THE CONCEPTUAL FRAMEWORK FOR

BUSINESS PROCESS INNOVATION

Towards a Research Program on Global Supply Chain Intelligence

Charles Møller

Aarhus School of Business, University of Aarhus, Fuglesangs Allé 4 DK-8210 Aarhus V, Denmark

Keywords: Enterprise Systems, Management, Business Process, Innovation.

Abstract: Industrial supply chains today are globally scattered and nearly all organizations rely on their Enterprise

Information Systems (EIS) for integration and coordination of their activities. In this context innovation in a

global supply chain must be driven by advanced information technology. This paper proposes a research

program on Global Supply Chain Intelligence. The paper argues that a conceptual framework for BPI is

required to approach innovations in a global supply chain. A research proposal based on five interrelated

topics is derived from the framework. The research program is intended to establish and to develop the

conceptual framework for BPI further and to apply this framework in a global supply chain context.

1 INTRODUCTION

Few words are more ubiquitous in business or

society today than “innovation”. This reflects that

businesses are striving for ways to survive and thrive

in an increasingly complex and connected world

(IBM, 2006). Organizations today are required not

operate effective business processes and also to

accommodate for changing business conditions at an

increasing rate. Consequently the ability to develop

and implement new processes driven by EIS is a

central competence in most industries, and

furthermore it is a critical practice for a global

enterprise.

The next practice in Global Supply Chain

Management is BPI (BPI). BPI is the transformation

of a global supply chain driven by a new advanced

Enterprise Information Systems technology. This

technology holds the potential to “close the control

loop”, but until now few organizations have

managed to unleash the full potential of global

supply chain intelligence. Thus, there is an emerging

need for managing the transformation and for new

approaches that will lead to robust global supply

chains. The emergent challenge and opportunity for

an organization is to architect, design and

orchestrate adaptive global supply chain networks.

Adaptive supply chain networks exploit innovations

to improve efficiency and responsiveness and

consistently achieve these objectives. Consequently

not only sense and response, but also robustness and

resilience are emerging concerns to most enterprises

(Sheffi, 2005).

Innovation is inevitably tied into technology and

especially IT. Modern Enterprise Information

Systems (EIS) from the major vendors contain vast

amounts of new concepts and tools, but let’s face it:

quite often these wonderful tools are used (and

sometimes misused) to create trivial solutions. Why

is that? Maybe because we as users and as

organizations are not able to grasp the enormous

complexity of the task of changing inter-

organizational processes spanning global supply

chains, numerous organizational boundaries and

countless IT-systems.

This paper is fueled by the idea that there is a

huge potential contribution in using advanced EIS to

transform an organization and create a better

alignment between business and processes. This is a

practice that can be described as BPI (BPI).

Davenport, Prusak and Wilson (Davenport et al.,

2003) simplify the innovation process into four

steps: 1) scanning and identifying ideas; 2)

packaging the idea; 3) advocating the idea; and 4)

making it happen. They come up with two extreme

roles: the “guru” packagers and the creative “idea

practitioners”. This outlines a playground for an

innovator as a mediator who transforms the big ideas

into practice and makes it work. Although

innovation theories often emphasize the innovator´s

233

Møller C. (2007).

THE CONCEPTUAL FRAMEWORK FOR BUSINESS PROCESS INNOVATION - Towards a Research Program on Global Supply Chain Intelligence.

In Proceedings of the Ninth International Conference on Enterprise Information Systems - DISI, pages 233-238

DOI: 10.5220/0002405502330238

 SciTePress

role in the process Christensen, Anthony and Roth

(2004), others take a completely different stance.

Michael Schrage argues that the innovative

prototype creates innovations, not the innovator. His

point is simply that the process of working (and

playing) with the prototype models is more

important than the design process. His work

illustrates how leading enterprises master this

modeling process and are able to transform the

learning into innovative products on the market. His

message is simple: you need to be able to model

your ideas, play with the models and learn by doing

(Schrage, 2004).

1.1 Research Approach

The fundamental theoretical lens on this problem is

the system’s perspective, i.e. the business process is

considered as a work system and BPI is considered a

systems engineering process. System Development

and in particular IS development is a well-known

and mature perspective. This perspective is mainly

focused on software development which is not the

main issue here. However, this perspective can

inform the model architect about modeling in an

organizational context. These fields are very rich -

for more details see (Møller, 2007).

Enterprise Information Systems are the technical

and the organizational context for integrated process

development. The EIS and the process models are

the new components of an information system. The

EIS has also changed from static systems towards a

new generation of EIS driven by process models

(Møller, 2005). It is equally important to understand

the old architecture and the new architecture of the

systems. We need to consider the vendors, how they

relate and also the adoption of new technologies.

The global supply chain is the business and

organizational context for developing integrated

processes. The arena for process innovation has

changed from the internal processes towards the

external processes in the supply chain. This has

many implications, including the fact that the roles

of the information systems are becoming more

prominent. Many of the modern inter-organizational

issues are only touched upon to some extend, and

they need to be provided using various real life

cases.

The theoretical foundation for Business

Processes is rooted in the industrial engineering

tradition. Many adjacent theories, tools and

techniques like “Lean” or “Six-sigma” should be

identified in order to establish a comprehensive

framework. In the computer sciences tradition there

is an emerging process modeling community based

on mainly process model standards and workflow

systems. Today the workflow community is very

engaged into standards, general models and

modeling and design techniques.

The Process Innovation Laboratory (Π-Lab) has

been proposed as a comprehensive framework and a

collaborative workspace for experimenting with

process models. The Π-Lab is using a combination

of integrated action learning and concept

development approach to facilitate innovation. This

methodology is called innovation mediation (Møller,

2007).

This paper establishes the conceptual framework

for a new methodology for developing business

processes in a global supply chain based on

advanced Enterprise Information Systems. The

proposed research program evolves around the

conceptual framework and has five interrelated

activities: 1) to establish the theoretical foundation

for BPI in the supply chain. The objective is to

identify, capture and to categorize the general

process theory in a supply chain context. 2) to set up

the conceptual context for developing global supply

chains. The objective is to identify and enhance new

concepts and the methods for developing global

supply chain intelligence. 3) to create the conceptual

basis for managing advanced Enterprise Information

Systems. The objective is to identify and transform

the new concepts and the technology management

perspective based on new advanced Enterprise

Information Systems. 4) to develop innovation

mediation as a methodology for BPI. The Π-Lab is

proposed as a comprehensive framework and a

collaborative workspace for experimenting with

process models. The Π-Lab is using an integrated

action learning and concept development approach

to facilitate innovation. 5) to execute a number of

industry driven action research projects on BPI.

These projects serve as the shared empirical basis

and furthermore a national and international network

of researchers and industries on BPI will be

established.

The conceptual framework is based on previous

research on operations management and information

systems, and this particular research contributes to

each of the topics with the Π-Lab and Innovation

Mediation as the main contribution. Thus the

research approach of this program is a combination

of theoretical studies, conceptual development of

methods and tools and explorative action research.

The research we embark on is based on engineering

and computer science, and it is called design

science. This study uses Design Research in

Information Systems in an emerging “lens” or set of

ICEIS 2007 - International Conference on Enterprise Information Systems

234

analytical techniques and perspectives

complementing the positivistic and interpretive

perspective in IS (Hevner et al., 2004). The design

research involves the analysis of the use and

performance of designed artifacts to understand,

explain and very frequently to improve the behavior

of aspects of Information Systems. Design science

ultimately is theorizing on business process design

or innovation, and the research activity framework is

elaborated in the following section.

2 BUSINESS PROCESS

INNOVATION

Process Improvement (Davenport, 1992) is business-

oriented of nature and consistently focused on hard

facts and value. The first wave of process

improvement used continuous improvement (kaizen)

techniques to empower people to solve problems.

This proved to be a very successful approach and

today we see the lean movement which is based on

this thinking with tools such as the 6-sigma and

others.

Since the beginning of the 90´s there has been an

enormous focus on business processes and business

processes as a source of innovation. This marks the

second wave and the understanding was that the

business processes were inhibited by organizational

and cultural boundaries. Consequently techniques

like Business Process Re-engineering (BPR)

emerged using a clean slate approach was attempted

and new IT was applied as a silver bullet. New IT

was often embodied in the first generation ERP

systems (or more general EIS) and after the EIS

technology was widely adopted, new problems

emerged. First of all the implementation issues were

considerably but the most prominent problem was

the claimed inflexibility of the EIS (Davenport,

1998).

All together business models require processes

to be integrated across the supply chain in order to

accommodate for transparency demand, and the EIS

technology naturally is the major component in this

architecture. Consequently the information

technology has become a barrier for process

improvement. These issues are also addressed by the

major ERP vendors that compete to provide the

next-generation EIS technology as well. Recently we

have seen, how they approached these challenges

(Møller, 2005), and we conclude that we are facing

an emerging disruptive change that will allow for

future EIS to be driven by process models. This is

also called process aware IS (Dumas et al., 2005).

Process models and enterprise modeling have

been around for a while, Extended Enterprises and

integration have been a major issue for industry and

research, and here we use the concept of an

integrated business process model to frame these

enterprise models. Meanwhile the trends and

tendencies in logistics and supply chain management

have reinforced the need for process integration

leaving the supply chain scattered and distributed

from globalization and outsourcing. Most important

the need for customer driven supply chains requires

new approaches to process integration across

enterprises, and we use the concept of process

innovation to frame these approaches. Consequently,

we need to explore and understand the implications

of this new situation - there are several research

opportunities in this context.

2.1 Supply Chain Management

Supply Chain Management (SCM) has become one

of the most important new business concepts. Global

competition and outsourcing have caused the

fragmentation of the supply chain, and supply chain

excellence is now a prerequisite for competitive

advantage (Christopher, 2005). APS was enabled by

refining the mathematical programming models and

in particular the genetic algorithms applied to solve

the network problems of an entire supply chain. The

APS systems facilitate the central management of

the supply chain activities and processes in real time,

essentially by extending the MRP/II planning

concepts to encompass the entire supply chain, and

as a result the systems in effect are SCM systems

(Møller, 2006b).

A recent study of the perceived benefits from

implementing ERP Davenport, Harris and Cantrell,

(2004) shows that the key factors driving ERP

benefits are: (i) integration of processes; (ii)

optimization of processes; and (iii) informate, or the

transformation of the company based on EIS data.

On the other hand, Davenport and Brooks

(Davenport and Brooks, 2004) argue that early ERP

was not primarily focused on the supply chain, but

the businesses that were able to extend their

Enterprise Information Systems into the supply

chain with “bolt on” SCM systems have experienced

substantial benefits.

The challenge is to transform new ideas and

advanced technology into business value. In other

words: How can we effectively apply new advanced

Enterprise Information Systems in a global supply

chain in order to create process integration? The key

to these benefits goes through the development of

infrastructural and strategic capabilities embodied in

THE CONCEPTUAL FRAMEWORK FOR BUSINESS PROCESS INNOVATION: Towards a Research Program on

Global Supply Chain Intelligence

235

ERP combined with the SCM systems - the next

generation of ERP (Møller, 2005).

2.2 Enterprise Systems Management

Few IT innovations have had as much impact on

business organizations in the past years as Enterprise

Information Systems. EIS are a standardized

software package designed to integrate the data used

throughout an entire organization (Davenport, 1998).

Many large enterprises have implemented EIS and

have now taken their next step on the EIS journey.

This journey is often described in terms of waves

(Shanks et al., 2003). The first EIS wave includes

the acquisition, configuration and implementation

along with resulting changes in the organization

after going live with the system for the first time.

The second wave includes making continuous

improvements and maximizing the benefits from

EIS. The EIS have changed fundamentally over the

last ten years (Møller, 2005), and companies are

now taking advantage of the web-based technologies

and advanced functions in order to establish an

integrated extended enterprise (Davenport and

Brooks, 2004). First wave EIS implementations have

been explored through case studies which have

focused on for instance EIS strategic options, how to

avoid failures, how to identify issues of alignment,

and business process reengineering issues. Only

recently we have seen research aimed at EIS beyond

the cost-intensive implementation phase. However,

the work we have seen on the actual application and

impacts of EIS has a clear message: These systems

have the capability to transform a business, but only

if the organization is able to integrate the activities –

not only internally, but also across the external value

chain. This requires the enterprise system to be

managed as an independent area in the organization

to fully exploit its potential and ensure that it

continues to produce business benefits. We believe

that this calls for a new management competence or

function: Enterprise Information Systems

Management (Møller, 2006a).

Simultaneously the EIS have evolved

tremendously, driven by: the changing business

requirements, the new technologies, and software

vendors´ innovations (Markus and Tanis, 2000). In

the recent years the ERP systems evolved into what

is often summarized as ERP II systems and the

organizations are now taking advantage of new web-

based technologies and advanced functions in order

to establish an integrated extended enterprise

(Davenport and Brooks, 2004). These issues are also

addressed by the major ERP vendors who compete

to provide the next-generation EIS technology as

well. Recently we have seen how they approached

these challenges (Møller, 2005), and we conclude

that we are facing an emerging disruptive change

that will allow for future EIS to be driven by process

models (Dumas et al., 2005).

Contemporary Enterprise Information Systems

(EIS) from the major vendors such as SAP, Oracle

and Microsoft offer vast amounts of new tools and

concepts based on the best practices. However,

changing inter-organizational processes spanning

global supply chains, numerous organizational

boundaries and countless IT-systems are a complex

task challenging research and education (Møller et

al., 2006).

2.3 Innovation Mediation

The central research question is therefore: how can

we establish a methodology for BPI in a supply

chain based on new advanced Enterprise

Information Systems technology?

The relationship between a business process and

the organizational context is widely debated. This

program is leveraging on the idea of an integrated

business processes as an identifiable concrete model

represented in an enterprise system, and applied in

practice in a supply chain. Consequently, the

research tasks are narrowed down to the need to

create: 1) A method to innovate business processes;

and 2) a tool to facilitate BPI. This idea has

previously been proposed as the Process Innovation

laboratory, or the Π-Lab (Møller, 2007).

Innovation Mediation is an explorative approach

to study integrated business process modeling in a

controlled environment embodied in the Process

Innovation Laboratory. The process innovation

laboratory is a collaborative workspace for

experimenting with process models. The Π-Lab is a

comprehensive framework for studying, for teaching

and for learning practical problem solving and

system design using integrated process models. The

Π-Lab facilitates innovation by using an integrated

action learning approach to process modeling, which

includes contemporary technological, organizational

and business perspectives. Innovation Mediation in

this context consists of five central elements:

Innovation Mediation is a method to develop

integrated process models in a (1) process

innovation laboratory using based on (2) the

theoretical framework for process innovation.

Models are established in a controlled environment

using two principles: (3) conceptual modeling and

(4) experimental learning. This is assumed to lead to

(5) the process innovation.

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We can distinguish between “in-vivo models”

which mean “live models” or “in-vitro models”

which means models in a controlled environment. In

an area where models are more significant and

established, the notion of a laboratory is often

central to experiment with “in-vitro” models. In

business and in particular in a supply chain context,

a laboratory is less familiar. However we have seen

cases with simulation and role playing games like

Forrester’s Beer game. They are in many aspects

examples of a process lab. The models we are

interested in are architectural concept types of

models with many aspects and the representation is

closely related to new IT and finally, the models

span organizational boundaries.

In architectural patterns have been successfully

applied as overall abstraction of designs. Patterns

were originally conceived by Christopher Alexander

(Alexander, 2003), a Berkeley Professor of

Architecture with a background within mathematics,

physics and chemistry. Alexander’s work is based

on the idea that nature is organized into a limited

number of structures which repeat themselves. He

describes architectures using fifteen properties. To

understand and to describe these repeating structures

is a new way of generalizing design knowledge that

is labeled patterns. A pattern language is just a

precise way of describing someone’s experience.

These ideas have spread to the object oriented

development world, were patterns are used as an

abstraction of a solution in a given context. Recently

patterns lead to the development of a catalogue of

processes (Malone et al., 2003). The pattern is a

reference design and the idea of reference models

has cached on in several modeling related areas,

such as enterprise modeling, information systems

architecture (Zachman, 1999). In this context a

pattern is expressed as: the issues concerning a

solution to a problem in a certain context. The use of

patterns is a learning approach. The complementary

idea to learning is the idea of conceptual modeling

or modeling in the large. Conceptual modeling is an

overall approach to develop complex systems in a

holistic organizational context. Conceptual modeling

integrates concepts and concept modeling develops

links from detailed aspect models to overall holistic

models and links from the current situation to the

future situation. Concept modeling can also be

understood in a learning perspective and the effect is

based on sharing mental models that sometimes are

referred to as boundary objects.

The pivotal point of this methodology is based

on the idea that the future systems are model driven.

Consequently there are two ways in which the

integrated models may be studied: 1) “in-vitro”, that

is in a controlled environment like in the lab, or 1)

“in-vivo” where the process is embedded in the

organizational and business context.

2.4 Practices for Global SC

Innovation Mediation and modeling is mainly about

gaining insight. A central idea to explore is the idea

of integrated action learning. Innovation means

getting new ideas, and consequently BPI needs to be

based on generating new knowledge on the process

models. Therefore we apply a learning perspective

on modeling. The ideas are often framed e.g. by

Kolb’s models on experiential learning (Kolb,

1984). Kolb’s model explains learning as a circle

with four elements: concrete experience, reflective

observations, abstract conceptualization and active

experimentation and testing in new situations. In this

framework the activities are taken as a checklist for

activities leading to learning. Consequently

Innovation Mediation needs to include: 1)

Intervention: Planning and executing test on the

models; 2) Experience: Observation of result of the

interventions; 3) Reflection: Explain deviations from

expected results; and 4) Conceptualization: Make

the experiences general.

The theory of learning is often connected to the

action research paradigm. Here we will assume that

the inclusion of many different perspectives can

emulate aspects of reality to a certain extend. The

shared empirical basis of this program will be based

on a smaller number of industry driven action

research projects on BPI. These cases provide the

program with a “live” laboratory for changing

processes.

3 CONCLUSIONS

This paper has now outlined the conceptual

framework for a research program on BPI based on

advanced EIS in a global supply chain context. The

paper has argued that most industrial supply chains

are globally scattered and nearly every business

relies on their EIS for process integration. In this

context innovation is inevitable driven by advanced

information technology. Consequently there is a

need for new approaches to BPI based on advanced

EIS. This is the central research question for the

proposed program. The program is established in an

applied research framework aiming at changing

practices towards global supply chain intelligence.

This global supply chain intelligence research

program is basically dealing with the issues of how

to design and implement effective and robust

THE CONCEPTUAL FRAMEWORK FOR BUSINESS PROCESS INNOVATION: Towards a Research Program on

Global Supply Chain Intelligence

237

(resilient) supply chains, and the program is focused

on learning and theorizing based on theoretical

concepts and practice. The main research

contribution of this program is to develop and to test

the Innovation Mediation methodology. However,

there is also a significant contribution to the supply

chain and EIS theories. This paper is an abridged

version of a working paper found at:

http://www.hha.dk/bs/wp/inf/I_2006_02.pdf.

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