Entity Business Model - Part 2

When defining business processes there needs to be supporting documentation based on a common template. All too often processes are defined and mapped out without positioning them within the organisation and without metrics. Additionally processes should contain the risk of not achieving the objectives measures and the action required by management when targets are missed. The template detailed below is a standard way of defining a detailing business processes in a way that the management of a company will understand.

In Part 1 of this article I defined the Entity Business Model; the Process Analysis Template provides a consistent way of capture information supporting the three categories of business processes that support the Business Model.

Process Analysis Template

Process Description
A Brief description of the Process and how it’s contribution to the Value Proposition.
Process Objectives
Processes are established to serve specific customer needs. The customers may be internal customers, such as another process, or external customers. The process objective defines what value is going to be supplied to the customer. One can look at it as the whole purpose for which the organisation has put together this set of resources and activities. Process objectives need to be specific, measurable, attainable, realistic, and have a sense of time. Most organisations will have fairly similar strategic management processes. However, their core business and resource management processes may differ significantly, as they are shaped by the organisation’s strategic objectives and the related critical success factors.
Critical Success Factors (CSFs)	KPIs Linked to CSFs
Critical success factors (CSFs) are the prerequisites and areas of dependency for a process to be successful.  CSFs may be inputs, parallel or supporting activities, or aspects of a business’s philosophy or infrastructure necessary to ensure the proper delivery of the process. The CSFs relate directly to one or more of the processes objectives. They are normally limited in number.	Key performance indicators (KPIs) are quantitative measurements, both financial and non-financial, of the process’s ability to meet its objectives and of the process performance. They are usually analysed through trend analyses within a company or through benchmarking against a peer of the company or its industry. The KPIs that should be listed must be relevant to the CSFs and/or the process objectives.  The KPIs listed must have relevance to the organisation. Taken together they should provide a key set of measures for measuring process performance–achieving process objectives.
Inputs
The inputs to a process represent the elements, materials, resources, or information needed to complete the activities in the process.
Activities
The activities are those actions or sub-processes that together produce the outputs of the process.  For some processes, arrows are omitted due to the non-sequential nature of the activities.
Outputs
The outputs represent the end result of the process—the product, deliverable, information, or resource that is produced.
Systems
The systems are collections of resources designed to accomplish process objectives.  Information systems produce reports containing operational-, financial-, and compliance-related information that make it possible to run and control the process.
Classes of Transactions
The classes of transactions are data and information that are related to the process for use in one or more reports to management or third parties.  The classes of transactions, which are broken down into routine and non-routine transactions and accounting estimates, provide a link from the process to the financial statements of the client.  Every process will have one or more classes of transactions.
Risks That Threaten Objectives	Management Responses Linked to Risks
Process risks are risks that may threaten the attainment of the processes objectives. Every process has one or more risks threatening the achievement of its objectives.	Management Responses are the policies and procedures, which may or may not be put in place, that help provide assurance that the risks are reduced to an acceptable level. The controls are implemented to either, reduce, transfer, or avoid the risks associated with the process and its objectives. Management may choose to accept the risk; in this case they will not implement any specific controls. This is an acceptable response.
Other Symptoms of Poor Performance
Other symptoms of poor performance represent other evidence that may exist and that indicates the process may not be operating to its most effective level.  The items listed here should lead to performance improvement opportunities listed below.
Performance Improvement Observations
Performance improvement observations are areas for performance or process improvement.  This improvement may be achieved internally by the client or other third-party assistance.

Sample Process Template

The example below is extracted from a standard Shipping Business Entity Diagram.

Establish & Monitor Network
This process pulls together routes, port facilities (e.g. bunkering, terminal, stevedoring) and vessels.
Process Objectives
1.    Enable delivery of shipping services to customers 2.    Set up an effective network
Critical Success Factors (CSFs)		KPIs Linked to CSFs
·       Efficient delivery of service supply. (1,2)		·      Turnaround times.
·      Enhanced quality of service to customers. (1,2)		·         Customer surveys.
Inputs
·      Network strategy (routes & ports) ·      Existing arrangements	·      Competitor action ·      New and emerging markets		·      Market research & analysis ·      Historical trade routes ·      Existing alliances
Activities
The activities are those actions or sub-processes that together produce the outputs of the process.  For some processes, arrows are omitted due to the non-sequential nature of the activities.
Outputs
·       Bunker, terminal, stevedoring agreements ·       New or modified alliances	·       Acquisition or development of terminal and stevedore companies ·       Network timetable		·       Fleet capacity and equipment requirement
Systems
·       Procurement	·       Network scheduling
Classes of Transactions
Routine ·       None	Non-Routine ·       Acquisition or development of terminal and stevedore companies.		Accounting Estimates ·       None
Risks That Threaten Objectives		Management Responses Linked to Risks
a)    Competitor action (1) b)   Regulatory control (1,2) c)    Non-compliance with agreements  (1) d)   Efficient use of network (1) e)   On-time performance (1)		Þ    Monitor market and respond to competitor action. (a ) Þ    Monitor and lobby regulatory authorities. (b) Þ    Monitor own and others’ compliance. (c) Þ    Load factor, contribution (d) Þ  Number of delays (e)
Other Symptoms of Poor Performance
·      Deterioration in service supply	·      Deterioration in quality of service to customers.		·      Empty / light legs of voyage ·      Increased repositioning costs
Performance Improvement Observations
·      Acquire or establish terminal/ stevedore companies	·      Renegotiate contract terms		·      Alliances

Note:

A numbering sequence is used to link objectives to CSF’s and each CSF has an associated KPI. Also Risks that threaten the objectives are linked to the corresponding objective and the mitigation of the risk is associated with each individual risk.