Technology transforms business, process and management

Wednesday, 02 December, 2009

Business process management (BPM) was unheard of just a few years ago, but the concept has now taken centre stage to become one of today’s most discussed business and technology management trends. Software AG’s Stephen Keys outlines the genesis of BPM and how it has evolved.

BPM originated, or evolved, from process management or process improvement initiatives and disciplines such as Lean and Six Sigma. It represents a culmination of collective experience, thinking and professional development in business management over several decades. BPM empowers people in all parts of a business, including both IT and operations, to be more successful.

The first thing to understand is that BPM is not a technology. It is a management discipline that leverages technology. BPM utilises process improvement methodologies combined with technology to align and control business strategy and operations.

BPM is very simple. It is a set of methods, tools and technologies used to design, enact, analyse and control operational business processes. It takes a process-centric approach for improving business performance that combines IT with best practice process methodologies.

BPM empowers business to design and manage processes, and IT and process experts to collaborate to rapidly build solutions. Significantly, it also enables them to continuously improve the effectiveness, transparency and agility of end-to-end processes that span people, systems, functions, customers, suppliers and partners.

Why BPM now?

The roles of business, process and management have been well defined, studied and improved over a period of decades. So why have the three suddenly come together to form BPM? The answer, and indeed the catalyst, is technology.

There are four core business drivers for the adoption of BPM:

  • Improving a process or sub-process: Companies implement BPM as a means of improving selected processes, to help drive costs out of the business and/or improve quality of service.
  • Institutionalising continual process improvement (CPI): BPM technology acts as an enabler for Lean, Six Sigma, TQM and other such initiatives. It allows companies to fully activate their CPI initiatives and deliver value by providing the visibility and control necessary for rigorous measurement, monitoring and management.
  • Leverage and extend the value of SOA: Many companies have ventured down the service oriented architecture (SOA) path. BPM directly leverages SOA, exposing services in terms of the business processes they represent.
  • Business transformation: BPM, as the combination of leading-edge technology and CPI methodology, represents a comprehensive framework for enacting strategic business transformation.

What does BPM do?

BPM aims to maximise the effectiveness of business processes by:

  • determining the optimal process for the current conditions
  • identifying and integrating the IT systems required to support that process
  • making the process operate as effectively and efficiently as possible
  • enabling controls for ongoing management and improvement.

Specifically, some of the outcomes of deploying BPM into the organisation include:

Process enablement: The process-modelling environment provided by BPM helps business analysts and process experts document, model and improve business processes. The process repository allows process designers to quickly re-use and modify existing processes to create new ones. The development environment allows system architects to link process steps to the underlying technical architecture.

Process automation: Technical architects and developers can use the integrated development environment to compose applications and user interfaces or build new services to implement the improved process. The process server and integration server manage the run-time environment of processes. This provides users with the capability to run what is modelled.

Process improvement: Key performance indicators (KPIs) reflect business and operational metrics. Users can define them either in the modelling environment or use business activity monitoring in the production environment to monitor these KPIs in real time. This promotes trend analysis, comparative analysis and the effective use of alerts. It also supports predictive analysis and fingerprinting to enable proactive, case-based exception management.

Effective governance: Good governance ensures that process applications follow security and architecture standards, in addition to monitoring SLAs and identifying remedial action in case of service degradation. This facilitates and encourages the all-important re-use of processes and their supporting services.

Integration infrastructure: BPM is a natural extension of SOA. This integration infrastructure helps implement process capabilities, contributing to rapid development, and should include middleware services and adapters that connect to third-party applications, wherever they reside in the value chain.

Getting started

The first step is to select a point of entry, which is a critical task in itself. An ideal starting point is the introduction of business activity monitoring (BAM). Even though the implementation of BAM is a project in itself, it resonates well with operational teams due to its focus on providing visibility and control across existing business processes.

This ‘measure first’ approach allows users to focus on key issues, such as process bottlenecks. This information helps target the deployment of BPM to deliver quick, short-term improvements. Organisations can then pursue an iterative approach to wider deployment, building out capability based on proven results, which also helps to manage costs and risk.

Tips to ensure a successful implementation

While the potential benefits to the business are significant and plentiful, there are some potential pitfalls to look out for when implementing BPM. Here are some of the more common issues, along with ways to successfully manage them:

  • Don’t fire too early - The technology piece of BPM (arguably the ‘sexiest’ component) can seduce with promises of increased productivity and fast results. This can sometimes lead to organisations forging ahead without proper consideration for business process methodology. Remember, BPM is not simply a technology tool that you can magically deploy and instantly see results. Recognise that BPM is a combination of people, processes and technology and you will go a long way towards achieving the right outcomes.
  • Encourage cross-functional thinking - There needs to be greater consideration for the end-to-end process and about how a value chain comes together across multiple silos, and even across multiple organisations. Give real thought as to how everyone’s role, performance and productivity create value within the greater process. Getting everyone to think this way takes time and persistence but the results are worthwhile.
  • People make processes work - If BPM is simply a thinly veiled attempt to reduce headcount, failure is highly likely. People make processes work, so process improvement simply to reduce headcount is a flawed strategy.
  • Sustain momentum - Training and development should be focused on facilitating continuous and sustained change in the organisation, not just a one-time technology installation.
  • Supporting the user community - BPM empowers process owners and users to implement change. Be sure to support them with policies, authority, rewards and recognition, compensation and other means of facilitation. At the same time, the end users of processes should be treated like customers. Make them more productive and the technology more invisible so they can continually add more value in their day-to-day work.
  • Build in flexibility - BPM exists to help create adaptive processes. Don’t just hardwire today’s answer at the expense of building in the flexibility to ensure that the answer can change to be effective tomorrow, and beyond.
  • Assist and encourage informed decision-making - BPM provides for fact-based decision-making. If you don’t let the data drive decisions, preferring to fall back on intuition and traditions, you will be squandering your investment and your opportunities.
  • Avoid automating bad processes - Just because BPM enables an unprecedented level of automation in actions, activities and decisions, doesn’t mean you just start automating things. BPM provides the methods and tools to analyse and improve processes, so you can then automate them when they’re performing optimally.
  • Don’t forget to celebrate! - Rolling out something in three months that used to take two years is worth celebrating.

A snapshot of BPM success

Here are just a few examples of how companies around the world use BPM to achieve real business benefits.

FedEx Kinkos has seamlessly integrated its Order-to-Pay process across 1500 stores, enabling real-time business visibility and improved cash flow.

Motorola uses BPM to gain visibility and control over its order entry-to-order booking process. This has led to dramatic improvements in streamlining the order process. In just nine weeks Motorola achieved:

  • an 85% improvement in problem discovery and resolution time
  • a 75% reduction in the number of problem orders
  • a 38% increase in business process productivity for the planning team.

Fonterra, the world’s largest dairy products exporter, has achieved end-to-end visibility across a supply chain that spans more than 140 countries. Process visibility and management has delivered savings of millions of dollars annually by enabling Fonterra to:

  • measure DIFOT (delivered in full and on time) as seen by the customer
  • provide faster, more accurate service since agents know the status of any order at any time
  • proactively resolve problems, thanks to automated alerts
  • more tightly control unplanned costs
  • better manage supply chain vendors.

Written by Stephen Keys, Director, Business Development, Software AG, responsible for Australian and NZ markets. Prior to joining Software AG, Keys spent eight years with Primavera Systems, overseeing the development of its international sales operations throughout the UK, EMEA and APJ. He holds a BA Honours Degree as well as a Diploma in Management.

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