Non-disruptive Organizational Transformation and

Organizational Structures for

BPO Organizations

Jorge Henriques Silva

Jorge.H.Silva@gmail.com and jsilva@huf.pt

Abstract. This paper gathers the thoughts and ideas of a group of people
discussing the subject of BPM Business Process Management - and the
impact of this management philosophy in organizations. We concluded that
the produced BPM studies and project reports covered mostly the
technological face of projects, although, often, referring to people as the most
important factor that contributed to the project success. Literature omits
models and methodologies to help companies in the task of designing the new
organizational structure, or, for simplicity, the organization chart.
This paper is not a recipe of type one size fits all but more a seminal set of
essential instruments to assist organization architects in the design of the best
and most adequate organizational structure. So, in this paper we risk a
proposal for the new organizational structure for companies that are in the
quest of BPM.

Introduction

One of the most marked characteristics of ISO9000:1994 is the process control and
inspection and the demand to document action plans to improve performance.
Nevertheless, there is no specific attention to the continuous process improvement.
In consequence, the International Organization for Standardization produced a new
revision of this standard, the ISO9001:2000. The new revision focused on a common
management system based in the concept of process linked to the use of the PDCA
cycle for process continuous improvement. This would generate inside evidences of
continuous process improvement.
In the recent past, companies worked hard to be conformant to the quality standards
since they had two sources of motivation, one intrinsic and the other extrinsic.
Intrinsically, they wanted to leverage the quality of products and services and
extrinsically, the market demanded it. Those companies that combined both
motivations and achieved their goals gained competitive advantages.

Ed. 16-Nov-2008

There is a lot of discussion about process management and Business Process

Orientation BPO and we believe that the concept is much more mature now than

it was in the year 2000. There are a lot of companies that already started their
Business Process Management BPM initiatives, so, there is a lot of experience in
the field. But, from our point of view companies are still focused in department
processes and not in End to End E2E processes.
We have also noticed that there is no literature or academic studies on the subject of
organizational structures for BPO organizations. In the scope of some frameworks
for organizational transformation it is recognized and, in some cases emphasized,
the importance and determinacy to the project success but there is no substantive
content on the subject.
So, our motivation to write this paper is twofold: one, to present a path for change
for companies that aims to be BPO and, second, to present a model of an
organizational structure that facilitates a BPO organization.
In chapter 2 we will present a path for organizations that want to evolve from the
position where they stand to BPO. This path will be presented by a 4 phases model
that describes the major steps of this evolutionary path. At the same time we will
present the arguments that fundament our believe that the current organizational
structures based in the department cell dont facilitate the BPO organization.
In chapter 3 we will present our model of the current organizational structure based
in the department cell to help us understand why BPO organizations need a different
base cell for its organizational structure.
In chapter 4 we will present a model that describes the To Be model of an
organizational structure for a BPO organization. It is an empirical model under
construction to be molded, validated and extended by companies that are willing to
make a determined step forward into performance and alignment.
In chapter 5 we will present a set of remarks and alerts to companies about the
department cell based organization.

The path to the BPO organization

This paper is headed to people who are in the process of changing their
organizations to a BPO organization, or are launching a BPM project, or are just
looking for information on these subjects.
We have used a step-based evolutionary model and it is based in our experience in
presenting and defending the BPO organization as a target model to enhance
company performance. In this approach we will use a kind of anthropological
analysis and view of the artifacts and objects that one would find if invited to visit or
explore these organizations at its different phases.

Figure 1: The path to the BPO Organization

Figure 1 illustrates a path for organizations from an Ad-hoc to a Process style of

management. It doesnt intend to be a prt-a-porter, or a one size fits all model
since there is a unique configuration for every single organization. So what is the
use for this model? In order to present our arguments, we must agree in a common
model and premises, a starting point. Therefore, we will present the model of figure
1 as a trip looking on an anthropological way to the artifacts found in the sediments
of organizations. Based on those evidences we will present our arguments to sustain
the need for a new type of organizational structure.
For each step we have condensed its characterization into 4 core perspectives of
BPM: strategy, people, processes and information systems. As we go up in the
ladder of evolution we will detain in each step and we will make some
considerations about the artifacts and evidences.
2.1

Phase 1: Ad-hoc

We have called Ad-hoc to phase 1. In this phase, the main characteristic is the
absence of formality in the construction of business processes. There are evidences
of mature processes in particular those that are based in mature information systems
like those coded in the ERP systems. Nevertheless, this support is not, normally,
End to End and it is seen as a way to centralize and share information, not to
implement the process formality.
Companies, in this phase, are striving to maintain the current market looking
internally to understand how they can evolve to address new markets or customers.
This is typically an inside out strategic positioning where the company is focusing
exclusively in looking how to develop the existing business with the existing
products and services.

The organizational cell is the department and there is a hierarchy of functions. In

consequence, the evaluation and the development of people are based on a
perceptional evaluation of functional performance.
Strategy

Not very clear in terms of processes.

Not actionable at lower levels of

operations (people dont know what they
have to do to move forward and
contribute to strategic goals).

People

There is no common language to design

and discuss processes.

The concept of process is still under

construction.

Processes

Information systems

There are disengaged initiatives in terms

of BPM.

Information systems are dispersed and

heterogeneous.

IT People are driving the use of

processes to collect business process
requirements.

It is difficult to change or create new

functionalities (low support).

Low integration between systems.

Table 1: Phase I Ad-hoc summary of BPMs core perspectives

The transition we propose to move on to the next step is the cloning of processes or
turn processes explicit as depicted in figure 1 - [Clone / Give visibility]. When
organizations start moving forward into a BPO organization the main problem is to
extract business processes from peoples minds and turn them explicit. After this, it
is possible to create a common and shared understanding of business processes.

Figure 2: The coworker dilemma (which representation of the process is the right one)

In figure 2 we have represented the problem of the company processes

representation. The user at the figures lowest part knows that there is more than one
way how-to to undertake the process (A and B). Both are acceptable inside the
organization and probably will lead to the same result. Additionally, on the top of
the picture, we see that the organization has coded this process in a distinct way in
an information system like an ERP. So, at the end, we have 3 different
representations of the same process. Two are mental, or virtual, and the other resides
in an information system but it is not strong enough to enforce the coworkers to use
it in the predetermined way. So, we conclude that there are multiple representations
of a process.
This is the main problem of not having a common and shared language to speak
processes and it is the main obstacle to share and create knowledge in this domain.
After a period of construction and deconstruction around process maps and related
concepts, the organization developed competences and projects that generated a set
of process performance indicators.
2.2

Phase II: Re-engineering

The organization is now in phase II: Re-engineering. The company has adopted the
BPM paradigm as one of the ways of creating competitive advantages. Besides the
creation of new processes and new clones, people are also involved in new
initiatives regarding the improvement of processes. For the first time, the company
has a way of measuring the performance of its business processes collecting real
business data. It is the first step to re-engineering and lean thinking. People are
looking to work in a lean way eliminating non-value added tasks and activities
trying to increase the performance of its department processes.
Strategy

Strategy addresses capabilities linked to

business processes.

People

People start to speak processes.

Discussions, meetings and problem

solving are continually enriching the
concept of business process.

There is an alignment between the

strategic level and the operational level.
Processes

Business process analysis (BPA) and

re-engineering initiatives are being
sponsored by top management.

Processes
are
being
measured
(performance) and monitored regularly
in meetings with all stakeholders.

Information systems

Information systems become aligned

with process execution needs.

A focus in integration and workflow tools

is a priority for IT investments.

Table 2: Phase II Re-engineering summary of BPMs core perspectives

In this phase the company is focused on achieving higher levels of efficiency in the
execution of its business processes. There is already a reasonable period of time in
gauging the processes performance and the respective indicators are intelligible to

the process responsible. There are specific company goals to re-engineer critical
processes.
In terms of organizational structure there is no change and the department continues
to be the main basic cell. Now, that every department has process indicators in some
extension it is possible to monitor the individual performance linked to the
department processes performance.
Metrics are now part of the vocabulary of people and when problems are identified
(arose/issued) multidisciplinary teams use an approach based on the process view
starting with a detailed analysis of the process breakpoints.
At this moment, the organization has learned that there is a very important benefit
which is the fact that people now have a shared and common vision over the same
process and additionally they are able to diagnose the problem in a more effective
way. Now people are able to speak of the breakpoints, the moments of truth and
other process elements. This drives the organization to combine all knowledge and
competences to solve problems. Figure 3 represents the vision just explained in the
last sentences.

Figure 3: All coworkers have a common and shared understanding of the process

Now that an explicit representation of the organization is being compiled the top
management should think how to manage the new organization assets: the
processes. These new assets have to be managed, optimized, maintained and
continuously improved. Standardization allows collecting the best practices used in
the company and incorporate them in all processes, allowing its reuse by all
organization. Reutilization allows that the same process may be used in other
processes. Instead of reinventing the wheel, the organization should be capable of
creating mechanisms that allow the reuse of processes that are now explicit. This is
the main job of the governance group. This group will be responsible to
continuously auto-represent the organization and share and disseminate this
knowledge to all organization.

IT departments top priority is the automation of tasks, or, workflow. The use of
workflow increases the companys efficiency by increasing the capacity to perform
more instances of the same process. Also of great importance is the support of IT as
a technological vehicle to make the implementation of workflows and measurement
easy to all people involved.
Once the BPM initiatives start to generate benefits to the company in a clear way,
the other departments will increase their requests to automate other processes
incrementing significantly the assets with potential to reutilization.
The potential to answer to new market demands is now much higher due to the
ability to easily adapt or change the company (value creation), through its processes,
to create or generate new sources of value to the customer.
The next step we propose is the transition based in the optimization of the existing
processes as depicted in figure 1 - [Optimize]. Now that the company has invested to
explore, make explicit, measure and re-engineer, it is time to optimize and innovate.
Now the equation is a little bit different: How to be best in class in innovation?
2.3

Phase III: 6 (Sigma)

In phase III: 6 (Sigma) is the age of business processes rationalization, of

eliminating tasks that do not add value (LEAN) and of systematic business process
innovation. Coworkers are familiar with the concept of process; they have
participated in one or more initiatives of business process design. They are process
managers or have participated extensively with their knowledge in process design.
The capacity to reuse other processes, services, sub-processes, exposes the power of
automation and architectures. As a consequence of these activities the company has
incorporated the capabilities to answer effectively to new processes required or
suggested by costumers or, simply, overpass competitors giving a faster answer to
new or existing problems that the customer may present. Also, the company realizes
that it is capable of delivering other type of services as a result of a self-operational
knowledge. The company may also realize that it is able to supply more demanding
markets or with other type of needs.
The search for more efficient processes, better quality and effectiveness is part of the
company culture. There are a lot of initiatives to continuously improve and it is seen
as the way of being and acting. The methodologies used are sophisticated and the
company invested a lot to train massively the people into these methodologies.
The company uses the BPM paradigm with some extend. Most of the business
processes are still intra-department, some of them already cross the company,
widely, from customer requirements to customer satisfaction. Still, strategy is a set
of sentences, wishes, and desires with very low operational alignment. The
organization still doesnt know exactly what to do to contribute to the prosecution of
goals (translation of strategy into operations).
The improvement of business processes and productivity is clearly a priority for top
management as a way of gaining competitiveness. This may in some cases be

considered a strategic goal. Also, things that are related with the representation of
business processes became very important. The number of processes increases
almost every day.
The Babel tower of different languages becomes a very important issue taken care at
board meetings since teams in different projects had to address different kinds of
problems with specific tools that implemented proprietary solutions.
Strategy

People

BPM is considered a strategic success

factor.

Knowledge of 6 sigma and other

methodologies is deep and extensive.

Initiatives
for
process
continuous
improvement are formal and put in place
to address the need to increase the
productivity of business processes.

People are monitoring the performance of

business processes and individual goals
start to be bound to the performance of
business processes which they participate.

Collaboration,
blogging,
online
collaboration, virtual meetings, etc are now
the usual tools to work.

Processes

The mapping of processes is growing

exponentially.

Tools to reuse existing building blocks in

order to assist the new business
architects are in place.

Information systems

Significant effort is put in place to

coordinate and combine the competences
of IT with other areas of the company.

Tools to manage the process map and to

assist management are in place.

Table 3: Phase II 6 Sigma summary of BPMs core perspectives

Figure 4 represents the common and shared view of the business processes by all
organization. Processes are not seen has a static asset, like a piece of furniture, but as
one of the enablers to innovate and create value to customers.

Figure 4: A 6 sigma approach to continuous process improvement

The main focus of the company is innovation, the basic organizational structure is
the department and the performance evaluation is based on the department process
indicators.
The next evolutionary step is to extend business processes to the complete value
chain as depicted in figure 1 - [Extend process to the complete value chain]. This
change aims to transform inside processes with frontiers at the boundaries of the
company into processes that cross the all value chain. This will tune all parties
involved in the service delivery to share and contribute to the same goals.
2.4

Phase IV: E2E (end to end) processes

In phase IV: E2E (end to end) processes the main focus is the creation of fantastic
experiences customized to the individual customer. In this phase, every single
person in the organization is aware of the services delivered to customers and
understands where and how they can add value to the customer.
Value creation is the current mindset and people are continuously looking for new
ways to surpass the customers expectations. Feedback of his or her service
evaluation is communicated efficiently and effectively to every single person
making him/her participant of the company value proposal construction.
Strategy

Strategy is directly derived not only from

the environment analysis but also from
the capabilities of the company to
outperform in certain areas.

Strategy is formulated and represented

in a way that people are able to
understand clearly how each one
contributes to the achievement of the
strategic goals.

People

Peoples mindset changed radically from

a department view to an empowerment
view invested by processes.

Online collaboration is normally the way

people work to achieve a certain output.

Competences are used through all the

organization and processes. The most
competent for the job have the power
and authority to change the way the
company does business.

Processes

Processes are now part of a more

complex architecture based on the
concepts of value chain and services.

Governance is a key activity to manage

the diversity of all aspects related with
the use of processes to deliver products
and services to customers.

Process planning is an activity where

people are involved in the planning of
new implementations and coordination
of resources and infrastructures.

Information systems

Alignment between business and IT is

well tight together. An EA Enterprise
Architecture is well developed to support
the business as a blueprint to the
continuous adaptation of new processes.

Computer systems are now more critical

to business delivery and management.

Knowledge management technologies

are the support to an individual and
customized service to the customer.

Table 4: Phase IV E2E processes summary of BPMs core perspectives

In this phase, the main focus of the company is the creation of great experiences to
the individual customer. The basic cell of the organizational structure is the process
and the performance evaluation is based in the performance of E2E processes.
The main advantages of the BPO organizations are basically the alignment between
the strategy and the operations and the focus of all people to create value to the
customer. Since this alignment is done based on the E2E processes, all people can
translate strategic goals into operational goals and, therefore, into actionable
improvements to their own processes. This cascade effect energizes the organization
to deliver and improve their products and services.
In the next table we highlight the main differences between Phase III 6 Sigma and
Phase IV End to End E2E - processes.
Phase III 6 Sigma

Phase IV E2E Processes

Organizational structure based in the

department cell.

Organizational structure based in the

process cell.

Internal processes are contained in

departments.

Internal processes contained in E2E

processes.

Internal processes with low integration

across the value chain.

Internal processes cross the value chain.

Performance evaluation based in the

department processes.

Performance evaluation based in E2E

processes.

Table 5: Main differences between phases III and IV

Although we have presented a non-disruptive thesis for this path it is one of the
paradoxes of this paper since it is clear that the old organization does not suit the
demands necessary for the next evolutionary step. It is necessary to operate an
organizational transformation to re-align people and the ways of doing business.
This movement looks more like a revolution than an evolution. Nevertheless, this
leap may be a small one if we consider it as an organizational paradigm shift in
peoples mental model that is already embedded (implicit in the concept of
evolutionary path of the first 3 phases).
We will present, in the next chapters, the arguments why the old organizational
structure based in the department cell doesnt suit this phase.

The organizational structure based on the department cell

In the previous chapter we have sustained that during the evolutionary path the
organizational structure would be based in the department cell. In this chapter we
will present some considerations about this type of structure. In order to do so, we
have considered a simplification in the number of hierarchy levels and complexity of

10

the management board even because our focus is the future organizational structures
for BPO organizations.
The typical organizational structure of today companies is based on the department
concept. Given a set of necessary functions to be performed, they are grouped into
departments who have to recruit people with the necessary competences to perform
them.
The result of this type of organizational structure is shown in the typical
organization chart in tree shape as depicted in the figure 5.

Figure 5: A typical organizational structure based in the department cell

Besides this structure, other organizational cells may appear, for example:
multidisciplinary teams, communities of practice, project teams, etc. These cells are
made of coworkers belonging to more than one department. Since these cells, at the
moment of creation, are not attached into a place in the organization chart the leader
that proposed its creation will have to formalize each elements functions and
leadership.
In this type of organizational structure everyone knows who has the power to decide
and to take decisions. The coworker is responsible for its own functions, the
department leader is responsible for the management and decision of the functions
that the department performs and therefore coordinates the resources assigned to the
department.
In figure 6 we represent a model of an organizational structure based in the
department cell. In the top half we can see that there is a social structure made of
shareholders that hold the property of the company, a mission, a set of values, and
the top management as the representative of the shareholder vision. In the lower half
there is an executive structure made of a physical sub-structure, a functional
sub-structure and an individual sub-structure. In fact, the physical structure is a
container that holds the functional and individual structures since a department
performs a set of functions and these functions are performed by individuals that
belong to the organization.

11

The top manager decides at a supra-department level by making sure that the
structures and organizational cells are aligned with the organization representation
(consistency) and are aligned with the business goals (coherency).

Figure 6: An organizational structure model based in the department cell

The action contexts are created in the department, which is responsible for
communicating and developing, through its leader management acts, the values, the
goals, the strategy and the competences. These action contexts are created to
improve performance, to develop projects and to achieve the goals.
This model exposes one of the major problems of this type of organizational
structure, the functional silos. We see that a coworker belongs to one and only one
department and that a function is performed in one and only one department. This is
like a container inside another container inside another and so on. Each
department aims to perform the functions that were assigned the best way possible
independently of the other departments.
Since we have stated that organizational structures based in the department cell do
not suit a BPO organization we will present 2 main arguments to fundament our
position.
Argument #1: A department performs one or more functions and a function is
performed by just one department. Lets imagine that in a certain organization
more than one department needs to perform the same set of functions. These
departments will have to perform at an adequate level. Therefore, they will have to
recruit coworkers with the necessary competences to perform the new functions.

12

This type of organizational structure does not facilitate the standardization and
sharing of goals between coworkers performing the same or similar functions since
they will inherit the specific department goals while this function could be
performed by the same coworker or organizational cell. This fact also creates
difficulties to manage and dimension the necessary resources (coworkers).
Argument #2: A coworker belongs to one department. The fact that one
coworker belongs to only one department limits the scope of the functions that a
certain coworker may perform. Even if he or she has the competences to perform the
functions associated to another department a coworker is bounded to the power and
authority of the department leader. To break this rule, the top management has to be
involved. They are the ones who have the power to re-structure, even if it is
temporarily, the departments.
How many times have we heard someone saying: If I want to do something
different I have to change department. or If I want to make new projects I have to
change business unit or department or company.. For sure we have heard these
same comments in very different companies. Does it mean that people are not
motivated? In our opinion no, but it means clearly that this co-worker is being
stopped or slowed down from doing something more creative and rewarding.
We have presented the organizational structure based in the department cell and we
have explored a little bit the model to understand where are the main obstacles to a
BPO organization. In the next chapter we will go deeper into the organizational
structure model based on the process cell and at the same time we will validate its
use for a BPO organization.

The organizational structure based on the process cell

First of all it is important to explain whats the meaning of this title. What is an
organization that is business process oriented (BPO)? To better understand this
concept we had to turn around 180 degrees the organization focus, or its lack.
Normally companies are focused to deliver good products according to
specifications, requirements, functionalities, etc. In a globalization environment one
may think that the new age is standardization. But, what kind of standardization?
We dare to suggest that, yes, companies should aim standardization, but of a
different kind, the standardization that creates fantastic experiences to all customers.
Customers experiences will then be the standardization of a global company. So,
whats missing in most of our companies?
Figure 7 shows our concept of value chain. We decided, as a simplification, in the
scope of this paper to represent the output of a company as a set of services.
Although one may argue that in a car sale whats being sold is a material object, the
fact is that the experience of the sale is what differentiates the interaction between
the sales office and the customer. That will be, perhaps, the most important moment
of truth that this company will manage in order to create a sense of loyalty with the
customer. If the customer creates this bound it will remain as a valuable intangible

13

asset for future interactions. So, from now on, in the scope of this paper, we will
refer to service as the main and single output of a company.
So, in the descending direction we see the delivery of service upon a customers
request. It is during the consumption of the service that the customer makes its own
evaluation of the company value. This creates, in the customer, a mental model of
the companys delivery value that will be compared to the value expectation. This
gap will create a perception of the value a company is able to deliver that is
perceived by the customer.
The customer will immediately create a feedback on his experience and will
compare it with other experiences. If this feedback could be captured and used
internally it could be used to clarify and tune the value proposal. This formulation is
based in the promise of service that a company makes to customers.

Figure 7: The concept of value chain

We call a reverse process the set of activities that make a process of adjusting and
continuously improving the value proposal since it is not focused in delivering value
to the customer but to promise and continuously renew the value proposal.
Companies will invest similar efforts to deliver and to promise analyzing the
difference between the perceived service and the value proposal. This gap that we
will call the value gap is what makes the difference between a great service delivery
and a medium or good one. Therefore, the reverse process Service promise
continuously monitors the value gap and adjusts and renews the value proposal to
customers.
In order to achieve this goal the company has to implement a set of management
processes that are able to incorporate the customers feedback to all points of action
and coworkers. But, this will only works if every single person is focused in creating
value to the customer through the creation of fantastic experiences in the service
delivery. This will be the ultimate test to our organizational structure to check that
every single coworker is customer focused.

14

Therefore, the symbol chosen to represent a value chain is the union of a deliver
process and a reverse process. The output is twofold. One part is about delivering a
great service to customers and the other is to customize and individualize it. This
way we will be creating great services and at the same time configuring it to meet or
surpass the customer expectations in future interactions.
Therefore, we have to re-center the organizational structure around the value chain.
In figure 8 we have depicted the core elements that make an organizational structure
and the possible relations with a coworker.
At the top we see the value chain as the main driver of the company mission. A
value chain outputs one or more services to customers. In turn each service is
accomplished or supported by a set of business processes that are executed inside
the company by coworkers.

Figure 8: Re-centering the organization around value chain

We have also depicted the competence object. Competences are essential to deliver
value to the customer. In this diagram it is observable that this re-centering aligns
competences with processes. Since competences are possessed by coworkers the
success or failure to meet or surpass customer expectations depends directly on the
stock of competences and its use within process execution.
It is also a way of strategic competences provision. Strategy formulation will be
based on the value chain and its value proposal. The strategic goals are then set
based in the promise of a value proposal that the company presents to the market.
These strategic goals will derive a set of operational goals of the supported
processes. These operational goals will in turn derive a competences gap and a set of
individual goals associated with the coworkers that are involved in the execution of
these processes.

15

In figure 9 we move ahead another step towards a more formal model of the
organizational structure. After re-centering the organizational structure around the
concept of value chain and service and looking into the relations between the
coworker and the different organizational structure core elements, we have extended
it incorporating the missions and goals.

Figure 9: Alignment of goals and missions in a Re-centered organization

We also have extended the concept of value chain to include the management chain.
It stands for the set of management processes that are related to the management acts
that managers perform in the day-by-day, including governance and strategic
management.
At the top we see that the top management defines a set of strategic goals. This is
one of the main functions of top management. They translate the internal and
external environments reading into a strategy. The management chain manages the
value chains of the company (more than one value chain may exist). In turn, each
value chain has a set of operational goals. In turn, the service has a set of service
goals that support the operational goals. At the lower level of operations we find the
process and its goals. Reading the diagram from bottom to top we see that the
individual goals of the coworker are aligned with the process performance goals and
these contribute to the service goals that in turn contribute to the operational goals
that contribute to the strategic goals.
Is each single coworker customer oriented, focused in creating value and fantastic
experiences to the customer? We argue that if the management is able to implement
a set of E2E processes and the necessary reverse processes to incorporate
continuously the feedback of the customer then the model above (figure 9) will drive
the creation of such an organization.

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At this moment we are a small step away from defining the model for an
organizational structure for a BPO organization. Before we do it we would like to
make some considerations regarding the power and authority chains. If we imagine a
company running a lot of processes instances at the same time, creating a huge
amount of interactions, who has the power to decide? The answer to this question is
that a coworker works with the process manager of the business process that is
executing at a certain moment. So, any decision that has to be made in the scope of
the process should be addressed to the process manager. If there is any conflict with
a different process, for example, another process manager is reclaiming the use of
the same coworker, then, the service manager should address the issue and solve it.
If the conflict cannot be resolved by the service manager then the value chain
manager should solve it. It is escalated until the top management takes the final
decision and everybody gets informed of resources coordination.
Until now we havent spoken of whats a process. We will do it right now and we
will present it in a summarized approach mainly to clarify the specific issues related
with a BPO organization.
In figure 10 we present our meta-model of a business process.

Figure 10:

Business process meta-model

We will summarize the meta-model considering 3 perspectives:

The creation of action contexts perspective. The context perspective

creates the necessary context for action guiding the coworker through its
execution.

The input and output perspective. The input and output perspective is
associated with the delivery of the process and the technical quality of the
delivery.

The management and resources perspective. The management

perspective refers to the coordination of resources to achieve the process
goals.

This late perspective will give us the necessary insight to understand the conflicts
that may arise from normal day-by-day operations in a BPO organization. Since

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there are no longer departments, it means that the process manager will have to
compete with other process managers to get shared resources and assets. When the
resources are scarce a process manager may find that he has not the necessary
resources to develop and improve the processes that he manages. This has always
happened with traditional companies with organizational structures based in the
department cell but, the difference to a BPO company is that while before the
resource problem was specific to the department now it is every process manager
problem and it is preventing the company from achieving its goals.
In figure 11 we depict a situation of resource sharing and flexibility in a BPO
organization. It is a much rewarding climate. It creates a bigger synergy effect and
people get a higher degree of transverse action contexts. Resources are used in a per
need basis at the points of action and not by sets of functions associated with the
department.

Figure 11:

Reuse of coworkers in a BPO organization

We have represented processes P1, P2, P3 and P4. Each one of these processes
relates and needs a certain domain of knowledge. We see that coworker C-D
possesses the competences to execute processes P1 and P2. This means that he
potentially executes instances of both processes. Since persons do not have the
property of ubiquity, each coworker will be executing a certain instance of a certain
business process at a given moment. This is a potential source of conflicts.
This organizational structure becomes an essential tool to evaluate the stock of
knowledge and competences necessary to deliver versus the in-house stock. This
evaluation will create a knowledge gap analysis and the corresponding development
plans per coworker according to the goals the company wants to achieve.
Other pertinent problem is the coordination of processes execution and use of
resources to deliver the value promised to customers. In a scenario of competition
for the same resources the company needs to implement a set of rules and
management processes capable of keeping the company in the road to deliver value
in a consistent way.

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The aspect of resource coordination is much more complex than it looks at a first
instance. In figure 12 we have depicted some situations that may occur:

Process reuse. In this case the same process P1 is used in value chain VC1
and value chain VC2. The reutilization of the same process is normally a
capacity problem. Since the same coworker may execute instances of both
processes belonging to different value chains it is a potential conflict. This
type of conflict should be solved by the respective processes managers and
if not possible by the value chain manager. On the other side, it creates a
positive effect reducing costs, reusing infrastructures, creating knowledge,
etc.

Coworkers that participate in more than one process. In this case

coworker C-A is participant of process P1 of chain value VC1 and
participant of process P4 of chain value VC2. This type of conflict is
similar to the previous one and should be solved in the same way.

Coworkers that participate in more than one process with different

roles. In this case coworker C-F is the process manager of process P6 of
value chain VC2 and is the process manager of process P3 of value chain
VC1. A similar thing occurs with coworker C-H that is process manager of
process P5 of value chain VC1 and he is value chain manager of value
chain VC2. In this last situation it might exist a conflict between the value
chain VC2 goals and the process P5 goals since coworker C-H may give
different priorities to the execution of the different processes he/she
manages. In this case, manager CJ and manager C-H should solve the
conflict or else manager C-L should solve it.

Figure 12:

Coworkers potential conflicts

In table 6 we have represented a simple competences matrix based only in the role
of the participants based in figure 12.

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With this kind of complexity an additional layer will be necessary to define policies,
rules and activity coordination although it will be more lean at operational level.
This is the governance subject. Since departments dont exist the power chain is
derived from the process architecture.
VC1

S1

P1

C-A

C-B

C-F

C-G

C-H

P3

P5

P4

P6

P
P

M
M

C-I
M

P1

C-E

C-J

S2

C-C
C-D

VC2

M
M

Legend: M: Manages; P: Participates; VC Value Chain; S: Service; P: Process

Table 6: Competences matrix

Finally, in figure 13, we present the organizational structure meta-model for a BPO
organization. In the center of the diagram we can see the main power chain. On the
top level we have the shareholder, then the top manager, then the value chain
manager, then the service manager, then the process manager and the coworker. At a
first glance it looks like it is a more hierarchical company but on the other side if we
think that department managers disappear, then, we will conclude that this hierarchy
facilitates the delivery of service to the customers because it is highly related to the
operations. On the other side, the multiplicity of the relation between coworkers and
objects like value chain, service or processes means that one coworker may be a
manager of a process, a participant of a process and any of the other ranks in the
model.
Our model is based in 3 main perspectives:

The power perspective. This perspective assures that the organization

knows at all time how to proceed in any situation that involves any kind of
decision. This is the core of the company operations. This power chain
maintains the delivery at an adequate or stable situation.

The authority perspective. The authority perspective is deeply related to

the management of resources and in particular to the calculation and
adjusting of the competences stock.

The governance perspective. The effort in maintaining the continuous

representation of the organization in all aspects is the mission of the
governance perspective.

Since we have previously given some attention to the power perspective we will
focus the next paragraphs on the rest of the perspectives.

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The authority perspective manages the provision of resources to process execution.

The possession or property of a certain resource does not mean that the company is
able to create value to its customers through its use. Companies that are able to use
its resources releasing all its potential will get more benefits than their competitors.
Also the combination of resources is a very important task for the resource manager
since we will consider as axiomatic that the combination of more than one resource
results in a higher potential than the sum of the isolated parts. The task of imagining
and creating new combinations of resources may be determinant to address new
problems and new markets with the existing competences and knowledge. It shall
work both ways descending and ascending the value chain. In the descending way
assuring that the customer receives the best service possible according to the
customer configuration and value proposal. In the ascending way tuning the value
proposal and organization resources so that the value proposal creates sources of
competitive advantage and surpasses the market expectations.

Figure 13:

The organizational structure of a BPO organization

We will not go deeply into the taxonomy of resources, but we will leave a definition
of each type of resource so that the model is better understood. The 3 types of
resources presented are:

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Material resources. We consider material resources all those that are

tangible and are available at stores and, therefore, may be found in shelves
or warehouses. Examples of these types of resources are: facilities,
computers, servers, furniture, cabling, etc.

Immaterial resources. We consider immaterial resources all those that are

not tangible, are sharable and their semantic context dont change
depending on the individual such as: information, knowledge, and ideas.

Intangible resources. We consider intangible resources those that are

individual and represent the mindset of each individual in relation to his
action in the company. Examples of these types of resources are: attitudes,
sense of mission, motivation, values and company vision and mission.

The last perspective is the governance. We summarize governance as the set of

activities that are related to the continuous representation of all aspects of the
organization: processes, people, information, and infrastructures. We have separated
the governance into main areas like specialized technical committees:

Process governance. Process governance takes care of the continuous

representation of the process architecture, its planning and urbanization. It
creates a common and shared representation of the process architecture and
regulates the use and share of these resources. Part of this last activity is
related with the reuse and construction of a blueprint for the
implementation of an adaptable and flexible process architecture to support
business.

Culture governance. Governance of organizational culture is a set of

activities related to ear and listen to all stakeholders, to represent the
cultural assets, symbols and artifacts and to suggest actions to build a
robust, consistent and coherent organizational culture according to the
values professed.

Immaterial governance. Governance of immaterial resources addresses

the question related with issues like the data and information architecture,
knowledge architecture, strategy, tactics, feedback from customers, quality,
etc. The committee will work to make sure that these resources are
adequately reused and shared by all processes.

Infrastructure and technology governance. Governance of infrastructures

and technologies is a set of activities that envision the representation and
dimensioning through planning and urbanization of all infrastructures
necessary to support the business processes and the strategy.

To summarize, we have presented a set of concepts related with BPO organizations

and the organizational structure model that fits best in this new type of organization.
The core of the BPO organization is the customer and the alignment and focus of all
organization to create fantastic experiences that the customer values in order to
create a sense of loyalty.
The business process is in the core of the organizational structure. We have
presented a business process meta-model and a re-centered organization around this
concept. We also have discussed some of the conflicts that may happen and
validated the model through its ability to solve them.
Finally we have presented the issue of governance as a distinctive aspect from the
traditional organizations. Governance is such an essential part of the model that
without it would be just a bunch of loosen processes and individuals without any
kind of coordination.

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The pros and cons of the departmental organization structure

Today the majority of the companies have created their organizational structures
around the concept of the department cell as the basic building block. We also know
that they are competitive with this type of organizational structures.
This paper does not intend to destroy todays organizations and declare obsolete this
type of organizational structures. Therefore, we havent been worried to compare the
organizational structures based in the department cell against other type of
organizational structures like the one we have presented here. On the contrary, we
want to present a model for future companies that have BPM initiatives in place and
necessarily have to address the issue of the organizational structure when coworkers
start asking and wondering what is going to happen to departments or to whom shall
they report in the day-by-day work. Since, until the moment, we had no notice of
investigation works under the subject of the organizational structures for BPO
organizations we have decided to take off with our own investigation and to present
an empirical model to validate and develop.
Although the title of the paper presents the idea of a non disruptive path towards a
company focused in BPM, the fact is that we have tried to present a path for change
management which will result in the last step on a disruptive moment. We argue that
if this moment is well planned all organization will be promoting and asking for this
change. It will be a quiet revolution, switching from one mindset to another mindset.
It will be a mindset focused to create fantastic experiences to customers and it will
be company wide. The company will be breathing and sweating customer focus.
Companies should be ready to design their own path at their own pace and rhythm.
It is common sense to say that there are no formulas when it comes to organizational
structures but the future is build on experiments that will result in the creation of
knowledge about a certain field.
We have proved in this paper that the organizations that are based in departments
have some difficulties to outperform over time. The departments maintain a
functional company based on monolithic blocks with little interfaces and with no
alignment in terms of common goals and priorities. Top management is normally
involved to address incompatibility issues that stress the tensions between the
departments and its (owned) functions. Coworkers are also involved in these
conflicts with difficulties to collaborate either formally or informally. It is the
company that ends up by loosing because customers are buying services to more
competitive companies.
At the end we argue that each company should develop a self awareness or
conscience of which type of organizational structure is adequate to achieve its
strategic goals. By doing this reflection it will immediately understand which
organizational structure and steps will suit best the achievement of its goals.
Its up to the top management of the company to decide what to do next with its
organization and choose, design and develop the right model at the right moment.

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Final comments and conclusions

Standard organization bodies are suggesting or imposing the need for companies to
demonstrate the use of processes and its continuous improvement as a way to assure
that they are providing the best service or products to their customers. Also, many
software vendors are developing solutions to solve technological issues. The
technological side has greatly evolved into sophisticated tools that enable the new
process architect functions to create new processes and improve the existing ones.
Nevertheless, the BPM initiatives normally start in a department and address the
department problems. Normally, the impact when the project is successful is
significant for the department but still not always felt by customers. It is not end to
end wide. It does not cross the boundaries of the company and sometimes not even
the department borders.
Most of the people that started BPM initiatives state that the biggest obstacle to the
project is the human factor. This means that the existing organizational structures
dont fit the new mindset and the new paradigm of business. There are a couple of
frameworks to address the problem of company transformation but there is not a
model that helps the top management to re-create the organizational structure or, in
other terms, the organization chart. This was the main purpose of this paper.

Abbreviations and glossary

BPM Business Process Management

BPO Business Process Orientation
E2E End to End process
BPA _ Business Process Analysis

Ed. 16-Nov-2008

The author: Jorge Silva, has a degree in Engineering (Eng. Electrotcnica e Computadores)
by the IST Instituto Superior Tcnico de Lisboa in the field of Computers and Systems.
Currently he is the IT Manager in Portugal of the multinational groups FICOSA and Huf.
With a diverse career, he worked in a wide range of project types from artificial intelligence
to the management of a SMB company. In the last 8 years he has devoted part of his time to
the subject of organizational transformation. He also developed projects related with
knowledge management, BSC (Balanced Score Card) design and BPO organizations design
focusing in the IT area (ITIL). He is currently focusing in understanding how to create the
organization abilities to innovate through flexible, adaptable and agile organizations based on
the management of intensive knowledge processes. He worked previously at Alcatel, Digital
and Siemens. During the last years he has been invited by several institutions to present
seminars and co-lecture seminars for executives (EGP Escola de Gesto do Porto).

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