Procedia Technology 9 ( 2013 ) 547 552

2212-0173 2013 The Authors Published by Elsevier Ltd.

Selection and/or peer-review under responsibility of SCIKA Association for Promotion and Dissemination of Scientific Knowledge
doi: 10.1016/j.protcy.2013.12.061
ScienceDirect
CENTERIS 2013 - Conference on ENTERprise Information Systems / PRojMAN 2013 -
International Conference on Project MANagement / HCIST 2013 - International Conference on
Health and Social Care Information Systems and Technologies

On the Measurement of Business Process Centralization

Vladimir Modrk*,
Faculty of Manufacturing Technologies, TUKE, Bayerova 1, Presov 080 01, Slovakia

Abstract
One of important managerial tasks is to find the optimum degree of centralization for each situation. Accordingly,
development of quantitative measures of centralization/decentralization appears to be steadily actual problem.
Development of such measures usually starts with a formalization of the object of measurement. For this purpose in the
paper is outlined a conceptual model of business process decomposition. Further, this paper is concerned with proposed
approaches to the measurement of structural properties of business process centralization. Subsequently, the measures are
subjected to comparison to identify their pros and cons.

2013 Published by Elsevier Ltd. Selection and/or peer-review under responsibility of
CENTERIS/ProjMAN/HCIST.

Keywords: Process modelling; structural properties; centrality; benchmarking; indicators.
1. Introduction
Improvement of business activities within organizations based on new concepts of process structures is a
continual challenge for companies. The processes of change are addressed mostly at the level of
administrative business processes (BP). Such situation fully accords with a logical succession of corporate


* Corresponding author. Tel.: 00421 51 7722828
E-mail address: vladimir.modrak@tuke.sk
Available online at www.sciencedirect.com
2013 The Authors Published by Elsevier Ltd.
Selection and/or peer-review under responsibility of SCIKA Association for Promotion and Dissemination of
Scientic Knowledge
548 Vladimir Modrk / Procedia Technology 9 ( 2013 ) 547 552
reengineering that followed the publication of Hammer and Champy's book [1]. Ultimately, many writers
(e.g., [2], [3]) argue that an ideal organization structure exists, which allows management of BP in
decentralized organizational settings with centralized reporting and control. Approaches to the business
process improvement can generally be divided into two categories: improvement of the operational properties
of BP and improvement of the structural properties of BP. While the first approach is oriented on dynamic
parameters of BP, the approach based on structural analysis deals with the static properties of BP. This paper
is concerned with the second category of BP properties from the point of view of measuring and
benchmarking of business process centralization or decentralisation. The term centralized underlines that
authority to make important decisions lies towards the top management, while conversely decentralization
implies more autonomy. Fayol in his book General and Industrial Management (1949) stated that one of
important managerial tasks is to find the optimum degree of centralization for each situation. Accordingly, the
quantitative measures of centralization/decentralization degree appear to be needful in this context.
Development of such measures usually starts with a formalization of the object of measurement.

2. Formalized Models of Business Process Structures
The formalized organization is one of critical conditions for the reengineering process sustenance.
Formalized process models typically start by establishing a framework for the systematic classification of
company processes. A possible classification framework for the systematic rebuilding of processes can be
built from three hierarchical levels, which are [4]: Elementary process (EP), Integrated process (IP) and
Unified enterprise process (UEP). Then, we can implement one of the most important tools for formalization
of an organizational structure that is process structure modelling technique. For this authors purpose, the
IDEF0 (Icam DEFinition for Function Modelling, where 'ICAM' is an acronym for Integrated Computer
Aided Manufacturing) method was the most suitable design tool of demonstrating process diagrams [5]. This
process modelling technique is based on process decomposition that is resulting in a set of business structure
models, which are represented by diagrams. In order to model a realistic business process network the
following structure of diagrams was used: system diagram, context diagram, and commodity flow diagrams.
An example of these four simplified diagrams is illustrated on Figure 1.
3. Overview of the some approaches to the measurement of BP centralization
Approaches to assessment of BP centralization/decentralization were emphasized using several perspectives
by researchers during the past decades. The network centralization can be, in simplified manner, defined as
the overall cohesion or integration of the graph. Networks may be more or less centralized around particular
points or sets of points. A number of different procedures have been suggested for the measurement of
centralization. According to Hanneman [7] Network analysts often describe the way that an actor is
embedded in a relational network as imposing constraints on the actor, and offering the actor opportunities.
He also adds that Actors that face fewer constraints, and have more opportunities than others are in
favourable structural positions. This view is consistent with our conception to analyse
centralisation/decentralisation aspects for benchmarking business processes. Freeman [8] has shown how
measures of point centrality can be converted into measures of the overall level of centralization. In generally,
measures of centralization refer whether a network is organized around its most central point. The structural
centre of a graph is a single point or a cluster of points which can be identified as managerial position
handling the team members of given process structure. Christofides [9] suggested using the distance matrix to
determine the absolute centre of a graph. His ideas are related to the two basic classes of network structural
properties Centrality and Prestige. Both of them are not individual attributes since they are mutually
dependent. The term centrality is broadly used in many disciplines, but it is not explicitly defined within
549 Vladimir Modrk / Procedia Technology 9 ( 2013 ) 547 552
graph theory [10]. However, most writers (e.g. [11] [12], [13], [14], [15]) think that the graph-theoretic
conception of compactness seems to be a natural extension of the centrality. Prestige can be simply defined
as the extent to which one actor has substantially greater prestige than others [16].




Fig. 1 A Fragment of the four simplified diagrams (adapted from [6]

Hanneman [7], in context of this research, pointed that it is useful to first think about very simple networks.
The following four generic graphs shown in figure 2 can be considered under such networks.

550 Vladimir Modrk / Procedia Technology 9 ( 2013 ) 547 552
A
C
B
G
F
E
D
A C B G F E D
C
B
A
G
F
E D
C
B
A
G
F
E D
a) b) c) d)


Fig. 2 Reference graphs for study of graph centralization: (a) star, (b) line, and (c) circle (d) complete

As it was mentioned above, the structural centre of the Star-Graph network (Figure 2a) is actor A. The
substance of the degree centrality is, that the more links a node has, the more opportunities he has.
Let n = |V| be the number of actors in the graph G = (V;E), then the value of the Actor-level degree centrality
of a node v is defined as [17]

C
D
(v) = deg(v)/(n-1), (1)

where the vertex degree (deg(v)) may be in-degree, out-degree and in-degree + out-degree, respectively.
For multi-graphs or graphs with self loops values of degree centrality greater than 1 are possible.
Centralization of a network can be expressed through the so called Group Degree Centralization function
[18]:

C
D
group
=[
i
(deg(v)
max
- deg(v
i
))]/[(n-1).(n-2)]. (2)

This index reaches its maximum value of 1 when one actor chooses all other n -1 actors, and the other actors
interact only with this one, central actor. The index attains its minimum value of 0 when all degrees are equal.
Its disadvantage is that it cannot be used for multi-graphs in case that all vertex degrees are not identical.
Another possibility to measure the structure centralization is to apply the so-called Index of centralization
or Degree of structure centralization [19]. The index values can be obtained through the relation:

=[
i
(deg(v)
max
- deg(v
i
))]/{(n-1). [
i
(deg(v)
max
1)]}. (3)

This index can obtain two limiting values:
= 1 in the case that the network is centralized to the maximum degree,
= 0 in the case that the network is decentralized to the maximum degree.

4. Benchmarking approaches to BP centralization measurement

For the purpose to benchmark the independent measures that are described by above equations a set of
selected graphs will be used. The first four are so called reference graphs. The next graphs (No. 5 No. 8)
were derived from Figure 1. The graph No. 5 represents a decisive part of the System diagram. The graph No.
6 is simplified version of the Context diagram. The graph No. 7 represents the Commodity flow diagram at
the first stage, in which only internal relations are considered. Finally, the graph No. 8 presents the
Commodity flow diagram at the first stage after integration of selected processes. Table 1 shows the results of
the implementation of the centrality/centralization indicators.


551 Vladimir Modrk / Procedia Technology 9 ( 2013 ) 547 552
Table 1 Centrality/centralisation results for selective networks

Graph number
Indicators
Actor level degree centrality
C
D
(v)
Group degree
centralization
C
D
group

Degree of
structure
centralization

A
C
B
G
F
E
D
C
D(A)
=1;
C
D(B)
=C
D(C)
=C
D(D)
=C
D(E)
=C
D(F)
=C
D(G)
=0,167
1 1
A C B G F E D
C
D(A)
=C
D(G)
=0,167;
C
D(B)
=C
D(C)
=C
D(D)
=C
D(E)
=C
D(F)
=0,333
0,067 0,333
C
B
A
G
F
E D
C
D(A)
=C
D(B)
=C
D(C)
=C
D(D)
=C
D(E)
=C
D(F)
=C
D(G)
=0,333 0 0
C
B
A
G
F
E D
C
D(A)
=C
D(B)
=C
D(C)
=C
D(D)
=C
D(E)
=C
D(F)
=C
D(G)
=1 0 0
A
C B
C
D(A)
=C
D(B)
=C
D(C)
=2 0 0
C
F
E
D
B
A
C
D(C)
=2;
C
D(A)
=C
D(B)
=C
D(D)
=C
D(E)
=C
D(F)
=0,4
not applicable 0,889
g
e
f
d
c
b
a
h C
D(a)
=C
D(b)
=C
D(c)
=C
D(d)
=C
D(g)
=0,429;
C
D(e)
=C
D(f)
=C
D(h)
=0,714
0,238 0,357
f
e
(g,h)
(a,b,c,d) C
D(a,b,c,d)
=C
D(g,h)
=1;
C
D(e)
=C
D(f)
=0,667
0,333 0,333



1
2
3
4
5
6
7
8
552 Vladimir Modrk / Procedia Technology 9 ( 2013 ) 547 552
5. Result discussions and conclusions

Based on the analysis of obtained results in Table 1 at least the following pertinent findings can be
formulated:
- Only the indicators Actor-level degree centrality and Index of centralization are suitable to measure
relevant structural aspects for both type of single-edge graphs and multi-edge-graphs.
- The indicators Group degree centralization and Index of centralization bring for some graphs (No. 1,
No. 3, No. 4, No. 5 and No. 8) the same results. Four of them (No. 1, No. 3, No. 4, No. 5) belong to
category of Regular graphs.
- Measure values of Group degree centralization and Index of centralization for graph No. 2 are
relatively very different. An answer on what value is more or less realistic is until now open.
As it is obvious, further research in this domain will need to specify other relevant structural models and
identify further indicators to be able to analyse and recognize decisive attributes and aspects of network
centralisation not only from theoretical viewpoint, but also as important practical implications for
improvement of business processes.
Acknowledgements
This work has been supported by the Grant Agency of the Ministry of Education of the Slovak Republic
and Slovak Academy of Sciences (VEGA project No. 1/4153/07).
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