Cross-Functional Operations Modeling as a Nexus of Commitments: A New Approach for Improving Business Performance and Value-Creation

Business processes have played a central role in improving enterprise performance. These improvements have taken place through the implementation of maturing processes with enterprise resource planning systems and the redesign of operations by using business process management methods. However, even in those organizations that have benefited from these practices, performance problems still persist. In particular, operations that go across the enterprise are a cause of bottlenecks. While this topic has been the target of models and consulting methods, performance shortfalls still persist, thus showing that organizations have not dealt with this integration challenge successfully.

The integration problem is about the main processes in an enterprise that go across different functions and competences. Each of these processes has the purpose of delivering well-defined business outcomes. These business outcomes are modeled as deliverables available at the different stages of evolution of a core business value subject (BVS). BVSs’ are the key subjects that the organization has to deal with and consequently, they are an essential part of the modeling approach. Each BVS is endowed with a partially ordered set of key commitments exposing the deliverables that are simultaneously needed and other specific agreements among the responsible role-players. Thus, a commitment is an organizational “contract” in the sense that it defines the set of business conditions and deliverables agreed upon by the responsible role-players as being essential to ensure progress of the BVS in the pursuit of the sought outcomes. When a Commitment is met and completed, the evolution of the involved BVS reaches a fundamental business milestone, i.e., a ‘check-point’ where evidence of value is verified as originally committed, and gets measured through cost, quality and other significant performance indicators for decision-making and monitoring.

The notion of Nexus of Commitments across a family of BVSs’ is then introduced as a governance mechanism for ensuring visibility and value-creation. The set of commitments associated to a BVS has a natural ordering defining its desired evolution and thus, captures functional dependencies across the involved deliverables. These dependencies may include deliverables from other BVSs’, thus extending the nexus across an entire web of BVSs’. Finally, capabilities and other elements in a Resource-based View of the enterprise are the necessary enablers to ensure the specific evolution of each individual BVS between consecutive milestones.

This model of the enterprise operations departs fundamentally from workflows, cases, and other behaviorcentric modeling principles. We also relate this model to other practical contributions in the context of the broad lean six-sigma techniques such as value-stream mapping (VSM) and SIPOC, as well as the fields of business process management and the resource-based view of organizations.

In this paper, we address the foundational principles, formal definitions, and some examples. We introduce the main model by using some real-world examples and also, present a rigorous formalization under the form of a metamodel. In addition, we present an Information System realization of the model with the goal of providing a business visibility and performance management instrumentation. In companion papers in this series, we also present some field evidence obtained through practical cases in different organizations.