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January 23, 2006
4 Min Read
The number of people I meet who have heard of business process management but are unsure what it is and unaware of how it can benefit their organizations continually surprises me. If this description fits you, here is BPM in a nutshell.
BPM is both a management philosophy and a software tool. As a management philosophy, it calls for organizations to document, analyze and measure their business activities not in terms of discrete functions such as marketing, sales, manufacturing and customer service but in terms of end-to-end business processes that cross functional boundaries. In that sense, BPM runs counter to both traditional organizational structure and enterprise application software, both of which focus on integration within each functional unit.
As a software tool, BPM takes the form of an integrated suite of components that first model the end-to-end process from a business perspective and then create an automated implementation of the flow described by the model. Once the automated process is deployed, BPM components monitor business performance based on actual process data. Instead of treating business modeling, IT implementation and performance management as independent endeavors, BPM unites them with an integrated set of tools and an overarching management philosophy of continual incremental improvement.
So, what can that do for your organization? Here are five reasons to invest in BPM:
1. Simplification. When Windows and LANs invaded the workplace in the early 1990s, the business process reengineering gurus of those days warned, "Don't pave the cowpaths!" Simply automating outmoded business processes made no sense when the nature of office work itself had changed. That warning is equally valid today, as the Internet and mobile wireless devices are transforming work once again. BPM projects begin with documenting how current processes work but then progress to how they could be made simpler, faster, more efficient and more effective. Flipcharts and stickies on walls get turned into process models that are analyzed through simulation to quantify projected performance improvements.
2. Efficiency. The process model describes sequences of business activities — some performed by people, others by automated systems — linked by rules. The software magic of BPM is turning those models into automated implementations that deliver work to those people and systems, enforce the rules and track completion against assigned deadlines. In case after case, the resulting workflow automation dramatically reduces cycle times — from weeks to one or two days is not uncommon — and allows significant expansion in daily work volume without adding staff. Efficiency improvements are the No. 1 source of return on investment from BPM.
3. Compliance and Control. The combination of globalization, mergers and acquisitions and regulatory burdens has created new demands for process consistency and transparency throughout the enterprise. By taking control of business processes and enforcing business rules, BPM ensures compliance not only with policies and regulatory requirements but also with best practices tuned to performance objectives. BPM tools encourage reuse of process fragments throughout the organization while allowing local variations where they make sense.
4. Agility. The new IT revolution is service-oriented architecture. SOA lets IT assets, both new and existing, be exposed for reuse and interconnection as component services. By standardizing the interfaces between components regardless of their underlying implementation, SOA dramatically lowers the cost and effort of integrating business systems across the enterprise. BPM provides the business logic, called orchestration, interconnecting these services and allows it to be modified quickly in response to changing demands.
5. Continuous improvement. The ultimate goal of business process management is optimization of business performance. The same metrics and key performance indicators mapped out and simulated in the process model can be aggregated from the process implementation and displayed in real time in BPM performance management dashboards and reports. Like corporate performance management systems, BPM supports high-level strategic metrics, drill-down analytics and alerts when results begin to deviate from performance targets. In addition, by providing a platform for rule-triggered actions, BPM can turn alerts into automated real-time escalation and remediation procedures, providing zero-latency response to the business environment. Ultimately, parameters distilled from actual operations can be fed back into the process model to begin the next cycle of performance improvement.
BPM suites combine process modeling, execution and performance management in a coherent set of software tools linked by a coherent management philosophy. Because it is neither IT infrastructure nor an enterprise application, BPM is still not well understood by IT. But the benefits are real, and you can't afford to ignore it.
Bruce Silver is an independent industry analyst. His "2006 BPMS Report" is available for free through BPM Institute.
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