Today no standards exist for organization modeling. Every modeling tool has its own approach to this problem, and every business that performs business model- ing does the modeling in its own way. Much variety exists.
The relationship map developed by Rummler and Brache [Rummler and Brache 1995] is perhaps the closest to a standard, albeit a de facto standard with as many variants as practitioners. Rummler and Brache describe a systems view of organiza- tions in which organizations and their components are depicted with rectangles nested within other rectangles. Customers, suppliers, and other external organiza- tions (or roles) are shown by rectangles outside the main organization. Interactions labeled with deliverables connect the organizations (or roles) to show how work gets done, both within and across the organizational boundaries.
Rummler and Brache also introduce the concept of including an organization chart—with reporting associations—within the relationship map view of the orga- nization, much as we have shown earlier in this chapter. Paul Harmon further ela- borates on this idea and shows how a chart with the reporting structure of functional units is embedded within the organization model [Harmon 2003].
The organization models presented in this chapter are broadly consistent with the work of Rummler and Brache and with Harmon’s extensions. Many commer- cial modeling tools have also built on the work of these thought leaders, so our presentation is also broadly consistent with commercial modeling tools.
The Object Management Group has started to create a standard for modeling organizations. Currently the OMG organizational modeling work is paused, wait- ing until more companies (and government agencies) show interest in this
standardization. As of early 2008, we believe the OMG is several years away from a standard that will address the modeling of business organization models.
Without standards, modelers will continue to rely on a combination of ad hoc approaches and the proprietary modeling languages built into the modeling tools they use today. Each modeling tool and ad hoc approach is different. Sometimes the differences are obvious. Worse, sometimes the differences are subtle. The model elements and associations that look the same in two tools have subtle dif- ferences in meaning. These differences create two problems. Analysts looking at diagrams created in different tools cannot accurately (or easily) interpret and compare the models. And models cannot be exchanged between different tools.
Case Study
A telecommunications services company saw some significant profitability differences between various business units. Some business units were more profitable than others, even for the same services. Why? Were the more profitable business units simply better organized? Should the less profitable business units be reorganized to resemble the more profitable ones? Were either the more profitable or the less profitable business units following industry best practices?
Each business unit had its own sales organizations and its own customer ser- vice organization. The North Sales Group and the South Sales Group handled regional sales, one for northern customers and the other for southern customers.
The Field Solutions Group handled solutions for new customers and existing cus- tomers, and the Equipment Resales Group provided used telecommunications equipment to existing customers. The company also had other corporate depart- ments: Marketing, Finance, Legal, Procurement, and Operations.
To help the company explore organizational alternatives, we created busi- ness models. We created business motivation models to capture the goals, problems, and opportunities. We created business process models.
We also created several organization models. We created both an organi- zation model of the existing situation and organization models for each of several alternative scenarios. The model of the existing situation captured the interactions between the current business units and the customers, influencers, and suppliers. The customer interactions included billing and collections, service delivery, inbound sales requests, contract approval, orders, support and maintenance, inquiries, prospecting, and customer qualification. Figure 4.17 shows one of the model diagrams for customer sales inquiries.
The telecommunications services company considered two customer segments: new customers and existing customers. When a new customer made a sales inquiry, they could contact one of three different internal orga- nizations:Field Solutions,North Sales Group, orSouth Sales Group.
Continued
Standards 99
Case Study—continued
Communication Services Co.: organization unit Customer: role
New Customer:
role
Existing Customer:
role Field
Solutions:
organization unit North
Sales Group:
organization unit South Sales Group:
organization unit
Equipment Resales:
organization unit Large
Suppliers:
role Supplier: role
sale inquiry sale inquiry
sale inquiry
sale inquiry
FIGURE 4.17 Customer sales inquiries at a telecommunications services company Or a new customer could contact a large supplier directly, resulting in an indirect sales inquiry to one of the regional sales groups. Similarly, an exist- ing customer could contact one of four different internal organizations:
Field Solutions, Equipment Resales, North Sales Group, or South Sales Group. The multiple interaction points made it difficult to under- stand the customer relationship. Customer information was kept in multiple databases, further impeding a single view of a customer.
Customers who recognized the multiple entry points exploited the duplication by arranging for the organizations to bid against each other. A customer called one team and asked for a bid. With the pricing in hand, they called another, announced the “market price” they had received, and asked the second team to beat it. The internal organizations only later dis- covered they were being played against each other.
The existing organization was flawed. The company supported its custo- mers poorly and provided that support inefficiently. The organization dupli- cated capabilities across several organizations, and the duplication was abused by some customers. The organizational structure damaged company performance. But the effect of structure on performance was not apparent from just an organization chart. Only analyzing an organization model revealed the problems.
We helped the company conceive a reorganization. As shown inFigure 4.18, customers are segmented into three groups: top accounts, regional midtier accounts, and other customers. Each customer segment has its own sales organization:Top Accountsfor the top customers,Regional Accountsfor the midtier customers, andTelemarketingfor other customers.
Supplier: role
Large Suppliers:
role
top customer sale inquiry
Communication Services Co.: organization unit sale inquiry Customer: role Top Customer:
role
Mid-tier Customer:
role
Other Customer:
role sale inquiry
Top Accounts:
organization unit Regional Accounts:
organization unit
Telemarketing:
organization unit
sale inquiry
sale inquiry mid-tier
sale inquiry
FIGURE 4.18 Redesigned customer sales
The new organization design allowed the company to retain some of the current structure, keeping knowledgeable staff with specific product know- how within their respective business units. The problem of the multiple cus- tomer interactions is solved. All customer contacts are now funneled, recorded, and tracked. Customers are not able to maneuver organizations into competing against each other. Overall, customer interactions are stream- lined—improving customer satisfaction and increasing efficiency. The new organization allows the company to present a single point of contact, and it promotes cross-selling.
The executive management team used business organization models to understand their current customer interactions and problems. The team evaluated several alternatives and chose one to best fit their company and their goals. The business models allowed the team to see the impact of the organizational changes before reorganizing and possibly discovering that the reorganization did not create the desired results.
A business organization model describes the people who work in and inter- act with a business. It includes organizations—groups of people with a common purpose. It includes roles—the responsibility people assume in an organization. It shows organizations or roles as part of other organiza- tions or roles. It shows what organizations or roles interact with other organizations or roles. It shows what organizations or roles influence other organizations or roles. And it shows what roles report to other roles.
Standards 101
A business organization model describes both organizations and roles within a business and those outside, including customers, competitors, sup- pliers, and influencers. Interactions and influences often cross organiza- tional boundaries.
A business organization model is a description of thewhobehind a busi- ness—the people, their roles, and their organizations. In Chapter 5 we explore the how—the business processes that a business uses to get things done.
CHAPTER
Business Process Models
5
Business process modeling is the third of the four business modeling disci- plines we describe in this book. A business process model describes tasks and the ordering of these tasks: what work is performed and when it is per- formed. A business process model also captures who performs the tasks. This chapter explains business process models.
Some businesses run smoothly. Each task is a part of an elegant dance, with employees doing just what they need to do and working together to make a sim- ple and beautiful whole. Other businesses run rough. They get their work done, but every task is a heroic struggle. Chaos reigns. Business processes are the differ- ence between the smooth businesses and the rough ones. The smooth businesses execute good business processes; the rough businesses execute poor ones.
A business process is a collection of step-by-step tasks that a business uses when it performs its work. For example, all restaurants pursue the same goals of serving food for hungry customers, but they differ in the details of their busi- ness processes. They greet customers differently, they take reservations differ- ently, and they prepare dinners differently.
Now that Cora Group has been successfully integrated into Mykonos, you are charged with growing the revenues of the Cora Group restaurants. You learn that Portia faces a business process problem. Portia’s customers are experiencing long delays before they are seated. You are concerned that the delays will result in a poor customer experience and will lead to reduced revenue. You would like to investigate what is happening in this restaurant: Why are customers waiting? Is there an issue with the way Portia takes reservations and assigns tables? Can the problem be solved with a new reservation system? With pagers? With more servers? With more efficient seating arrangements?
You want to understand the business process of Portia customer dining, from the beginning to the end, from the time a dining party arrives until they leave the restaurant. You want to know how customers are greeted, how reservations are handled, how customers are seated, how they are served, and how tables are
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freed and cleaned so that new customers can be served. You also want to under- stand who is interacting with the customers along all these steps and how their jobs are performed.
To achieve this understanding, you create a business process model. A busi- ness process model is a model of a business process—a model of what work is being done and who does it.