Why Business Process Management?

Published on the 19/05/2008 | Written by iStart


Business Process Management isn’t just about reducing paper. It allows you to re-engineer processes, achieve operational efficiencies and extend workflows to suppliers and customers, as well as breathing new life into legacy systems…

If you thought Business Process Management (BPM) was little more than an excuse for consultants to engage in a bit of navel gazing, think again.

A successful BPM implementation can increase management visibility, as well as saving time, money, staff and of course, paper.

A good accounts package or ERP system should give you a accurate view of the historical performance of your business, but does it let you know what’s really going on behind the scenes, right now? Can you see the hold ups, the stalled documents, the spanners in the works?

In fact, basing business decisions on your profit or loss in the last financial period is a bit like trying to steer a car while looking through the rear-view mirror.

By the time you see it’s gone wrong it’s already too late to do anything about it. What’s required is measurement of how your company is interacting with itself and its customers right now. One of the best ways of shedding light on the inner workings of a business – or in IT terms getting ‘visibility,’ is through Business Process Management.

But BPM can do much more than provide visibility.

Roughly defined, BPM is a technique that involves mapping basic business functions and breaking them down into distinct processes, then automating and integrating those processes where needed so that they run smoothly based on business rules.

The idea is that BPM allows managers to manage exceptions, rather than getting involved every time a process runs. Although electronic document workflow is inseparable from BPM because there are very few business processes that don’t, at some point, produce a document, that doesn’t mean that BPM and pure document workflow are interchangeable.

Workflow tools are often described as BPM systems to make them seem more versatile than they really are.

Whereas conventional workflow tools allow collaboration by transferring work from one user to another, BPM systems not only combine the functionalities of workflow tools – but also address process modelling, system integration, the application of business rules and process management functions.

This makes them a powerful tool for operational staff and managers.

Who you gonna call?
Typically a BPM implementer will provide all the necessary resources including consulting, development, integration with third party systems and deployment (once deployed, an internal business analyst can monitor and make changes to processes).

BPM projects begin with a readiness programme which is designed to set out goals and objectives and assess where a company currently sits in relation to them — clearly illustrating the gap between where a business is, and where it wants to be.

Once clarity around that gap is achieved, work can begin to close it. Next, the most successful implementations align strategy, people, processes and systems across the business by asking questions about the business’s systems and procedures.

A project will likely then enter into a measurement phase. As the old quote goes: ‘If you don’t measure it, it will not improve; if you don’t monitor it, it will get worse.’

Measurement should be in the area of both tangible costs, such as system and people costs, and intangibles such as lost goodwill, customer satisfaction and so forth. The ‘beef’ of a BPM project comes in the next two phases; process improvement and where applicable, process outsourcing.

This is where the benefits start to accrue. Successful projects often result in reduced staff numbers, as people are freed from repetitive manual processes and can be reassigned to more productive work.

The numbers vary from site to site, but they can be significant. For example 50% staff reductions in areas like accounts processing is not unheard of and one call center reports a 70% reduction in its staff after a BPM plan was put into action.

While BPM can raise efficiency and worker productivity, these initiatives typically do not result in an ‘overheated’ work atmosphere or place undue stress on employees in areas where there is already high staff turnover.

In the call centre case for example (a sector that frequently exhibits high staff churn), much of the efficiency was achieved by providing staff with the information they needed to answer queries then and there, rather than having to refer callers to someone else or call them back.

This alone reduced a lot of the stress of call centre work and actually increased job satisfaction for the employees that remained.

Also, document storage costs will fall as documents are migrated from manual to digital document management systems. Once a BPM project gets underway most implementers take a ‘transitional’ approach to projects which means progressively applying BPM across an organisation.

In BPM terms the processes which are usually addressed first are the ‘low hanging fruit’ in an organisation — typically those which involve a high degree of paper dependency.

However, hard copy still has its uses, as frequently it’s not the paper itself that’s the problem, rather it’s the processes which surround that paper that are the problem. Some processes are stronger candidates for automation than others and — especially for smaller organisations — some systems are likely to remain manual for reasons of cost.

The most compelling proposition in favour of BPM offerings is for automating processes that cross organisational boundaries; for example, where parts of a process have been outsourced. BPM implementers work with their customers to find out where to extract the greatest benefit.

As a guide, processes that are paper-intensive and which hold information time-sensitive to the effective delivery of services — either internally or in association with business partners, are the usual places to start.

Internal & external work flow integration
Another key benefit of BPM is that it can maximise your investment in existing applications by applying solutions to integrate them.

For example, a workflow automation solution will automatically push the workload across the network or across an intranet/internet to whoever is required to action or authorise the next task.

By focusing on the process, a company can tap into existing data, which can extend the scope and life of legacy applications, and also go a long way towards overcoming the ‘information silo’ effect of running disparate systems.

A workflow automation tool may create data, extract data from internal or external sources, update databases, alert users to something happening, schedule or reschedule other tasks, or wait for other conditions to be met before advancing.

This helps a business to run effectively, because the solution relies on events or dates to trigger tasks and not human intervention. An automated process management tool is ideal for managing service level agreements because it can generate audit trails giving online access to completed work and work in progress so nothing ‘falls through the cracks’.

At any point in time managers can look at who’s working on what, see exactly how far through the process they are, and how long the work is taking.

One problem with addressing your own document workflow problems, however, is that it doesn’t extend beyond your own enterprise.

You may very well have addressed your own internal business processes and work flows – but what about your suppliers and customers? Bottle necks at their end are just as likely to impact your efficiency as log jams within your own organisation.

However, many BPM implementers now provide solutions that allow organisations to collaborate both on internal processes, as well as with their suppliers, service providers and customers.

Integrating with existing ERP systems these ‘adapters’ can talk directly to databases or custom-built applications — providing ‘extensibility’ from your legacy systems to your business partner’s systems. In terms of implementation, there is frequently little client-side BPM installation required, apart from an internet browser and connection.

Application development effort is often only required to define the user forms and integration specific to the process.

This type of application is referred to as a ‘zero-client solution’, which makes it easy to implement because all that’s required is a server application and the aforementioned web browser.

With many BPM solutions presenting users with ‘drag & drop’ interfaces, the browser based solutions make it obvious to users how to proceed. Rather than having to go through a paper document telling them what to do next, they’re taken through it online.

The benefits are not only that the process is automated, but that rules can be applied to each step. So if a sales rep’s job, for example, is to record all the things required to activate a device for a business customer, the system will tell them which person or group of people is required for the next task.

If this ‘hand-off’ is not made in a timely fashion, the breaking of a ‘rule’ will have occurred and management can be alerted.

Calculating BPM Return On Investment
Return on investment (ROI) is the measure generally used to justify IT expenditure, and ROI should be as much a component of a BPM proposal as it is for any other project.

Currently providers say ROI from a BPM solution is in the six to 18 month time frame.

However, it’s often the less tangible benefits of BPM (such as improved customer service, operational efficiencies and higher user acceptance) that really make it worth the cost of implementation.

One key benefit likely to resonate around the boardroom table is ‘management by exception’. Rather than having management involved in every transaction of a business process, management by exception raises an alert (such as an automated email notification) when a job reaches a Service Level Agreement (SLA) threshold.

As soon as there’s a risk that a SLA with a customer might be breached, the job is escalated and management notified — then putting in place whatever response is needed to rectify this — an action plan, a resourcing plan, or simply proactively explaining to the customer what’s going to happen.

Another way to calculate ROI is to establish what it’s worth to your organisation to maximise its investment in existing applications and not replace working technology.

By focusing on the processes, a company can tap into its existing data, which extends the life of legacy applications, as well as laying the foundation for more rapid IT support for new and improved processes in the future.

INTEGRATION INTENSIVE PEOPLE INTENSIVE DECISION INTENSIVE DOCUMENT INTENSIVE
Strong focus on automating processes that integrate systems and applications with limited human interaction Strong focus on automating people intensive activities like servicing customers, managing sales, supporting field force workers Strong focus on processes that require employees to make business critical decisions based on business rules Strong focus on processes that involve extensive use of scanned images for back office processes
EXAMPLE PROCESS EXAMPLE PROCESS EXAMPLE PROCESS EXAMPLE PROCESS
Order fulfilment, supply chain integration, straight through processing involving database and applications Order to cash, employee onboarding, non-paper based claims processing Lending Origination, underwriting, inventory management Paper based claims processing, accounts payable, contract management
REQUIRED FEATURES REQUIRED FEATURES REQUIRED FEATURES REQUIRED FEATURES
Integration tools, transaction management process modeling, strong SOA support, Development tools Task list/workflow portal, Strong UI, Organisational management, integration with packaged apps eg ERP Business Rules Engine (integrated on third party), tools for analysing business data captured from the processes Robust native support for document imaging, document management and records management, task list/portal for workflow, event management for changes to documents

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