility usuallyassociated with more senior managers. This ensures that new ideas are constantly brought inand individuals return to their line functions with new skills. Up to eight such major changeinitiatives run at any one time. ``Process rooms'' at several sites also provide displays of processmaps and process related information.

Supporting systemsNortel realised its ISO standards implementation was heavily documented, centralised andbureaucratic. It was revamped (quality management system for a Vision 2000) to provide onlythe information people needed to do their jobs well and aspects like training. Nortel is nowupgrading it to a business management system on the Internet. It will show core process mapsand allow access to lower levels of maps, together with costing information. Narrative from selfassessment applications is also accessible.

Culture and alignment of functions with processesNortel's approach to BPM has been shaped by its culture which makes use of individual contactsand networks rather than procedures. Empowerment has been aligned with mission, vision,behaviours, values and objectives. Three areas for attention have been identified. One is aroundpersonal relationships, across the organisation and customer to supplier and includes managingcareers. The second is around what people actually do (job content). This is viewed as the energy.The third is the process, which is seen as the management of energy. Recognising these Nortelhas not moved to be a purely process based organisation, and has no intention to do so. It sees thedrive to processes as moving the boundaries of the functional organisation to coincide with theprocess organisation. Nortel employees still recognise their work group as the department, notnecessarily the process. Functions and processes sit together, with people working with just onemanager, so the functional group and process group are the same.

Business process management ± lessons from European business

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