dev elop Vi s i on an d St r at e g y

DE F INIT IONS AND KEY MEAS U RES

Version 2.0.0

The Framework for Process Improvement

Experience shows that benchmarkings potential to drive dramatic
improvement lies squarely in making out-of-the-box comparisons
and searching for insights not typically found within intra-industry
paradigms. To enable this type of beneficial benchmarking, the
APQC Process Classification FrameworkSM (PCF) serves as a highlevel, industry-neutral enterprise model that allows organizations
to see their activities from a cross-industry process viewpoint.
The PCF enables organizations to understand their inner workings
from a horizontal process perspective, rather than a vertical
functional viewpoint. The PCF does not list all processes within a
specific organization, and every process listed in the framework is
not present in every organization.
Originally created in 1992 by APQC and a group of members, the
framework has experienced more than twenty years of creative use
by thousands of organizations worldwide. The PCF is supported by
APQCs Open Standards Benchmarking research. It is continuously
enhanced as APQCs Open Standards Benchmarking team further
develops definitions, processes, and measures. Please visit
APQCs web site periodically for updates. The PCF is available for
organizations of all industries and sizes at no charge by visiting
www.apqc.org/pcf.

History
The Process Classification Framework was originally envisioned as
a taxonomy of business processes. The initial design involved more
than 80 organizations from the United States and worldwide. Since
its inception, the PCF has been updated several times to reflect
changes in the way organizations do business.
In response to feedback from users of the PCF, APQC regularly
engages practitioners, consultants, and academics to develop
definitions based on real-world experience with the processes.
That collaborative effort resulted in this document: a listing of
processes with definitions and selected key performance indicators
from APQCs Open Standards Benchmarking repository. This
particular document was developed with assistance from IBM.
The definitions contained in this document are to be considered
in conjunction with the PCF. The content in this document will be
updated according to research performed by APQC and subsequent
updates to the PCF. This document was created using PCF version
6.0.0.
Version 2.0.0 December 2012

1.0 Develop Vision and Strategy

oPeraTIng Processes
1.0
develop
vision
and
strategy

>>>

2.0
develop
and manage
Products and
services

>>>

3.0

4.0

>>>

market
and sell
Products and
services

>>>

deliver
Products
and
services

managemenT and sUPPorT servIces

6.0

develop and manage human capital

7.0

manage Information Technology

8.0

manage Financial resources

9.0

acquire, construct, and manage assets

10.0

manage enterprise risk, compliance, and resiliency

11.0

manage external relationships

12.0

develop and manage Business capabilities

5.0
manage
customer
service

1.0 Develop Vision and Strategy Definitions and Key Measures

1.0 Develop vision and strategy__________________ 3
Key Performance Indicators______________________ 3
1.1 Defining the business concept and long-term vision__ 3
1.1.1 Assess the external environment____________3

TABLE OF CONTENTS

1.2.4 Coordinate and align functional and

process strategies________________________5
1.2.5 Create organizational design (structure,
governance, reporting, etc.)________________5
1.2.6 Develop and set organizational goals_________5

1.1.2 Survey market and determine customer

needs and wants_________________________4

1.2.7 Formulate business unit strategies___________ 5

1.1.3 Perform internal analysis___________________ 4

1.3 Manage Strategic Initiatives______________________6

1.1.4 Establish strategic vision___________________ 4

1.3.1 Develop strategic initiatives________________ 6

1.2 Develop business strategy_______________________4

1.3.2 Evaluate strategic initiatives________________ 6

1.2.1 Develop overall mission statement__________4

1.3.3 Select strategic initiatives__________________ 6

1.2.2 Evaluate strategic options to achieve

the objectives___________________________5

1.3.4 Establish high-level measures_______________ 6

1.2.3 Select long-term business strategy___________5

RIGHTS AND PERMISSIONS

About APQC

2012 APQC. ALL RIGHTS RESERVED.

APQC is a member-based nonprofit and one of the worlds

leading proponents of knowledge management, benchmarking,
and best practices business research. Working with more than
750 organizations worldwide in all industries, APQC provides
organizations with the information they need to work smarter,
faster, and with confidence. Visit www.apqc.org or call +1-713681-4020 and learn how to Make Best Practices Your PracticesSM.

APQC encourages the wide distribution, discussion, and use of

the PCF and PCF definition documents for classifying and defining
processes. APQC grants permission for use and adaptation of the
PCF for internal use. For external use, APQC grants permission for
publication, distribution, and use, provided that proper copyright
acknowledgment is made to APQC. No modifications to the look or
content should be made in external venues.
Please use the following text when reusing the PCF in
external print or electronic content.
The PCF was developed by APQC and member companies as
an open standard to facilitate improvement through process
management and benchmarking regardless of industry, size,
or geography. The PCF organizes operating and management
processes into a number of enterprise-level categories, including
categories, process groups, and over 1,000 processes and
associated activities. The PCF and its associated measures and
benchmarking surveys are available for download and completion
at no charge at www.apqc.org.

Permission granted to photocopy for personal use. 2012 APQC. ALL RIGHTS RESERVED.

1.0 Develop vision and strategy (10002)

Category 1.0 Develop vision and strategy establishes a direction and vision for an organization. It involves defining the business
concept and long-term vision, as well as developing the business strategy and managing strategic initiatives. Processes in this
category focus on creating a vision, a mission, and strategic objectives, and culminate in creating measures to ensure that the
organization is moving in the desired direction.
Key Performance Indicators:
Gross revenue
Net income

Process Insight:
These key performance indicators can be viewed per full-time equivalent employee (FTE), in year-over-year growth, or in a way that
makes sense given the needs of the individual organization.

1.1 Define the business concept and long-term vision (10014)

The Define the business concept and long-term vision process group encompasses four processes related to developing an
organizations strategy and business design. First, the organization assesses the external environment, which provides insight
into the operating framework. Next, the organization surveys the market, which provides insight into business opportunities and
customer desires. Third, there is an internal analysis of the organizations characteristics, which assesses how it matches market
requirements and opportunities; this process results in the ability to define internal core capabilities. Finally, the organization defines
a strategic vision that states long-term goals. This process group forms an organizations strategic direction.

1.1.1 Assess the external environment (10017)

Assess the external environment involves establishing and developing the organizations insight into the operating framework.
The purpose is to understand competitor moves, market economics, regulatory changes, technology developments, and
emerging business opportunities and risks, while monitoring the effect of the market on the organization. This insight is then
leveraged in management decision making.
Several concurrently running processes can help assess the environment. The market place should be identified, analyzed,
and evaluated so that existing and emerging competitors aims, offerings, strengths, and weaknesses are understood.
Economic trends and political/regulatory issues affecting the organization should be identified so that a view of the operating
environment is established. Technological innovations in the field should be monitored and assessed to understand the
different threats and opportunities they provide. It is also important to analyze demographic, social, and cultural changes and
to understand their impact on the organization. Finally, ecological concerns/trends and their implications for the organization
should be considered.

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( 1.2 Develop business concept and long term vision continued )

1.1.2 Survey market and determine customer needs and wants (10018)
Survey market and determined customer needs and wants consists of establishing and developing insight into long-term
business opportunities so that existing customers are better served and new ones are found. Approaches, methods, and
tools can be similar to those found in process 3.1.1 Perform customer and market intelligence analysis, but the purpose and
practices are different. This process consists of qualitative and quantitative market assessments that uncover conditions and
trends affecting different opportunities. The process also includes capturing and assessing customer needs and wants in an
effort to address changing expectations and identify opportunities.

1.1.3 Perform internal analysis (10019)

Perform internal analysis involves assessing an organizations internal characteristics and evaluating its strengths and
weaknesses in an attempt understand how its existing capabilities address market requirements and respond to opportunities.
The analysis starts with the organizations characteristics, such as organizational design, reporting structures, and culture.
Then current processes are analyzed so that the current performance is understood and a baseline for identified development
activities and existing systems/technology is established. The organizations financial position is analyzed so that its ability to
invest and to organize its cost structure is understood. Finally, the organizations competencies are analyzed so that internal
capabilities, knowledge, and skills, which can be extracted and leveraged in building the strategy, as detailed in 1.2 Develop
business strategy are identified.

1.1.4 Establish strategic vision (10020)

Establish strategic vision involves establishing a common view of the organizations direction and then developing a plan to
achieve it. The process involves establishing the strategic intent of the organization that guides decision making. Then the
organizations key leadership and stakeholders are aligned with the direction of the organization and the strategic vision is
communicated to stakeholders.

1.2 Develop business strategy (10015)

The Develop business strategy process group encompasses the development of an organizations mission statement, strategy,
and business design. The first step is to develop a mission statement that clarifies the reason for the organization. The next step
is to define key steps in realizing the vision and develop strategic options to achieve objectives. Implications of strategic options
should match the organizations internal capabilities, which are then transformed into a long-term business strategy. After the
organizations strategy is defined, functional and process strategies are developed to coordinate with the overarching vision. Based
on the requirements set through these processes, an organizational design is created and goals are defined. The formulation of
business unit strategies is the final process in this group.

1.2.1 Develop overall mission statement (10037)

Develop overall mission statement focuses on creating a concise statement that summarizes the purpose of the organization,
describes its daily activities, and states its core values. The process begins with defining the organizations current business
and goals, and then the mission statement is formulated based on those goals. After the mission is documented, it is
published and communicated to the organizations stakeholders.

Permission granted to photocopy for personal use. 2012 APQC. ALL RIGHTS RESERVED.

( 1.2 Develop business strategy continued )

1.2.2 Evaluate strategic options to achieve the objectives (10038)

Evaluate strategic options to achieve the objectives focuses on defining and evaluating strategic options to steer an
organization and manage its operations. The process begins with defining, assessing, and analyzing an organizations strategic
options and understanding their impacts. Then the organization develops operational strategies, including a sustainability
strategy that addresses environmental and social issues, global support, and shared services strategy. It also defines a Lean/
continuous improvement strategy that focuses on operational efficiency and effectiveness.

1.2.3 Select long-term business strategy (10039)

Select long-term business strategy involves defining how an organization will maximize its long-term value. During this
process, an organization considers the evolution of its operational environment and the risks and benefits of the strategic
options associated with the selected strategy. The long-term strategys fit with the organizations internal characteristics and
capabilities should be considered.

1.2.4 Coordinate and align functional and process strategies (10040)

Coordinate and align functional and process strategies ensures that an organizations vision aligns with the overarching
business strategy and goals. This process involes ensuring that functional and process strategies follow common business
principles.

1.2.5 Create organizational design (structure, governance, reporting, etc.) (10041)

Create organizational design (structure, governance, reporting, etc.) is the process of selecting a business and operational
strategy. This process consists of creating an organizational structure (units, processes); work groups (unit/teams structure);
roles (responsibilities, relationships); integrated mechanisms (governance, communications); and performance measurement
systems (measurement, reporting).
The process starts with an evaluation of the current structure to establish a baseline. Next, job-specific roles are mapped
and analyzed to define their value to the organizations capabilities and goals. Activity diagrams are created to assess
hand-off activities between roles and organizational units. Then, based on the strategic requirements and analysis of the
current organization, redesign workshops redefine and develop roles, activities, and processes. After changes are defined,
the implications of feasible alternatives are assessed and any required mitigation work is scoped. Finally, changes are
implemented and the organization is migrated to the new organizational design.

1.2.6 Develop and set organizational goals (10042)

Develop and set organizational goals consists of establishing performance goals. Measures are developed to steer both
individual and organizational behavior towards the defined strategy. Measures should assess the organizations operational
performance (e.g., production efficiency) and financial performance (e.g., profitability).

1.2.7 Formulate business unit strategies (10043)

Formulate business unit strategies consist of developing and setting goals at the business unit level. These strategies support
the execution of overall organizational strategies and follow common business principles. This process follows the same
general process as 1.2.3 Select long-term business strategy.

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1.3 Manage strategic initiatives (10016)

Manage strategic initiatives focuses on actions, projects, or programs that enable an organization to realize its strategy and achieve
goals. It includes analyzing the operating environment for the development of strategic initiatives. Strategic initiatives are evaluated
and the most appropriate initiatives are selected for execution. It is critical to follow the progress of execution so that the impact
of the initiatives is identified. Refer to 12.2 Manage portfolio, program, and project for additional information on managing strategic
initiatives.
1.3.1 Develop strategic initiatives (10057)
Develop strategic initiatives involves responding to organizational performance or changes in the operating environment. The
process starts with an analysis of current performance and the identification of conditions that affect it. Based on the analysis,
initiatives are developed so that identified issues or exploit opportunities are addressed.

1.3.2 Evaluate strategic initiatives (10058)

The Evaluate strategic initiatives process involves evaluating proposed initiatives based on the risks and benefits associated
with their execution.

1.3.3 Select strategic initiatives (10059)

Select strategic initiatives involves choosing initiatives, establishing a timeframe, and executing the strategy. Selection is
based upon estimated execution risk, expected size of the opportunity, estimated operational benefit, and estimated impact
on performance if the initiative is not executed. Initiatives should be considered based on long-term goals and organizational
need.

1.3.4 Establish high-level measures (10060)

Establish high-level measures involves monitoring the progress and impact of executed initiatives. It should include the
creation of an initiative tracking system.

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Permission granted to photocopy for personal use. 2012 APQC. ALL RIGHTS RESERVED.