Business maturity assessment model: a practical approach for identifying opportunities for sustainability improvement.

Paunescu, Carmen

1. INTRODUCTION

Organizations today need performance measures to drive long-term strategies and organizational change, to manage resources, and to operate processes effectively and continuously improve. They should give consideration to both their results as well as their processes. Organizations increasingly recognize the need for a consistent process orientation and require appropriate comprehensive frameworks, which help to scope and evaluate their process management initiatives (Jeston & Nelis, 2008). In order for an organization to determine its overall progress in the long term, it should perform a continual assessment of its strategy, functions and operations and determine its maturity level. The concept of process maturity is continually being used in many aspects of organizations as a means of assessment or as a part of a framework for improvement. Recently, a number of models to measure the maturity of Business Process Management (BPM) have been proposed. A maturity model can be used as a benchmark for comparison and as an aid to understanding business processes. By understanding a maturity model, organizations can use this to help not only assess their current maturity level but also help efficiently advance them to a higher level of maturity. The subject of measuring an organization's maturity has been made the purpose of many academic papers lately (Morsal et al., 2009; Curtis & Alden, 2007; Rosemann & De Bruin, 2005; Fisher, 2004; Harter et al., 2000 to name a few). International standards provide also different models for assessing an organization's maturity level (ISO 9004 and ISO/IEC 15504). The common base for the majority of these models has been the Capability Maturity Model (CMM) developed by the Software Engineering Institute at Carnegie Mellon University. The CMM framework, for example, includes 18 key process areas--such as quality assurance, configuration management, peer review, defect prevention, and training--against which five levels of process maturity can be achieved, namely: initial, repeatable, defined, managed, and optimized. The international standard ISO/IEC 15504 also known as SPICE (Software Process Improvement and Capability dEtermination) helps to determine organization's level of maturity in relation to people, process, technology, and measurement. The maturity levels 0 to 5 in the model are described as: incomplete, performed, managed, established, predictable, and optimizing. Building on this approach, Fisher (2004) refers to "five levers of change" against which the organization's progress can be assessed and advanced, as follows: people, process, technology, strategy and controls. When the organization achieves consistent alignment across all five levers, then it is operating at a level where it can achieve optimal results. The five "states" of process maturity that the companies are expected to traverse are: siloed, tactically integrated, process driven, optimized enterprise, and intelligent operating network.

Some shortcomings of existing BPM maturity models are the complexity and intricacy of dimensions used for measuring organization's process maturity and the lack of actual applications of these models, and particularly the lack of sufficient depth in the assessment levels.

The research project, which underlies this paper, develops and tests an ISO 9004-based maturity assessment model for process optimization and sustainability improvement in Romanian organizations. The proposed maturity model, that companies from different industries might use, aims at assessing an organization's strategies and its operations. The use of such an assessment tool should enable the organization to identify specific areas for improvement or optimization and to establish any action plans needed for the organization's further development. The paper summarizes the interim results of an ongoing research on organization maturity assessment and BPM, conducted in Romanian firms in 2008. Multiple managers, responsible for quality and other executives in 1182 organizations completed the Maturity Assessment Survey (MAS). The MAS was designed to identify the degree to which Romanian organizations are sustainable and offer continued satisfaction to their stakeholders, and to help organizations identify areas in which they can improve. The paper identifies five core components that shape process maturity at strategic level and other nine key constructs that drive process maturity at operational level. A correlation analysis was employed in order to show the degree to which the research variables identified determine process maturity level in Romanian companies and drive their sustainability improvement. The developed maturity model provides solid information for researchers interested in testing the validity of the instrument in other organizations, internationally, with the purpose to increase their performance and achieve sustainability. However, in future research it is important to provide advanced empirical evidence to substantiate our beliefs.

2. BUSINESS MATURITY ASSESSMENT MODEL

2.1 Conceptual Model

We draw from the BPM literature to identify and define the key constructs of an organizational maturity assessment model for process optimization and sustainability improvement. The proposed model is multi-dimensional and integrates a number of distinct variables that correlate each other (Figure 1). The key constructs of the proposed maturity model are defined as follows: (1) Strategic level: organization's context; strategy development and deployment; process management; results measurement and analysis; and learning, improvement and innovation, and (2) Operational level: organization's environment (opportunities, changes, trends, and risks) and data collection; strategic planning (and resources allocation); risk identification and management; human resources management; process responsibility and authority; key performance indicators; learning; improvement; and innovation.

[FIGURE 1 OMITTED]

The underlying assumption of the theoretical model is that the constructs represent independent variables and the dependent variable is organization's process optimization and sustainability improvement. A further assumption is that higher maturity in each of these constructs will be reflected in higher levels of sustainability for organization.

2.2 Sampling

The data were collected, based on the Maturity Assessment Survey (MAS), from multiple members from 1182 Romanian organizations, through face-to-face interviews (100%), during October 2007 and May 2008. The reporting companies represented a range of various industries, including commerce and sales (46%), real estate (15%), consulting (10%), distribution and transportation (7%), banking and insurance (6%), IT (6%), telecommunications (3%), advertising (2), and a mix of other industries (5%). The companies had been in operation for a significant number of years (Mean = 8.5). As regards the organization size, 26% companies employ less than 10 employees (n = 305), 34% of them employ between 10 and 49 employees (n = 397), 23% organizations employ between 50 and 249 employees (n = 274), and 17% organizations employ more than 250 employees (n = 206). Of the 1182 responding organizations, 787 (65%) achieved profitability in the last three consecutive years of operation or more. The sample consisted of 615 men (52%) and 567 women (48%), while 30% were general managers (n = 360), 19% quality managers (n = 225) and 51% were from various executive positions (n = 597: sales and marketing managers, financial managers, operations managers, HR managers, product and account managers, etc.). The mean age of respondents was 37 years.

3. FINDINGS

The Cronbach's Alpha score was 0.883 for constructs identified at strategic level and 0.789 for operational constructs, over 0.7, which meets the reliability requirements of the analysis. The Pearson correlation analysis showed that strong positive correlations between the components of the organization's maturity model account for a higher level of maturity and sustainability improvement of organization's processes. As required actions for improvement or optimization that Romanian organizations might consider to increase their business process performance and attain a higher level of maturity, the research results revealed the following: determination of organization's future capabilities needed for sustainability, based on external and internal environment analyses; consideration of the need for natural resources critical to development and achievement of performance and life cycle management; assessment of the threats and opportunities of emerging market or product opportunities that organizations may consider offering; identification and management of the risks associated with the technological trends, the risks associated with relevant needs of society (job fluctuation, immigration, etc.), and the risks associated with availability of natural resources; development of a skills qualification system to promote self-development and human resource learning; and development of more reliable performance metrics for all strategic, operational and support processes.

4. CONCLUSIONS

The research results show that generally, the organizations in Romania are aware of and understand their core competences and competitive priorities that drive their success on the market. Consequently, they consider the needs and interests of various stakeholders concerned with the business outcomes, are improvement-oriented, and plan to insure predictability of the results. Conversely, only a few organizations focus on innovation and invest in their capabilities as necessary to ensure future success. It must be underlined that the respondents (organizations) were not selected at random and therefore, generalization is an important limitation of the study. Furthermore, due to the large differences in the size of the samples and to the complexity of the questionnaire, the error estimated for data collection and processing is of maximum 5%. Further empirical evidence to substantiate our research assumptions will be provided in a future research.

5. REFERENCES

Curtis, B. & Alden, J. (2007). The Business Process Maturity Model (BPMM): What, Why and How, Available from: http://www.bptrends.com/publicationfiles/02-07-COL-BPMM WhatWhyHow-CurtisAlden-Final1.pdf, Accessed: 2009-05-12

Fisher, D.M. (2004). The Business Process Maturity Model. A Practical Approach for Identifying Opportunities for Optimization, Available from: http://www.bptrends.com/ publicationfiles/10-04%20ART%20BP%20Maturity% 20Model%20-%20Fisher.pdf, Accessed: 2009-05-12

Harter, D.E.; Krishnan, M.S.; Slaughter, S.A. (2000). Effects of Process Maturity on Quality, Cycle Time, and Effort in Software Product Development. Management Science, Vol. 46, No. 4, April 2000, pp. 451-466, ISSN (electronic): 1526-5501.

Jeston, J. & Nelis, J. (2008). Business Process Management: Practical Guidelines to Successful Implementations, Second Edition, Published by Elsevier Ltd., ISBN: 978-0-75-068656-3, Oxford

Morsal, S.A.A.T.; Ismail, M.Y. & Osman, M.R. (2009). Developing a Self-Assessment Model to Measure QMS Maturity in ISO Certified Manufacturing Companies, Journal of Scientific and Industrial Research, Vol. 68, No. 5, May 2009, pp. 349-353, ISSN: 0022-4456

Rosemann, M. & De Bruin, T. (2005). Towards a Business Process Management Maturity Model, Available from: http://is2.lse.ac.uk/asp/aspecis/20050045.pdf, Accessed: 2009-05-12