Corporate Performance Management

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August-Wilhelm Scheer

Wolfram Jost · Helge Heß

Andreas Kronz

Editors

Corporate

Performance

Management

ARIS in Practice

With 145 Figures and 5 Tables

123

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Professor Dr. Dr. h.c. mult. August-Wilhelm Scheer E-Mail: [email protected] Dr. Wolfram Jost E-Mail: [email protected] Dr. Helge Heß E-Mail: [email protected] Dr. Andreas Kronz E-Mail: [email protected] IDS Scheer AG Postfach 10 15 34 66015 Saarbrücken Germany

Original German edition published by Springer, 2005

Cataloging-in-Publication Data

Library of Congress Control Number: 2005936459

ISBN-10 3-540-30703-6 Springer Berlin Heidelberg New York ISBN-13 978-3-540-30703-6 Springer Berlin Heidelberg New York This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, speciﬁcally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microﬁlm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer-Verlag. Violations are liable for prosecution under the German Copyright Law.

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The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a speciﬁc statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use.

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Preface

Over the years, the discipline of process management has been discussed in terms of a wide range of issues and approaches. When the concept was first mentioned in the media 12 years ago, discussions initially centered on whether sweeping changes along the lines of Business Reengineering or smaller, incremental steps would prove more successful, or the optimum form of the notation for document-ing workflow sequences.

Since these beginnings, Process Management has become an important control in-strument in many companies, because its practitioners realized that optimizing a company's capacity to create value in the form of processes has a direct and im-mediate effect on the bottom line. While process optimization is undoubtedly a highly effective method of cutting costs, over the last few years much greater sig-nificance has been attached to the subject of customer orientation.

If you think about the last time you were dissatisfied with your supplier or pro-vider, and why this was so, you will very probably agree that the reason for your dissatisfaction had nothing to do with the product itself, but instead was related to the quality of service or processes: delivery dates that were not met, slow response times, the need to speak with multiple contacts etc.

The oft-quoted adage "If I can't measure it, I can't optimize it" applies equally to processes. It is therefore essential for companies to formulate their process objec-tives for times, costs, and quality in terms of concrete, measurable performance indicators. Then, the latent synergies in the company can be exploited to the full with benchmarking and process comparisons, and best practices can be identified. This understanding has been called "Corporate Performance Management" by the Gartner Group, and it refers to the use of "Processes, Methodologies, Metrics, and Technologies" in order to create an inextricable link between corporate strategy, planning, implementation and controlling. In order to assure a company's agility, its management must use tools and methods that enable the consequences of deci-sions to be evaluated quickly, so that the company can respond with flexibility. Synonyms for "Corporate Performance Management" are "Business Performance Management" and "Enterprise Performance Management".

Besides its direct use for optimization purposes, the importance of monitoring processes has also increased as a result of initiatives and statutory regulations re-garding corporate governance and risk management. For example, the Sarbanes Oxley Act requires that companies present proof of the effectiveness of their in-ternal control systems as part of their periodic company reporting programs. This means that essential process checks and the associated processes must be docu-mented and the suitability and effectiveness thereof must be tested regularly. Even the trend towards outsourcing processes is predicated on a clear definition of what is expected of the service provider in terms of process performance, and

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ne-VI Preface

cessitates the implementation of appropriate monitoring measures for testing com-pliance with service level agreements.

Disproving the old saw that builders' homes are the most in need of repair, IDS Scheer can demonstrate the remarkable success of implementing this process-oriented approach in its own house using ARIS Process Platform: among its other achievements, consistent process-orientation by a committed support team at the Customer Helpdesk cut enquiry processing time by more than half, and for this the team was honored with the "Helpdesk Award 2004", awarded by an independent technical panel at the end of 2004.

But have we reached the point where we can make sense of all these numbers, alerts and benchmarks and make the right decisions? What good is a whistling ket-tle if no-one knows how to turn the heat off? Process Mining methods have been developed and patented to ensure the consistent application of data mining tech-niques to process data, and which are available as part of the ARIS Controlling Platform, provide guidance in finding the important cause-and-effect relationships among millions of discrete items of process information.

Against this background, the trend towards attaching more and more importance to organizational knowledge and the analysis of organizational relationships, be-yond pure key performance indicator systems, is entirely logical. In companies with flat hierarchical structures and knowledge-intensive processes, success de-pends to an ever increasing degree on ensuring that the right employees – often separated by time and geography – work together and communicate efficiently. Rigid supervisory responsibilities and reporting paths are losing their former pri-macy; adhoc interaction, collaboration and working in communities merge with well structured workflows.

It is here that exhilarating challenges await today's managers, as they are called upon to combine new levels of freedom and motivation for the individual with a results-oriented approach to meet their own expectations for effectiveness and ef-ficiency.

This volume continues the "ARIS in Practice" series of articles published by the Springer Verlag. Contributions will focus on the use of the ARIS Controlling Plat-form in visualizing, evaluating and analyzing "actively lived" business processes in sectors such as the chemicals industry, telecommunications, energy manage-ment, logistics, and also banking and insurance. When these tools are combined with the requisite industry knowledge, they can be used to monitor company per-formance and set up a program of continuous optimization based on process-oriented key performance indicators.

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Preface VII

The editors wish to express their sincere thanks to all the contributing writers, without whose technical skills and efforts this book would not have been written. All contributors are named in alphabetical order at the end of the book.

The editors also wish to thank Mr. Michael Linke, IDS Scheer AG, for his con-summate management of the compilation of this book, and for his organizational support.

Saarbrücken, October 2005

August-Wilhelm Scheer Wolfram Jost

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