Designing business processes from scratch is a daunting prospect and ensuring sufficient modelling quality can be time-consuming. The use of process templates significantly increases the efficiency and effectiveness of process design. Process templates are generally called business process reference models.
Reference models have been defined as generic conceptual models that formalise state-of-the-art or best practice knowledge of a certain domain. They provide a set of generally accepted practices and processes that are developed with the goal of being reused. Such models have the following characteristics:
- they represent business practices (providing practices for conducting business);
- they have universal applicability (representing a class of domains, not a particular enterprise); and
- they allow re-usability (they can be understood as blueprints for developing information systems, they can be structured to allow easy adaptation to company-specific situations).
Reference models play an important role in activities such as business modelling, information system development, implementing ERP systems, and training and research. In order to be able to use reference models, they must be adapted to the requirements of a specific enterprise.
Reference models represent the content of various domains. The most important types are:
- industry reference models (representing the practices of a specific industry sector such as banking, pharmaceutical or retail);
- software reference models (these can be enterprise applications such as ERP systems);
- procedural reference models (e.g., a project management reference model); and
- company reference models (containing specific practices within a company group).
The use of business process reference models has many positive economic effects – they lead to efficient process design, effective execution, and therefore, the increased agility of an organisation. However, you should also take into consideration that by applying general reference models you could lose the advantage of having a unique and perhaps better business practice.
The decision about following the best practice approach or innovating is strategic. It calls for a clear prioritisation and categorisation of business processes. It is especially important that process categorisation is done before implementing new ERP system, as it determines the extent of business process change required, as well as software customisation requirements.
In another blog, I will overview the process of comparing the capabilities of an ERP system with a company’s business needs. This step forms part of ERP implementation methodologies and is called fit gap analysis.