Business Process Management (BPM)
Business Process Management (BPM) is a discipline involving any combination of modeling, automation, execution, control, measurement and optimization of business activity flows, in support of enterprise goals, spanning systems, employees, customers and partners within and beyond the enterprise boundaries.
A holistic perspective of BPM includes all three of the following notions (See Figure below):
- Ideally, BPM is a Management Approach/Philosophy led by a company's management team that places emphasis on understanding and optimizing business processes. By defining business processes, establishing measurements to track their performance in alignment with business goals, implementing improvements and monitoring processes, companies can not only innovate faster to meet changing market demands, they can deliver the best quality products and services in the fastest and most cost effective way to both internal and external customers. Change Management and Performance Management are key aspects of BPM.
- BPM can also refer to a Methodology for instituting a continuous process improvement lifecycle. Methodologies provide specific guidance in the form of phases, activities and techniques business teams can use to continuously improve a business process.
- Sometimes BPM refers to Technology that is used to help perform the activities of the methodology and/or enforce its execution. BPM software can help with mapping and documenting business processes to aid communication, analyzing them to identify inefficiencies, control them thru workflow, automate activities, monitor both business activities and performance as well as augment and enhance current computing systems to optimize workforce. We should note that there is no key underpinning technology that defines a system as 'BPM'. No matter whether its 'old school' software design or something that incorporates the latest social networking techniques, so long as it attempts to address the goals of BPM, it might be labeled BPM technology.
Business Process Management - Background.
Business Process Management (BPM) includes methods, techniques, and tools to support the design,enactment, management and analysis of business processes (van der Aalst et al., 2003). BPM approaches prescribe that the entire management of an organization - strategy, goal setting, controlling and planning - be based on its core processes. In definitional terms, a process is simply a structured, measured set of activities designed to produce a specific output for a particular customer or market (Green and Rosemann, 2000). ‘Process management’ in this relatively new light has revolutionized the way organizations conducted business. Just after the industrial revolution, with the influence of existing theories such as those of Henry Ford and Fredrick Taylor (i.e. Fordism and Taylorism), a ‘function oriented’ approach, where individuals concentrated only on one specific task, was used in the day-to-day activities of the organization (Hammer and Champy, 1993). However, as the business arena started to evolve dynamically, weaknesses of this perspective began to hinder the organization 1241 from acting competitively. In response to the pitfalls of functional over-specialization and lack of overall process control, Hammer and Champy (1993) proposed the ‘Business Process Re-Engineering’ (BPR) concept, which was further re-enforced by other contemporary practices such as Davenport’s ‘Process Innovation’ (1993), Total Quality Management (TQM), Six Sigma, Lean Management, Time-based Management, and value-based performance measurements. The basis of these practices is having a ‘process-oriented’ vision, rather than a function oriented one. This business demand was met with a suite of technologies, ranging from groupware and office automation, to workflow systems, and, more currently, BPM technologies. Although, workflow technology has delivered a great deal of productivity improvements, it has been used mainly for predefined static and repetitive business processes that required a basic level of coordination between human performers and some application components. Recently, BPM has been used as a broader term to reflect the fact that a business process may or may not involve human participants and may also cross organizational boundaries. While there have been significant advances in various BPM research areas, in particular on technological features that support process control and monitoring, and application integration (i.e. van der Aalst, 2003), the foremost factor in BPM success is achieving improvements in the business outcomes. Indeed, unless the efforts towards BPM can clearly produce business outcomes, advanced technology deployments will only generate disappointments (Davenport, 1993; Kettinger et al., 1997; Grover et al., 1998). For organizations to succeed in reaping the benefits of BPM, it is essential that they first outline the business drivers for BPM, articulate the targeted processes, and have a clear agenda on deployment strategies. For many organizations this initial requirement is a very significant challenge. Raduescu, et al., (2006) reports on the issues identified within such large process modeling projects
The Need for Business Process Management
The landscape has become intensely competitive for almost all businesses. For some businesses this is driven by globalization; for others, weakness in their local market economies is the driver of increased competition. As barriers-to-entry to competitors become lower, businesses have to fight harder than ever to keep and grow their market share in an uncertain economy. To compete successfully in the environment of today, businesses must find ways to reap the kind of benefits BPM delivers. Otherwise, at best they are missing out on profits and at worst they risk being overrun by their competitors. Innovation and Transformation Agility have become critical in the hyper-intense environment of today and BPM offers a path to achieving that agility. A BPM approach will help a business innovate and transform its way to achieving more business value. Business Process Management has in fact become a mission critical business capability.
Benefits of Business Process Management (BPM)
Business process management helps organizations geared up for worldwide competition by helping leaders and organizations improve performance through a wide array of components, such as: analysis, proper design, careful observation and control as well as modification of business processes. All of these are products of BPM, providing organizations with the following five benefits.
- Improved Business Agility: It has always been a necessity to make modifications to an organization’s best practices in order to stay abreast with the changing conditions in the market. An efficient BPM permits the business owner to make pauses in its business processes, implement changes and re-execute it. With this, process will have the unique ability to stay on track and implement changes or redefine the tasks of its process users. The end result is a higher level of adaptability to unstable situations. Greater control and agility allows organizations to alter workflows and re-use or customize them as necessary. Through this, business processes become more responsive through the structure that entails precise documentation of the steps involved in a certain process. The defined knowledge allows organizations to comprehend the possible impact of change on business processes. An organization that has knowledge of the effects of process modifications is more open to options that could improve profitability.
- Reduced Costs and Higher Revenues: Implementing the right BPM suite in an organization can trim down the costs associated to business process execution. More enhanced processes and productivity of the workforce makes it possible. Hence, employing the right BPM in the organization can significantly deliver positive results.The decline in operational costs, post-BPM deployment, may not be visible right away, but eradicating bottlenecks would cause remarkable improvements. For instance, this could reduce lead time that can have a positive effect on how the organization sells the products. This may also mean that consumers will have more access to the services and products in unity to their needs within the shortest time possible. Thus, organizations will have more market demand, which is followed by more elevated sales and improvement in terms of revenue. In line with this, organizations can also improve efficiency and profitability through the reduction of waste. BPM involves allocating and tracking resources to avoid wastage. Plus, customary evaluations of performance can lead to determination of inefficiency, wastage and conduct actions to address these problems.
- Higher Efficiency: Deployment of BPM enhances the efficiency of business processes tremendously. This potential is brought by the integration of organization processes from start to finish. Process owners are automatically alerted every time they hand out responsibilities to its individual members. This leads to more proficient monitoring of delays or reallocating tasks among the members. Therefore, BPM aids in eliminating bottlenecks and reducing lead time in terms of implementing and enhancing business processes. BPM also results to optimization of processes through the removal of any redundant tasks and implementing automation to reduce the possibility of rework and errors. This quality and more has attracted organization leaders to deploy favorable BPM processes not only to maximize returns, but also align the organization objectives with its processes.
- Better Visibility: Essentially, BPM makes use of refined software programs in order to make process automation possible. These programs allow process owners to keep track of performance and see how the business processes function in terms of real time. The automation of processes discloses how processes are working without the need of extensive labor and monitoring techniques. Enhanced transparency allows management gain a better understanding of their processes. These things allow the management to modify structures and processes efficiently while keeping track of outcomes.
- Compliance, Safety and Security: Reliable BPM practices assist organizations informed of their duties. These can be financial reports, labor laws compliance and a wide range of government rules that organizations should follow. A comprehensive BPM guarantees that organizations comply with the standards and stay up to date with the laws. Furthermore, business process management also has the ability to promote security and safety measures. It is done by properly documenting procedures and facilitating compliance. Organizational policies and internal controls play a vital role in BPM. Such things aid organizations encourage their staff to safeguard organization assets, which include private information and physical resources from misuse, loss or other acts like theft. Overall, organizations that utilize BPM principles discover that they have the capacity to reduce cost and enhance productivity by simply identifying how processes would work under the best conditions. This is also followed by implementing the necessary adjustments to implement control and achieve the best performance that would aid in tracking future outcomes. With all these, there is no wonder why BPM is making a buzz in the giant world of business and marketing.
Challenges in Implementing Business Process Management (BPM)
The following are the biggest challenges to any BPM initiative in an organization
- Not getting Executive endorsement: Many key business processes underpin business capabilities, just as a well set of capabilities underpin business’s unique competency, thus, it’s strategic effort need get executive endorsement, start top down as you have to understand business objectives and understand key capabilities to achieve the business strategy. With this you build the processes that can plug and play into delivery + support of the business to consumers or businesses. However, senior executives have many things on their “To Do” list, how to manage a solid business case can be another challenging thing to do.
- Lack of Business Case: A business Case provides the description and reason for starting an BPM initiative to articulate and align with VSSP (Vision-Strategy-Structure-People-Processes).
What is the current process state? What are the concerns with the current state (costs, inefficiencies, top line impacts etc). What is the proposed process state? What is the cost, time, others resources needed to get to the proposed state. It’s about he financial impact of the proposed state (in terms of ROI or the expense ratio). A solid business case can also become a base to develop a BPM roadmap as the next challenging step.
- Not Develop a Road Map: Develop a comprehensive roadmap provides an effective roadmap for the (BPM) trip an organization will make. Imagine without one, how might the trip turn to be?
If there is no guide people will walk but to where? If there is a shouting guide that cannot explain where we go, people refuse to walk. Especially for the complex BPM effort, a understandable roadmap results in more systematic planning and milestone setting. A clear customer centric roadmap can also avoid the thorny IT-led route as the next challenge.
- Implementing IT-led BPM: At industry era, both BPM are easily get caught by over-complexity, inflexibility and redundancy. Every business process that is not impacting the customer in a positive trend should be brought out or clearly re -engineered. Customer satisfaction index is important, as it is an overall [^key-performance-indicators-KPIs|KPI] that is mandatory to be maximized. Different channels for achieving it should be used. Innovation & technology breakthrough are the clear differentiators in the BPM world. Traditional BPM might also be too inward-looking, outside-in customer-centric BPM can fit better in business purposes in competitive business environment
- Too Slow to React to the Business Change: Change is accelerated in today’s business dynamic, how should BPM adapt to such transformation? At the organization level and its value channels, all processes should be observed, controlled and optimized as a whole, not separated . Bottlenecks should be brought out and every task with a negative client service impact should be eliminated and its parental process should be re- modeled. Real time performance dashboard KPIs data could be analyzed for the future re-model of the entire business processes chain ....reprogram the DNA if necessary ! Adaptive Control/Actions of processes should be on board. Without this, BPM is just words......
- Gap between the modeling and the implementation phases: Once the business processes have been mapped and reviewed the organization goes “back to normal' : the process maps become part of the 'historical' archive and the alignment with the evolving requirements from the operations gets lost, that being said, there’s gap between modeling and implementation phases.
For initiatives that go forward from publication of paper process maps to setup of a run-time environment, the methodology indeed becomes the instrument to orchestrate work and collect data for analyzing processes. A BPM initiative is frequently launched as an inevitable step in the migration of a new application which requires an important review of the business processes. .
- Seen as a One Time Project: Managing a process requires constant attention to throughput (leveling and balancing workload across instances and task performers). The owner has to be sensitive to the need for improvement, BPM shouldn’t be seen as one time project. It’s a "continuous" journey. So should BPM become the instrument to let business learn how to look for operational improvement by analyzing processes; not only in case of issues but also by structurally evaluating the BPM library towards the actual situation. This activity will induce a critical/questioning attitude towards the processes and can be the foundation for continuous improvement.
- Not Investing in Staff: For any project or business as a whole, people are still the weakest link, how to invest in staff is always a long term goal; and from BPM perspective, the following roles are critical:
- BPM Project manager - day to day responsibility for running the BPM Project -> reporting to the steering group
- Senior USER ( Process Owner) – focused on the business objectives of the project
- SMEs( Subject Matter Experts) from the line-of –business area – having in depth knowledge of the operational mechanics and deep appreciation of the macro –level business objectives ( roles per major business area)
- Process Architect ( Lead Business Analyst ) - will provide the analytical rigor and techniques of the project .He/she will guide SMEs for process improvement
- Additional BAs/Process Consultants may be necessary
- IT Experts - at least one or two are needed to advise on opportunities to leverage and re-use existing IT assets. They need detailed understanding of the capabilities of the Selected BPM technology and experience of integrating multiple systems
- SQ (Service Quality) Expert
- Lack of CoE BPM: BPM Center of Excellence (CoE) is the key of a successful BPM project approach, it takes the top executive sponsorship for the creation of BPM Center of Excellence and a BPM project team to be highly committed to the organization re- engineering and change.Following are the key aspects in CoE:
- Comprises a group of committed individuals who focus on how the process of the firm drive bottom –line Profitability & Performance.
- Responsible for developing common principles, language, frameworks and methodologies for process development and process architecture management
- Delivers overall process architecture ( key processes interaction across different business units , different product life cycle phases and company value chains)
- Well versed in BPR ( business processes re-engineering)
- Business Systems Manager ( acts as the primary interface between business unit & IT department)
- Poorly Defined Measures of Success: ROIs for BPM typically quit shortly after the 'go-live" date. Whereas the first BPM initiative requires a lot of infrastructure, extending BPM from the first process to other processes/functional units requires a lot less effort providing the benefits of BPM are seen. And the other biggest challenge for BPM is to become an un-ignorable 'instrument of control' in the strife for operational excellence. As financial results (P&L, variance analyses,...) and KPIs have already become logic components for business control. Therefore the adequate governance and right set of metrics will help measure not only the process effectiveness but also efficiency, to ensure process both doing the right things and doing things right.
From rocky road to bumpy ride, BPM touches the mighty waters, hit by social wind, it has also to avoid pitfalls and overcome such big challenges in order to reach process wonderland.