Business Modelling: - tud.ttu.ee

Business Modelling:SAP’ Business Model Framework forBusiness Innovation and TransformationSascha KuhlmannDirector Enterprise ArchitectureBusiness Transformation ServicesSAP Amercia, IncProf. Dr. Mark von RosingLEAD Enterprise ArchitectSAP Business Process ExpertSr. Lecturer, Copenhagen Business SchoolSr. Lecturer IT University of CopenhagenGlobal SAP Development PartnerGlobal Open Group (TOGAF) Development PartnerLeading of the EA RoundTable SAP University Alliances

Prof. Dr. Mark von Rosing•M.Eng.•MBA•M.Com•PhDAs the Managing Director for Value Team ApS, specialized in strategic management and marketanalysis, Prof. Dr. Mark von Rosing has been serving the top 5 consulting companies and many ofthe fortune 500 companies over the years. He is in every way an entrepreneur with a proven trackrecord for delivering results. Furthermore is he:• He just received IBM’s prestigious “Growth Award 2009/10” for contributing as the strongestgrowth enabler across EMEA.• Main author of SAP Press New Business Performance Management book: Applying real-worldBPM in an SAP environment• Head and founder of the Global University Alliance BPM curriculum program• Head and founder of the Global University Alliance Enterprise Architecture Curriculum program• Member and co-developer of the Global TOGAF Business Model Methos and certificatoindevelopment Group• The Co-developer of SAPs Business Model Framework, Method and Approach• The Co-developer of SAPs Process Architecture Framework, Method and Approach• The Co-developer of SAPs Enterprise Value Architecture Framework, Method and Approach• Developer and co-owner of SAP LEAD Enterprise Architecture program and certification• The Co-developer of SAPs Business Process Management Framework and approach• Designer and co-developer of the new SAP BPX certification program for associate andprofessional level• Author of numerable publications in the area of Business Model Management, BusinessProcess Management, Business Value Management & Sustainability• Founder of the User Group: www.openroundtable.org which consists of over 200 companiesProf. Dr. Mark is a SAP Development, Education and University Alliance Partner and has in thiscontext coached and helped numerable companies create and realize value. His developedapproaches within Strategic Management, Business Modelling, Process Management andBusiness Value Management has helped hundreds of companies over the world.

Sascha Kuhlmann• Director Enterprise Architecture atSAP America, Inc.• Member of the Board of Directorsof the OpengroupAs the director of Enterprise Architecture he focuses on helping customers to drivestrategic business and IT alignment.Sascha is not only known for his role as within SAP Enterprise Architecture Space, he isalso known for his strategic insight into business strategy and thereby Business Model,Operational Business Model, and defining value drivers as well as performance drivers.Over the past years Sascha and his team have developed or participated in developingseveral impacting methodologies around the topics of Enterprise Architecture and SOA,e.g.:• Global SAP’s Enterprise Architecture Framework (EAF)-TOGAF 8.1.• Global SAP's Business Model Framework (BAF)• Global SAP's Process Architecture Framework (PAF)• Global SAP's Enterprise Value Architecture Framework (EVAF)• Business driven SOA roadmaps• SAP’s SOA Reference Architecture• Best Practice Benchmark for Enterprise Architecture• Business Model Building Blocks• Enterprise Maturity Models• Business Model Heat MapsHe lectured at several SAP centric events about Enterprise Architecture, PortfolioManagement, Service Design & Modeling and Value Management and works closely withthe American SAP Users Group (ASUG). Sascha is the point of contact for ASUG’sEnterprises Architecture Special Interest Community. Furthermore he is a member of theSAP University Alliance which consist over 900 Universities, developing a global EAcurriculum.

AgendaSummaryExecutive ResearchThe need for a Business Model approachIntroduction to Business ModelWhat is an Business Model?Why focus on Business Model and theconnection to1. Process Model2. Value Model3. SAP's Solution ModelMethodology and FindingsHow can a company apply theBusiness Model principlesThe need for a Business Model approachContext discussion and decisionsNext StepsHow can a company move forward?© SAP 2011 / Page 4

The difficult task of combining:Strategy, Business Model, Critical Success Factors,Process Landscape & Solution LandscapeThe important task of linking ones Business Model to IT to identify, create and realize valueCompany StrategyBusiness Transformation ProjectSource: Real-world BPM in an SAP environment , SAPpress, 2011 – Jim Hageman Snabe, Mark von Rosing, Ann Rosenberg, Sascha Kuhlmann et al.The Business Model is the key ingredience of a Business Architecture, thereby providing the link to theProcess Architecture and Information Architecture together and thereby enable Business Transformation.Without a clear Business Model, management and operation careens from one performance and value issueto the next, unable to leverage reusable capabilities, assets (competencies) and process execution. With adefined and declared Business Model, a organisation uses the core competitive and differentiatingcompetencies that can drive performance and value opportunities to realization.© SAP 2011 / Page 7

AgendaSummaryExecutive ResearchThe need for a Business Model approachIntroduction to Business ModelWhat is an Business Model?Why focus on Business Model and theconnection to1.Process Model2.Value Model3.SAP's Solution ModelMethodology and FindingsHow can a company apply theBusiness Model principlesThe need for a Business Model approachContext discussion and decisionsNext StepsHow can a company move forward?© SAP 2011 / Page 8

Business Model Research 2010:• Scope: 1765 CEOs and 2936 business leaders representing all majorcountries© SAP 2011 / Page 9

Business Model Research 2010:Purpose• Scope: 1765 CEOs and 2936 business leaders representing all majorcountries• Purpose:1) Understand use/role of a Business Model in a company2) Understand use/role of a Business Model in a companiesperformance3) Understand the connection of ones Business Model and acompanies innovation and transformation initiatives© SAP 2011 / Page 10Source: Real-world BPM in an SAP environment , The Importance of a Business Model, SAPpress, 2011 –Mark von Rosing, et al.

Business Model Research 2010:Overall FindingsAs part of this research, over a five year period information was sought about thedifferences between the responses of financial outperformers and those ofunderperformers. For companies with publicly available financial information, theresearchers compared revenue and profit track records with the averages for those inthe same industry.© SAP 2011 / Page 11

Business Model Research 2010:Overall FindingsAs part of this research, over a five year period information was sought about thedifferences between the responses of financial outperformers and those ofunderperformers. For companies with publicly available financial information, theresearchers compared revenue and profit track records with the averages for those inthe same industry.Companies thatperformed aboveaverage on theparticular financialbenchmark weretagged asoutperformers, andthose below theaverage werelabeled asunderperformers© SAP 2011 / Page 12Source: Real-world BPM in an SAP environment , The Importance of a Business Model, SAPpress, 2011 –Mark von Rosing, et al.

Business Model Research 2010:Findings: types of business model innovation and transformationHere are the current types of business model innovation and transformation we identified:• Revenue model innovationInnovate how the company makes money by changing the value proposition(product/service/value mix) and the pricing model.• Industry model innovationRedefine an existing industry, move into a new industry, or create an entirely new one.• Enterprise business model innovationInnovate the way the organization operates, rethinking the organizational boundaries ofwhat is done in-house and what is done through collaboration and partnering.© SAP 2011 / Page 13

Business Model Research 2010:Findings: types of business model innovation and transformationHere are the current types of business model innovation and transformation we identified:• Revenue model innovationInnovate how the company makes money by changing the value proposition(product/service/value mix) and the pricing model.• Industry model innovationRedefine an existing industry, move into a new industry, or create an entirely new one.• Enterprise business model innovationInnovate the way the organization operates, rethinking the organizational boundaries ofwhat is done in-house and what is done through collaboration and partnering.Successful companies take advantage of emerging opportunities in the new economicenvironment by innovating their business model in three ways:1. Many organizations revisit their enterprise business model during a downturn to reducecosts through new collaboration and partnership models and by reconfiguring their assetmix.2. Industry leaders with strong financial resources take advantage of unprecedented industrytransformation by introducing alternative industry models and disrupting their competitors.3. Many also rethink their revenue model and value propositions to respond to a different setof customer behaviors and market requirements.© SAP 2011 / Page 14Source: Real-world BPM in an SAP environment , The Importance of a Business Model, SAPpress, 2011 –Mark von Rosing, et al.

Timing of Leading Business Model InnovatorsImplementing New ModelFindings:Source: Bureau of Economic Analysis USA Today, S&P 500, 20101. Whereas any type of business model innovation can lead to success, financial outperformers are more likely to be industry andenterprise business model innovators than revenue model innovators.2. Enterprise business model innovation and transformation is the most prominent type of innovation, especially duringchallenging economic times.3. Industry model innovation is less frequent but is more likely to be pursued by industry leaders with strong financial means andindustry positions that can leverage bold moves to expand their leadership.4. Revenue model innovation is considered the easiest but tends not to yield the same financial benefits, because the innovationsare less defendable or lasting.5. Enterprise model innovation is especially prominent during economic downturns as companies seek new ways to gain cost andflexibility advantages.6. Enterprise model innovators focus on those areas of the business where they have an advantage and deliver value, and theypartner extensively for other areas of their business.© SAP 2011 / Page 15

Industry Transformation Drives the Need forBusiness Model InnovationThroughout the analyses, information was gathered and conclusions were made basedon these top- and bottom-half groupings. The analysis results show that business modelsmatter to the performance of all companies. The research, however, clearly shows thedifference in how the outperformers and underperformers focused on their innovationwithin service/product, operations, and business model© SAP 2011 / Page 16Source: Real-world BPM in an SAP environment , The Importance of a Business Model, SAPpress, 2011 –Mark von Rosing, et al.

Business Model Research 2010 FindingsUnderperformers vers outperformersThe underperformers’ business model innovation and transformation mostly focused around:1. Product/service asset value proposition2. Product/service innovation3. Operations innovation4. Cost reduction.© SAP 2011 / Page 17Source: Real-world BPM in an SAP environment , The Importance of a Business Model, SAPpress, 2011 –Mark von Rosing, et al.

Business Model Research 2010 FindingsUnderperformers vers outperformersAlthough the outperformers’ business model innovation and transformation alsofocused on product/service asset value propositions, the focus on business modelalignment was the main focus of competitive advantage.© SAP 2011 / Page 18Source: Real-world BPM in an SAP environment , The Importance of a Business Model, SAPpress, 2011 –Mark von Rosing, et al.

Business Model:What can, what should and what will we do?© SAP 2011 / Page 19

AgendaSummaryExecutive ResearchThe need for a Business Model approachIntroduction to Business ModelWhat is an Business Model?Why focus on Business Model and theconnection to1.Process Model2.Value Model3.SAP's Solution ModelMethodology and FindingsHow can a company apply theBusiness Model principlesThe need for a Business Model approachContext discussion and decisionsNext StepsHow can a company move forward?© SAP 2011 / Page 20

Business Modelling:Business Model Level 1Business Model Level 1Main Business Model with mainBusiness Competencies whichproduce internal and externalvalueOveral Strategic Anchoring• Corporate Strategic Business Objectives(SBOs)• Company’s management models• Core competencies• Business Responsible© SAP 2011 / Page 21

Example of Business Model Level 1 :Defense Business Model (value chain view)© SAP 2011 / Page 22

Example of Business Model Level 1 :Oil & Gas Business Model (value chain view)Business Model (value chain competency view)Exploration &AppraisialDevelopment & ProductionHydrocarbonSupply and GasTransmissionRefining &ManufacturingPrimary Distribution Terminal Distribution Secondary Distribution Commercial Sales & RetailingCustomers &ChannelsUpstreamExploration &AppraisialE&P ContractManagementLiquid & GasProductionAllocation &SettlementLubes BlendingSupply Plan & SourcingSupply Chain Monitoring and ControlInbound, Processing for Base Oils &AdditivesLubes Production PlanningLubes Production SchedulingLubes Blending & PackagingWarehousing and StorageOutbound Processing of Finished GoodsQuality Assurance and ControlMarketingPlanning &ExecutionSales Planning& AccountManagementDownstream Domestic Marketing & RetailingCashManagementCustomerServiceServiceTerminal TransportationStation FuelManagement ManagementManagementConvenienceRetailingPETCHEMPetroChemicalCrackingCommodityStorage FacilitySupply chain OperationalManagementCommercial Sales, marketing planning, execution, Salesplanning and account mgt, customer service, research anddevelopment and commodity tradingIndependentPower PlantGas Processing, Gas Transmission and DistributionBulk Supply Chain Planning and OptimizationBulk Supply Chain Operations and SchedulingBulk Supply Chain Execution and SettlementBulk Supply Chain Reporting and AnalyticsPhysical Oil and Gas Commodity TradingOil and Gas Paper Trading and Risk ManagementReGassification TerminalCentralised Utilities Facilities (CUF)Enterprise Management & Support© SAP 2011 / Page 23Procurement (Centralised)Corporate PlanningFinance & Financial ServicesHuman Resource Management & HR shared servicesProcurement (Decentralised)Supply Chain Planning and OptimizationEnterprise OpimizationTechnical Solutions (Engineering Group)Project ManagementSource: Prof. Dr. Mark von Rosing

Business Modelling:Business Model Level 2Business Model Level 1Main Business Model with mainBusiness Competencies whichproduce internal and externalvalueOveral Strategic Anchoring• Corporate Strategic Business Objectives(SBOs)• Company’s management models• Core competencies• Business ResponsibleBusiness Model Level 2Business Model with BusinessCompetency groupsStrategic Anchoring• Department Strategic Business Objectives(SBOs)• Critical Sucess Factors (CSFs)• Core competencies (Differentiated andCompetitive)• Cost & Revenue© SAP 2011 / Page 24

Business Modelling:Example Defense Business Model Level 2© SAP 2011 / Page 25

Business Model Level 3Business Model Level 1Main Business Model with mainBusiness Competencies whichproduce internal and externalvalueOveral Strategic Anchoring• Corporate Strategic Business Objectives(SBOs)• Company’s management models• Core competencies• ResponsibleBusiness Model Level 2Business Model with BusinessCompetency groupsStrategic Anchoring• Department Strategic Business Objectives(SBOs)• Critical Sucess Factors (CSFs)• Core competencies (Differentiated andCompetitive)• Cost & RevenueBusiness Model Level 3The company’s Business ModelCompetencies desribed in moredetailTactical Anchoring• Critical Sucess Factors (CSFs)• Key Performance Indicators (KPIs)• Core competencies (Differentiated andCompetitive)• Value opportunities• Identify and define service enablementneeds• Define Performance and Monitoring needs© SAP 2011 / Page 26

Business Model Level 3:Defense - Army: Operational Business Model© SAP 2009 / Page 27

Business Model Level 3:Defense - Air Force: Operational Business Model© SAP 2009 / Page 28

Business Model Level 3:Defense - Navy: Operational Business Model© SAP 2009 / Page 29

Business Model Level 3:Oil & Gas Upstream: Operational Business Model© SAP 2011 / Page 30

Business Model Level 3:Oil & Gas Upstream: Operational Business Model© SAP 2011 / Page 31

Business Model Level 3:Oil & Gas Upstream: Operational Business Model© SAP 2011 / Page 32

Benchmark HeatMapThe need of identifying Performance & Value OpportunitiesCompetency Performance / Criticality MatrixBusiness Requirements ManagementCore DifferentiatedThe core differentiating competencies (CDCs) mustbe differentiating to the industry average. Theyshould be supported by SAP Own Practice andPerformance and Value Drivers need to be identifiedin order to ensure wished results/benefitsCore CompetitiveThe core competitive competencies (CCCs) must beat least industry average, but diminishing returnsbeyond that point. They should be supported by SAPOwn Practice and Performance and Value Driversneed to be identified in order to ensure wishedresults/benefitsBase (Non-Core)The Non-Core Competencies (NCCs). Within this areathere are the low value processes which should beoperated effective at the lowest cost possible. Theyneed to supported by SAP Best Practice andPerformance and Value Drivers need to be identified inorder to ensure wished results/benefits© ValueTeam 2011 / Page 33Process Health (business processes, data, and applications)

Business Model Level 3:Oil & Gas Upstream: Operational Business ModelBenchmark suggests• Deficiencies in current competency• High impact to operations. Focus ondrilling but lesser to – be results• Limited enablement in IT• Opinion drivenE&P Contract Management As Is To - Be© SAP 2011 / Page 34JOA / PSC Strategic Planning 0 4.5JOA / PSC Opportunity Analysis 0 4.5JOA / PSC Development 0 3.5Venture Equity Trading 0 4.5Joint Venture Management 2 5PSC Management (Financial) 0 5Third Party Drilling Contract Management 0 5Third Party Drilling Contract Development 0 5

Business Model Level 3:Oil & Gas Upstream: Operational Business ModelAllocation & Settlement As Is To - BeContractual Allocation 0 5Benchmark suggests• Critical for operations• Stated desire for high levelperformance• However not seen as coredifferentiator competency© SAP 2011 / Page 35Ownership Allocation 0 5Lease Fuel Valuation 0 5Revenue Accounting 3 5Gas Plant Accounting 2.5 4Regulatory Reporting (Financial only) 2 5

Business Model Level 3:Oil & Gas Upstream: Operational Business Model© SAP 2011 / Page 36

Business Model Level 3:Oil & Gas Upstream: Operational Business Model© SAP 2011 / Page 37

Example of CFO Performance & Value Opportunities© SAP 2011 / Page 38

Example of CIO Performance & Value Opportunities© SAP 2011 / Page 39

Business Model levels and the connectionto Process Model LevelsBusiness Model HierarchyBusiness ModelCompetencyAreas / CategoriesBusiness ModelCompetency GroupBusiness ModelCompetencyBPM Process Model HierarchyThese are the main business areas and therebyprocess categories which produce external and/orinternal value. Example: Sales – As this is neither ascenario nor a transaction, this cannot be integratedinto SAP, but is needed to scope the business area.Every Process Business Area's main processconsists of more than one level 2 process groupswhich describes it in detail.Example: Sales Processing – this can be used inSOLMAN as an SAP solution scenario.Process groups will be described as a set oflevel 3 processes (Business Process).Example: Create Sales Order – this is the firstlevel SAP transactions.Business ModelCompetencyElementsLevel 4 is at least needed to map To-Beprocesses to SAP solutions.Example: Sales Order for known customer- SAP transactions.Business Model Competencies andProcesses can, and should, be interlinked.© SAP 2011 / Page 40Level 5 is ideal to map To-Be processactivities and its different variances toSAP Solutions.Example: Sales Order Invoicing - SAPtransactions.

How a Business Model can be integrated with the levelsof Process DocumentationProcess example used: APQC Process Classification Framework (PCF)Business ModelDepending on Business Model level one can illustrate either a:1) Strategic high -level view with the value chain business model2) Entire enterprise competency view with a Business Model map3) Operational Business Model view with detailed competencyelementsBusiness Area - Process CategoryThe highest level in the APQC PCF which accommodates processcategories cataloged by a business area function. E.g., 4.0 Deliverproducts and services. Equivalent or fit to a Business Modelcompetency category or group.Process GroupsDescribes intermediate groupings of processes within the category.E.g., 4.2 Procure materials and services. No direct correspondinglevel in Business Model, there is however a link that needs to beestablished to either the Business Model competency categories or/andgroups.Business ProcessDescribes a discrete set of events focused on the “who, how, where andwhen” of operational activity. E.g., 4.2.3 Order material and services.No direct corresponding level in Business Model, there is however a linkthat needs to be established to either the Business Model competencyand/or the elements.ActivitySpecific events of operational work to transform inputs to outputs. E.g.,4.2.3.4 Create/distribute purchase orders. The link is most equivalentto Business Model elements .TaskDetailed information on how to complete a work instruction. Generallyscreen and field level actions. No direct corresponding level in BusinessModel, there could be a link to Business Model elements.© SAP 2011 / Page 41

Process view and Business Model are not the same, butare complementary and are needed in any engagementMatching the Business Model and the processes gives the company:• The much needed "link" to Strategy in the processes and thereby the applications• Identification and mapping of Core Competitive Competencies (CCC's) – either Core Competitive or CoreDifferentiated• Identification and mapping of Non-Core Competitive Competencies (NCC's)• Identification and mapping of Value and Performance Drivers• Competencies by(re-) grouping activities• Activities have input /output -> consolidationinto Competenciesdefines competencyinterfaces• Organization = A set ofCompetenciesnetworking togetherBusiness process descriptions are alreadyavailable in many client organizations• Business Model as a new dimension to alignbusiness processes and process architecture• Through Business Model and processlinkage, identification of business issues,pain points and weakness clusters•"Activities" as linking part between BusinessModel and process view• Complementary views, e.g. prioritize "hot"Core Critical Competencies (CCCs) withBusiness Model transformation andinnovation potential© SAP 2011 / Page 42

Business Model to Process Model:Process Level 1Process Level 1Main (management or support)processes with focus on wholecompanyMain Groups of Processes• Identify main process• Document main process flow• Document main process relations• Document main process input and output(match to KPIs)© SAP 2011 / Page 43

Process Level 1: Defense example© SAP 2009 / Page 44

Process Level 1: Defense example© SAP 2011 / Page 45

Level1L:evBeulsi2nLevel: e 3:sBusineBsssuProcessAsirneeassGroupLevel 3:BusinessProcessStepLevel 4:BusinessProcess Activitye.g. 3. Order to Cashe.g. 3.1 Order managemente.g. 3.1.1 Order Processinge.g. Standard Sales Ordere.g. Order ProcessingModuleOr der dataSal es Order Confir mationRM@FS( R/3)Pri ci ng agr eem entCons ult ingagreementRM@FS( R/3)RM@FS( R/3)i s input forhas output ofRes our c eConfir mati onRes s orc eConfir medO bt ain approvalon handbook ingHard Book ingac c ept edOrderProc es i ngOrder has beenent eris input f orTr igger c r eat ion c ar ri es outof a Cons ult inghas output of agreementConsul tingagreementex ecut e.Proc es s Bil ingDoc um entBil ling doc umenthas been proc es sInvoi ci ng ofc us tomerc ar ri es outc ar ri es outc ar ies outc ar ri es outc ar ri es outRes s our c eManagerRes sour ceManagerRes s our ceManagerPr oj ec tM anagerProgram ManagerCus t om erEngagem. .Hard Book ing notac eptedSorc e S ear chTr igger c r eat ionof s tafi ngli stStaf ing Lis t s endto 3r dpartyAc count Pay ableExample:Laying processes on top of the Business Model helps toidentify resource and technology redundancies and gapsProcess ModelBusiness ModelBoth processes use the Procurement competency:Are the activities redundant?Are the resources redundant?Are the applications redundant?What effect will a change of any of these process have on the other?© SAP 2011 / Page 46

Business Model to Process Model:Process Level 2Process Level 1Main (management or support)processes with focus on wholecompanyProcess Level 2Core processes with focus forexample on department levelMain Groups of Processes• Identify main process• Document main process flow• Document main process relations• Document main process input and output(match to KPIs)Core Processes• Identify different end-to-end businessprocesses• Identify Process ownership (eventually)• Document core process input and output(define PPIs)© SAP 2011 / Page 47

Process Level 2 : Defense exampleConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidential© SAP 2009 / Page 48ConfidentialConfidential

Process Example Sales & Service:Understand markets and customersSales & Service: Understand markets & customers:Management Processes-Develop target segments strategy-Decision Making Processes in quantifying market opportunities-Determine target segmentsPrimary Processes-Conduct customer and market research-Identify market segments-Analyze market and industry trends-Analyze competing organizations, competitive/substitute productsSupporting Processes-Perform customer and market intelligence analysis reporting-Evaluate existing products/brands-Assess internal and external business Environment-Evaluate and prioritize market opportunities-Prioritize opportunities consistent with capabilities and overall strategy-Validate market changes and opportunities© SAP 2011 / Page 49

Business Model to Process Model:Process Level 3Process Level 1Main (management or support)processes with focus on wholecompanyProcess Level 2Core processes with focus forexample on department levelProcess Level 3Business processes will bedescribed as a set of level 3processes (sub-processes) and arethe starting point of SAP processcyclesMain Groups of Processes• Identify main process• Document main process flow• Document main process relations• Document main process input and output(match to KPIs)Core Processes• Identify different end-to-end businessprocesses• Identify Process ownership (eventually)• Document core process input and output(define PPIs)Business Process• Document process cycles “end-to-end” withinput and output simulations (define PPIs)• Apply the 10 process parameters• Apply Netweaver BPMN process meta modelparameters© SAP 2011 / Page 50

Process Level 3: Defense exampleConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidentialConfidential ConfidentialConfidentialConfidentialConfidential© SAP 2009 / Page 51

Process Example:Operations Support Planning© SAP 2011 / Page 52

Business Model to Process Model:Process Level 4Process Level 1Main (management or support)processes with focus on wholecompanyProcess Level 2Core processes with focus forexample on department levelProcess Level 3Business processes will bedescribed as a set of level 3processes (sub-processes) and arethe starting point of SAP processcyclesMain Groups of Processes• Identify main process• Document main process flow• Document main process relations• Document main process input and output(match to KPIs)Core Processes• Identify different end-to-end businessprocesses• Identify Process ownership (eventually)• Document core process input and output(define PPIs)Business Process• Document process cycles “end-to-end” withinput and output simulations (define PPIs)• Apply the 10 process parameters• Apply Netweaver BPMN process meta modelparametersProcess Level 4Sub-process needed to map To-Beprocesses to SAP SolutionsSub-Process• Document process activities with static anddynamic simulation and optimization (definePPIs)• Apply SAP Composite application processcharacteristics (including service definition)• Define monitoring and measurements© SAP 2011 / Page 53

Example Sales & Service processes Level 1-4© SAP 2011 / Page 54

Business Model to Process Model:Process Level 5Process Level 1Main (management or support)processes with focus on wholecompanyProcess Level 2Core processes with focus forexample on department levelProcess Level 3Business processes will bedescribed as a set of level 3processes (sub-processes) and arethe starting point of SAP processcyclesMain Groups of Processes• Identify main process• Document main process flow• Document main process relations• Document main process input and output(match to KPIs)Core Processes• Identify different end-to-end businessprocesses• Identify Process ownership (eventually)• Document core process input and output(define PPIs)Business Process• Document process cycles “end-to-end” withinput and output simulations (define PPIs)• Apply the 10 process parameters• Apply Netweaver BPMN process meta modelparametersProcess Level 4Sub-process needed to map To-Beprocesses to SAP SolutionsProcess Level 5Process steps needed to map To-Be processes to SAP Solutions© SAP 2011 / Page 55Sub-Process• Document process activities with static anddynamic simulation and optimization (definePPIs)• Apply SAP Composite application processcharacteristics (including service definition)• Define monitoring and measurementsSub-activity Process• Document sub activities with static anddynamic simulation and optimization (definePPIs)• Apply SAP Composite application processcharacteristics (including service definition )• Define analytics and measurements

Example of defined Measurement areas around thedefined Performance & Value Drivers

SAP's Modelling Principals’Business Model© SAP 2011 / Page 57

SAP's Modelling PrincipalsFrom Business 2 Model to Business 2 Execution (process model)© SAP 2011 / Page 58

Order dataSales Order ConfirmationRM@FS(R/3)Pricing agreementConsulting agreementRM@FS(R/3)RM@FS(R/3)ResourceConfirmat ionRessorceConfirmedObtain approvalon handbookingHard Bookingacceptedis input forOrderProces singhas output ofOrder has beenenteris input forTrigger creation carries outof a Consult inghas output ofagreementConsultingagreementexecute...carries outProcess BillingDocumentBilling documenthas been proces sInvoicing ofcustomercarries outcarries outcarries outcarries outRessourceManagerRessourceManagerRessourceManagerProject ManagerProgram ManagerCustomerEngagem...Hard Booking notacceptedSorce SearchTrigger creationof staffing lis tStaffing List sendto 3rd partyAccount Payabl eThe connection from Process levelse to SAPexample: From Order to Cash to Create Sales Order/ OrderProcessing ModuleLevel 1:BusinessAreae.g. 3. Order to CashLevel 2:BusinessGroupe.g. 3.1 Order managementLevel 3:BusinessProcessLevel 4:BusinessProcess Stepe.g. 3.1.1 Order Processinge.g. Standard SalesOrderLevel 5:BusinessProcess Activitye.g. Order ProcessingModuleTechnical IdentityCard (Process Step)Technical IdentityCard (Function)© SAP 2011 / Page 5959

AgendaSummaryExecutive ResearchThe need for a Business Model approachIntroduction to Business ModelWhat is an Business Model?Why focus on Business Model and theconnection to1.Process Model2.Value Model3.SAP's Solution ModelMethodology and FindingsHow can a company apply theBusiness Model principlesThe need for a Business Model approachContext discussion and decisionsNext StepsHow can a company move forward?© SAP 2011 / Page 60

Business Model is a part of SAPs BusinessArchitecture Method© SAP 2011 / Page 61

AgendaSummaryExecutive ResearchThe need for a Business Model approachIntroduction to Business ModelWhat is an Business Model?Why focus on Business Model and theconnection to1.Process Model2.Value Model3.SAP's Solution ModelMethodology and FindingsHow can a company apply theBusiness Model principlesThe need for a Business Model approachContext discussion and decisionsPossible next StepsHow can a company move forward?© SAP 2011 / Page 62

Proposed Next Steps:SAP Business Model Quick scan assessmentApprox. 20 days Business Model Quick Scan assessment: Review existing Business ModelMaturity, competencies, benchmark and identify gaps. Propose Solution Approach to closeGaps and improve Maturity of: Strategic Link, including Definition Business Model Maturity (Level 1-5) Status of companies definition and template of Business Model and/or Operational Business Model– Core Competitive - , Core Differentiating - & None-Core Competencies Definition and template of the Strategy Map connected to ones Business Model Definition of the Value Map connected to ones Business Model competencies, e.g.– Common definition and template of Scorecards - Are Strategic business goals defined for overall competencyarea?– Are Value Drivers by Business Competency Area with Business Owner defined. Process Link, including Link between Business Model and Process Modeling Principles ( SAP Process Grouping)– Link between Business Model competencies and process's– Definition of Business Processes and the link to competencies (Level 1-3), e.g.– Business Processes Area, Business Processes Group, Business Processes Definition of Business Processes (Level 4-5), e.g.– Business Processes Steps & Activities Technology Link, including Process Modeling Principles– Process Flow linked to competency flow– Process Parameters Performance Drivers by Business Area and Business Owner.– Measurements (performance and monitoring of competency output)© SAP 2009 / Page 63

THANK YOUQuestions?Sascha A. KuhlmannDirector Enterprise ArchitectureBusiness Transformation ServicesM +1 312-731-4710F +1 610 492-2879E-Mail sascha.kuhlmann@sap.comProf. Dr. Mark von RosingLEAD Enterprise ArchitectSAP Global Education PartnerSAP Global Development PartnerSAP University Alliance PartnerMobile +45 2888 8901E-Mail mark@vonrosing.dkFor more information:For more information or questions about business architecture, business model, strategy map and valuemap examples, and business architecture template, please visit www.openroundtable.orgSAP Education: Business Architecture training: Process Architecure & Value ArchitectureIf you would like more information, contact Karin van den Brand, SAPEducationBusiness Development Manager:E-mail karin.van.den.brand@sap.com or bytelephone +31 6 222 16 409.