Database Reference
In-Depth Information
Traditionally, positioning has been considered as an independent set of functional tasks split
within the marketing, finance, and strategic planning functions. Similarly, capability/capacity
has usually been considered the preserve of the individual operational departments that may have
mutually conflicting priorities and measures of performances (see Chapter 2, Section 2.1.3 “CRM
Reflects and Mimics the Integrated Nature of an Enterprise”).
The problem for many enterprises lies in the fact that there is a fundamental flaw in the orga-
nizational structures: organizational structures are
hierarchical
, while the transactions and work-
flows that deliver the solutions (i.e., products and services) to the customers are
horizontal
. Quite
simply, the
structure
determines who really is the customer. The traditional management struc-
tures condition managers to put functional needs above those of the multifunctional processes to
which their functions contribute. This results in
◾
Various departments competing for resources
◾
Collective failure in meeting or exceeding the customers' expectations
◾
Inability to coordinate and collaborate on multifunctional customer-centric processes that
would truly provide the competitive differentiation in future markets
The traditional mass marketing type of organization works well for researching market opportuni-
ties, planning the offering, and scheduling all of the steps required to produce and distribute the
offering to the marketplace (where it is selected or rejected by the customer). It takes a very dif-
ferent kind of organization, namely, the customized marketing-type organization, to build long-
term relationships with customers so that they call such organizations first when they have a need
because they trust that such enterprises will be able to respond with an effective solution. This is
customer-responsive management that we discussed in the Chapter 1, Section 1.2.2 “Customer
Responsiveness”.
BPM is the very process that manages and optimizes the inextricable linkage between the
positioning and the capability/capacity of an enterprise.
7.1.1 Value-Added View of Business Processes
Business processes can very easily be seen as the basis of the value addition within an enterprise
that has been traditionally attributed to various functions or divisions. As organizational and
environmental conditions become more complex, globalized, and therefore competitive, pro-
cesses provide a framework for dealing effectively with the issues of performance improvement,
capability development, and adaptation to the changing environment. Along a value stream (i.e.,
a business process), the analysis of the absence, creation, addition of value, or (worse) destruction
of value critically determines the necessity and effectiveness of a process step. The understand-
ing of value-adding and non-value-adding processes (or process steps) is a significant factor in
the analysis, design, benchmarking, and optimization of business processes in the companies
leading to BPM.
Values are characterized by value determinants like time (such as the cycle time), flexibility
(options, customization, and composition), responsiveness (lead time, number of hand-offs, and
duration), quality (rework, rejects, and yield), and price (discounts, rebates, coupons, and incen-
tives). We must note that we are not disregarding cost (such as materials, labor, and overheads) as
a value determinant, but the effect of cost is truly a result of other value determinants like time,
flexibility, and responsiveness.
