Key Messages
Engaging business people in the process design and ensuring their buy-in requires starting with building the business context. This is where Operating Models prove their value.
Defining Operating Models is especially essential when designing business processes for complex organizational setups and customer interactions (i.e. cross border, inter/intra-company, third party etc.).
Operating Models are created during the process design phase and are used to support the implementation and change management during build phase and roll-outs.
Mind the gap!
“Which gap??” you would be tempted to ask. Well…WHAT do you do? What is your business? How do you operate, and can you explain this to your IT frenemies or to the outside consultants managing your system integration? How do you build and maintain a mutual understanding of the fit between processes, IT systems and your operations throughout your business transformation? Does everyone know WHY and WHAT you must change to deploy your strategy?
How Operating Models bridge the gap between process design and business operations
From our extensive experience managing transformation projects, we can say that there is a “missing” link between process design and business operations. This missing link can put a strain on transformation initiatives, and it can either increase their cost exponentially, delay them or in worst case scenarios, completely derail them. We help you avoid these dangers with a structured methodology and approach.
Definition
In their most basic form, Operating Models dictate where and how critical activities are performed across an organization. In the context of a business transformation, an Operating Model is the blueprint for how resources are organized in enterprise entities and how they should interact with each other to achieve the strategic objectives of the business. Operating Models therefore show the execution of business processes across different enterprise structures including all involved business partners (vendors, customers).
Operating Models in Business Flows
Business Flows, our business transformation framework, offers a unique process and model driven approach, which combines the use of End-to-End business processes (scenarios) and Operating Models as the main blueprint for transforming an organization. Enterprises using Business Flows for their transformation are provided a comprehensive toolkit (Business Transformation Cookbook) to bridge their strategy, process design, and mode of operations. In this methodology, Operating Models are the missing link and serve as the linchpin between strategy, the implementation of said strategy, and execution.
Methodology
In Business Flows an Operating Model is defined by a set of flows. Each flow distinguishes the exchange of information, material, service, or value between a “sending” and a “receiving” enterprise structure. These flows are accomplished with the help of business processes, hence every flow in the context of an Operating Model can be linked to an End-to-End scenario and/or business process. We take all the flows, including the related information, the involved organizational units, and business partners and create an object-relation model which is embedded in the process repository.
Fig. 1 Example visualization of an Operating Model
Example
It is important to understand that companies typically require several Operating Models. Each Operating Model may have the same business model as an objective (e.g., after sales repairs as a service) but will vary heavily depending on the complexity of the involved enterprise structures and their organizational and geographic characteristics. Simply speaking, the more “boundaries” the flows must cross, the more complex the Operating Models become, and the more complex the required business processes typically are.
A simple example (Fig. 1) is the difference between providing services to customers within a country or to customers outside of the country. In this example regular customers inside the country don’t have to initiate a pick-up repair order because a regular pick-up service is provided (Milk run) whereas companies outside the country do.
After the Operating Models of the above mentioned example are created we can now filter and drill down into the specifics. In the Fig. 2 we have filtered the model for the “EU non AT customers” and all its flows. You see two Material Flows (inbound to the Service Center and outbound from the Shipping Point) as well as Information and Value Flow interactions with the Commercial Unit. In this perspective the intercompany flows (i.e. the material flow between Service Center and Shipping Point) have been deliberately hidden although they are included in the model.
Fig. 2 Operating Model and selected Material Flow attributes
Fig. 3 End to end scenario and Business Processes
Fig. 2 also shows the attributes of a selected flow and its linked business process (Perform goods receipt for customer-owned material) as well as the relevant End-to-end scenario (ASS Repair center services processing Fig. 3). Navigating via the URL to the End-to-end scenario allows us to validate each process against the specific sequence of interactions of the operating model. In this example, it would be interesting to check if the I2O Outbound logistics process fulfills all requirements for the cross border shipment (Fig. 2 - Material Flow ‘outbound repair’).
Uses and benefits
Using our Operating Models bridges the gap between business and IT by facilitating the communication and creating the synergy between your strategy, its implementation and execution. They support the implementation and change management during build and roll-outs, hence adding considerable value to the success of your Business Transformation. You will be able to create a common understanding of how it all (people, processes and technology) fits together. The Operating Models help you communicate the WHY and the WHAT you are changing to internal and external stakeholders at various instances along the transformation lifecycle for:
Supporting the business case for the ERP transformation project
Scoping and process design
Validating process models against ‘real world scenarios’
Conducting fit/gap workshops
Defining subsets of E2E scenarios and processes to fit certain template shapes / roll-outs
Deriving test scenarios
Analyzing all use cases related to specific E2E scenarios
Call for action
At bpExperts we work with you to embed the capabilities for continuous transformation into the fabric of your organization. If you are interested in learning more about how to ‘close the gap’ in your transformation approach reach out to us. Independently if you are at the beginning of your journey or if you are already “in the middle of things”.
A special occasion to learn more is our Business Transformation Day on the 10th Nov. 2022. Alternatively request a free demo anytime.