Value-based Process Project
Portfolio Management
University of Bayreuth
Prof. Dr. Maximilian Röglinger
Research Center
Finance & Information Management
Project Group
Business & Information Systems Engineering
of the Fraunhofer FIT
Professorship of Business & Information Systems
Engineering and Value-based Business Process
Management
www.fim-rc.de
www.fit.fraunhofer.de/bise
EBR Conference, Ljubljana,
November 2014
2 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Agenda
1) Research Group „Value-based Business Process Management“
2) Big Picture: Value-based Process Project Portfolio Management
3) Example: BPM Roadmapping
4) Example: Process Prioritization with the ProcessPageRank
5) Conclusion and Challenges Ahead
3 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Agenda
1) Research Group „Value-based Business Process Management“
2) Big Picture: Value-based Process Project Portfolio Management
3) Example: BPM Roadmapping
4) Example: Process Prioritization with the ProcessPageRank
5) Conclusion and Challenges Ahead
4 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Believe it or not: There still is a Gap between
Business and Process People!
Business People Process People
Connected
customers in a
digital society
Increase long-
term company
value
Process redesign,
modelling, monitoring,
improvement, and
automation
Cycle time, error
handling, reliability,
automation, …
5 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Value-based Business Process Management at the
Research Center FIM and the Fraunhofer FIT
Industrialisierung
Wertorientierung
Business Process
Management
Flexibility, automation,
standardization, sourcing, and
improvement of processes with
modern information technology
Value-based process decision-
making and analysis of general
relationships that govern
process change
Our objective is to systematically identify and realize potential for process flexibility,
automation, standardization, sourcing, and improvement in line with economic principles and
by harnessing modern information technology.
6 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Agenda
1) Research Group „Value-based Business Process Management“
2) Big Picture: Value-based Process Project Portfolio Management
3) Example: BPM Roadmapping
4) Example: Process Prioritization with the ProcessPageRank
5) Conclusion and Challenges Ahead
7 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Value-based Process Project Portfolio Management Conceptual Framework
1
AS-IS
I
…
II
III
Process Project Portfolio
Project layer
…II
… I …
III
TRANSFORMATION
2 …
3
Pro
cess
Port
folio
BPM
Process layer
Valuation layer
Company Value
KPI Portfolio
B C
A
…
Valuation layer
Company Value
1‘
2‘ …
3‘
Pro
cess
Port
folio
BPM
Process layer
TO-BE
KPI Portfolio
B C
A
…
8 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Bridging the Gap between Business and Process People
requires an interdisciplinary multi-method Approach!
Value-based management
Multi-criteria decision-analysis
Project portfolio selection
and scheduling
Business process modelling
Value-based Process
Project Portfolio Management
…
Network analysis
Business process simulation
Business process
execution and monitoring
…
9 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Classing Value-based Process Project Portfolio
Management into the Core Elements of BPM
Rosemann und vom Brocke (2010)= Focus of Value-based Process Project Portfolio Management
10 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Agenda
1) Research Group „Value-based Business Process Management“
2) Big Picture: Value-based Process Project Portfolio Management
3) Example: BPM Roadmapping
4) Example: Process Prioritization with the ProcessPageRank
5) Conclusion and Challenges Ahead
11 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Are you too busy to improve?
12 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Example: BPM Roadmapping
Research question: Which projects should an
organization implement in which order to balance
the development of BPM capabilities with the
improvement of individual business processes?
I
…
II
III
Process Project Portfolio
…II
… I …
III
Project layer
Lehnert M., Linhart A., Röglinger M.: Chopping down trees vs. sharpening the axe – Balancing the
Development of BPM Capabilities with Process Improvement. In: Proceedings of the 12th International
Conference on Business Process Management (BPM), Haifa/Eindhoven, September 2014, p. 151-167
13 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
How to balance
this over time?
Developing BPM capabilities
(improve dynamic capabilities
through BPM-level projects)
Improving individual processes
(improve operational capabilities
through process-level projects)
Balancing Investments into BPM Capabilities and
Process Improvement
14 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Balancing Investments into BPM Capabilities and Process Improvement
Advantages of Developing BPM Capabilities
Developing BPM capabilities…
…affects all processes of an organization.
…advances an organization’s capabilities to
integrate, build, and re-configure processes.
… facilitates process improvement in the future.
…has a long-term performance impact.
15 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Balancing Investments into BPM Capabilities and Process Improvement
Advantages of Improving individual Processes
Improving individual processes…
…affects a distinct process in terms of
its time, cost, quality, and flexibility.
…has a short-term performance impact.
16 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Considering a Multi-period Planning Horizon
Status quo
t = 0
Assumption: only one project per period
t = 1 t = 2
€
€€
€
€€€
€€
€€
BPM roadmap candidate
with the highest risk-
adjusted expected NPV of
the process cashflows
Contingency Factors:
Demand uncertainty
Customers‘ sensitivity w.r.t.
time, price, and quality
Degeneration effect of
process performance
Investment outflows and
effects of project candidates
…
17 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Agenda
1) Research Group „Value-based Business Process Management“
2) Big Picture: Value-based Process Project Portfolio Management
3) Example: BPM Roadmapping
4) Example: Process Prioritization with the ProcessPageRank
5) Conclusion and Challenges Ahead
18 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Value-based Process Project Portfolio Management Conceptual Framework
1
BPM
Process layer
AS-IS
I
…
II
III
Process Project Portfolio
Project layer Valuation layer
Company Value
1‘
2‘ …
3‘
Pro
cess
Port
folio
BPM
Process layer
TO-BE
KPI Portfolio
B C
A
…
…II
… I …
III
TRANSFORMATION
Valuation layer
Company Value
KPI Portfolio
B C
A
…
2 …
3
Pro
cess
Port
folio
19 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Example:
Process Prioritization with the ProcessPageRank (PPR)
Research question: How can process
prioritization decisions be made in line with
how processes are interconnected?
1
2 …
3
Pro
cess
Port
folio
Lehnert M., Seyfried J., Siegert M., Röglinger M.: ProcessPageRank – A Network-based Approach
to Process Prioritization Decisions. Working paper at the FIM Research Center.
20 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
5
Process A
SANII: 0.80
10
Process B
SANII: 0.60
Which Process should be improved?
5
SANII: Stand-alone need for improvement index Є [0; 1]
?10
Process A
SANII: 0.80
18
Process D
SANII: 0.20
25
Process B
SANII: 0.50
18
Process A
SANII: 0.30
18
Process E
SANII: 0.60
18
Process F
SANII: 0.70
?
Process C
SANII: 0.54
25
3
Process G
SANII: 0.40
5
24
3680
3220
11
10
Process B
SANII: 0.60
? ?
??
21 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Adopting and Adapting the Google PageRank to the
ProcessPageRank
Rank Process PPR(i)
1 C 0,37686
2 B 0,27599
3 A 0,19841
4 D 0,14875
SANII: Stand-alone need for improvement, NUI: Number of use instances, d: Dampening Factor
𝑃𝑃𝑅 𝑖 =𝑆𝐴𝑁𝐼𝐼𝑖 𝑗=1𝑛 𝑆𝐴𝑁𝐼𝐼𝑗
∙ 1 − 𝑑 + 𝑑 ∙
𝑗∈𝐼𝑖
𝑃𝑃𝑅 𝑗 ∙𝑁𝑈𝐼𝑗𝑖 ∙ 𝑆𝐴𝑁𝐼𝐼𝑖
𝑘∈𝑂𝑗𝑁𝑈𝐼𝑗𝑘 ∙ 𝑆𝐴𝑁𝐼𝐼𝑘
The PPR ranks processes based on their
network-adjusted need for ImprovementProcess A
SANII: 0.5Process B
SANII: 0.7
2 2
Process C
SANII: 0.4
3
Process D
SANII: 0.2
45 5 5
22 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
The PPR as a Fundament of Prioritizing Process-Level
Projects
Process A
SANII
Process B
SANII
Process C
SANIIProcess D
SANII
Process Ranking Multi-dimensional Ranking of
Process-level Projects
How can process-level projects be prioritized in an interconnected process world?
The PPR ranks processes based on their network-adjusted need for improvement.
The SANII maps all performance dimensions of the Devil‘s Quadrangle
(Cost, Time, Flexibility, Quality) into a single performance indicator.
A process-level project may have different
effects on each performance dimension.
The propagation of such effects within the
process network depends on the dimension.
Status Quo: But:
Rank Process PPR(i)
1 C 0,37686
2 B 0,27599
3 A 0,19841
4 D 0,14875
23 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Outlook: How can process-level projects be
prioritized in an interconnected process world?
TimeCost
Flexibility(Inner flexibility)
Quality
Change in the SANII
Project Process C T Q F
Project A Credit admin 0.2 -0.45 -0.6 0.2
Project B Credit admin 0.5 -0.25 -0.1 0.3
Project C Schufa Test 0.2 -0.45 0.3 -0.35
Process-Level Projects (PLP)
Rank processes
before any PLP
Rank processes
after each PLP
Compare the changes
for each dimension
Aggregate the changes
in the valuation functionRank the PLPs
Processes
SchuFa test
Transaction
6
Credit
administration
5
Stock
administration
6
Debit
administration
15
Charging
5
5
4
3
7
6
SchuFa test
Transaction
6
Credit
administration
5
Stock
administration
11
Debit
administration
15
Charging
5
5
4
3
7
6
SchuFa test
Transaction
6
Credit
administration
15
Stock
administration
17
Debit
administration
7
15
Charging
5
5
3
SchuFa test
Transaction
6
Credit
administration
5
Stock
administration
6
Debit
administration
15
Charging
5
5
4
3
7
6
SANII
Process C T Q F
Charging 0.4 0.4 0.4 0.4
Transaction 0.4 0.3 0.4 0.5
Credit admin 0.6 0.7 0.7 0.3
Debit admin 0.5 0.6 0.6 0.7
Schufa Test 0.7 0.6 0.5 0.6
Stock admin 0.3 0.6 0.7 0.5
24 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Agenda
1) Research Group „Value-based Business Process Management“
2) Big Picture: Value-based Process Project Portfolio Management
3) Example: BPM Roadmapping
4) Example: Process Prioritization with the ProcessPageRank
5) Conclusion and Challenges Ahead
25 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Value-based Process Project Portfolio Management Conceptual Framework
1
BPM
Process layer
AS-IS
I
…
II
III
Process Project Portfolio
Project layer Valuation layer
Company Value
1‘
2‘ …
3‘
Pro
cess
Port
folio
BPM
Process layer
TO-BE
KPI Portfolio
B C
A
…
…II
… I …
III
TRANSFORMATION
Valuation layer
Company Value
KPI Portfolio
B C
A
…
2 …
3
Pro
cess
Port
folio
26 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Value-based Process Portfolio Management Central Challenges
Value-based Process Portfolio Management requires…
…considering multiple processes simultaneously!
…accounting for interdependencies among processes!
…considering the effect of BPM on process execution!
…separating the effects of different BPM capabilities!
…conceptualizing process performance as a multi-dimensional construct!
…integrating multiple (partly conflicting) performance dimensions!
…distinguishing multiple process-related project types and their effects!
…accounting for dependencies among process-related projects!
…considering all relevant cashflows, multiple planning periods, and risks!
27 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Prof. Dr. Maximilian Röglinger
Research Center
Finance & Information Management
Project Group
Business & Information Systems Engineering
of the Fraunhofer FIT
Elite Graduate Program
Finance & Information Management
Professorship of Business & Information
Systems Engineering and Value-based Business
Process Management
Contact
Maximilian Röglinger
University of Bayreuth
Friedrich-von-Schiller-Str. 2a, 95444 Bayreuth
Phone: +49 921 55-4710
Email: [email protected]
Web: www.fim-rc.de
www.fit.fraunhofer.de/wi
Research Areas
Value-Based Business Process Management
Customer Relationship Management
Strategic IT Management
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