Written by: Kim Peiter Jrgensen, Jens Theodor Nielsen, Torben Claus

Dahl and Mark von Rosing

Part II Template
1 Value Drivers in Corporate Businesses
ThischapteroffershelpinpromotingBPMasamanagementdisciplineand
thusmakingitmorelikelyforawell-writtenBPMbusinesscasetoobtaintop
managementapproval.Thecentralinstrumentisanewmodelinwhichthe
interrelationshipofmanagementconcepts-likebusinessmodelling,
performancemanagement,valuemanagement,businessgovernanceis
describedandtheimportantroleandinterconnectionofBPMishighlighted.
TheworkonthemodelisinspiredbytheauthorsdailyworkattheDanish
DefenseCommandandtheknowledgeofthedefenseindustry.Howeverthe
modelitselfisdevelopedthroughdialogueinexternalnetworks,thereby
combiningbestpracticeknowledgeandprinciplesofdifferentindustriesas
wellasownpractice,allnecessary,tosupportandenableoneofthemost
complexIndustriesinexistencetoday.Forontheonehandamilitarybusiness
musthaveinsomeareasthemostcostefficientprocesspossible,whilein
otherareashavesomeofthemostinnovativeandcompetitiveprocesses.
Recognizingthatbeingsecondinthislineofbusinessjustnotaverydesirable
option.Hencebeingnumbertwo-meansthatyoulostandtheenemywon!
Insomewayitcanbearguedthatcompetitivenessandtherebyfocus,
flexibility,responsiveness,whilemaintainingrobustnessistheveryDNAofa
militarybusiness.Thereforetheprinciplesofhowtoidentifytherightvalue
driverstoalign,innovate,changeandtransformonesbusinessmodel,isvery
applicabletobothprofitandnon-profitorganizationsalike.
1.1 Introduction
Writingthischapterhasinmanywaysbeenchallenging,asittriestotackle
oneofthemostcomplexIndustries.InthisIndustrythepolitical,militaryand
technologicallandscapeputsgreateremphasisthaneverbeforeonthe
efficiency,effectivenessandcapabilityofdefenseorganizations.Thisrequires
morethaneverafocused,flexible,responsiveandrobustbusinessmodel,and
anorganizationthatcanworkinprogramsandprojects,allwithfully
integratedcostefficientprocesses.Asifthiswouldnotbeenough,process
managementinsuchanindustryalsoincludesfullgovernancecontrolof:
The different information management processes: ensuring that data is
secure, credible, useful and available to the people who need it, when
required.
Asharedservicesstrategycoveringtechnologyandinfrastructure.
Enterprise and asset management processes: optimizing defense logistics
incomplexsupplychainscenarios.
The high performance computing environments: powering research and
development of new defense processes and in combination with services
andtechnologies.
The total cost picture: the current financial situation causes not only a
threat to the economy as a whole, but to national defense organizations
aswell.Eventhoughonemightnotreckon,thedefenseindustriesarealso
impacted,andamoderationintheirbusinessisexpectedonaglobalbasis.
Even though a national defense organization is less vulnerable to
economic downturn than other industries, defense spending may be
diverted to other federal priorities. Over the long term, the financial
bailout will most likely redistribute available funds from defense to other
needs.Acostfocuswillmorethaneverbeapartofsurvival.

Thechallengesandtheexcitingjourneyofthenecessaryprocesscentric
transformationisaimedtobedescribedinanoverviewonthefollowing
pages.
Firstwewillintroducetheparametersandthevaluedriversforthebusiness
model.Next,wewilllookfortoolsandapproachesforchangingadynamic
organizationwithoutlosingitsfocus,responsibility,flexibilityandrobustness
inundergoingsuchchanges.
Duringthearticlewewillfollowthevalueflowsandfocusonwhereinthe
organizationwegetmostperformanceandvalueforthemoney.
1.1.1 The importance of having the right business model in place
Toenableourarmedforces,coalitionforcesandcivilianorganizationstoliaise
effectivelyinaglobalenvironment,weneedtomanageourprocesses
efficientlyandcost-effectivelyandtoensuretheiropennesstointeraction
acrossorganizationalboundaries.Bringingtogetherpreviouslyunconnected
processesandtherebyareasandentitiescanimprovethevisibilityand
availabilityofvitalinformation.IntheearlystagesoftheBusinessProcess
transformationintheDanishArmedForces,itbecameclearthatifprocess
changesweredeployedwithoutthecorrectbusinessmodelmanagementin
place,themodelsusedcouldnotdelivertherequiredbenefits.Thevery
natureofthedefenseindustry,aswellasrecentbroaderregulatory
legislation,suchastheSarbanes-OxleyAct,makesthemanagementof
Governance,Risk,andCompliance(GRC)notonlyimportantbutmandatory.
Governmentcomplianceregulationsimposedonthisindustrygofarbeyond
theregulationsimposedonmostotherindustries.

InternationalTrafficinArmsRegulations(ITAR);Registration,Evaluation,
AuthorizationofChemicals(REACH);ExportAdministrationRegulations(EAR);
anduniqueidentification(UID)andradiofrequencyidentification(RFID)
accountforjustafractionoftheadditionalregulationsandmandatesfor
whichthenationaldefenseorganizationsmustdemonstratecompliance.

AsapointofdeparturefortheanalysiswewilldefineBusinessGovernanceas
discussedbyProf.DrvonRosinginchapter1andaccordingtoCarlvon
ClausewitzasTheCentreofgravity.Thisconcepthasanorientationtowards
theoutsideaswellastotheinsidecoreofanorganization.Clausewitzhas
designedthefollowingexplanation:
Centreofgravityisthecharacteristics,thecapabilities,orthelocationsfrom
whichanorganizationderivesitsfreedomofaction,physicalstrength,orwill
tofightforthemarketsandearnmoney.
Atthestrategylevel,centreofgravitymightincludethestrength,analliance,
asetofcriticalcapabilitiesorfunctions,oranorganizationstrategyitself[DoD
Dictionary-2008]."
Italsopresentsaneedtochoosebetweencharacteristics,capabilityor
location,wheninrealityallthreeexistsimultaneouslyinmutualdependency.
Anorganizationoperatinginagivenlocationisineffectivewithoutessential
characteristicsandcapabilities.Moreover,theuseoftermssuchasfoundation
ofcapability,hubofallpowerandmovementordominantcharacteristicsis
ambiguousenough.Andworse,theyareinvariablyaccompaniedbyan
expansivelistofexamplesthatincludealliances,communitiesofinterest,
publicopinion,and"Internationalrulesforgoodcommerce[Strange2003].
WhatmakesBusinessGovernanceinaDefenseorganizationchallengingisthat
itincludesfarmorethanchoicesbetweencharacteristics,capabilityor
location.ABusinessGovernanceframeworkinadefenseorganization
includesthedecisionmakingprocess,thedirectmoneyflow,theprimary
processesaswellasthedirectandindirecttasksandtheoutcomeintermsof
results.

1.1.2 Description of a business model

Thepurposeofabusinessmodelistodescribehowthecoreproduction
interactswiththeneedsofcompetenciesandtheneedofcapacityand
resources.Thebusinessmodelisseenasastrategytooltovisualizethebasic
strategyrelationsintheorganization.IntheDanishDefenseforcesthe
businessmodelhasathirdpurpose,toshowhowthedefenseshouldtransfer
fromagovernmentalthinkingorganization,withmoneyasthedriverwhen
makingsolutions,toamoderngovernmentalorganization,havingitsfocuson
theneedsofcompetencies,logistics,weaponplatforms,infrastructureandIT
foroptimalsolutions.Thebusinessmodeldevelopmentprojectbeganin1994
andtheresultingmodelisstillusedasguidelinesforfuturedevelopment.
Whyfocusoncompetences?Everybodyintheorganizationneedsunique
knowledgeanduniqueskillsfortheoptimizedproduction.Skillsand
knowledgecanbeacquiredintwodifferentways,youcanrecruittheright
peopleoryoucaneducateanddevelopyouremployees.Eitherwayyouneed
resources,capacityandtimetogettherightprofiles.
Intheglobalworldtimeisthemainparameter.Goodbusinesswillverysoon
getcompetitionfromotherplayersonthemarkets,soasthemoreefficient
theproductioncanbe,thehigheristhepossiblytostayinbusiness,aslongas
theprocessesisrunningeffectively.Forthatyouneedtherightcompetences.
BelowisanexampleofsuchadetailedBusinessModel[vonRosing,2009].This
kindofmodelcanbeusedtodefineandplanthecompetitivenessandthe
valuecreationandrealizationneededinthebusiness.

BusinessModelingisnotthesoletooltodefininganddevelopingones
performanceindeployingarmedforcesforexample,ordefiningwhereand
howvaluecouldorshouldbecreatedandrealizedinthedifferentdefense
businesslines.
Thesecondmainparameteristoaligntheprocessesatallthetime.
Focushastobeonhowtomeasureimprovementinproduction
capacityandtheprocessessurroundingtheproduction.The
measurementorinformationisakindoflifelinetobusiness
governance,anditcreatesthevaluemanagement.TheValue
managementcreatesneedsofchangesandsometimesnew
implementationsoftechnology.
1.1.3 Business Governance
Itdoesntmatterwhetheryouhaveabigorasmalldefenseorganizationina
bigorasmallcountry,becauseinanycaseambitiousBusinessGovernance,in
additiontoeffectivemilitarycommandandcontrol,isrequiredtoachievethe
abovementionedgoalsandtoensuretherightconnectionbetweenbusiness
modelmanagement(BMM)andbusinessprocessmanagement(BPM)inthe
organization[vonRosing,Dahl,Nielsen,2010].

Corporatemanagementandtherestofthemanagementisresponsiblefor
makingsure,thatcontinuousinformationisproducedontheperformanceof
theorganization'scoreprocesses.ThiscanbeintheformofBusiness
Intelligencereportsorasupdatesaboutthedevelopmentoftechnological
capabilitiesthatcouldpossiblysupportproductiveandadministrativeneeds.
BusinessIntelligenceinformationcouldbeusedtoassesse.g.thepossibilityof
replacingmanpowerwithtechnologywithintheorganization,although
attentionshouldbedirectedtowardstheuniquebusinessneedsasthe
startingpoint-beforeanyattemptstoautomateproductionoradministrative
activity.
1.1.4 Organization Leadership and Management
Intermsofleadershipandmanagementadefenseorganizationisaunique
organization.Militaryandcivilianpersonnelworktogethertoensurethe
defenseforceiswellmanaged,welltrained,wellequippedandwellprepared
toprotectthecountryanditsnationalinterests,bothathomeandabroad.
Strongleadershipiscentraltoachievingthisgoalinbothoperationalandnon-
operationalenvironments.
Skillsinleadershipandmanagementarefundamentaltothesuccessofany
defenseorganizationanditsmissions.Defenseiscommittedtodevelopingthe
leadershipandmanagementskillsofallpersonnel,bothmilitaryandcivilian.
Theinterestingthingaboutadefenseorganizationisthatatsomepointin
theircareers,everyoneintheorganizationislikelytohaveleadership
responsibilitiesandmusthavethecapacitytoleadandmanageeffectively
fromtheirpositionwithintheorganization.Itcansomehowbesummedthat
leadershipinadefenseorganizationistheprocessofinfluencingothersto
gainwillingnesstoactonorders,withoutquestioningtheleadersdecisions.
Asthefoundationforleadershipandmanagementactivitiesinadefense
organization,themanagementatExecutiveslevelhastoestablishthe
necessaryLineManagementandfocusontasksintheorganizations.Senior
managementalsohastolookforleadershipandefficiencyinrelationstothe
processesandtheprocessmanagement.Inthetoolboxfordoingthisjob,one
willfindProcessManagement,ProcessDeploymentandProcess
Implementationastoolstomovetheorganizationtobemorecostfocused,
effectiveandefficient.
Nextstepwillbeasdescribedearlierinchapterone,tobuildupa
PerformanceandValueManagementsystemtoobtainessentialbusiness
information.AsProf.Dr.vonRosingalreadydescribes,ValueManagementis
probablyoneofthemostcommondilemmasandchallengesconfrontedby
companiestoday,regardlessoffactorssuchassize,revenue,industry,region
orbusinessmodel.Inanyorganization,butespeciallyinadefense
organization,thetimingforusingtheinformationisalsoessential.Assoonas
corporatemanagementrespondstotheinformationandhostsallchanges
throughthetransitionprocess,thechangesintheorganizationwillbe
simplifiedandthetimespentonchangewillbeshortened.
1.2 Organization and Value Drivers
Whentalkingvaluesinadefenseorganizationthiscanbeunderstoodin
multipleways.Asexample;thedefensesowninternalvaluesreflectthelong
traditionsanddistinctiveidentitiesofthetraditionalorganizationandits
mission.SomeofthesespecificdefensevaluescouldbeProfessionalism,
Loyalty,Integrity,Courage,InnovationorTeamwork.
Suchvaluesareestablishedtoprovideacommonandunifyingthreadforall
peopleworkingwithindefense.Developedbytheseniordefenseleadership
andtypicallyreaffirmedbyaparliamentarydefensecommittee,theDefense
Valuesareanimportantcomponentinguidingorganizationalbehavior.Ina
Defenseorganizationvalue-basedbehaviorisaboutindividualsatalllevelsin
defensebeingpreparedtoacceptresponsibilityandaccountabilityfortheir
missions,andtothinkclearlyabouttheeffectoftheiractionsonthemission,
projectortasks.Valuesarefundamentaltogoodperformance.
However,inthissectionthetermOrganizationValueDriversisnottobe
confusedwiththeaboveinternalvaluesofthedefenseorganization.The
phrase:OrganizationalValueDriverscoversmechanismsthatcouldhelp,for
instancetheDanishDefense,optimizecorebusinessoftheorganization
throughthedynamicimprovementofallprocesseswithinthemainprocesses
spanningfromthemanagementprocessesovertheidentifiedcoreprocesses
andtothesupportingprocesses.ExamplesofsuchValueDriverswithin
defensecouldbeseenintypicaldisciplineslike:
RealizationofDoctrines
CapacityPlanning
OperationalPlanning
LifeCyclePlanning
TechnologyDevelopment

Thedecisionitselftomakelarge-scaleinvestmentsinforinstanceIT-enabling
ofbusinessprocesses,aswellasthecomplexchallengesinensuringthatthe
investmentsareeffectiveandefficient,needtobemanaged.
Clearmanagementofthesechangeswillenabletheorganizationtoplanthe
valuetheywantcreatedinthedifferentlinesofbusinessandtherealizationof
thisvaluewithinthecontextoftheorganizationsoverallvisionandstrategies.
Havingstudiedcompaniesbehaviorinthisfieldwithascopedapproachon
theissuefromtheviewofadefenseandapublicsectororganization,wefind
itinterestingthatcompaniesspendsubstantialtimetryingtorealizevalue,
whichinitselfisquiteunderstandable,butatthesametimeexactlymaking
thatfatalmistakepointedoutinchapter1,whichisnottorealizethesimple
anddirectconnectionbetweenvalueplanning,valuecreationandvalue
realization[vonRosing,2009].
1.2.1 Value Management
Bythetermbusinessvaluecompaniesmustunderstandthevalueoftheir
investmentinordertostaycompetitiveintodaysrapidlychangingbusiness
World.Thegains,processcosts,revenuepotentialandpossiblevaluespots
areoftenhiddenandrarelyaddressed.

Alsowithindefense,aprerequisiteforValueManagementcoveringthe
planning,thecreationaswellastherealizationofvalueinalllinesofbusiness
shouldbeseeninafulldefinitionofvaluedriversforallmainprocessareasin
theorganization(e.g.managementprocesses,coreprocessesandthe
supportingprocesses)aswellasinthesubsequentmonitoringofthesevalue
driverstobeabletoreactwhennecessary.
Suchanapproachtovaluerealizationrequirestheinvolvementofvarious
rolesandresponsibilitiesatdifferentlevelsoftheorganization[vonRosing,
2010].Theinterrelationshipofrolescanbeillustratedbythefollowing
simplifiedrepresentationofrolesintheDanishDefense.

Example: Roles and Responsibilities in Value Management
[vonRosing,Dahl,Nielsen,2010]

MinisterofDefense ValuePlanning:
Initiates Parliamentary Defense
Commissions
Sets strategic Business Objectives (SBOs)
andtherebyPoliciesandobjectives
ValueCreation
NIL
ValueRealization
Evaluatesperformance
PermanentSecretaryof
StateforDefense
ValuePlanning:
SetsCriticalSuccessFactors(CSFs)
Provideslegalfoundation
Setsmanagementguidelines
ValueCreation
NIL
ValueRealization
Oversees all the different joint concept
andvalidatesperformance
JointChiefofStaff ValuePlanning:
DefinesKeyPerformanceIndicators(KPIs)
Givesplanningguidance
ValueCreation
NIL
ValueRealization
Analyzes different service budgets to see
thatactivitiesandinitiativesarefundedin
budgetrequests
ChiefsofOperational
Commands
ValuePlanning:
Buildplansandbudgets
ValueCreation
Initiateandconductsultimateoperational
activity
ValueRealization
Reviewplans,budgetsandproduction
Other ValuePlanning:
Buildplansandbudgets
ValueCreation
Producesupportforoperationalactivity
ValueRealization
Reviewplans,budgetsandproduction

InthefollowingparagraphwewillintroduceourValueDriverModel,a
modelaimedaclarifyingtheValueDriversandtheirinteractionwithinalllines
ofbusinessandfunctionalareas.Themodelisseentocoverthechallengesto
bemetinnotjustadefenseorganizationbutbasicallyinanyorganizationor
company.
1.2.2 The Value Driver Model
ThevaluedriversinthemodelflowfromBusinessGovernance.Thereason
beingthatBusinessGovernanceisandalwayswillbethecentralhubof
everythingthatgoesonallaroundinacomplexorganizationlikeanational
defenseorganization[vonRosing,Dahl,Nielsen,2010].ThepurposeoftheValue
DriverModelistoexplainthewaythevaluedriversnormallyflowthroughthe
organizationandsecondlytoshowhowthemappingofthosedriverscanbe
usedtocatchbusinessinformationfromtheprocesshierarchyandpresentit
fortheSeniorExecutivesfordecision.

TheValueDrivermodelisbasedontwodimensions,SpheresandValueDriver
Fields(VDF).
Thespheres:
BusinessGovernance
CoreBusiness(Organization,tasksandlimitation)
BusinessProcessManagement
TechnologyDelivery

TheVDF:
LineManagement
ValueManagement
TechnologyManagement
Automation
Balancingthethreebusinessmanagementspheresinthemodelareallknown
topicsontodaysbusinessmanagementagendabutintegratingthemallinone
modeltogetherwiththedeliveryofTechnologyandITand,inparticular,
puttingBPMonmapasequalpartnertoCorporateGovernanceandLine
Managementhighlightsnewinterfacestoanorganization.Theoverlapping
areasbetweenthespheresconstitutefieldsinwhichroomformaneuvercan
beallocatedtothevaluedriversidentified.
TheBusinessGovernancelooksinthreedirections:
Market(viaManagementofBusinessopportunities)
CoreBusiness(viaLinemanagement)and
BusinessProcessManagement(viaValueManagement)

TheCoreBusinesslooksinthreedirections:
TechnologyDelivery(viaTechnologymanagement)
BusinessProcessManagement(viaBalancing)
BusinessGovernance(viaLinemanagement)

TheBusinessProcessManagementlooksinthreedirections:
TechnologyDelivery(viaAutomation)
CoreBusiness(viaBalancing)
BusinessGovernance(viaValuemanagement)

Inadefenseorganizationasystematicreadingofitsvaluedriversshould
provideBusinessGovernancewithbestpossibleperformancefeedbackprior
toanydecisiononchangesintheforcedeploymentplanningorexecution,
operation,manufacturingorlogisticactivitiesintheorganization.Inaddition,
BusinessGovernancemustensurethattheongoingprogramsandprojects,
justaswithinforcedeployment,worktoseekneworganizational
effectivenessandefficiency,atthelowestpossibleprice.
All companies have strategies, goals and some sort of value drivers
implied simply by their existence, but very few of them follow value
drivers in a way that ensures the most value for money. One of the
main goalsofthisstudyprojectatthe Danish DefenseCommand was
howthiscouldbechanged.Steponewastodescribetheflowofvalue
insidetheorganization.
Step two was to analyze how the flow and the processes in the
organizationcouldbeoptimized
Step three was to describe how ongoing continuous improvement
could be implemented without losing adaptability, efficiency and
flexibility.
OneoftheoutcomesofthestudyattheDanishDefenseCommandwasa
manualforprocessmanagementthatshouldhelpintroducecommon
standardsandfunctionasaguidetocontinuousprocessimprovement.
HistorytellsthatmanagementatExecutivelevelinacompanyingeneral
ignoresthepossibilitytoalignthecorporateprocessesandusethethorough
picturetomakedecisions.Bytakingadvantageofthefeedbackcomingfrom
allthespheresillustratedabove,BPMcouldbethetooltodothisbetter.Seen
frominsideanon-profitorganizationoraGovernmentAgency,the
understandingoftheneedtobebestinclass-istoalargeextentsimilar-to
thatofaprivateorganization.Basically,therequirementtoyourjobthewayit
hastobedoneintheeyesofthecustomer(inthepublicsectortoproducethe
kindofservicesthecitizensarewillingtopaytaxesfor)isthesame.Whenit
comestochangestakingplaceinpolitics,thesemayappearasquicklyas
changesinthemarket,andtheneedforagilityisacceptedinbothprivateand
publicsectors.
However,topmanagementinanorganizationoftenmakesdecisionsthatare
notnecessarilyinlinewiththeofficialcommitmenttoeffectivenessand
efficiency.Forinstance,numerousexamplesexistwherenewITsolutionsare
purchasedwithoutcheckingtheneedsinawiderprocessperspective,andthe
consequenceisoftenfailedimplementationwithincreasedcostandless
incometofollow.
Suchexamplescanalsobefoundinhighprofiledigitalizationinitiativesaimed
atmodernizingbusinessareas.ADanishexamplecouldforinstancebethatof
aMinistryofFinanceinitiativetocentralizeallITsupportinthegovernment
agencies.Afirststepwastobuildupacommonlearningmanagementsystem
to:
Storeallgovernmentalemployeescompetencies
ProvideaplatformforE-learning
ProvideanITsystemforbooking

Thebusinesscaseforthissystemwasnotbasedonananalysisofthe
organizationalenvironment.Asanexample,weintheDanishArmedForces
alreadyoperateanintegratedsystemtocatchuponallemployees
competencies(SAPHR),andinthesamesystemthereisgoodfunctionalityfor
bookingandeventmanagement.PlatformsforE-learninghaveexistedinthe
armedforcesforover15years,butthedefenseexperiencefromthisperiod
wasnotfullyincludedinthebusinesscase.
ThevisionforthecentralizationofgovernmentITistoestablishajoint
EnterpriseResourcePlanning(ERP)solution.Thistoowillbedifficultforthe
DefenseCommandasmostpublicservicesinDenmarkareusingthefinancial
modulesofMicrosoftNavision,whiletheagenciesofMinistryofDefenseuse
SAPwall-to-wall.
Withoutgoingintodetails,thekeyriskinsuchaone-size-fits-allapproach
fromtheviewoftheValueDriverModelisthattheinitiationofITdelivery
directlyfromtopgovernanceignoringtheCoreBusinessofthevarious
businessareas,withouthavingaunifiedprocessarchitectureinplaceand
withoutaValueManagementdriverinplacethatgoesbeyondfinancialbook-
keepingwillcausefragmentationindecisions,managementandpractical
operations.Basically,insuchanapproach,thereisnoconnectionfrom
BusinessGovernance,ITGovernanceandProcessGovernancetothe
PerformanceandValueGovernanceofAutomation.
InthefollowingchapterswewillgothroughtheValueDrivermodeldeveloped
byDahlandNielsenintheDanishArmedForcesandwewillfocuson
informationneededtoachievevalueeffectivenessandefficiencyandValue
maximizing.Todothiswehavetolookateachofabovefourspheres,their
internalconnectionsandthewaythevaluedriversturnaroundinthemodel
1.3 Core Production
TheBusinessGovernancesphereis,throughthestrategyprocess,focusing
onbothexternalandinternalfactors.Theexternalviewshowsthemarket
potentialandtheinternalviewprovidesapictureofcoreproduction.Next
stepistoalignthecoreproductionwiththeorganizationandtheprerequisite
needsforcapacityandcompetenciesbeforethedecisionofbuildupan
organization.

Theorganizationandtheavailableproductioncapacitygenerallylimitthe
productionbutotherlimitationscouldincludegovernmentalrules,
environmentalrulesetc.TheflowfromBusinessGovernancetoCore
Businessdescribesthedimensionsoftheproduction.Althoughthisdoesnot
bringvalueinitself,itisnecessaryforunderstandingtheentireprocessthat
manageslimitationsandconstraints.
InthedynamicCoreBusinesssphere,thefocusisshapedbytherelated
VDFs.TheVDFBalancingbetweenCoreBusinessandBusinessProcess
Managementisworkinginbothdirectionstofindabalance.Bothspheres
needtheotherspheretoprovidefeedbackandtolerance-levelandusethe
acquiredknowledgeforoptimizing.
ThevaluedriverfieldbetweenCoreBusinessandTechnologydelivery,
(technologymanagement)isnotmanagedconsciouslyinmanyorganizations.
Herebythecorebusinessmissesanareatobeoptimized,andtheevaluation
andrunningcostsbetweensystemandcoreBusinessisconsequently
unadjustedandoff-balanced.
Typical challenges
Oftencurrentoperationsfollowwellknownorganizationalpatterns
clingingtoalreadyknownandtriedpracticesonhowthingsaredone.
Thecostisunchangedandfollowsthepricedevelopmentinthe
market,themarketpotentialisdecreasingandtheExecutiveshave
threeoptions,oracombinationofthese:Dropoutofmarket
Usemoremoneyforcommercializing
Optimizetheprocesses

Thecheapestwayisnormallytooptimize,butwithadynamiccorebusinessin
place,thishasprobablyalreadybeendone.Inadefenseorganizationthis
appliesindirectlyaswell.Insuchasituationfocusonoptimizingthecore
businessthroughBusinessProcessmanagementwillmakethechallenge
easierbyprovidingtherelevantbusinessvaluedriversandatthesametime
providetheopportunitytooptimizetherevenueearlyintheprocess.
1.4 Business Process Management
Currently,BusinessProcessManagement(BPM)asatermisoffered
substantialattentioninvariousbusinessenvironments.Numerousdiscussions
istakingplaceatseminarsallovertheglobe,injournalsandthroughweb-
basedmedia.However,terminologyanditsperceptionsvaryfromforumto
forumandtheoneauthoritativegoodimplementationexampletofollowis
stilloutstanding.Theanswertothemostbasicquestion,whatBPMreally
means,isinsomeorganizationsalsoleftalittleblurred,despiteparticipation
inseveralconferencesbybothmanagersandemployees.Therefore,some
companiesandorganizations,whetherprivateorgovernmental,face
problemsmovingfromdiscussiontofocusedaction.
TheconclusionthatBPMsimplyneedstimetomatureinanorganizationis
onlynatural,andifthedirectionseemsattractive,thenhowarethefirststeps
upthematurityladdertaken?
1.4.1 Maturing BPM within the organization and top management
AttheDanishArmedForceswerealizedveryearlythatsupportinsomeform
atthetopmanagementisnecessaryforaBPMinitiativetosucceed.IfBPMas
aconceptisfullyintegratedwiththestrategyandthebusinessmodel,theway
aheadcangetclosetoatextbookroadmap,butiftheneedforBPMisnot
clearlysupportedfromtopmanagement,evenwithawellpreparedcase,BPM
willbehardtobothsellandimplementinitsfullformat.
Trueitisthat,processesdosellthesedays,inparticularinlargegovernment
organizationswheremanyworkroutinesare,duetodigitallawrequirements
orcostreduction,ITsupported.Typicallyeven,inorganizationsusingERP
systemslikeSAPlocaloptimizationinitiativeswithinfunctionalareasarelikely
tobealreadyongoing.TheseactivitiescanprovideagoodplatformforBPMas
processimprovementinsuchasituationisgenerallysupported,andusually
alsopraisedwhenitincludessimplification,standardization,buildingnew
processrelations,optimizationandcuttingcosts.
Existingprocessprojectshowever,alsorepresentseriouschallengestothe
introductionofprocessmanagementasprojectstypicallyareinitiatedlocally
andhaveafunctionalfocusratherthanaprocessfocus.Typically,thisresults
inalackoffocusontheconceptofvaluebutaheavyfocusonfinancial
economics,theresultbeingtoomanyinvestmentinstanceswithlimitedvalue
formoney.Processdevelopmentprojectswithinnarrowfunctionalborders
areinriskofloosingthecross-organizationalperspectiveresultinginsub
optimization.Sadly,thisistypicallynotrecognized,neitherbymanagement
norintheorganizationitself.
A way forward with prospect of success
IftheidealstartingpointwithaclearBPMprojectsponsoredbytop
managementisnon-exist,theonlyrealalternativeisaslowerandmore
tacticalapproachtoitsestablishment.IfproperBPMistogaingroundinan
environmentasdescribedabove,thelogicalapproachistoworkonashow
case-basicallyaBPMinitiationproject.
ThebusinessunitresponsibleforBPM,theBPMteam,shouldestablishorfind
analreadyplannedbusinessimprovementprojectwithacrossfunctional
projectmandateandhavetheprocessteamworkcloselywiththatproject
team.Theprojectshouldgiveprioritytoasolidanalysisofbusinessprocesses
beforeeventualITfunctionalityisdeveloped.
TheBPMInitiationprojectmustalsoensuretoengagecorporatemanagement
inordertogetstrategicanchoringaswellasbusinessrepresentativesto
understandtheDefenseCoreProcesses[vonRosing,Dahl,Nielsen,2010].

Thisinvolvementoftopmanagementensuresatopdownapproach,whichby
defaultismostsuitableforsuchhighlyhierarchicalorganizationsandthe
integrationwiththeorganizationalvaluedrivers.
TheBPMteammustalsoensurethattheprocessflowismodeledforaswell
internalprojectpurposesasforexternalcommunicationpurposes.Graphics
oftenspeaklouderthanwords.
1.4.2 BPM and facilitating Value Driver Fields
BPMisstillanewmanagementdisciplineanditremainsachallengetoexplain
therealvalueofittothosemanagerswhobelieveitisjusthype.However,
onewaytopromoteBPMwouldbetoexplaintheValueDriverModeland
pointoutthoseVDFthatexistinthemodel,onlyduetotheexistenceofBPM.
WithoutawarenessofBPM,thesefieldswillnotbehandledproperly.

TherelationshipbetweenBPMandtheotherspheres,andtheworkinthe
VDFs,willbeexplainedinthefollowingparagraphs.
1.4.3 BPM and Business Governance
BPM,asillustratedintheValueDriverModel,constitutestheotherofthetwo
keyBusinessSpheres.Wherethecorporateleadershipcanensurethedelivery
ofintendedoutputsinCoreBusinessthroughtraditionallinemanagement,
theVDFtobeusedtoensurethattheorganizationworkswithaslittlevalue
drainaspossible,isValueManagement.Accordingly,BPMisaimedat
ensuringthatoutcomesandproductsareproducedinthedesiredandbest
waythroughouttheorganization.
WithintheVDFValueManagementmanagementatExecutivesleveldirects
activitiesintheBPMsphere-whilethevaluefocusoftheBPMactivities
correspondinglyprovidesthebasisforfulfillingValueBasedManagementat
theverytop.
Typical challenges
Toaverylargeextent,itishardtoconvinceseniormanagementthatthe
promisesofBPMaretrustworthy,andmanagement-accordinglyand
reasonablyenough-isreluctanttoallocatetoomuchmoneyforthepurpose
andimplementabiggerchange.Hencetheneedforashowcase
demonstratingthattheproposedprocessarchitectureandthe
interrelationshipbetweenbusinessprocessesarevalid.
AnothertypicalandlogicalreasonforfrictionisthefactthatmostArmed
forcedDefenseorganizationsarebynatureverycommandandstructural
driven.Withthat,membersofseniormanagementholdtheirauthoritydueto
aformalresponsibilityofafunctionalline/branchwithintheorganization.As
properBPMwillmovefocustowardsobtainingresultsandconsequentialcross
functionalprocessesandissues,BPMwillbeperceivedasathreattothis
establishedpowerpicture.Theperspectiveofafutureroleasaprocessowner
mighttosomedegreebeofinterest,butastheunderstandingofsucharole
willbealittleblurredattheearlystagesofBPM,itcannotcompetewithcore
business,orbusinessasusual.Againagradualapproachwithbreakdownof
managementprocesses,core(primary)andsupportingprocessesseemstobe
logical.

Measuring,andprovidingdata-basedinformationaboutprocessperformance,
isalsodifficult.BPMsuites(BPMS)marketthemselvesasbeingreadyout-of-
the-boxtoprovideprocessintelligence.However,itisunlikelythatsucha
BPMSisdeployedtoanylargeextendifBPMisnotalreadyongoingand
processintelligenceisunlikelytoconvinceseniormanagementaboutthe
movetowardsBPM.ValueBasedManagementundersuchconditionsis
basicallynotinplace.
How the Value Driver Field Value Management could work
Justasdefinedinchapterone,CorporateManagementwillsetstrategic
businessobjectives(SBOs)exampleofthiscouldbe:cutdefensebudget
cost.Furthermoretargetsforbusinessperformanceindicator(BPI)couldin
suchacasebeforexample:tocutthedefensebudgetcostwithin6months
by30%.Atsuchahighlevelthiswouldhavetobebrokenmoredownto
CriticalSuccessFactors(CSFs)inordertobringitclosertoanoperationallevel.
Suchabreakdowncouldlikethefollowing[vonRosing,Dahl,Nielsen,2010].:
1. ReduceForceOperationandAdministrationCosts
2. ReduceCostofForceDeployment
3. ImproveCapitalDefenseManagement
4. CapitalDefenseOptimization
Inordertohaveanoperationalunderstandingalloftheabovefourareas
wouldhavetobebrokendowntoKeyPerformanceIndicators(KPI).These
KPIsarewhattheorganizationmustseektoachieve.Heresomeexamples:
Critical Success Factors Key Performance Indicators
Consolidate or outsource defence procurement functions
Refine vendor strategies
Consolidate or outsource IT design and development functions
Consolidate or outsource IT design, development and deployment services
Consolidate or outsource IT end-user-support
Consolidate defence operations and maintenance services
Consolidate or outsource defense benefits administration functions
Consolidate or outsource Defense learning and development functions
Consolidate defence recruitment functions
Improve alignment of defence unit strategies with Corporate Armed Forces strategies
Improve alignment of defence structures with Defence Command strategies
Consolidate defence payroll functions
Consolidate or outsource defence property management functions
Improve alignment of political financial decisions/strategies with corporate defence
command strategies
Analyze enemy targeted markets and segments
Rationalize deployment portfolio
Analyze targeted force deployment segments
Select and enter sucessfull and exit non-sucessfull UN/EU defence projects
Consolidate defense order fulfillment functions
Increase focus on enemy insight and forward-looking information
Minimize recovery costs through self-healing recovery capabilities
Improve focus on higher-value defence capabilities
Increase use of lower-cost defence capabilities
Minimize recovery costs
Better alignment of operations deployement planning, management & reporting functions
Minimize costs related to external shocks
Better alignment of financial accounting & analysis functions
Consolidate defence real estate/facilities
Improve alignment of political allowed budgets and program plans with operations priorities
Increase use of lower-cost activities
Reduce fixed IT cost by paying for usage, not for availability
Strengthen defense-wide financial reporting standards
Design more ease-of-use/self-service operations
Improve emphasis on design for Force deployment packing/shipping efficiency
Standardize catalogs
Consolidate defense service and support operations
Withdraw non-profitable defense projects.
Improve emphasis on project quality and ease of service
Rationalize and/or refocus service portfolios
Retarget projects and services and manage project output
Consolidate billing operations
Manage procurement for MRO on a national defense basis
Rationalize/consolidate MRO vendor portfolio
Consolidate IT, defense Telecom and force deployement network equipment and facilities
Implement integrated applications across organizational boundaries
Rationalize IT application portfolio
Improve focus on military employee retention
Improve HR practices
Reduce Force Operation
and Administration Costs

TheBPMTaskforceorBPMCentreofExcellence(CoE),dependingonthe
processfocusandmaturityofthecompany,willbeabletobreakdownthese
KPItargetsintoProcessPerformanceIndicators(PPI)andtheconnectedIT
applicationareasinordertocombinevaluedriverswithIToperation.
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AfullyoperationalBPMCentreofExcellencewillbeabletoreportonthese
targetsandprovidecorporateleaderswithtimelyandreliableinformationon
howwell,orbad,theorganizationisperforming.Logically,theBPMtaskforce
orBPMCoEcanalsoevaluatetheprocessintelligencepictureandadviseon
wheretodirectmanagementawarenessorallocateinvestments.
TheconceptofValueBasedManagementmaybealmostaschallengingto
introduceinanorganizationasBPM,butitmightbepossibletoassistthe
introductionofbothbyexplainingthelinkbetweenthem.Thus,bothconcepts
maybeeasiertosellifthemessage;managementofvaluesandmanagement
ofprocessesgohand-in-hand,iscommunicatedwidely.
1.4.4 BPM and Line Production
TheVDFwhichwillfacilitatetheconnectionbetweenLineProductionand
BPMisone-usuallynotgivenenoughattention.Actually,ithasnotreally
beengivenapropernameyet.AtermlikeBalancingissuggested,e.g.
makingsurethatpurposeandperformanceofintraorganizationactivitiescan
bemanagedinawaythatmakesitpossibletodelivertheendproducttoa
customeratapricethatcancompeteonthemarketanddeliversasmuch
profittotheorganizationaspossible.
Typical challenges
Asdescribedearlier,processoptimizationandinnovationprojectsanchoredin
afunctionalbusinessarearisklosingthecross-organizationperspectiveand
mayresultinsuboptimization.Toalertmanagementawarenesstotheserisks
isashardforBPMpromoterstodo,asitishardtochangebusinesstraditions
andconvincedecisionmakersoftheneedforanewapproach.Inparticularit
ishardtoselltheneedforcentrallyintroducedBPM,withitsnewterminology
andmethodology,whenallprocessinitiativessofarhavebeenfunctionaland
areperceivedassuccessful.If,inaddition,theorganizationisbeingrunon
strictbudgetsallocatedonlytofunctionalbusinessunits,fundingforcross-
functionalprojectswillalsobedifficulttoachieve.
Anotherwell-knownchallengeforBPMexpertsistoeliminatethe
misconceptionthatBPMisanITissue.Oftentheneedforprocess
optimizationisallocatedfortheITdivisiontohandle,ormaybetheperception
thatITresourcesarelimitedsimplybecomesacomfortableexcusefornot
runningoptimalprocessesinthebusinessunits.Thebusinessfoundation
proposedrepeatedlyinthisarticlethroughValueDriversiscriticalfor
successfulimplementationofBPMandtheunderlyingprocesses.
Whilereluctanceintheorganization,fortheabovereasons,mayslowdown
progressintheestablishingofBPMinitsownright,thegrowingawarenessof
thevalueofprocessoptimizationcan,afterall,beusedtogetsupportand
fundingfortheintendedfirstice-breakingcross-functionalBPMinitiation
project.Thosepeoplealreadyinvolvedinprocessworkintheorganization,
typicallypersonswithsomeITtasksinthejobdescription,shouldbegiventhe
opportunitytocontributetotheprojectsomewayoranother.Theywill,
eventually,befunctioningasimportantambassadorsfortheprocessapproach
intheirownunits.Thedialoguefacilitatedbythefirstinitiationprojectisvital,
asitputstheconceptofcrossfunctionalBPMonthemapandpreparesthe
groundsfortheacceptanceoftheVDFBalancingbetweenBPMandCore
Business.
How the Value Driver Field Balancing could work
WhentheappropriateBPMstructureinanorganizationisestablished,andthe
processarchitectureismodeledanddocumented-monitoringofprocesses
cantakeplace.Theorganizationhasnowmovedanimportantstepupthe
maturityladder.TransparencyofprocessesandunderstandingofBPMwill
increaseandastheorganizationmatures,theconflictofinterestCore
BusinessandBPMwillalsofade.Balanceofinterestswilldevelop,andactors
inCoreBusinesswillrealizewhatsinitfortheminrelationtoBPM.
ThecrucialnextstepistoputproperBPMintoactionand,withverycareful
timing,toidentifyProcessOwners.Ofcourse,differentkindofpeoplewillbe
involvedinmanagingaparticularprocess,butonlyonepersonshouldholdthe
statusofaprocessowner,themostseniorofthepersonsinvolvedintheBPM
organization,andhopefullyamanagementboardmember.WhentheProcess
OwnerandtheBPMCoEisinplace,realBPMcanfunction.
Balancingindicates,ofcourse,thatinputisrequiredfrombothsidesofthe
pivotpoint.Forinstance,monitoringKPIsandPPIsandinterpretingthese
shouldbedoneinclosecooperation.Identificationofpossibleinterventionsto
remedyshortfallinaprocessshouldalsobedoneindialoguebetweenthe
BPMCoEandrepresentativesfromfunctionalbusinessareas.
Whenitcomestoidentifyingnewprocessimprovementprojects,however,
decisionontheprojectmandateshouldnotbedecidedwithinthisBalancing
VDF.Thegoodideasflowingfromjointmonitoringandanalysismustbe
presentedtotheprocessownerswhoraisetheissuesattheExecutiveslevel.
Inthemanagementboard,whereideallyallprocessownershaveaseat,the
portfolioofdevelopmentinitiativesshouldbedecided.Thus,asaresultofthe
BPMwork,newstrategicdevelopmentprogramsandprojectswillbelaunched
andtherelatedcontinuousimprovementwilltakeplacewithextensive
supportfromtheBPMCoE.
Ifspecificneedsforprocessoptimizationshouldbeidentifiedlocallyorwithin
functionalareas,forinstanceasaLeaninitiative,theinvolvementoftheBPM
CoEwillensurecoordinationandwillalsomakesurethatthefocusofthe
initiativescorrespondstothecompleteprocessarchitectureofthe
organizationandthatallrelevantaspectsarecommunicatedtotheprocess
ownerandotherinterestedparties.
TheBPMCoEgenerallyactsasasortofsecretariatfortheprocessownersand
providesthemwiththeservicestheirrolerequires.Withseniorlinemanagers
asProcessOwnersandaBPMstructureinplace,aprocessmature
organizationholdsagoodopportunityforkeepingthebalance.
1.4.5 BPM and Technology Delivery
TheVDFbetweenthespheresofBPMandTechnologyDeliveryis
Automation.Mostly,whentalkingprocesses,thatwillmeandeliveryofIT
andinparticularERPsystems.
Modelsaregoodforcommunicatingwithuppermanagementaswellaswith
linemanagersand,asdescribedinchapter1andsectionDescriptionofa
businessmodel
Thepurposeofabusinessmodelistodescribehowthecoreproduction
interactswiththeneedsofcompetenciesandtheneedofcapacityand
resources.Thebusinessmodelisseenasastrategytooltovisualizethebasic
strategyrelationsintheorganization.IntheDanishDefenseforcesthe
businessmodelhasathirdpurpose,toshowhowthedefenseshouldtransfer
fromagovernmentalthinkingorganization,withmoneyasthedriverwhen
makingsolutions,toamoderngovernmentalorganization,havingitsfocuson
theneedsofcompetencies,logistics,weaponplatforms,infrastructureandIT
foroptimalsolutions.Thebusinessmodeldevelopmentprojectbeganin1994
andtheresultingmodelisstillusedasguidelinesforfuturedevelopment.
Whyfocusoncompetences?Everybodyintheorganizationneedsunique
knowledgeanduniqueskillsfortheoptimizedproduction.Skillsand
knowledgecanbeacquiredintwodifferentways,youcanrecruittheright
peopleoryoucaneducateanddevelopyouremployees.Eitherwayyouneed
resources,capacityandtimetogettherightprofiles.
Intheglobalworldtimeisthemainparameter.Goodbusinesswillverysoon
getcompetitionfromotherplayersonthemarkets,soasthemoreefficient
theproductioncanbe,thehigheristhepossiblytostayinbusiness,aslongas
theprocessesisrunningeffectively.Forthatyouneedtherightcompetences.
BelowisanexampleofsuchadetailedBusinessModel[vonRosing,2009].This
kindofmodelcanbeusedtodefineandplanthecompetitivenessandthe
valuecreationandrealizationneededinthebusiness.

BusinessModelingisnotthesoletooltodefininganddevelopingones
performanceindeployingarmedforcesforexample,ordefiningwhereand
howvaluecouldorshouldbecreatedandrealizedinthedifferentdefense
businesslines.
Thesecondmainparameteristoaligntheprocessesatallthetime.Focushas
tobeonhowtomeasureimprovementinproductioncapacityandthe
processessurroundingtheproduction.Themeasurementorinformationisa
kindoflifelinetobusinessgovernance,anditcreatesthevaluemanagement.
TheValuemanagementcreatesneedsofchangesandsometimesnew
implementationsoftechnology.
Business Governanceofthischapter,theprimarymodelexecutivesworkwith
istheBusinessModel.ButtheBusinessModel,asexplainedinsectionCore
Production,hasafocusthatiscompetencebasedandnotprocessbased.
ToensuretheoptimalreferencemodelforBPManadditionalbusiness
processmodelandprocessarchitectureisneeded.Thisbusinessprocess
modelwillassistprocessownersintheirworkattoplevelandatthesame
time,throughthelogicalbreakdown,theoperationalawarenessofprocesses.
ThusitservesmanypurposesofprocessmanagementinsidetheCoEandin
addition,beingavisuallanguage,itisalsothemostpowerfultoolwhenit
comestothedefinitionandcommunicationofworkregulationsaswellasthe
developmentofendusermanualsetc.
TheBusinessModelandtheBusinessProcessModelcomplementeachother
andtogethertheyprovideaverycentralreferencebasisforbothmanagement
andwidercommunication.Even,whenitcomestoautomationoftheprocess
architecture,thebusinessmodelmayassistBPMinfindingkeystothe
simplification,standardization,developmentofnewflows,andBPMmay
inspireinnovationwhenitisimplemented-innovationunderstoodinthe
termsofoptimaluseofresources,capacitiesandtherebythecompetencesof
thebusiness.
However,forthepurposeofestablishingtheoptimalprocessautomationand
configurationoftheSAPERPsystem,itistheBusinessProcessarchitecture
thatdoesthejob.
Typical challenges
Asmentionedearlier,processmanagementhastraditionallybeenclosely
linkedtoITandthisperceptionisstilltypicaloutsidetheBPMsphere.When
talkingabouttheVDFAutomation,thediscussionaboutprocess
managementtypicallytriggersaninitialpowerstruggleaboutwhoisinthe
lead,BPMorIT.

Theillustrationdemonstratesdifferencesbetweenaprocess(business)centric
perspectiveversusandIT-centricperspective
Nodoubt,businesscomesbeforeanyITagendas,butasBPMthinkingtoa
verylargeextendistheresultofthedevelopmentofERPandthetrainingof
processcompetenceswithinIT,theconflictisnotdifficulttounderstand.
Thesolutiontothisis,throughoutthematuritystages,tofacilitatecareful
interactionintheVDFAutomationandinvolvecompetentBPMinterested
resourcesthroughouttheorganization,includingandnotleastIT.Whena
properBPMstructureiseventuallyestablishedthedistinctroleoftechnology
expertiseshouldbereassessed.Astheusualestimationthatonlysome20-25
%ofabusinessprocesscanbeautomatedprobablyholdswater,thereisno
doubtthatfurtherERPdevelopmentshouldbecontrolledbystrategic
developmentprogramssupportedbytheBPMCoE.
How the Value Driver Field Automation could work
ThedocumentationofanyITsystemshouldbelinkedtothebusinessprocess
modelwithallthedifferentprocesslevels,systematicallybrokendowntothe
lowestlevel.Thesynchronizationofe.g.theSAPSolutionManagerwitha
BPMSlikeARISonlymakessenseifthemodelingiscorrect.Theprospectof
achievinggenericuserinstructionsorthatofautomatedtestingmaybea
dreamintheearlierBPMstagesbutneithershoulditbeignored.

Theorganizationmusthaveaproductionversionofitsprocessmodelanda
setupforProcessModelControllingwhichcanassurethattheintegrityof
thefullprocessarchitecturerestwiththeBPMCoE.Thestandardsfor
modelingthetop3-4levelsshouldbedecidedinadialogueintheVDF
AutomationbuttherequirementsofBPMshouldcomefirst.Meetingthe
needswhenitcomestothelowerprocesslevelsrestswithITonly.Logically,
theroleasacustodianfortheBPMSshouldalsorestwithIT.
Toensurethecontinuousmaintenanceoftheprocessarchitectureasortof
permanentModelingBoardoraBPMSTaskForceisprobablyneeded.This
wouldalsoensureITexpertscontributiontobusinessprocessimprovement
initiativesandgenerallyfacilitatethedialogueintheVDFAutomation.
1.4.6 Terminology and conventions
BecauseofthefreeinterpretationofBPMasaconcept,anorganization
tryingtomakethemovetowardsBPMwillimmediatelyrecognizethatthe
establishmentofaprecisein-houseterminologyandacoherentmethodology
isofurgentnecessity.HowcouldabusinesscaseforBPMpossiblybe
presentedinawaythatappearssoundintheearsofnotjusttheconvinced
enthusiasts,butalsointhoseoftheseniormanagers,ifacommonlanguageis
notinplace?Thetextbelowsuggestshowsomeofthetypicalissuescanbe
arranged.
Process Levels
Themostessentialterminologytostandardizeisthatofprocesslevelsif
processmodelsaretobecompatible.Thetermbusinessprocessisvery
generalandisbeingusedbyalmostanyonebutatthesametimeitgenerates
differentassociations,andthedialoguebetweennewBPMadvocatesand
othermembersoftheorganizationisdoomedtobeunproductiveifthe
understandingofthegranularityandpurposeofthevariouslevelsarenot
common.
Differentdefinitionsoflevelsexistbutatypicalapproach,andtheonetobe
usedhere,includes5-6levelswherethemainprocessesoftheorganizationat
thetoplevel1arebrokendownsystematicallytotheextentitseems
reasonablefortheparticularprocess.

TheillustrationdepictstheProcessLevelsandthemaincontent
WithreferencetotheValueDrivermodelsuchabreakdownmakessenseasit
supportsthelogicoftheidentifiedBusinessSpheresandVDF[vonRosing,Dahl,
Nielsen,2010].

Processlevel1,themainprocesses,makessurethatthereferencetothe
organizationsbusinessmodelremainsintactwhenitisinterpretedfroma
processview.
Processlevel2,theactualbusinessprocesses,shouldbeanidentificationof
relevantprocesses,groupedwithinmanagement,productionandsupport
processesandgivenaclearrelationtooneofthemainprocesses.Thenumber
ofprocesseswouldmostlikelybe70-80,anditwillbeatthislevelprocess
ownershipshouldbeidentifiedandoverallperformanceindicatorsassigned.
BusinessarchitectureatthislevelwillsupporttheVDFValueManagement.
Processlevel3representsthevaluechainofsubprocesseswithinthebusiness
process,aflowfromstarttoendandwiththepossibilityofassigningall
relevantinformation,includingPPIs,asobjectsintheBPMS.Theproperly
developedflowdescription,basedonconsultationsbetweeninterested
parties,becomesthereferenceformanaging,assessingandreportingonthe
businessprocesses.Atthislevel,subprocessesallhaveareferencetoa
primarylevel2processbutatthesametimesubprocesseswillalsoreoccurin
differentprocessflows.Visualizingtheseoccurrencescontributestobreaking
upthetraditionalfunctionalsiloapproachintheorganizationandfacilitates
theBalancingVDF.
Processlevel4breaksdownasubprocessintoanend-to-endactivityflow.If
thesubprocessistobeautomatedbytheSAPfunctionality,activitiesinthe
processflowcanbelinkedtoe.g.atransactioncodeindifferentSAP
applications.ThelinkbetweenbusinessandITisthencreatedandthecore
issueofVDFAutomationisputinplay.

SynchronizationofaBPMSandSolutionManagercantakeplaceand
documentationatlowerlevelswillalsohaveaclearreference.
Processlevel5willbeadescriptionofthestepsintheactivitiesandintheSAP
systemthecustomizationcanintheorybedocumented.Againthisfitsintothe
ValueDriverModelsidentificationoftheSphereofTechnologydelivery.
Naming conventions
Thelogicalcontentoftheprocesslevelsshouldbereflectedinthenaming
standards.Manyanexternalconsultantisseengoingintoaprojectteaching
thatallprocesses,despitethelevel,shouldbenamedusingtheimperative
formofaverbfollowedbyanoun.Linguistically,thismakessenseatprocess
level4and5wheretheactivitiesareconditionedbyaprecedingeventif
this,thendothat.Atprocesslevel3,however,wheretheissueisabout
sequencingsubprocessesofageneralcharacter,suchanamingstandardis
awkward.
Itcouldbearguedthatthisdiscussionisjustaquestionofmerewordingand
thereforeirrelevant.However,experienceshowsthatpoorlanguageresultsin
poorcommunicationandwhatisneededforaBPMinitiativetosucceedis
goodcommunication,notbad.Manymodelsproducedinvariousproject
proofthatthegranularityoftheprocessisunclearandthattheprojecthas
enormousproblemsmakingtheimportantdistinctionbetweenprocesslevel3
and4.HavingabrieflookattheValueDriverModelconfirmsthatknowing
whereweareisimportantandittakesdifferenttoolstohandleprocesses
whetherweareintheVDFBalancingorVDFAutomation.Languagesare
differentbuttheuseofimperativesonlyatlevel4andbelow,is
recommended.
Havingaclearandfocusedterminologyispricelessinamodelingcontext,and
thedevelopmentofaprocessmanualwithstandardsismandatorybeforea
BPMinitiationprojectislaunched.
General
AsBPMisnewtomostpeopleandterminologyisnotalwaysagreed,process
championsshouldbecarefultocontrolthereleaseofnewdefinitionsandonly
makeuseofterminologywhichisrequiredinacertaincontextandwhich
reflectsthematurityoftheorganization.
TheimportanceofProcessOwnersisoftenstressedintheliterature,butsome
concernshouldberaisedinrelationtotiming.Thustheprocessownership
shouldnotbeallocatedbeforetherolecanbegivenanyusefulpractical
content.Iffancytitlesandterminologyisbeingexcessivelyusedatanearly
stagewheretheorganizationisimmatureandthecontentispurelyacademic,
thetermswillbewornoutevenbeforetheyhavecomeintopracticaluse.And
thiswillundermineagoodcaseforBPM.
1.5 Technology Delivery
ThoughtheTechnologyDeliverySphereiswiderthanmereITbaseddeliveries,
andmakingbestuseofe.g.anewsortofforkliftisbasicallythesameissueas
bestuseofanITapplication,thefocuswillbeonITinthiscontext.
1.5.1 Establishing the competences
Theneedforclarifyingtherolesandsettinguptherightstructureforhandling
theinterfacewithBPMhasbeencovered.Inthelightofthelatest
developmentsinSAPandBPMStheITdepartmentsroleinmaking
automationworkisboundtobeademandingone.KnowledgeofBPMS,IT
architecture,customizationsintheSAPsystemandupdatedinformation
aboutfuturereleasesoffunctionalitywillbeinhighdemand.Buildingupthe
necessarycompetenceswillprobablybeaseriouschallengeforthebusiness
sphereoftechnologyandIT.
ToensurethattherequiredservicescanbedeliveredtotheBPMCoEor
initiatedprogramsandprojects,amorefocusedgovernanceset-upintheVDF
TechnologyManagementislikelytoberequired.
1.5.2 Improving delivery of services
ThefunctionalITareaintheorganizationwillproducetherequiredIT
solutionstotheCoreBusinessandsupporttheday-to-dayoperationofthe
systems.Inadditiontotheseservices,ITshouldalsofeedintotherestofthe
organization,valuableinformationaboutstate-of-the-arttechnological
options.ThiswayITcontributestokeepingcompaniesontherighttrack,
technologically.Whileacknowledgingitsspecialstatusasahigh-techbusiness
unit,itmustbeacceptedthatITbasicallyremainsasupportingservice
deliveringthecapacitiesneededinCoreBusiness,justlikeotherfunctional
supportingbranches.
Typical challenges
BeforeestablishingBPMandsettingupastructurefortheprocess
optimizationinanorganization,theideasforoptimizationofbusiness
processesistypicallyinspiredbytheawarenessofnewITfunctionality.
Typically,thoseinvolvedinrunninganddevelopingtheSAPsystem,whether
attheITdepartmentorinCoreBusiness,willregularlypromoteideasofusing
aspecificfunctionalitytooptimizeprocesses.Asgoodastheseideasmight
sound,italsoresultsinnarrowprojectmandatesandprojectsestablishedon
thisbackgroundwilleventuallyfocusonwaystouseatool,e.g.theSAPPS
module,ratherthanimprovingaproperbusinessprocesslikeResource
Planning.
How the Value Driver Field Technology Management could work
AnoptimizedapproachtomanagingITthatreflectstheintroductionofBPM
andobservestheideasoftheValueDriverModelcouldbasicallybeawell
trimmedbusinessprocessitself,theprocessDevelopmentofproduction
capacity.
ThisbusinessprocessrunningwithintheVDFTechnologyManagementwill
includestagesintheSAPimplementation,lifecyclemanagement,upgrades,
trainingetc.butthecustomizationoftheSAPsystemwillnotbepartofit,as
thiswillbedealtwithintheVDFAutomationlinkingtheTechnologyDelivery
andBPMspheres.
VDFTechnologyManagementwilladjusttheITmanagementorganization
accordinglyandprobablybeaddressingmoreattentiontotheoverallIT
architectureandupgradeofinfrastructure,ratherthanbegeneratingnew
developmentprojects.ThischangewillcomplementtheworkintheBPM
sphereandthechancethatITwillactuallyendupsupportingbusiness
processeshasincreased.
ITwillnotbeleftfortheITDepartmenttobeinchargeofthecompleteIT
infrastructureautonomouslyandjustfeedsolutionsintotothecorebusiness,
butITasacapacitywillbedevelopedincooperationbetweenCoreBusiness
andITdelivery.
1.6 Implementation of change
Implementationofchangeintheorganizationsincludesanumberofdifferent
perspectives,andtheyallneedcarefullyplanning.Fieldstudies
1
haveshown
thatifalargergroupofemployeesfindsitnecessarytoconductchanges,then
theorganizationitselfwillreactmoreproactivelyduringtheimplementation.

1
ProfessorKotter,Eightsteps

Basically,changesareawaytoreplacelessefficientpartoftheproduction
withmoreefficientones.Itcouldbethereplacementofatechnology
solutionsortheintroductionofamoreefficientprocessstructure.These
changeswillinfluencethepowerrelationshipbetweenemployees.Somewill
loose,andsomewillwin.Thewinnerwillwalkfasterthroughthetransition
processtothenewstructure,whiletheloosermayhaveanegativeeffecton
theworkinthenewstructure.Successfulchangethereforerequiresthe
establishmentofakindofaWin-Winsituationforeverybody.
Anotherfailureriskariseswhencorebusinessimplementsnewtechnology.
Therearealotofsituationswherethetopmanagershavemisunderstood
theirresponsibilityforadynamicchangeprocess.Inmostcasestheymakea
learningprogram,whereemployeeslearntousethetechnology,andthen
BusinessGovernanceexpectsafastpayback.Normallytheywillhavetowait
quitelongbeforetherepay,duetothechallengesfoundwithinCoreBusiness
andBusinessProcessManagement
Therealchangesdependontheemployeeslevelofwillingnesstoaccepting
changes.
Thechallengeincontinuousimprovementis:
Todothechangesfast
Involveallemployedwhenyoustarttheproject
Try to keep the internal power structure or you might loose good
employees
Buildupawin-winsituationfortheemployees
Reallocateemployeesifitspossibleortrytohelpthemgettinganew
job
1.6.1 Development Management Methodologies
Largedevelopmentprojectsliketheonesconductedbothinthedefense
organizationsandelsewherearetypicallyconductedaslargerITandSAP
projects.Typicallytheyarejustthat,namelyITprojects-andnotbusiness
developmentprojects.Evenprojectsperfectlycompletedaccordingto
methodologieslikePRINCE2oftenturnouttohavefarlesseffectonbusiness
thanexpected.ThisofcoursereflectsthefactthattheITsphereinan
organizationissimplyjustanotherfunctionalsilointheorganization,butit
alsoillustratesthatallsignificantmodificationstothedesignorconfiguration
ofanSAPsystemneedsastrategicanchorratherthanafunctional.
IfBPMisintroduced,suchastrategicanchorisprovided.Asillustratedwith
theValueDriverModelitbecomesclearthatITultimatelyservesthe
CorporateManagementthroughBPMmakinguseofVDFValue
ManagementandAutomation.
Thissituationalsorequiresnewmethodologicalapproaches,likeProgram
ManagementandPortfolioManagement.Highlyprofessionalproject
managementisnotenough.
TheexperienceintheDanishDefenseisthattheveryinitiativetointroduce
BPMintoourorganizationwouldbeagoodexampleofastrategicprogram
itself.Themediumtermperspectiveofaprogramfitsnicelywiththe
organizationsneedfortimetomaturetheorganizationandprepareforBPM
andtheprojectsundersuchaprogramwillcontributetothegradual
developmentoftheorganization.
1.7 Conclusion
Intheprevioussectionsofthischapterwehavegonethroughthevalue
driversseenfromthepointofviewofaDefenseorganization.TheValue
DriverModelhasbeenpromotedasthewaytonotjustunderstandvarious
businessissues,butalsotoidentifytheprocessopportunitiesfor
improvementandinnovationinanorganization.
TheValueDriverModeltherebygivesanorganizationauniqueapproachto
identify,createandrealizethewishedgoalsandresults.Forthemostthisisin
themainareaofcostefficientandeffectiveprocesses,aswellasinnovateand
competitiveprocess.Onceinplace,BPMfulfillsitspurposethrough
interactionwithalltheotherBusinessSpheresintheValueDriverModel,
BusinessGovernance,CoreBusinessandTechnologyDelivery.
InaperfectworldValueDriverswillbebalanced,BPMcanmonitor
performanceandValueBasedManagementcanassisttheexecutivesin
keepingtheperspectiveoftheCoreBusinesswiderthanjustthefunctional
silos.TheExecutiveswillalsothroughBPMbeabletoensurethatthe
professionallymanagedITcapacitiesresultinoptimalsupportofbusiness
processesthroughtheVDFAutomation.Thecontinuousimprovementof
businessprocesseswill,insmallerscale,behandledbyBPMasdaytoday
business-whilelargerprocesschanges,likeallotherbusinesschanges,willbe
handledthroughdevelopmentprogramswithinthefieldsofcorporate
Continuousimprovement.
Ultimately,thesituationisestablishedinwhichcontinuouslyimproved
BusinessGovernancecanfunction,assistedbyBPMandprobablyalsobythe
ValueDriverModel.
AlltogetherthisshouldhelpconvincingcorporatemanagementthatBPMhas
averygoodbusinesscase.Inthisexcitingjourney,wehaveencounteredthe
followingbenefitsfromBPM:
Improved visibility of vital processes and thereby information,
enabling enhanced operational effectiveness
Establishment of an enterprise-wide process methodology and a
framework to identify the different value drivers and thereby the possibility to
demonstrate value creation and realization for the different defense lines of
business
Improved operational effectiveness through the integration of
operational processes that facilitate shared situation awareness
Potential savings of millions across the organization, derived from
process integration efficiencies

Sources:
Joint Publication 1-02, DoD Dictionary of Military and Associated Terms),
(Washington, DC:2008)
Strange, J, L., Understanding of Clausewitz, Joint Force Quarterly, summer
2003,
von Rosing, Mark. Business Value Management, a way to plan, create and
realize value (2009)

von Rosing, M., Dahl, C., Nielsen, J.T., Business Process Management i the
Defense Industry (2010)

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