Post on 12-Jan-2015
description
Systemic Approach Towards Enterprise Functional Decomposition
Dmitry Kudryavtsev, Lev Grigoriev
2011
Workshop “Convergence of Business Architecture, Business Process Architecture, Enterprise Architecture and Service Oriented Architecture”
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11 2
About the company
BUSINESS ENGINEERING GROUP SPb
Consulting
Organizational design, strategic management, business process improvement and re-engineering, enterprise architecture management, quality management
Products
ORG-MASTER® line of software products for organizational design and analysis
GOV-MASTER ® software for public organizations design and analysis
Seminars and Trainings
Business engineering School, School of business analysts, Business ideology school
Research
Models and methods of organizational design, enterprise engineering and modeling
History: management consulting, enterprise modeling software and trainings since 1997
Customers: large and medium-sized CIS business and public organizations
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Outline
1. What is “enterprise functional decomposition”?
2. Requirements for the decomposition
3. Currently available models and methods
4. The suggested framework– terminology,– main principles,– process / method.
5. IT support
6. Implementation
7. Framework benefits
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Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
What is “enterprise functional decomposition”?
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Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
What is “enterprise functional decomposition”?
“Functional decomposition identifies the high-level functions of an organization or proposed solution and then breaks down those processes into sub-processes and activities. This can be done as part of a systems development or business process analysis project. The goal is to break functions down into smaller pieces to allow for analysis of the detail processes and to ensure coverage of all significant processes” - A Guide to Business Analysis Body of Knowledge, 2006
“Functional decomposition – a technique for mastering the complexity of the function of a system. The effect of applying the technique is that a functional model of a (sub)system is replaced by a set of functional models? Also called functional subsystems, and vice versa. Where functional model is a black-box model of a concrete system and function is the set of services the concrete system is able to provide” - Jan Dietz, “Enteprise Ontology Theory and Methodology,” 2006.
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Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Functional decomposition role in enterprise engineering
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PurposePurpose
FunctionStructureStructure
Principles and rulesPrinciples and rules
IT-architecture,Technical architecture,People,Organizational structure
Mission, Vision,Goals, Strategies,CSF, KPI
Value chain, functions, business processes, activities
Functional decomposition
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Requirements for the decomposition
System engineering driven Business practice driven
Completeness and Necessity (“Do right things”),
Correct understanding of semantics (e.g. what does “maintenance management” mean?)
Consistency (e.g. avoid overlapping activities…)
Support for management best practice:• Widely-used reference models,• Methodologies (TQM, VBM…).
Regulatory compliance (ISO, SOX…)
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Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Requirements for the decomposition
In more technological form:
1. Activities follow its’ purposes - alignment with the enterprise intentional model (for completeness check, prioritizing),
2. Reuse of the proven and shared normative models or knowledge (reference models, patterns, etc),
3. Consistency of principles within functional decomposition,
4. Value-based management harmonization,
5. ISO 9004:2009 harmonization.
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Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
ISO 9004:2009 harmonization
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Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Value-based management harmonization
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Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Currently available models and methods
A. Reusable elements for enterprise functional decomposition • APQC Process Classification Framework, SCOR, ITIL, CBM…• Lifecycle models
= starter kit and building blocks,
require supplementary method
B. Methods for enterprise functional decomposition• Goal-oriented (Kavakli and Loucopoulos)• Beer’s Viable System Model (VSM) based• Normative model driven (e.g. Barros)
Need to be integrated and extended.
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Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
The framework: terminology
Functional system – purposeful system, which consists of activity elements and has the following features:
•purpose as the main system-forming factor,
•self-regulating – it includes a management component/activity elements,
•hierarchy – it consists of other functional systems,
•isomorphism – all the functional systems have a similar structure.
where:
Activity element – any element of enterprise activities description, e. g. process, action, functional area.
Purpore - high level, overall goal of a system. The role of an object within superior system.
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Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
The framework: main principles
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Strategy & Policy
Design & Improvement
Operational planning
Measure-ment,
Analysis, Control
Management
Natural
resources
Finance
People in the
organization
Infrastructure
Environm
ent
Know
ledge
Information
technologies
Enabling systems
Valuecreation
Functional system’s pattern
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
The framework: main principles
Alignment of functional system pattern with purposes and goals
Stakeholder’sconcerns
Goals of the functional system
Goals of value creation elements
Goals of managerial and enabling
behavior
help achieve
help achieve
provide Purposes
Functional system
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
All the pattern components are harmonized with ISO 9004:2009
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Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Value-based management (VBM) harmonization
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Functional system
Corporate level Business level Functional area level
FeaturesCorporate system Business system
(Functional area-level) Functional system
Beneficiary Shareholders, Investors
Customer Superior system,Internal client
Purpose area (value type)
Corporate value Customer value + Profit
Value for superior system, Value for internal clients
Key performance
indicators
Economic Value Added (EVA), Value Creation Index (VCI)
EBITDA, Return-on-Assets (ROA), Free Cash Flow (FCF)
Depend on the functional area.
Value creation elements
Business system, Corporate governance,Environmental health,
safety and social responsibility management.
Inbound Logistics,Operations,
Outbound Logistics,Marketing & Sales,
Service.
Depend on functional area.
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Corporate system pattern
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Legend:
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Business system
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Legend:
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11 20
(Functional area-level) Functional
system
Legend:
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Pattern-based enterprise functional decomposition
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Corporate system
Business system
Functional systems
Functional subsystem
Business-lines
Corporate strategy /
goals
Business strategies /
goals
Functional strategies /
goals
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
The framework: process
1. Identify functional systems and subsystems within business system
2. Identify functional systems and subsystems within corporate system
3. Identify subsystems and processes
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Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
The framework: process
1. Identify functional systems and subsystems within business system1.1. Describe customer-oriented value chain/stream in terms of interacting functional
systems,Usage of existing reference models (VRM, SCOR, APQC), lifecycle models and patterns.
1.2. Identify groups of managerial processes,
1.3. Identify enabling functional systems.
2. Identify functional systems and subsystems within corporate system 2.1. Describe corporate-level value chain/stream
Specify and/or fine-tune corporate system pattern
2.2. Identify groups of managerial processes
2.3. Identify enabling functional systems
3. Identify subsystems and processes3.1. Describe value creating subsystems or processes within functional systems
Usage of generic (e.g. APQC) and domain-specific reference models (e.g. ITIL), lifecycle models.
3.2. Generate operational planning processes for value-creating components of functional systems
3.3. Choose and customize the required processes from Design & improvement, Strategy & Policy and Paradigm groups of processes for functional systems.
3.4. Identify managerial processes for business system,
3.5. Identify managerial processes for corporate system.23
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
IT support - The ORG-Master business architecture engineering tool
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Ontology-based enterprise model
editor
Ontology-based enterprise
model
Reporting and query module
Documents
Diagrams
ORG-MASTER ®
Modeling process wizard
Integration wizard
Diagram editor
Query results
Semi-structured
data
OWL
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11 25
Knowledge Process
Creation and Acquisition
Formalization Distribution Use
Knowledge acquisition forms
Analytical reports
Structured Administrative documents Y
Query answering
Internal Representation
Structured Administrative documents Х
Local knowledge acquisition
organizational models
The ORG-Master business architecture engineering tool
Ontology-based organizational
model
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11 26
Knowledge Process
Creation and Acquisition
Formalization Distribution Use
Text X
Tables Y
Text Y
Graphics Y
Internal Representation
Tables X
Graphics X
Pseudo-Graphics
The ORG-Master business architecture engineering tool
Ontology-based organizational
model
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Implementation
• Ilim Group, Koryazhma Branch,
• Omskiy Repair plant (RMZ Gazprom Neft-Omsk Refinery LLC),
• CottonClub
+ current clients
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Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Implementation example
Ilim Group, Koryazhma Branch
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Problem:
Equipment reliability dropBreakdowns happened often unplanned equipment downtime increased
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Implementation example
Solution - maintenance system reengineering project:• Develop maintenance system concept, strategy and
measures;• Redesign organizational structure,• Identify maintenance processes and raise their maturity,• Optimize the key maintenance processes;• Information system improvement;• Formalize and enhance key maintenance operations;• Develop organizational documentation.
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Maintenance system functional decomposition
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Implementation example
Maintenance system functional decomposition helped • to clarify responsibilities during organizational structure
redesign, • to identify maintenance processes and check their list for
completeness,• to deploy functional strategy.
Functional system pattern • provided consistent description of different systems, • helped to embed planning and improvement activities in
every functional system and to make mid-level managers responsible for these activities.
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Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Implementation example
Overall effects of the maintenance system reengineering project:
• 40 percent decrease in the unplanned equipment downtime;
• Increased manageability and performance; • Repair times reduced; • Increased equipment reliability.
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Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Framework benefits (1/3)
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Recursive decomposition
using single activities pattern
Similar structure of activities at different level of detail and in different
functional areas
Causal links between activity elements
(in addition to hierarchy)
Rapid management maturity growth
Ease communications between managers
Reuse of company’s internal knowledge
Corporate standards
Better organizational design
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Framework benefits (2/3)
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Purposeful decomposition
“Do right things”
Realize strategy quicker with less resources
Clear priorities in decision-making
Set causal links between activity elements
Systemic Approach Towards Enterprise Functional Decomposition, CEC 11
Framework benefits (3/3)
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ISO 9004:2009 Harmonization
Reuse managerial best-practice
Guarantee for sustainable growth
Ease the certification process
VBM Harmonization
Better satisfy key
stakeholders
Corporate value growth
The END
Questions?
2011
dmitry.ku@gmail.com, griglev@gmail.com