The document discusses value-based process project portfolio management. It introduces the research group and conceptual framework, which aims to bridge the gap between business and process people by taking an interdisciplinary approach. Examples are provided on BPM roadmapping to balance developing capabilities vs. improving processes, and using process PageRank to prioritize processes based on their interconnectedness. Key challenges are managing multiple processes, accounting for interdependencies, and integrating multidimensional performance metrics. The goal is to select and schedule projects to maximize company value over multiple periods.

1. Value-based Process Project Portfolio Management
University of Bayreuth
Prof. Dr. Maximilian Röglinger
Research CenterFinance & Information Management
Project Group Business & Information Systems Engineering of the FraunhoferFIT
Professorship of Business & Information Systems Engineering and Value-based Business Process Managementwww.fim-rc.de
www.fit.fraunhofer.de/bise
EBR Conference, Ljubljana, November 2014

2. 2• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Agenda
1)Research Group „Value-basedBusiness Process Management“
2)Big Picture: Value-based Process Project Portfolio Management
3)Example: BPM Roadmapping
4)Example: Process Prioritizationwith the ProcessPageRank
5)Conclusion and ChallengesAhead

3. 3• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Agenda
1)Research Group „Value-basedBusiness Process Management“
2)Big Picture: Value-based Process Project Portfolio Management
3)Example: BPM Roadmapping
4)Example: Process Prioritizationwith the ProcessPageRank
5)Conclusion and ChallengesAhead

4. 4 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Believe it or not: There still is a Gap between
Business and Process People!
Business People Process People
Connected
customers in a
digital society
Increase long-term
company
value
Process redesign,
modelling, monitoring,
improvement, and
automation
Cycle time, error
handling, reliability,
automation, …

5. 5• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Value-based Business Process Management at the Research Center FIM and the Fraunhofer FIT
Industrialisierung
Wertorientierung
Business Process
Management
Flexibility, automation, standardization, sourcing, andimprovementofprocesseswith
modern informationtechnology
Value-based process decision- making and analysis of general relationships that govern process change
Our objective is to systematically identify and realize potential for process flexibility, automation, standardization, sourcing, and improvement in line with economic principles and by harnessing modern information technology.

6. 6• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Agenda
1)Research Group „Value-basedBusiness Process Management“
2)Big Picture: Value-based Process Project Portfolio Management
3)Example: BPM Roadmapping
4)Example: Process Prioritizationwith the ProcessPageRank
5)Conclusion and ChallengesAhead

7. 7 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Value-based Process Project Portfolio Management
Conceptual Framework
1
AS-IS
I
…
II
III
Process Project Portfolio
Project layer
…
II
… I …
III
TRANSFORMATION
2 …
3
Process Portfolio BPM
Process layer
Valuation layer
Company Value
KPI Portfolio
B C
A
…
Valuation layer
Company Value
1‘
2‘ …
3‘
Process Portfolio BPM
Process layer
TO-BE
KPI Portfolio
B C
A
…

8. 8 • Maximilian Röglinger • Value-based Process Project Portfolio Management © FIM Research Center
Bridging the Gap between Business and Process People
requires an interdisciplinary multi-method Approach!
Value-based management
Multi-criteria decision-analysis
Project portfolio selection
and scheduling
Business process modelling
Value-based Process
Project Portfolio Management
…
Network analysis
Business process simulation
Business process
execution and monitoring
…

9. 9• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
ClassingValue-based Process Project Portfolio Management intothe Core Elements of BPM
Rosemann und vom Brocke (2010)
= Focus ofValue-based Process Project Portfolio Management

10. 10• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Agenda
1)Research Group „Value-basedBusiness Process Management“
2)Big Picture: Value-based Process Project Portfolio Management
3)Example: BPM Roadmapping
4)Example: Process Prioritizationwith the ProcessPageRank
5)Conclusion and ChallengesAhead

11. 11• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Are youtoobusytoimprove?

12. 12• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Example: BPM Roadmapping
Research question: Which projects should an organization implement in which order to balance the development of BPM capabilities with the improvement of individual business processes?
I
…
II
III
Process Project Portfolio
…
II
…
I
…
III
Project layer
Lehnert M., Linhart A., Röglinger M.: Chopping down trees vs. sharpening the axe –Balancing the Development of BPM Capabilities with Process Improvement. In: Proceedings of the 12th International Conference on Business Process Management (BPM), Haifa/Eindhoven, September 2014, p. 151-167

13. 13• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
How to balance this over time?
Developing BPM capabilities
(improve dynamic capabilities through BPM-level projects)
Improvingindividual processes
(improveoperational capabilitiesthroughprocess-level projects)
BalancingInvestments intoBPM Capabilitiesand Process Improvement

14. 14• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
BalancingInvestments intoBPM Capabilitiesand Process Improvement
Advantages of Developing BPM Capabilities
Developing BPM capabilities…
…affects all processes of an organization.
…advances an organization’s capabilities to integrate, build, and re-configure processes.
…facilitates process improvement in the future.
…has a long-term performance impact.

15. 15• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
BalancingInvestments intoBPM Capabilitiesand Process Improvement
Advantages of Improvingindividual Processes
Improvingindividual processes…
…affects a distinct process in terms of its time, cost, quality, and flexibility.
…has a short-term performance impact.

16. 16• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Consideringa Multi-periodPlanningHorizon
Status quo
t = 0
Assumption: onlyoneprojectper period
t = 1
t = 2
€
€€
€
€€€
€€
€€
BPM roadmap candidate with the highest risk- adjusted expected NPV of the process cashflows
ContingencyFactors:
Demand uncertainty
Customers‘ sensitivityw.r.t. time, price, and quality
Degeneration effectofprocessperformance
Investment outflowsand effectsofprojectcandidates
…

17. 17• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Agenda
1)Research Group „Value-basedBusiness Process Management“
2)Big Picture: Value-based Process Project Portfolio Management
3)Example: BPM Roadmapping
4)Example: Process Prioritizationwith the ProcessPageRank
5)Conclusion and ChallengesAhead

18. 18• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Value-based Process Project Portfolio Management ConceptualFramework
1
BPM
Processlayer
AS-IS
I
…
II
III
Process Project Portfolio
Project layer
Valuationlayer
Company Value
1‘
2‘
…
3‘
Process Portfolio
BPM
Process layer
TO-BE
KPI Portfolio
B
C
A
…
…
II
…
I
…
III
TRANSFORMATION
Valuationlayer
Company Value
KPI Portfolio
B
C
A
…
2
…
3
Process Portfolio

19. 19• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Example: Process Prioritizationwith the ProcessPageRank (PPR)
Research question: How can process prioritization decisions be made in line with how processes are interconnected?
1
2
…
3
Process Portfolio
Lehnert M., SeyfriedJ., SiegertM., Röglinger M.: ProcessPageRank –A Network-based Approach to Process Prioritization Decisions. Working paper at the FIM Research Center.

20. 20• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
5
ProcessA
SANII: 0.80
10
ProcessB
SANII: 0.60
WhichProcessshouldbeimproved?
5
SANII: Stand-aloneneedforimprovementindexЄ[0; 1]
?
10
ProcessA
SANII: 0.80
18
ProcessD
SANII: 0.20
25
ProcessB
SANII: 0.50
18
ProcessA
SANII: 0.30
18
ProcessE
SANII: 0.60
18
ProcessF
SANII: 0.70
?
ProcessC
SANII: 0.54
25
3
ProcessG
SANII: 0.40
5
24
36
80
32
20
11
10
ProcessB
SANII: 0.60
?
?
?
?

21. 21• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Adoptingand Adaptingthe Google PageRanktothe ProcessPageRank
Rank
Process
PPR(i)
1
C
0,37686
2
B
0,27599
3
A
0,19841
4
D
0,14875
SANII:Stand-aloneneedforimprovement, NUI: Numberofuseinstances, d:DampeningFactor
푃푃푅푖= 푆퐴푁퐼퐼푖 푗=1 푛푆퐴푁퐼퐼푗 ∙1−푑+푑∙ 푗∈퐼푖 푃푃푅푗∙ 푁푈퐼푗푖∙푆퐴푁퐼퐼푖 푘∈푂푗 푁푈퐼푗푘∙푆퐴푁퐼퐼푘
The PPR ranksprocessesbasedon their
network-adjustedneedforImprovement
ProcessA
SANII: 0.5
ProcessB
SANII: 0.7
2
2
ProcessC
SANII: 0.4
3
ProcessD
SANII: 0.2
4
5
5
5

22. 22• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
The PPR as a Fundament of Prioritizing Process-Level Projects
ProcessA
SANII
ProcessB
SANII
ProcessC
SANII
ProcessD
SANII
ProcessRanking
Multi-dimensional Ranking ofProcess-level Projects
Howcanprocess-level projectsbeprioritizedin an interconnectedprocess world?
The PPR ranksprocessesbasedon theirnetwork-adjustedneedforimprovement.
The SANII mapsall performancedimensionsof the Devil‘sQuadrangle(Cost, Time, Flexibility, Quality) intoa singleperformanceindicator.
A process-level projectmayhavedifferent effectson eachperformancedimension.
The propagationof such effectswithinthe process networkdependson the dimension.
Status Quo:
But:
Rank
Process
PPR(i)
1
C
0,37686
2
B
0,27599
3
A
0,19841
4
D
0,14875

23. 23• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Outlook: Howcanprocess-level projectsbeprioritizedin an interconnectedprocess world?
Time
Cost
Flexibility
(Innerflexibility)
Quality
Change in theSANII
Project
Process
C
T
Q
F
Project A
Creditadmin
0.2
-0.45
-0.6
0.2
Project B
Creditadmin
0.5
-0.25
-0.1
0.3
Project C
Schufa Test
0.2
-0.45
0.3
-0.35
Process-Level Projects (PLP)
Rank processes
beforeanyPLP
Rank processes
after eachPLP
Comparethe changes
foreachdimension
Aggregate the changes
in thevaluationfunction
Rank the PLPs
Processes
SchuFatest
Transaction
6
Creditadministration
5
Stock administration
6
Debit administration
15
Charging
5
5
4
3
7
6
SchuFatest
Transaction
6
Creditadministration
5
Stock administration
11
Debit administration
15
Charging
5
5
4
3
7
6
SchuFatest
Transaction
6
Creditadministration
15
Stock administration
17
Debit administration
7
15
Charging
5
5
3
SchuFatest
Transaction
6
Creditadministration
5
Stock administration
6
Debit administration
15
Charging
5
5
4
3
7
6
SANII
Process
C
T
Q
F
Charging
0.4
0.4
0.4
0.4
Transaction
0.4
0.3
0.4
0.5
Creditadmin
0.6
0.7
0.7
0.3
Debit admin
0.5
0.6
0.6
0.7
Schufa Test
0.7
0.6
0.5
0.6
Stock admin
0.3
0.6
0.7
0.5

24. 24• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Agenda
1)Research Group „Value-basedBusiness Process Management“
2)Big Picture: Value-based Process Project Portfolio Management
3)Example: BPM Roadmapping
4)Example: Process Prioritizationwith the ProcessPageRank
5)Conclusion and ChallengesAhead

25. 25• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Value-based ProcessProject Portfolio Management ConceptualFramework
1
BPM
Processlayer
AS-IS
I
…
II
III
Process Project Portfolio
Project layer
Valuationlayer
Company Value
1‘
2‘
…
3‘
Process Portfolio
BPM
Process layer
TO-BE
KPI Portfolio
B
C
A
…
…
II
…
I
…
III
TRANSFORMATION
Valuationlayer
Company Value
KPI Portfolio
B
C
A
…
2
…
3
Process Portfolio

26. 26• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Value-based Process Portfolio Management Central Challenges
Value-based Process Portfolio Management requires…
…consideringmultiple processessimultaneously!
…accountingforinterdependenciesamongprocesses!
…consideringtheeffectofBPM on processexecution!
…separatingtheeffectsofdifferent BPM capabilities!
…conceptualizingprocess performanceas a multi-dimensional construct!
…integratingmultiple (partlyconflicting) performancedimensions!
…distinguishingmultiple process-relatedprojecttypesand theireffects!
…accountingfordependenciesamongprocess-relatedprojects!
…consideringall relevant cashflows, multiple planningperiods, andrisks!

27. 27• Maximilian Röglinger • Value-based Process Project Portfolio Management
© FIM Research Center
Prof. Dr. Maximilian Röglinger
Research CenterFinance & Information Management
Project Group Business & Information Systems Engineering of the FraunhoferFIT
Elite Graduate ProgramFinance & Information Management
Professorship of Business & Information Systems Engineering and Value-based Business Process Management
Contact
Maximilian Röglinger
University ofBayreuth
Friedrich-von-Schiller-Str. 2a, 95444 Bayreuth
Phone: +49 921 55-4710
Email:maximilian.roeglinger@fim-rc.de
Web:www.fim-rc.de
www.fit.fraunhofer.de/wi
Research Areas
Value-Based Business Process Management
Customer Relationship Management
Strategic IT Management