Process
Management 4.0 for
Engineering SuccessWHITE PAPER — PROCESS MANAGEMENT 4.0 FOR ENGINEERING SUCCESS

Executive
summary

Developing products for an increasingly complex world certainly challenges or even exceeds
engineering capabilities. Many factors impact complexity such as connectivity, security,safety, product variants, development velocity, reliability and quality.
Many argue tha the major driver to better manage thiscomplexity is the engineering paradigm of Industry 4.0. To
succeed in this new age, engineers must look for solutions
to adapt engineering to a more dynamic world. This whitepaper introduces a solution to address the engineering
challenges of the modern-day industrial revolution.

Characteristics of Industry 4.0 include:
FIRST
REVOLUTIONSECONDREVOLUTION

THIRDREVOLUTION

FOURTHREVOLUTION

Mechanization,
steam andwater power

Mass
production andelectricity

Electronic andIT systems,
automation

Cyber physicalsystems

The Industry 4.0 Paradigm
Industry 4.0 facilitates the vision and execution of a smart
factory (See figure 1). Within the modular structured
smart factories of Industry 4.0, cyberphysical systems
monitor physical processes, create a virtual copy of thephysical world and make decentralized decisions. Over theInternet of Things, cyberphysical systems communicate
and cooperate with each other and with humans in realtime, and via the Internet of Services, both internal andcross-organizational services are offered and utilized byparticipants of the value chain.

AUTHORS
Duncan Seidler

Figure 1: The evolution to industry 4.0• Serves more complex (production) processes• Flexible and responsive• Decentralized and adjustable
How should an organization prepare for Industry 4.0?
What should be changed to prepare for this paradigm willvary significantly by company or product. Managedchange is much more critical. To guide this organization,
this new paradigm calls for flexibility and agility and has
little tolerance for waste.

Director International Business Development
Dr. Erich Meier
Director Product and Technology / CTO
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WHITE PAPER — PROCESS MANAGEMENT 4.0 FOR ENGINEERING SUCCESSEngineering Change
Engineers typically embrace the opportunity to learn and adapt. However, engineers
and teams alone face diminishing returns, organizations must learn to change, to beresponsive, faster and more agile.
Agile principles such as those originally outlined in the Agile Manifesto have long
been popular. In recent years, frameworks such as Disciplined Agile and Scaled Agile
have emerged to help expand the benefits of agility beyond a single team.
Such frameworks can be valuable tools to create the cohesive structures fororganizational change. However, the basis for change must be the business needs or
the business goals, the organization then needs the ability to set direction, steer anddeploy resources effectively and efficiently.
Product development can only succeed in the Industry 4.0 paradigm by building alearning organization. In many organizations, this means addressing fundamental
factors required to empower the organization to change and learn. Building a learningorganization requires engineering management foresight to reset inefficient practices
and deploy resources more systematically.
Indicators of organizations with a low ability to learn include excessive rework andlow engineering efficiency leading to overruns and recalls as engineers maybe stuck
firefighting. This may also result in low employee satisfaction and retention leading toknowledge drain.
The notion of learning organizations is not new; the concept was coined through thework and research of Peter Senge in 1990:
A learning organization is the business term given to a company that facilitates thelearning of its members and continuously transforms itself. Learning organizations
develop as a result of the pressures facing modern organizations and enables them toremain competitive in the business environment.
According to Senge, the typical benefits of a learning organization may include:• Maintaining levels of innovation and remaining competitive• Being better placed to respond to external pressures• Having the knowledge to better link resources to customer needs• Improving quality of outputs at all levels• Improving corporate image by becoming more people oriented• Increasing the pace of change within the organization
Extending this concept into engineering will help us to better manage the challenges
of Industry 4.0.

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WHITE PAPER — PROCESS MANAGEMENT 4.0 FOR ENGINEERING SUCCESS

Effective Process Management
Good process management is the foundation ofestablishing a learning organization in a complex
engineering environment. Without it organizations may
be chaotic, dependent on a few contributors, and notprepared properly for each project; this introduces waste,
redundancy and risk.
Performing process audits and assessments around theglobe in over 700 engineering organizations Method Parkby UL has witnessed many examples of best and lesseffective practice. Organizations that invest in process
management to support their business have a higher
chance of success.
Industry 4.0 processes are individualized due to factorsthat impact use such as compliance, safety or risk levels,
product lines, departments or customers. Many tools
for business process management insufficiently capture,
manage and communicate these engineering processes
due to differing requirements; business processes areoften repeatable, require less context and depth ofunderstanding. Due to this fact, organizations often resort
to using applications like Microsoft PowerPoint, Word,Excel and Visio. These tools have significant limitations
for process capture; creating clear, consistent andunderstandable processes is a challenge. Dependencies
that exist within and between documents are difficult
to manage. In addition, thousands of hours of work areinvested to draw and communicate processes.
The process consumer is then challenged with processes
that are disconnected, incomplete and inconsistent.
Significant time and effort is required to sort throughnumerous documents and understand what needs tobe performed in the context of the business unit,program, project, product line or customer. As a result,
Method Park has often seen processes that are theoretical,
vary in granularity, outdated and do not allow tailoring.
These factors increase the chances that processes are notaccepted, followed or improved.

Figure 2: The Stages process management software by Method Park

However, there is a way out. The digitization ofquality management systems by placing processes
into a database is required to succeed in Industry 4.0
Method Park. This web-based process management
software, Stages®, provides engineering organizations
with a platform to manage flexible and decentralized
complex processes. In a modular and extendable way
Stages provides the right context for the end user,
generating different perspectives to support and enhance
understanding. Capturing the process landscape in a
database ensures interfaces are managed and processes
are consistent. Only in this way can processes be usable,
focus on process content and learning instead ofmanagement and capture.
Effective process management supports the learningorganization to:• Assist with organizational development according tochanging business objectives.
• Meet business objectives in a managed andrepeatable way.
• Manage repeatable experience by definitionof processes.
• Establish measurable process improvement following
the changing business objectives.

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WHITE PAPER — PROCESS MANAGEMENT 4.0 FOR ENGINEERING SUCCESSThe Methodology
All too often process investments and improvement projects in large engineeringorganizations are made without a clear methodology, resutling in compounded wasteand failure. Method Park has many examples of documentation of processes that do
not support understanding or use, excludes tools and how to use them.
These experiences over 15 years led Method Park to develop a methodology to support
engineering organizational change and learning. Rather than following a hit-and-missapproach, our goal has been to capture the lessons of effective process management
and help engineering organizations to compete in the Industry 4.0 age.

Typical statements often
heard that indicate
ineffective process
management and a weaklearning organization:“Without a running product, wecan‘t care about the processes.”Project Manager“We do not need processes, wehave tools.”
Engineering Manager“We have to harmonize processes
before we can release them.”
Process Responsible“We just care about theprocesses, we do not deal withthe project work.”
EPG LeadProcess Management 4.0 is the methodology which allows organizations to specify
and manage processes for building and using Internet of Things for development
and production purposes. It supports on the fly created value chain approaches andbusiness models.
Benefits of Process Management 4.0• Serves more complex processes(in development and production)• Is flexible and responsive(in design and execution)• Is decentralized and adjustable(in definition and responsibility)

1) Define goals

Change should be guided by the business goals. When goals are identified and traced
to projects and activities they can steer the organization. In this way, we can help
ensure the efficient and effective use of resources. Traceability of objectives and goals
to actions helps to focus the organization and can resolve difficult discussions andreduce waste. We recommend the Goal-Question-Metric approach, such as those fromBasili Rombach, as effective tools.
Many organizations define their process improvement goals from what they are forced
to do by their customers, OEMs, or the regulators. This leads to goals like “We haveto meet Automotive SPiCE® level 3 until the end of the year” that almost never has
any sustained value for the organization, because all the efforts are targeted toward
reaching the level and all process efforts are abandoned after the appraisal. The realbusiness goals are determined by asking “Why?” until you find the real goal.
In most organizations we worked with that were targeting a certain level, asking the“Why?” question lead us to goals like “We would like to win at least 10 new customers
because we want to grow by 25% in revenue”. This can then be broken down into subgoals to make the organization more efficient, e.g. by automation, to be able to scale up
their business, and to define and document lean processes to allow the organization
to grow 20% in engineering personnel. This looked to bring value to the organization,
the improvements were sustained and institutionalized, and meeting the required
Automotive SPiCE® level was a mere side-effect.

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WHITE PAPER — PROCESS MANAGEMENT 4.0 FOR ENGINEERING SUCCESS2) Analyze process capability

Understanding capability might be established throughassessment or audit based on capability frameworks suchas SPiCE® or CMMI®. We may also pull together contextual
information such as the tools in use, history and structureof the organization. With a transparent and realistic
assessment of the current state of engineering we canstart to build a road map. This way we ensure problems arehandled in proper order.
Examples for such capability determinations are either asemi-formal gap-analysis against a subset of Automotive
SPICE®, e.g., SWE.1 Software Requirements Analysis,
MAN.3 Project Management, and SUP.8: Configuration
Management), or a lightweight SCAMPI C appraisal against
the CMMI-DEV level 2 process areas. Both methods
only take a few hours of effort, if they are conducted byexperienced assessors or appraisers.

3) Define Business Process Management
organization

Now we have a clear understanding of our business we canidentify the process architectures that will be required in
our organization to support the business. Understanding
the different types of architectures is critical. Organizations
need the not just the best architecture but the rightarchitecture. Defining clear architectures at this point we
can reduce the risk of rework in the future.
Ensuring the right stakeholders are involved is a criticalfactor, change will only happen when engineers seevalue, own and accept the process. This requires that theprocess management organization is set up correctlywith a mixture of support roles and practitioners. Manyorganizations do not build clear roles and responsibilities
in the process management organization, examples of aBusiness Process Management (BPM) structure is outlinedin Figure 3.
Things to consider in building effective process
governance include:• Process architecture• Process management team
• Process management program• Process management toolset• Modeling guideline

Figure 3: Example BPM organization

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WHITE PAPER — PROCESS MANAGEMENT 4.0 FOR ENGINEERING SUCCESS4) Model processes

Process definition must be managed to ensure
consistency; we need clear process governance.
This includes defining terminology, guidelines and thelandscape based on the outlined architecture. Guidelines
will help to address variations in granularity andapproaches used in the definition.

An example of a guideline taken from theProcess Management 4.0 methodology:“ER 3.4 Granularity of Roles
Define as few roles as
possible. Splitting or merging
of roles shall be done
considering the skill sets.”

The methodology provides an extensive library of bestpractices guidelines. These approaches will have a large
impact on the outcomes, they will shape the landscapefor learning. For example: should work products oractivities be captured first or should reviews be explicitly
defined? The process modeling will be an iterative processrepeated per process area. It should be noted processes
must not be 100% complete, shorter release cycles arerecommended where feedback is integrated quickly. This
type of approach versus a bid bang approach will help toovercome resistance to change, forge a culture of learning.

5) Establish a learning organization

In order to learn, organizations need built-in
measurements that are traced back to businessgoals. Principles should be established such as no process
should exist without feedback, no process without
the evacuation of measurements, allow changes andimprovement all the time.
One of the most successful organizations applying our
methodology processed and incorporated over 1.000
feedback items from its engineers within a single year.
This way, the process participants felt empowered toinfluence the way they work, which resulted in a very highprocess acceptance and institutionalization.
Establishing a learning organization is a process but alsoa cultural change. Processes capture the knowledge andexperience of an organization. Therefore, processes will
always change, because our knowledge and experiencegrows every day.
Usually you start to do intuitive engineering of new
products in order to be creative. Whenever you have beensuccessful in engineering you try to repeat that approachfor future development, i.e. you gained experiencebased on the knowledge you used. In order to repeat
your success, you write down what you have done. This
written down experience is called a process.

From our experience, a good approach focuses onmodeling the value chain processes first and leave
management and supporting processes on the sidefor the first few iterations. The value chain can best be
determined by looking at the organization’s productlife cycle, or following the technical system engineering
processes from chapter 6.4 of ISO 15288 (“Systems AndSoftware Engineering ⎯ System Life Cycle Processes”).

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WHITE PAPER — PROCESS MANAGEMENT 4.0 FOR ENGINEERING SUCCESS

Summary andconclusion

In a dynamic engineering environment organizations need the ability to respond to change.
Change is a process and a culture of learning which steers the organization. This process enables
people to function together, to develop and grow. Building a learning organization is about
creating the structures to enable people to change together.
The foundation of transformation is effective process management coupled with a systematic
approach to change focused on the business goals. In this way engineering organizations canlearn to adapt to the needs of Industry 4.0 to be flexible and responsive, decentralized andadjustable.

“People don’t resist change. They resist being changed!”- Peter SengeAuthors

Take a training and learn more
about the methodology describedin this white paper:
Process Management 4.0 –Best Practices

Duncan Seidler

Dr. Erich Meier

Director International
Business Development

Director Products andTechnology / CTO

Courses are available at our training
center methodpark.com/training

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