Bringing value-based business process management to the operational process level
For years, improving processes has been a prominent business priority for Chief Information Officers. As expressed by the popular saying, If you cant measure it, you cant manage it, process measures are an important instrument for managing processes and corresponding change projects. Companies have been using a value-based management approach since the 1990s in a constant endeavor to increase their value. Value-based business process management introduces value-based management principles to business process management and uses a risk-adjusted expected net present value as the process measure. However, existing analyses of this issue operate at a high (i.e., corporate) level, hampering the use of value-based business process management at an operational process level in both research and practice. Therefore, this paper proposes a valuation calculus that brings value-based business process management to the operational process level by showing how the risk-adjusted expected net present value of a process can be determined. We demonstrate that the valuation calculus provides insights into the theoretical foundations of processes and helps improve the calculation capabilities of an existing process-modeling tool.
value-based business process management process measure net present value process modeling certainty equivalent expected value variance