This case comprehensively documents the journey of Commonwealth Bank of Australia's (CBA) approach to develop effective BPM governance that penetrates the whole organization. The 'right' BPM Governance approach was essential to progress with their enterprise-wide Business Process Management (BPM) efforts. This rich case study of one of the largest banks in the Australian Finance sector demonstrates a range of governance mechanisms taken to achieve effective BPM governance across the organization. Their journey suggests that both vertical governance and horizontal coordination mechanisms with a dedicated unit on process excellence are necessary to achieve transformation toward a process-centric organization. The learnings from this case study can be applied by other organizations when designing and executing their BPM governance efforts.
Business Process Management (BPM) governance refers to the guiding principles that
define roles and responsibilities in decision making
This case takes place at the Commonwealth Bank of Australia (abbreviated ‘CBA’ or ‘Commbank’). CBA is an Australian multi-national bank; and one of Australia’s Copyright © 2019 for this paper by its authors. Use permitted under Creative Commons License Attribution 4.0 International (CC BY 4.0). leading providers of integrated financial services; including retail, business and institutional banking, funds management, superannuation, life insurance, general insurance, broking services and finance company activities. Founded in 1911 by the Australian government and fully privatized in 1996, the Commonwealth Bank is one of the "big four" Australian banks and is one of the largest Australian listed companies on the Australian Securities Exchange, with brands including Bankwest, Colonial First State Investments, ASB Bank (New Zealand), Commonwealth Securities (CommSec) and Commonwealth Insurance (CommInsure). CBA’s operations are conducted primarily in Australia, New Zealand and the Asia Pacific region. In addition, they also operate in a number of other countries including the United Kingdom, the United States, China, Japan, Singapore, Hong Kong, Indonesia and South Africa.
CBA is guided by a vision to excel at securing and enhancing the financial wellbeing of customers, shareholders, employees, and the broader community. Underpinned by four capabilities of technology, people, productivity and strength, CBA positions the customer at its ‘core’ and aims to provide customers with the best possible products and services. Recognizing that business processes are at the nucleus of deriving and sustaining this goal, CBA places great value in an enterprise-wide process management paradigm and supports this with a multi-leveled and multi-faceted BPM Governance effort, which is described with rich detail in this case study. This case study was derived in collaboration with academics and practitioners applying a variety of techniques such as; document analysis, formal interviews, workshops and discussions, where the primary data was collected during March-August 2018. CBA continuously evolve their practices and this case presents what was current as of August 2018. Additional information to supplement this case study is provided as Ancillary Material (available at https://drive.google.com/file/d/1X14OA7uSuCyHzQZEnruKBkE0hoOz2JoJ). 2
CBA applies many methodologies to sustain growth (over the past century), often with a close eye to improve operations by enhancing current business processes and/or procedures. With a complex, siloed and hierarchical functional operating model that had historically existed within CBA, some of the earlier approaches to process management were not successful in addressing costly delays in services, high rates of rework/poor quality, many non-value adding tasks within processes, and overall poor customer service. While many ad-hoc improvements (especially product and technology enhancements) existed, it wasn’t until the dawn of the 21st century that the Bank started to truly think about process management as a whole-of-organization initiative.
Whilst BPM is traditionally focused on improving or optimizing single processes; one process at a time, CBA’s Enterprise-wide paradigm for Business Process Management aims to extend the focus to the entire organization aligning initiatives to its strategy which provides a systematic way to improve processes across the organization through informed decision making. This meant the breaking down of silos that are formed by functions or organizational hierarchies. In particular, this effort forced CBA to look across these functions and departmental hierarchies to assess ‘end-to-end’ processes, find standardization and scalability opportunities. The ultimate goal was ‘process-centricity’, where CBA can consciously use its processes to achieve business results.
Recent sectorial changes and events which occurred at CBA highlighted the need for adequate oversight and assessment of emerging risks, clear accountabilities, and simple and clear decision-making processes in a holistic manner. Governance in relation to individual processes and how processes are managed was called for. Existing governance approaches had to be extended to include process governance oversight. 3
CBA is an organization that is not unfamiliar to governance. However, the addition and integration of a horizontal BPM layer to existing entrenched vertical functional governance frameworks required careful design and application. Governance is applied at CBA to ensure that processes, strategy, process designs and changes work in concert with each other. Overall, it is designed to: (i) oversee and steer process performance management & future states, (ii) approve and prioritize process improvement initiatives ensuring that the end-to-end process is driving towards its business strategy, (iii) make sure that process decisions are in line with the simplification and standardization goals.
BPM governance at CBA evolved through iterative efforts (Ancillary Material Part A presents a time-stamped overview of the enterprise-wide process management efforts at CBA, highlighting some of the key milestones). For example, CBA has dedicated roles for BPM, spanning multiple organizational levels; with very senior executive roles such as Chief Process Officer (CPO) and the establishment of the ‘Process Architecture’ team in 2015 led by the CPO. This team developed a structured process architecture, systematically prioritized processes as high and medium impact processes (referred to as ‘HIPs’ and ‘MIPs’), and appointed ‘process owners’ and ‘sub-process owners’ for all top priority processes. In addition, the Process Architecture team created a ‘Process Reference Architecture’ (PRA) and a clear BPM taxonomy to provide a consistent set of process best practices. In 2017, the Bank appointed a dedicated team of process specialists (known as the ‘Process Management and Improvement’ (PM&I) team), led by a dedicated General Manager tasked to establish Business Process Management thinking and associated skills throughout the organization. These activities represent seminal milestones in CBA’s effective BPM Governance efforts.
At the ‘nucleus’ of CBA’s BPM efforts lies a tool-supported process architecture. A
process architecture (PA) by definition is “a collection of business processes and their
interdependencies with each other”
The Process Reference Architecture (PRA) is designed to be a central tool for developing a deep understanding of end-to-end processes. A Process Reference Architecture (PRA) contains detailed descriptions (with standard documentation) of current state process (i.e. all process variations, risks, supporting systems, resources, and measures of process performance), the “future state” process, and an ideal/optimized process to deliver strategic outcomes. The future state design acts as the roadmap or guide for all future change decisions impacting the process.
Next, we describe CBA’s BPM governance in detail, positioning the actions taken at both the internal/team level and organizational level. 3.1
In 2015, with Executive Committee (ExCo) support, the role of the Chief Process Officer (CPO) was created as well as the first process architecture governance team (see Ancillary Material Part B for sample position descriptions). This was the start of the top-down structural changes within CBA to drive a process-centric organization with a core focus on deriving an enterprise-wide process architecture. The learnings from the first process architectures developed highlighted that more work needed to be done to enhance governance of processes. Although General Managers were supportive of having a common future state process and roadmap to work towards for their business units, it was recognized that without top-down support in their business or a clear Process Owner from the senior executive team, the roadmap would not be delivered.
At the start of 2017, there was a further structural change which resulted in the creation of a General Manager for Process Management and Improvement (GM PM&I), and the four teams: Process Architects, Process Office, Process Innovation and Productivity team reporting to this new GM (see Fig. 1). They became the main catalyst for all BPM initiatives at CBA. The PM&I team provided 15 services (12 customers facing and 3 team supporting services), which was clearly communicated via a service catalog (see Ancillary Material Part C for an overview). A key goal of BPM governance at CBA was to elevate process as a strategic asset, protect the integrity of CBA processes and guide improvement investments so that process goals exceed functional goals. The ongoing, stable practice of process governance at CBA required the design of a holistic and multi-faceted governance framework, including governance of the processes, the process taxonomy and related process changes; each of them is described in detail below.
Governing the processes. CBA’s mechanisms to govern their processes can be summarized in two main aspects: (i) the establishment of process owners and sub-process owners and (ii) the establishment of Process Improvement and Governance charters. Process owners and sub-process owners within CBA: In order to set the required governance for core processes, ‘process owners’ roles were identified and profiled. The aim was to create consistency in decision making with clear roles and responsibilities chartered. Cross-functional decision rights for the end-to-end process were agreed in principle, and clear decision, dispute and escalation processes were set up. The memberships and decision rights at the Process Governance Forums (see details below) were also clearly articulated and decision rights for process owners that span multiple group functions were clearly established.
Process Owners at CBA are at a General Manager or higher level who is ultimately responsible for managing the performance of the end-to-end process. The Process Owner chairs a ‘Governance forum’ (see details below) where representatives from the areas that are impacted by the end-to-end process convene to discuss the performance and proposed changes to the process to understand the true impact of any changes to the process. Clear decision rights for process owners that span multiple group functions were established; articulating their accountabilities and responsibilities (see Table 1).
Most end-to-end (E2E) processes (which are also referred to as the horizontal core processes, e.g. Home buying) will also have a number of sub-process areas (which are referred to as vertical processes, such as payments, assessments etc.). Sub-processes are essentially only a section of the E2E process, and these sub-processes may be shared by a number of core processes with specified sub-process owners. These sub-process owners also join in the related governance forums of the E2E processes. The various accountabilities and responsibilities allocated to process owners and sub-process owners are consistent with the Banking Executive Accountability Regime (BEAR) 1. 1 The BEAR regime is set out as part of the Banking Act 1959, establishing accountability obligations for authorized deposit-taking institutions and their senior executives and directors. The regime is administered by APRA (- an independent statutory authority that supervises institutions across banking, insurance and superannuation and promotes financial system stability in Australia). See https://www.apra.gov.au/banking-executive-accountability-regime for further details.
Responsibility • Establish a governance body (cross-functional team
if required) • Work with and engage the governance body • Establish and manage appropriate controls to facilitate the process’s future state vision - medium and long-term, ensuring alignment with business and group strategic goals • Provide visibility of and report on the performance of the process with respect to customer experience and process strategy • Facilitate identification opportunities to initiate and drive continuous process improvement and act as sponsor • Ensure the recording of process documentation is
current, accurate, accessible and adhered to • Deliver process to external customer requirements
and current Customer Value Proposition • Maintain relationships with stakeholders participat
ing in the customer to customer process • Remove barriers and facilitate collective learning
and collaboration across functional boundaries • Benchmark process performance • Change Management across projects, people, priori
tization and sequencing of change
Process Improvement and Governance charters: All high impact processes (HIPs) have a process governance charter outlining the purpose, membership, inputs and outputs (see Ancillary Material Part D, Figure D.1). Process owners of all other processes were also encouraged to set up a Governance forum. When a Process Reference Architecture (PRA) is developed, a PRA charter is also created for each process (see Ancillary Material Part D, Figure D.2). The PRA’s are governed by the Process Architecture Review Board (PaRB) which has its own charter. Membership of the Process Governance Forum comprises of permanent or extended members (or their delegates 2). Permanent Members include; • The E2E Process Owner: The Process Owner is accountable for the E2E Process.
They are typically associated with the product or product family and own the strategy (or Reference Architecture) that guides process decision-making. 2 Delegated authority implies full empowerment of the delegate to act on behalf of the regular attendee to perform the full responsibilities and decision-making rights placed on forum members. • Shared Sub-Process Owners: Sub-Process Owners are accountable for the primary business services provided to the end-to-end process that enables the purpose of the process to be achieved. Examples of Sub-Process Owners are Operations, Digital, Credit Decisioning and Customer management. • Supporting Sub-Process Owners: The supporting process owners are accountable for the supporting business services that they provide to a process. These services support the process but are not necessary for critical day-to-day operations. Examples of supporting Sub-Process Owners are Risk, IT and Finance. • Process Architects: Process Architects provide insights, expertise and guidance to the forum regarding the performance of the process and potential impacts of requested change initiatives. • Solution Architects (as deemed relevant): Solution Architects provide insights, expertise and guidance to the forum regarding the performance of the technology and potential impacts of requested change initiatives. • Process Governance Secretary: The Secretary provides general administration of the Governance Forum. This includes sending the agenda, taking and communicating minutes, tracking actions and other associated tasks.
Extended Members are representatives of other processes that may consume the services provided by the process within the scope of this forum. This group may be materially impacted by the decisions of the Process Governance Forum. For example, a Credit Cards process owner may sit on the forum for the Payments Process.
Decision making at the Process Governance Forums is clearly specified (see Ancillary material, Part E for further details). The Process Governance Forum has the decision rights to make decisions for their respective process in the best interests of the Groups’ endorsed Business Unit strategies as well as risk and regulatory obligations. These include decision rights such as; endorsing all strategy and initiatives, introducing new capabilities which may impact the future state of the process, mobilizing resources to address process performance gaps with respect to both the progress towards the future state and/or the deterioration of current performances.
knowledge is important to have
The taxonomy also set standards to ensure that the decomposition and leveling are consistent with the process hierarchies and provides guiding principles to adhere to when modeling processes. It was used as a minimum standard for modeling processes within the ARIS tool used to maintain the process architecture (referred to as the ‘Process Knowledge Warehouse’ (PKW) at CBA) and was also used in the process change control and maintenance activities associated with the Process architecture and PRAs. Governing process-centric change. The main aims were to integrate BPM governance into existing investment forums to have clear process management controls and to ensure that required metrics and standards to make and measure decisions about process change impacts were clearly in place. Specific ‘Process Questions’ 3 were set up, to understand the benefits of change and a number of governance forums were established; adding a process lens in the Group Investment Prioritization process and Strategic Planning process. Examples include the Process governance forums, the Pre-Investment Committee(s), and the Process Architecture Review Board (PaRB).
The purpose of a Process Governance forum was to facilitate both the strategic and operational decisions surrounding an end-to-end process and oversee the actionable outcomes. The forum assumes responsibility for decisions affecting the end-to-end process in terms of the following: 1. Process strategy- endorsing and providing recommendations towards the strategy of the end-to-end process and understanding and tracking the impact of a change in strategy to the current metrics and associated business outcomes, 2. Changes to processes- by verifying alignment of changes to the process strategy, managing exceptions (reviewing options and making risk management recommendations or escalations to appropriate governance forum if necessary), consulting/advising on how changes to the scope of an initiative may impact the end-to-end process, and 3. Process performance management- by understanding and driving process performance towards defined targets and endorsing targeted process reviews/focus areas and setting actions to address outcomes (e.g. process KPIs, customer document process etc.).
A quick reference guide (QRG) describing the process governance forums are made available through CBA’s intranet (via the Process Management and Improvement portal), for all stakeholders. Extracts from this reference guide which explain how the forums are run is presented in Ancillary material Part F). They are meant as a guide and not as prescriptive terms of reference.
The current state process architecture with performance metrics is a key input to these forums. The delivery of process architecture for high impact processes (HIPs) is facilitated by the PM&I team sponsored by the identified Process Owner for the endto-end process. The PM&I team ensures that individually and collectively the members of the Process Governance forum have data which enables them to have a documented and maintained end-to-end process, understand the end-to-end process including its inputs, outputs, risks and policies, analyze process performance to enable informed decision making and identify and drive process improvement.
A Process architecture Review Board (PaRB) exists at CBA with the purpose and rationale to oversee and steer the process performance management and future states. PaRB was set up to: (i) endorse process performance targets, process taxonomies and process future states; (ii) understand process performance and drive performance to at 3 These questions were around 7 different aspects (see Ancillary Material Part G). least a minimum level and towards defined targets; (iii) endorse targeted process reviews/focus areas and set actions on the outcomes (e.g. process KPIs, customer document process etc.); (iv) endorse process improvement initiative recommendations proposed ensuring that the initiatives are driving towards target future state; (v) reduce complexity across process domains and portfolios; (vi) provide immediate recommendations for program/ projects process architecture problem spaces; (vii) have clear and consistent communication to and collaboration of stakeholders; and (viii) approve process architecture artifacts, products and processes to drive the right customer outcomes.
This BPM governance approach had to consider CBA’s existing governance frameworks and the current business operating model that the bank had. Corporate Governance at CBA shifted with the introduction of CBA’s Process Governance forums. More recently, process governance has also been aligned to risk and compliance governance at CBA, with the process office at CBA partnering with the group’s Operational Risk and Compliance Risk functions to create a disciplined, centralized approach to standardize the end-to-end view of process, obligations, risks and controls. For example, CBA’s process architecture was closely integrated with CBA’s Risk Incident repository (RiskInSite 4). This collaboration and integration of the BPM framework with Group Risk enhanced the value of the process-centric taxonomy to the business, by providing a shift from a portfolio/Business Unit risk view to a Process View of Risk (PvOR). This powerful view enabled the process owner, and delegates in the forums to have a clear line of sight of the inherent risks and controls in the process they are managing, and to understand the ‘true’ health of their processes while identifying gaps in their current reporting and management of the process. The PvOR metrics can be used in combination with other key process performance metrics visualization tools, such as Process View of Technology (PvOT) and Process View of Cost (PvoC), which all enhances the ability of process owners/forums to target ineffective process with initiatives while monitoring the impact of initiatives to the end-to-end process health. 4
The practices outlined above enabled CBA to create ‘an ecosystem’ of rules, roles, responsibilities and process measurement to facilitate transparent decision making that powered their enterprise-wide BPM efforts to generate optimized business performance and maintain regulatory conformance. Overall, these resulted in matured process governance that supported CBA corporate governance which led to more accountable and efficient customer experiences. For example, the Home Buying governance meetings enabled the processing teams to focus on moving applications forward rather than battling over procedure and quality challenges. The GMs of each area (broker, operations, sales, risk, product) resolved the concerns at the governance layer to enable a smoother processing path, whilst staying within the acceptable risk level and policies. Whilst setting up the process governance took considerable effort; the results have been noticea4 This is based on IBM’s OpenPages Operational Risk Management system. ble. The CBA mortgage book has grown above the market in 2019, and the staff engagement score for operations is well above the average score of the group even though it’s the largest division with over 4,000 employees. In the Institutional Lending business, introducing the Process Architecture methodology and governance principals allowed for the Product and Process Governance Forum to be established for the end-toend lending process and in-life maintenance. As a result, the four governance forums were collapsed into one to enable the business to focus on understanding and improving customer experience, setting accountabilities, and creating visibility in managing risks. The Governance Charter drives the process culture mindset shift; prompting the workforce to focus on value-added initiatives that create additional customer, staff and overall process benefits.
Table 2 presents a summarized overview of the companywide results achieved through the BPM Governance practices described above. Signaled the strategic significance of ‘process’ (process as a ‘strategic asset’).
Drove process related activities and delivered an organization-wide process architecture.
Created a highly experienced and accredited team with the required process management capabilities in house.
Provided a ‘one-stop’ service on process related activities ranging from training to redesigning a process.
Developed organizational level and individual level capabilities in process practices.
The CPO and PM&I team together, Resulted in having a clear ‘BPM home’ with the right authority and resources.
Enabled to ‘push’ process goals exceeding individualized functional goals (especially those that were disintegrated with corporate goals).
The service catalog clearly outlined the process and end-toend engagement between the business units and the BPM team; setting clear expectations and efficiency of the engagement.
The engagement model enabled BPM upskilling across other Business Units (at both operational and strategic levels).
BPM upskilling at diverse units and levels with experiential learning through the actioned projects.
Created consistency in decision making with clear roles and responsibilities.
Established an agreement on cross-functional decision rights for the end-to-end processes. communicate responsibilities and accountabilities, consistent with national, sectorial standards (i.e.
BEAR regime in this case).
Establish horizontal governance mechanisms with cross-functional decision rights.
Standardize process modeling activities through process architecture and process-centric taxonomy.
Establish a horizontal coordination mechanism (i.e., Process Governance Forum) to govern processcentric change.
Set up a horizontal coordination mechanism (i.e., Process Architecture Review Board) to govern overall process performance for the entire organization.
• • • • • • • • •
Setting up of clear decision, dispute and escalation processes.
Clear rights to make decisions for a process in the best interests of the Groups’ endorsed Business Unit strategies (overruling, single functional interests).
Provided guiding principles to adhere to when modeling processes.
Created a rich, well-integrated process architecture, which enabled them to derive reliable process information for critical decision making.
Process identification, improvement and continuous improvement were well guided and resourced with clear roles and responsibilities.
Facilitated both the strategic and operational decisions surrounding an end-to-end process and how to oversee the actionable outcomes.
Endorsed process performance targets, process taxonomies and process future states, providing clear guidance to current and future BPM work.
Ensured that process improvement initiatives are aligned with strategic targets and drove process performance towards defined targets.
Ability to orchestrate effective and well aligned diverse initiatives to ensure cohesion, appropriate metrics, decision making and standardization. 5
The development of effective enterprise-wide BPM governance is an ongoing process that requires collaborative efforts across the entire organization. CBA’s BPM governance mechanisms enabled them to instill a process mindset across the individual business areas to adopt a new way of looking at how CBA operates and getting all to understand the upstream and downstream implications of process changes. Several lessons can be derived from this case study: Multi-level governance mechanisms: CBA’s experience points to the need for the implementation of governance mechanisms at both whole-of-organizational and specialist BPM team levels simultaneously. It also illustrates the strong links between BPM Governance and an organization’s strategic goals. In CBA’s case, the process governance was closely aligned with their Risk Management goals and strategies. The strong Process Governance complimented the risk management mechanisms in place and helped CBA achieve better risk outcomes for the bank and its customers.
Organizational-level governance: A holistic governance framework at an organizational level ensures that processes and process improvement projects are well aligned with an organization’s strategic goals. In particular, it is important to establish a process taxonomy as a standardized BPM terminology throughout an organization and a process architecture (PA) acts as a critical pre-requisite to provide a holistic view of the organizational processes.
Process governance: Process governance with clear roles and responsibilities are critical to maintaining accountability and decision rights on process performance and improvement initiatives.
Process performance: Governance mechanisms around process change cannot be ignored because they help organizations establish process performance targets as well as prioritize process improvement initiatives.
BPM center of excellence: A strong and highly visible BPM team is necessary to drive a sweeping process-centric transformation throughout an organization. To communicate the importance of ‘process’, it is vital that organizations establish a C-level role along with a BPM team endowed with appropriate capabilities to offer a range of services to educate employees, execute process changes, assess process performance and offer advice and other supports necessary.
Notwithstanding the applicability of lessons learned from CBA, organizations need to be mindful that BPM governance has to be designed in conjunction with current organizational contexts and strategic goals. 6
We greatly appreciate the input from the members of CBA’s Process Management and Improvement team especially: Liza Holmes, Karen Allen, Steven Conlon, Kristin Kow, Cathy Farrugia, Ayssor Joukhador, Amanda Wickett, Daina Fraser, Anthony Deeb, Max Cardew, Bobby Sharma and Pavan Veerapaneni who attended a Strategic BPM workshop with QUT staff in March 2018, and who’s resulting workshop contributions and discussions formed much input to this case study.