ARTIGOS

Enterprise maturity and successful business process orientation projects

Maturidade empresarial e o sucesso de projetos organizacionais orientados a processos de negócio

Madurez empresarial y el éxito de proyectos organizativos orientados a procesos de negocio

 

Carlos Alberto Pereira Soares*, Marcelo Magalhães**, Wainer Silva*** and Dorval Mallman****

* Doutorado em Engenharia de Produção, Universidade Federal do Rio de Janeiro. Coordenador do Programa de Pós-Graduação em Engenharia Civil, Universidade Federal Fluminense, CEP 22320000 – Niterói, RJ – Brasil. carlos.uff@globo.com

** Doutorado em Engenharia Civil, Universidade Federal Fluminense. Pesquisador do Departamento de Engenharia Civil da Universidade Federal Fluminense, Passo da Pátria, 156 – ZIP 22320000 – Niterói, RJ – Brazil. marcelo@provision.com.br

*** Doutorado em Engenharia Elétrica, Vanderbilt University. Diretor do Departamento de Engenharia Civil da Universidade Federal Fluminense, CEP 22320000 – Niterói, RJ – Brasil. wainer_uff@yahoo.com

*** Doctorado en Ingeniería Eléctrica, Vanderbilt University. Director del Departamento de Ingeniería Civil de la Universidad Federal Fluminense, CEP 22320000 - Niterói, RJ - Brasil.

**** Doutorado em Administração, Universidade Federal do Rio Grande do Sul. Professor em Administração, Fundação Getulio Vargas, CEP 22231-010 Rio de Janeiro, Brasil. dorvalmallmann@gmail.com

 

ABSTRACT

According to business process management (BPM), organizations should be oriented to optimize their business processes using the best technology available. Strategic management maturity (SMM) can be understood as the stage the organizations achieve when they use the best practices related to strategy to their business area. Business process orientation (BPO) stimulates the BPM effort and uses BPM as reference and tool. In this article, it is suggested that BPO projects using BPM information to have a successful impact depends on the SMM level of the organization where the project happened. A research was conducted in eleven Brazilian companies. Seven variables were used to measure the SMM level and four variables to evaluate the impact of the BPO projects. The conclusion was that the higher the SMM level of company, the higher is the positive impact of the BPO project.

Keywords : Business Process Management; Maturity Model; Business Process Orientation

 

RESUMO

O gerenciamento de processos de negócio (BPM, no acrónimo em inglês) é uma abordagem de gestão que estimula as organizações se voltarem para a otimização dos seus processos de negócio com o uso intensivo das melhores tecnologias disponíveis. A maturidade de gestão estratégica (SMM) pode ser entendida como o estágio que as organizações obtêm no uso das melhores práticas relacionadas à estratégia para a sua área de negócio. A orientação a processos de negócio (BPO) estimula o esforço BPM e usa BPM como referência e ferramenta. Neste artigo, sugere-se que um impacto bem sucedido de projetos de BPO que usam informações de BPM depende do nível de SMM da organização onde o projeto for realizado. Foi realizada uma pesquisa em onze empresas brasileiras, utilizando sete variáveis ​​para medir o nível de SMM e quatro variáveis ​​para avaliar o impacto dos projetos de BPO. A conclusão foi que quanto maior o nível de SMM da empresa, maior o impacto positivo do projeto BPO.

Palavras-chave : Gestão de Processos de Negócio; Modelo de Maturidade, Orientação a Processos de Negócio

 

RESUMEN

La gestión de procesos de negocio (BPM, el acrónimo en inglés) es un enfoque de gestión que estimula a las organizaciones a volver a la optimización de sus procesos de negocio con el uso intensivo de las mejores tecnologías disponibles. La madurez de la gestión estratégica (SMM) puede ser entendida como la etapa que las organizaciones obtienen en la utilización de mejores prácticas relacionadas con la estrategia para su área de negocio. La orientación a processos de negocio (BPO) estimula el esfuerzo BPM y utiliza BPM como referencia y herramienta. En este artículo, se sugiere que un impacto exitoso de proyectos BPO que utilizan informaciones de BPM depende del nivel de SMM de la organización donde el proyecto fue realizado. Se realizo una investigación en once empresas brasileñas, utilizando siete variables para medir el nivel de SMM y cuatro variables para evaluar el impacto de los proyectos de BPO. La conclusión fue que cuanto más grande es el nivel de SMM de la empresa, mayor es el impacto positivo del proyecto BPO.

Palabras Clave: Gestión de Procesos de Negocio; Modelo de Madurez; Orientación a Procesos de Negocio

 

Scholars have been defending for at least 25 years that organizational environments are becoming increasingly complex (Vasconcelos and Ramirez, 2011). Improving organizational business processes has been pivotal on companies’ and researchers’ agendas for years (McCormack et al., 2009). The business process management (BPM) and business oriented management (BPO) approaches have been developed to deal with these organizational changes. As a result, it has been a surge of papers and a practitioners’ interest in those subjects for more than a decade ((Rhee, Cho and Bae, 2010), (Vergidis, Tiwari and Majeed, 2008)).

BPM is defined, for the purpose of this paper, as all efforts in an organization to analyze and continually improve fundamental activities such as manufacturing, marketing, communications, and other major elements of company’s operations (adapted by Trkman, 2010 from Zairi, 1997). BPO is a way of thinking and working that emphasizes the integration of inputs into valuable outputs rather than focusing on hierarchical or functional effectiveness (McCormack et al., 2001; Aguilar-Savén, 2004).

BPM can be seen as a collection of methodologies, techniques and tools supporting the analysis and the improvement of business processes (Melão and Pidd, 2000). BPM must be linked to the organizational strategy.

Several approaches such as total quality management, continuous process improvement, and business process reengineering have been proposed to increase business process orientation (BPO) (Zhang and Cao, 2002). One of these approaches is business process management (BPM), which seems to be the most comprehensive, well-known, and widely used practice (Rohloff, 2009).

The BPO treats more broadly the organization around processes than the BPM. McCormack (McCormack, 2007) define that a process-oriented organization “is an organization that emphasizes processes as opposed to hierarchies, in all areas, with a special emphasis on outcomes and customer satisfaction”. According to the authors, the BPO approach views the organization as a broad framework that aims to organize workflows and information, which will help the organization to build and to offer a higher level of value to the customer.

Despite considerable investment in research in this area, most reviews report as many as 60-80% of BPM initiatives having been unsuccessful (Abdolvand, Albadvi and Ferdowsi, 2008). Therefore, the service industry is not convinced that a business process approach could bring significant tangible and measurable benefits (Vergidis, Tiwari and Majeed, 2008). However, the research field on BPM and BPO is still in its infancy (Hung, 2006) and it is still lacking a theoretical framework. Consequently, the analysis and categorization of both theoretic research and practical efforts are not yet fulfilled (Melão and Pidd, 2000); (Trkman, 2010).

Despite considerable investment in research in this area, most reviews report as many as 60-80% of Business Process Management initiatives having been unsuccessful. Therefore, the service industry is not convinced that a business process approach could bring significant tangible and measurable benefits.

According to Lee et al. (Lee and Dale, 1998), BPM should be linked with policy deployment and aligned with the critical objectives and the company goals. BPM may be a good managerial tool, since it presents a solution based on the systemic thinking (Brocke and Sinnl, 2011).

Segatto et al. (Segatto, Pádua and Martinelli, 2013) assess whether the BPM approach has systemic characteristics so that it can be a practical solution for managing organizations. However, new approaches to the use of systemic vision in defining projects should be proposed. There are several fundamental problems that remain unsolved by current approaches (Mendling, 2009).

In parallel with the recent development of enterprise information systems, business processes have become more complicated (Zhang, Bae, and Koo, 2011). The effective implementation of BPM should be improved. BPM is listed as one of the top priorities in most surveys. Chief information officers listed business process improvement and innovation as being of the utmost importance (Johnson and Levien, 2010), (Gartner Group, 2010). Similarly, chief executive officers emphasized that process improvement is the key to reach higher quality and efficiency (Mefford, 2009). As emphasized by Brynjolfsson (2010): “the way that companies implement business processes, organizational change and information technology (IT)-driven innovation is what differentiates the leaders from the laggers”. According to Yahya et al. (2013), the increased individuation and variety of logistics processes have spurred a strong demand for a new process customization strategy.

At the extent that the business environment becomes more complex, more crucial decisions involving highly complicated and tricky problems are made (Vasconcelos and Ramirez, 2011). Within this context, structured decision-making procedures with reductionist and linear characteristics cannot deal with the managerial complexity, even the most sophisticated ones (Vasconcelos and Ramirez, 2011). The systemic thinking offers an important alternative to the reductionist approach (Jackson, 2003) (Korn, 2011) and those related to disciplines in the social sciences (Barton et al., 2004).

Maturity models typically include a sequence of levels (or stages) that form an anticipated, desired, or logical path from an initial state to maturity (Becker et al., 2009; Gottschalk, 2009; Kazanjian and Drazin, 1989). An organization’s current maturity level represents its capabilities about a specific class of objects and application domain (Rosemann and de Bruin, 2005).

According to Lockamy and McCormack (Lockamy III and McCormack, 2004), companies that strategically focus on their business processes reach greater levels of performance and have a better work environment based on high levels of cooperation and less conflict.

Strategic planning is defined as a formal, administrative process that calls for an explicit procedure to determine specific, long-range objectives and generate alternative strategies, requires both strict implementation and a system to monitor results (Armstrong, 1989). Such planning represents a strategically important organizational decision-making process because it establishes the means and ends of an organization, clarifies competitive threats and opportunities, and controls and implements actions, which in turn enhance firm performance ((Ansoff, 1991); (Menon et al., 1999)).

Strategic planning can be considered from a content or a process viewpoint. The content relates to the distinct elements of the strategic plan which are unique to each specific firm. The process relates to the mechanisms for the development of the strategic plan and its subsequent deployment (O’Regan and Ghobadian, 2002). Managers perceive that strategic planning contributes to effectiveness, giving them a feeling of confidence and control. Greenley (1986) has identified a range of advantages to be gained from using strategic planning. It means strategic planning may therefore be effective as a process of management, regardless of the performance achieved.

Enterprise maturity to perform the strategic planning is important. It is recognized that half (if not more) of the strategic initiatives fails, and such failure is usually due to factors under managerial control. Therefore, a detailed understanding of who is mixed up in these processes, and thus bears some responsibility for their success or failure, becomes an important consideration (Nutt, 1999). The organization’s strategy and structure must be aligned with its competitive environment ((Cadez and Guilding, 2008); (Rogers, Miller, and Judge, 1999)).

Enterprise maturity to perform the strategic planning is important. It is recognized that half (if not more) of the strategic initiatives fails, and such failure is usually due to factors under managerial control. Therefore, a detailed understanding of who is mixed up in these processes, and thus bears some responsibility for their success or failure, becomes an important consideration.

According to Naslund (2008), a systemic approach to promote an organizational change and to bring improvement seems to be missing. External and internal relationships between strategy, personnel, processes, and technology must be considered in order to achieve the business objectives (Hung, 2006). Noting the existing approaches, Hung believes that the field of research is still in its infancy (Hung, 2006) and theoretical explanation and, consequently, analysis and categorization of both research and practitioners efforts are missing ((Melao and Pidd, 2000) (Trkman, 2010)).

It should therefore establish which business processes are key processes to bring more competitive advantage and which have lesser influence. It should also specify which business processes should be standardized and where employee may have certain flexibility (Trkman, 2010). Harmon (2007) argues that the enterprise functional view is focused on dividing the processes into activities attributed to specific departments, thus reducing the global performance of the organization. The main reason is that there is no management of the relationships between departments, which generates antagonistic or even conflicting objectives in the organization, thus making it difficult to perceive how each part contributes on aggregating value to the client.

Maturity models are a prospering approach to improving business process management (BPM) capabilities. In fact, the number of corresponding maturity models is so high that practitioners and scholars run the risk of losing track (Röglinger and Jörg, 2012). Mingers and White (2010) have analyzed the contribution of systemic thinking to the management sciences by assessing their applications in a variety of areas, including strategy, information systems, information technology, organizations and corporate social responsibility and production and management of projects. Skarzauskiene (2010) also analyzed the application of systemic thinking to organizational sciences, indicating important aspects for its application. The essence of systemic thinking includes the understanding of the inter-relationships rather than the linear cause-effect relationships; viewing the dynamic rather than the static processes and viewing and understanding the context (Skarzauskiene, 2010).

Röglinger et al. (2012) agree with Brocke et al. (2010) who point at the need for “a clear distinction (. . .) between process maturity models and BPM maturity models.”

However, researches that correlate enterprise maturity and the results generated by the BPM are required. If the BPM modeling indicates improvement actions for organizations, project management develops and implements plans to achieve a specific scope that is driven by the objectives of the program or portfolio it is subjected to and, ultimately, to organizational strategies (Project Management Institute, 2013).

BPM systemic characteristics approach can be a practical solution for managing organizations systemically (Segatto, Pádua and Martinelli, 2013). Since the practical experience showed many failed projects and programs, several papers tried to identify critical success factors (‘CSF’) of BPM (e.g. (Ariyachandra and Frolick, 2008); (Bandara, Gable and Rosemann, 2005)).

Batista et al. (2008) point out that despite the efforts to manage end-to-end processes across business units, few companies are successfully accomplishing it. Many authors emphasize the importance of systemic thinking for the organizational management, but it is difficult to summarize and group the theories as their authors rely on different attitudes regarding both systemic thinking and meaning of the organizational performance (Skarzauskiene, 2010).

According to Miller et al. (2004), the success of management actions can be influenced by the presence of two significant factors that increase the chances that decisions will achieve what was intended. One is the availability of previous experience to support planning (the ‘experience-based approach’), and the other is a receptive climate that ensures that those with responsibilities for implementation must keep it on their agenda (the ‘readiness-based approach’). The effort of the BPM can develop these two factors in an organization.

To contribute to the development of the systemic thinking oriented to the business success, this paper has the following goals: to propose an approach to evaluate BPO projects and to identify how the strategic maturity of processes affects the outcome of the business process orientation (BPO) projects, focused on the organizational improvement.

Many authors emphasize the importance of systemic thinking for the organizational management, but it is difficult to summarize and group the theories as their authors rely on different attitudes regarding both systemic thinking and meaning of the organizational performance (Skarzauskiene, 2010). As a concept which includes the BPM, the organizations can apply the business process orientation (BPO) as a way of developing the systemic thinking oriented to business success where the organization emphasizes the processes as opposed to the hierarchy, focusing on results and on the customer satisfaction (McCormack, 2007).

To contribute to the development of the systemic thinking oriented to the business success, this paper has the following goals:

• To proposean approach toevaluate BPO projectsand
• To identify howthe strategicmaturityofprocessesaffects the outcomeof the business processorientation(BPO) projects, focused on the organizational improvement.

 

Research methodology adopted

To fulfill the two goals of this research, a study involving Brazilian companies was conducted. Eleven companies were selected in the cities of Rio de Janeiro, Belo Horizonte and Brasília. These companies involved three engineering companies, one industry and commerce, one insurer, one health plan company, one sugar and ethanol power plant, one commercial bank, one closed private pension entity, one public authority and one vocational education institution, demonstrating the applicability of the model in different business segments.

The case study was conducted between September 2011 and March 2014 and implementations of organizational changes were surveyed based on business processes in a period from 2005 to 2013.

The limited sample size was due to the complexity of the work involved. It could not be done by simply submitting a questionnaire to the managers of the companies. The companies had to be personally accompanied by one of the authors, and the assessment of all aspects of the project evaluated through not structured interviews. The answers provided by the managers of the companies would be affected if they have not been part of the project, for lack of self-criticism, or for resistance in critically evaluate the efforts in which they may have participated.

Eleven companies were selected in the cities of Rio de Janeiro, Belo Horizonte and Brasília. These companies involved three engineering companies, one industry and commerce, one insurer, one health plan company, one sugar and ethanol power plant, one commercial bank, one closed private pension entity, one public authority and one vocational education institution, demonstrating the applicability of the model in different business segments.

The case study method enables the development of a broader understanding of risks and opportunities involved in BPO projects. This study can be generalized to other scenarios by the adoption of this research model in other organizations, operating in the market of engineering or other business segments.

This research combined both a qualitative case study and a quantitative survey. The first one intends to identify aspects related to BPO projects. The second one aims to calculate the correlations among the factors evaluated and to infer their importance for the achieving of the BPO.

This research development establishes a line of deductive reasoning that covers the identification of the problem, hypothesis development, the search for updated references on the subject and the proposition of practical recommendations for managers involved in BPO projects.

This research can be classified–by its nature–as an applied research, because it generates knowledge for practical application to specific problems solution.

Therefore, this work is a bibliographical, experimental, and documentary research, and achieved by a participant observation (Serva, 1995), which consists of: “Search situation where observer and observed are face to face, and where the data collection process occurs in the natural environment of life itself observed, which are no longer seen as objects of research, but as subjects that interact at some studies project” (Serva, 1995).

This study proposes two hypotheses:

H1–The strategic maturity influences the perception of the successful implementation of changes supported in the BPO?

H2–The BPO maturity influences the perception of the successful implementation of changes supported in the BPO?

The result of the analyses of these two hypotheses provides empirical evidence to support the widespread view that, while many will fight to get a seat at the decision table, not all will stay around to get things done.

Several variables were applied to measure the size of the companies, their level of maturity (Magalhães, 2013), and the impact of the BPO projects conducted by them, as well the alignment of the projects with the strategies of the companies. These variables, their definitions, and the range of possible output for them are synthesized in Table 1.

 

 

In all projects examined, there was a current process mapping, critical analysis, and the proposal of an action plan for implementation of the improvements observed. All of them were performed within deadlines, costs and quality expected by the sponsors of the projects.

In descriptive statistics, the Pearson correlation coefficient measures the degree of correlation and the direction of this correlation (positive or negative) between two metric scale variables. The practice shows that correlations above 0.70 to plus or minus indicate a strong correlation. Otherwise, if the value is between 0.30 and 0.70 positive or negative, it can be considered a moderate correlation. Finally, correlations below 0.30 are considered low correlations. Given the limited sample size (11), we considered only the strongest correlations; and we assessed as moderate, those found between 0.60 and 0.70.

For strong and moderate correlations, even in the case of ordinal variables, characteristics of this segment of study, we applied the ANOVA and the T-Student’s test, for variables of the same nature before and after the BPO project, to verify if the variances can be considered different from the statistical point of view (Table 2). And for variable of different natures, we applied the regression analysis to decide whether there is a correlation or not, and if the behavior of the independent variable is explained by the dependent variable.

 

 

The results of the correction matrix for more relevant results (correlations above 0.7 or under - 0.7) suggest that:

• The higher the strategic maturity degree before the project, the higher is the BPO maturity degree after the BPO project (Correlation 0.70). It seems that the strategic and BPO maturity tend to be linked before and after the Project (Correlation 0.82 and 0.74 respectively) (figure 1);

 

 

Correlations between maturity variables

• Smaller companies tend to identify more new processes in projects that follow the proposed methodology (Correlation - 0.77). Companies that demonstrate a greater knowledge about their processes before the BPO project will also tend to identify more new processes (Correlation 71). Interestingly, companies that identified more new processes with the BPO project tend to be those who now hold the highest total number of known processes (Correlation 0.86) (figure 2);

 

 

Correlations between the scale and the number of processes

• Companies which have greater strategic and BPO maturity before the BPO project tend to develop a project scope of smaller coverage (respectively with correlation -0.88 and -0.93). A correlation close to the cutoff value (-0.65) indicates that, apparently, the companies with higher maturity in the BPO after the project, also develop project scopes with less coverage (figure 3);

 

 

Correlations between BPO maturity and coverage

• Do bigger companieshavemoredifficulties in generatingresults withBPOprojects? The research identifiedthattheir managersdo not observetheBPOprojectresultsin the medium term(Correlation -0.81); andclosecorrelationsof the cutoff valuepointthat,apparently,the samemanagersalsodo not observeshort-term resultsand, finally, they evaluate the BPOproject effect morenegatively (Correlation - 0.63 e - 0.62) (figure 4);

 

 

Correlations between scale and perception of BPO projects

• What can, then, generatemore results inBPOprojects? Thegreater support fromthe high managementseems to influencethe perceptionof occurrence of resultsin the shortand medium term(62 and 0.64respectively). But thehigh strategicmaturityafter the project,tends to generatea positive evaluationalsoafter the project(Correlation 0.77) and, apparently,is related to the perceptionoflong-term results(Correlation 0.67). The positive evaluationof the BPO project afterits completiontends tobe related tothe occurrence of the long-term results(correlation 0.73) (figure 5).

 

 

Correlations between the maturity variables, high management support and results of the BPO projects

 

Results discussion

To respond to the hypothesis that the strategic maturity influences the perception of the successful implementation of changes supported by the BPO, the results indicate that the field of the strategic management before a BPO project, tends to be important for this to develop a management culture oriented to processes. It’s interesting to think that the BPO project is part of the strategic effort of an organization and, without strategic maturity, the BPO projects can achieve results below the expected.

But, most important was the finding that the strategic maturity after the BPO project influences the positive evaluation of the project and the consequent generation of results after the project, despite it was not found in relation to the existing strategic maturity before the BPO project and to the perception of results or to project evaluation. This suggests that the BPO projects have, among their activities, steps that enhance the strategic maturity of the company, putting the BPO as an instrument for achieving strategic goals and not as a mere bureaucratic survey of activities project. In this case, the H1 can be confirmed.

This suggests that the BPO projects have, among their activities, steps that enhance the strategic maturity of the company, putting the BPO as an instrument for achieving strategic goals and not as a mere bureaucratic survey of activities project.

 Another interesting aspect was the clue of getting a more positive perception and the generation of more results with a BPO project when there is greater support from the high management to the project. This interest from the executive direction on the BPO project can ensure political support for the full realization of the directions generated by the project. After all, BPO projects recommend courses of action which, if not put into practice, can never “leave paper.”

On the other way, with the hypothesis (H2) that says the maturity in BPO before or after the BPO project influences the perception of the successful implementation of changes supported by the BPO, was not found any significant correlation. But we obtained other interesting results. Companies that already have a more extensive model of processes tend to deepen their modeling processes with a BPO project, further expanding its model. Smaller companies find more of new cases through the BPO project. There were no significant correlations between the enterprise scale and maturity in the BPO before the project, which leads us to suggest further research to identify aspects that contribute to the BPO maturity of a company in addition to its scale. What was evident is the tendency of the managers of larger companies not to see results from the BPO projects, perhaps because they do not identify or seek to identify new processes, source of value generation for the companies. The lack of boldness in BPO projects can undermine the perception of value on this effort.

In fact, it is worth noting that, apparently, more BPO mature companies tend to develop less extensive projects, perhaps more focused on specific and new processes, as was evident in the relationship between the number of processes already identified and the identification of new processes after the BPO project.

In summary, the BPO and its unfolding BPM should be efforts considered relevant for meeting clear corporate strategies sponsored by the high management. If they do not exist, the BPO project should stimulate the strategic definition promoting its practice. Thus, the BPO projects will tend to deepen the systemic view of the organization and to point out potential new processes, generators of value to the company. Finally, the strategic maturity before the BPO project is positively related to the maturity in the BPO before and after the project, which shows that the BPO can be a means of enhancing the implementation of a strategic management, which becomes a necessary condition to the success assigned to the BPO itself in the long term.

This work points out the emphases to be given by practitioners responsible for managing change processes in their organizations. The observation that the BPO effort should be seen as a form of operational implementation of corporate strategy by consolidating the strategic culture in the organization is an excellent insight to change management projects.

This work points out the emphases to be given by practitioners responsible for managing change processes in their organizations. The observation that the BPO effort should be a form of operational implementation of corporate strategy by consolidating the strategic culture in the organization is an excellent insight to change management projects. After all, the goal of practitioners in these projects is to provide valuable results in the perceptions of managers, and the importance of BPO as the strategy enabler contributes to this positive perception.

Another important insight is suggesting to practitioners to emphasize to the managers of large companies that BPO projects of limited scope should not generate a high perception of value after the project, because improvements tend to be obtained in more comprehensive and cross-functional analyses. This argument can create conditions for BPO projects to involve more areas, to become more valued instruments to strategic implementation, and to generate more value for the related stakeholders.

 

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Received in March 2016 and accepted in December 2017

Recebido em março de 2016 e aceite em dezembro de 2017

Recibido en marzo de 2016 y aceptado en diciembre de 2017