Convergence of business and IT is on the rise, and so is the necessity for creating business outcomes that matter, and for innovation and creating sustainable business agility in the face of complexity. A business-centric method, the business process optimization (BPO) (refer to Part 1 for more information on the concept of BPO) method holistically combines capabilities to deliver improved business outcomes through new levels of agility. In order to achieve and sustain business performance, modern enterprises must be able to change the business operational model at a rate, cost, quality and predictability consistent with strategic imperatives. This requires operational dexterity and the ability to change the business model itself to address agility and complexity gaps necessitated by market forces, competition and business leaders.
By optimizing the process of change in a partnership between business and IT, the business can be liberated from the rigidity and fragility of existing IT applications that hard-code processes and information utilization, but also from rigid business procedures and practices that do not meet current needs for being nimble and proactive. With BPO, the business is no longer constrained by IT and instead, IT becomes an asset for increased business competitiveness.
The BPO method consists of two phases as illustrated in Figure 1.
Figure 1. The BPO method
The Engage & Assess phase involves understanding current business architecture, the business goals, the desired business outcomes, the area of focus, and the level of agility required. Business goals describe specific things that are important for the business to achieve. KPIs are associated with each goal to identify what success will look like.
The Architect & Plan phase creates an actionable business agility architecture blueprint that can guide and govern implementation of agile business and IT solutions through the identification of variation points (predictable change) and agility requirements (unpredictable change). The architecture blueprint focuses on holistic business design and transformation and provides the foundation for structured transition planning.
The BPO method as a whole can define the art of what is possible to achieve with technology for a process area, and will help navigate the many agility options available, including deciding on the level of business agility truly needed for the desired business outcome. While valuable in and of itself, the BPO method also has built-in links to "downstream" solution methods or approaches necessary to realize the business agility transition plan, which is one of the work products produced by the BPO method. The BPO method phases are described in more detail in Understanding the BPO method.
The language of business design
At the heart of BPO is an agile business design. The business design of an enterprise is the shared understanding of both the structure and function of its business and should consider not only components internal to the organization, but its entire value network. Significant improvements in an enterprise are considerably more likely when its business design is understood and laid out for collaborative consideration. Even better is when the business design is able to cope in a structured fashion with predictable as well as unpredictable market and business changes. Clearly, a good business design should be documented in an actionable form. However, enterprises often do not take the time or effort to formally document their business design, either because they don't know how, or because they don't appreciate how important such an activity is to the overall agility and effectiveness of the organization.
Language is a system of communication that enables humans to cooperate. Creating an agile business design is a collaborative activity and we need a formalized language to perform that activity effectively. The role of language is not just to enable the efficient expression of ideas, but to compel the expression of certain kinds of ideas. Creating a language that compels the expression of the ideas of agility will lead naturally to business designs that are fundamentally more robust and effective. Without such a language of business design, how would we even discuss the desired future state of the business, let alone the performance and agility requirements related to it?
Different languages address different domains. The language of business design is the domain-specific language for the agile design of a business and must address all the eight enablers of agility that underpin BPO, as shown in Figure 2.
Figure 2. Business enablers
The concept of a language of business design is described in detail in the IBM whitepaper The Language of Business Design (PDF).
Although a language of business design is valuable in and of itself, the full value is not realized unless the resulting business design is actionable for the enterprise. Consequently we must capture not only business intent and desired outcomes, but also the building blocks (business as well as IT) that must be put in place in order for that intent and those outcomes to be realized.
In the context of the BPO method, the language of business design is used to compel questions and dialog pertaining to desired business outcomes, but is also the formal foundation for the business agility architecture blueprint. A formal functional model, the business agility architecture blueprint codifies, in actionable form, the building blocks of a future state business operating model that will achieve the outcomes defined in phase 1 of the BPO method.
Understanding the BPO method
Arriving at a structured and actionable transition plan requires good understanding of desired business outcomes as well as the architectural blueprint for an operating model that enables such outcomes. The BPO method is structured in two distinct phases, as shown in Figure 3: Engage & Assess addressing business outcomes and Architect & Plan addressing architectural transition planning.
Figure 3. Details of BPO method phases
Note that while there is value in each in isolation, they are much more powerful together.
Engage & Assess phase
This is the first phase of the BPO method. This phase involves acquiring an understanding of the current business architecture and documenting the desired business goals, outcomes and areas of business agility. Based on that, an organizational roadmap is developed for and leading with one or more operational areas. This phase will take approximately 2-3 weeks to execute.
The deliverables from phase one of the BPO method are:
- Business Agility Assessment: The business agility assessment establishes a baseline of current business agility. It is derived from several points of view, and identifies key issues, gaps, desired business outcomes, and evaluates priorities.
- Business Outcome Map: The business outcome map ensures each recommendation from the agility assessment is linked to a measurable goal (expected business results) and that a set of key performance indicators (KPIs) is associated with each goal.
- Business Agility Roadmap: The business agility roadmap provides an actionable, prescriptive, targeted and staged business agility set of organizational initiatives that will provide the path and means to achieve the desired outcomes in a timely fashion.
Architect & Plan phase
In the second phase of the BPO method, the focus is on developing the architectural blueprint that enables the business outcomes defined in the Engage & Assess phase, and maps those outcomes onto the key operational aspects of the future operational state of the business. Subsequently this business agility architecture blueprint is the foundation for transition planning. The transition plan identifies the downstream projects required to realize the future operational state, including identifying the agility enablers that would naturally be applied, thereby determining the "type" of each project in the transition plan (for example, BPM or business analytics). This phase will take approximately 4-5 weeks to execute.
The deliverables from phase two of the BPO method are:
- Agility Heat Map: The agility heat map the set of components (the Component Business Model) in which the lack of agility is hurting the business most. The agility heat map determines the desired scope for agility improvement.
- Agility Blueprint: The business agility architecture blueprint is a component-based (enterprise planning) model that codifies the future business operating state. The blueprint identifies and prioritizes operational components, with special emphasis on business entities, processes and decisions, and based on agility indicators from phase 1, assigns both variability characteristics (such as predictable change and optimizing current state) and agility requirements (such as unpredictable change and driving future state) to each such component.
- Agility Transition Plan: The transition plan lays out manageable incremental steps towards the defined future state necessary to create business impact and fulfill business outcomes.
Link to downstream activities and methods
The BPO engagement model links to and provides a comprehensive context for various solution approaches necessary to realize the strategic imperatives and business operating model from the business agility architecture blueprint and the agility rransition plan. It's important to realize that there is no overlap between the BPO method and, for example, a BPM methodology; the BPO method focuses on business outcomes and enterprise planning while a typical BPM methodology focuses on operational improvement from a solution perspective. Indeed many BPM, decision management and business analytics projects are challenged by a lack of strategic context and a lack of understanding of required agility characteristics. By complementing these methods with BPO methods, such weaknesses are mitigated or entirely eliminated.
Modern enterprises cannot trust the future to chance, but must plan for and effectively address future change, and indeed must embrace such change as a competitive differentiator. To that end, business agility is a key enabler, something that enterprises become rather than only something that they do. The BPO method was created to ensure that achieving appropriate levels of business agility can be addressed in an engineering fashion rather than as a "black art." The two phases of the method provide, respectively, the desired business outcomes and the operational blueprint and transition plan that will take you there. As such, the BPO method is a valuable supplement to existing solution- and project-focused methods and a natural ingredient in the enterprise planning cycle that traditionally has been driven by business or enterprise architecture.
The authors would like to sincerely thank the following contributors to this article: Abdul Allam, Asit Dan, Geoffrey Hambrick, Ian Turton, Jean Pommier, Jerome Boyer, John G Vergo, Jorge L Sanz, Kevin Daley, Kishore Channabasavaiah, Rob High, Robert P Hablutzel, Samuel Antoun, Sella Ganapathy, Tapas Som, and Shuvanker Ghosh.
- Leveraging SOA, BPM and EA for Strategic Business and IT Alignment: developerWorks, C. Jensen et al, December 2008.
- Combining Business Process Management and Enterprise Architecture for Better Business Outcomes: IBM Redbook, C. Jensen et al, March 2011.
- The Language of Business Design: IBM whitepaper, October 2010. (PDF)
- The Data4BPM series: P. Nandi, et al, April 2010
- The Component Business Model: A component-based approach to strategic change.
- Cutting Through Complexity with Business Agility: An IBM study.
- Actionable Business Architecture: An IBM whitepaper.
- Capitalizing on complexity: A Global IBM CEO Study, 2010.