Business Process Governance -More Effective through Digitalization

Abstract

This article explains the key components of busienss process governance and how they can be improved through digitalization. It was published in BPMInstitute.org: ttps://www.bpminstitute.org/resources/articles/business-process-governance-more-effective-through-digitalization

Full text

Business Process Governance – More Effective through Digitalization
By Dr. Mathias Kirchmer,
Co-Founder and Co-CEO, BPM-D
Affiliated Faculty, Program for Organizational Dynamics, University of Pennsylvania
The Impact of Digital Transformation on Process Governance
Most companies have launched digital transformation initiatives (Kirchmer, Franz, Lotterer, Antonucci,
Laengle, 2016). Hyper-Automation has become a reality which changes the way business processes are
organized and executed (Stoudt-Hansen, et al., 2019). However, only a small number of organizations
have their business processes sufficiently under control to realize the full potential of new digital
technologies (Kirchmer, 2019) (Cantara, 2015). Appropriate business process management (BPM)
capabilities have a significant impact on the value achieved through digitalization (Antonucci, et al.,
2020).
This is especially true for establishing appropriate business process governance. Process governance
drives the realization of the targeted digitalization benefits as well as the ongoing improvement and
change of digital processes (Kirchmer, 2015) (Rosemann, 2015) (Hove, Rosing, Storms, 2015) (Franz,
Kirchmer, 2012). Process governance identifies necessary adjustments of the process, defines the
required actions and ensures their execution. In a digital environment where an increasing number of
applications is housed in the cloud, processes, hence the way how to use the digital tools, have become
a key asset of an enterprise (Kirchmer, 2017) (Abolhassan, 2016), that must be managed properly.
Digital processes require a new governance approach to realize their potential. Speed, flexibility, and
effectiveness must be combined. The new process governance leverages the opportunities of
digitalization systematically.
Technologies supporting a digital business process deliver data about a process that has not or not fast
enough been available with traditional business processes. This includes data about the performance of
a process as well as about its compliance with the process design and related compliance requirements.
Process governance uses this data to increase its effectiveness.
The ongoing adjustment and re-configuration of digital technologies can often be done by business
departments, with limited or no support of the information technology (IT) organization. Process
governance reflects this new business reality.
As consequence, process governance must go through a digital transformation itself, leveraging
appropriate tools, such as process mining (van der Aalst, 2016) or dynamic process modelling and
simulation (Scheer, 1998), to meet those needs of a digital environment. The result is digital process
governance which is value-driven, tool-enabled and people-centric.

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Definition of business process governance
Business process governance is the organizational framework to establish and maintain end-to-end
process performance in an organization. It exists in parallel to the structural, often function-oriented,
organization with its reporting lines. Process governance manages the alignment of different activities
with the requirements of internal and external clients.
Governance in general relates to processes and decisions that seek to verify performance, define
actions, and grant power (Wikipedia, 2020). This definition can be transferred to business process
governance: Process Governance relates to processes and decisions that seek to verify performance,
define actions, and grant power related to the management of operational processes through the
“process of process management” (Kirchmer, 2017) (Hove, Rosing, Storms, 2015) (Rosemann, 2015).
Process governance does not replace the existing organization structure. It adds an additional market
and customer-focused view to ensure appropriate business process performance (Spanyi, 2015.
The application of process governance must be defined in the context of a specific organization. It is
delivered through a combination of different mechanisms (Janssen, 2015):
• Structural: Business process related roles and responsibilities are defined, for example the role
of a process owner
• Procedural: Governance processes are defined, for example how to measure the end-to-end
performance of a process and define improvement initiatives
• Relational: Informal relationships between people enable process governance
The definition of process governance is visualized in Figure1.
Figure 1: Definition of Process Governance
Process governance addresses the entire lifecycle of a business process. Its key focus is on the running
process. All process components, as described in the ARIS architecture, are relevant for the governance
approach: organization, functions, data, deliverables, and control flow, as well as the technology support
of process execution (Scheer, 1998). This leads to a close relation between process governance and

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other governance approaches, such as IT governance or data governance. The alignment with those
related governance organizations needs to be reflected in the process governance approach.
Key components of process governance
This definition of process governance is operationalized to establish it in an organization. It is realized
through six key components (Kirchmer, 2017):
• A high-level identification of the company’s main, cross-functional business processes
• Clarity on the goals to frame the definition of key performance indicators (KPI) of these processes
• Accountability and ownership for the management of business processes, combined with the
appropriate empowerment, control and guidelines
• Management of the knowledge about processes to achieve the necessary transparency enabling
fast well-informed decisions and related actions
• Aligned recognition and reward systems
• A set of priorities to focus on what matters most for an organization
To govern business processes, those processes need to be identified, from the external event that starts
them until the result of value they deliver. The goals of those processes must be defined clearly as basis
to measure and verify the process performance. Key performance indicators (KPI) operationalize those
goals. Accountabilities and ownership, combined with appropriate empowerment and direction, enable
necessary performance improvements. This is the core structural component of a process governance
approach which reflects the people-centricity. It also includes the definition of the relation to other
governance bodies. To enable fast decisions and the definition of required actions, the right degree of
transparency over processes and their behavior is required. This is achieved though the management
of knowledge about a process and the way it is executed. Recognition and reward systems must be
aligned with the defined ownership roles and accountabilities to provide the right motivation. A company
only competes through 15-20% of its business processes (Franz, Kirchmer, 2012). These high impact
processes must be in the focus of process management and improvement initiatives. Hence, appropriate
priorities for the use of resources must be set and applied.
The key components of process governance are summarized in Figure 2.

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Figure 2: Key Components of Process Governance
Enhancement opportunities for process governance through digitalization
The possible improvement of process governance through digitalization is examined using the six key
components of process governance. These governance components are impacted in two ways through
a digital transformation:
• Faster and more comprehensive information about the operational process through the
underlying digital technologies and the data they produce.
• Use of digital tools to support process governance processes themselves, especially process
and project prioritization, modelling and repository, process mining and intelligence tools.
The identification of the key business processes is not directly impacted though the digitalization.
However, leveraging process reference models, leveraging a repository tool, simplifs this activity
(Kirchmer, Franz, 2020) (Kirchmer, 2017). The reference models can be used as guideline to identify the
company specific core processes and describe those on a high level. Having those process models
available in a digital formal also enables the ongoing adjustment of the process scope. Process mining
tools may also help identifying processes, if they are already sufficiently automated.
The goals of processes and related KPIs are defined based on the overall business strategy of the
organization. Digital process and project prioritization tools help to break down strategic imperatives into
value-drivers and to assess the impact of subprocesses on those value-drivers. Process KPIs describe
the relation of sub-process to value-drivers. Digital tools support the definition of the most relevant of
KPIs. The availability of performance data about digital processes helps to establish the baseline for
KPIs and set realistic improvement targets. Process mining tools extract this information.
The definition of ownership and accountabilities, remains the key aspect of process governance. This
reflects the people-centricity of the governance. Digital transformation does not change this
organizational activity itself. However, it simplifies its realization and day-to-day application. The

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availability and easy access to relevant governance information allows to streamline the structure of the
governance organization. This is the same effect information technology has on the organizational
structure of a company where middle management positions can be cut out since their role to aggregate
data is no longer required (Hammer, Champy, 1993). Having comprehensive and accurate information
about the process, delivered through process repositories and mining tools, speeds up decision making
and increases the acceptance of those decisions. The collaboration between different people involved
in process governance can be supported through digital collaboration and workflow tools which increases
those effects even further.
Basis for all process governance activities is the availability and management of the required knowledge
about the process. This governance component is significantly improved in a digital environment. The
availability of performance and conformance information though process mining applications used by the
governance organization allows fast-well informed decisions and focused actions (Scheer, 2018) (Van
der Aalst, 2016). Structural information about the process, captured in process modelling and repository
tools (Kirchmer, Franz, 2020a) (Kirchmer, 2017) (Scheer, 1998), is important to create a baseline and
manage the process conformance. The use of process reference models across business units simplifies
the governance of process standardization.
Recognition and reward systems reflect the achievement of end-to-end performance goals of a business
process. This is in general independent of the digital process transformation. However, the simpler and
more reliable measurement of KPIs through tools like process mining improves this governance
component.
High impact low maturity processes are the best targets for optimization and innovation initiatives -
independent of the degree of digitalizing (Franz, Kirchmer, 2012). Process governance priorities need to
reflect this and evaluate initiatives based on their effect on those high impact processes. Digital tools
supporting a process and project impact assessment as well as the resulting prioritization enhance this
governance component (Kirchmer, Franz, 2020b). Process mining tools deliver the required information
about actual processes.
The main enhancement opportunities for process governance through digital transformation are
summarized in Figure 3.
Figure 3: Main Enhancement Opportunities of Process Governance through Digitalization

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Establishing digital process governance improves the overall performance of the BPM-Discipline and its
role in strategy execution. This leads to an improved process lifecycle management and with that the
systematic transfer of strategy into technology and people-based execution, at pace with certainty
(Kirchmer, 2015).
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