Saturday, March 20, 2010

Business Process Management (BPM)

“BPM is a structured approach employing methods, policies, metrics, management practices, and software tools to manage and continuously optimize an organization's activities and processes”
-- Gartner Research

Business Process Management (BPM) can be defined as the practice of improving the efficiency and effectiveness of any organization by automating the organization's business processes [In general, a process for a task comprises a sequence of steps that should be followed to execute that task]. Business Process Management used to be referred to as Business Process Reengineering in the past.

Some the general goals that every organization aims at are:

(i) Better Customer Service
(ii) More sales channels
(iii) Online services
(iv) Better efficiency

Besides, the ever-changing business scenario demands for higher levels of quality, optimization of cost, on time delivery, rapid adaptability, identifying productivity bottlenecks, risk mitigation and risk control. BPM provides solutions to all these demands. Some of the benefits that BPM will provide include:

(i) Reduces risk in business processes
(ii) Consistent quality output
(iii) Increased Return on Investment
(iv) Wider range of participation in process
(v) Drives process improvement
(vi) Simplified Training

The central aim of BPM is to align the organization with the customers’ wants and needs. BPM attempts to continuously improve business processes and achieves process optimization by defining, measuring, and improving business processes. The concepts of BPM has evolved from operation transformation and enables flexible design, deployment, monitoring and tracking, process focus, and efficiency.

Each organization will have business processes that are unique to its business model. These processes will evolve over time as the business reacts to market conditions. Therefore, the BPM software tool in use at the organization must be easily adaptable to the new conditions and requirements and continue to be a perfect fit for the organization. An effective use of BPM demands that organizations stop focusing exclusively on data and data management, and adopt a process-oriented approach that blends machine and manual operations.

The concepts of KAIZEN are often used for business process improvements. In general, KAIZEN can be explained as:
KAI = Change
ZEN = Good
Changing for improvement; Changing to become better.

According Wikipedia, “A closer definition of the Japanese usage of KAIZEN is ‘to take it apart and put back together in a better way.’ What is taken apart is usually a process, system, product, or service.”

The process of implementing KAIZEN can be summarized as follows:
Go to GEMBA = Go to the place where things happen
Watch at GEMBUTSU = Look at what happens
Look for MUDA = Look for waste
Perform KAIZEN = Improve something good to make it even better

Before we move on to the life cycle of Business Process Management, let us take a closer look at what ‘model’ and a ‘workflow’ are. A ‘model’ is a multi-dimensional representation of reality capturing a moment in time. A model has purpose, perspective, audience, content, level of detail and phases as related to a life cycle. A model conveys a message and summarizes information. A Business Process Model describes the details about the way a business conducts its work. A workflow is an integral element of Business Process Management. Workflow is a term used to describe work definition, allocation, and scheduling. It defines the sequence and conditions based upon which steps consisting of work, flows. Workflow handles the routing of work between resources [people, systems, or machines]. Workflow manages the order in which these steps are handled. Workflow also enables employees to monitor and, reconfigure the flow of a business process as needed.

From a high-level view, the life cycle of Business Process Management consists of Process Mapping, Process Deployment, and Process Improvement.

Process Mapping consists of Process Discovery and Process Design. Process Discovery consists of identifying the key processes and defining the rules and roles for each process. Process Design involves modeling the process with its rules and roles on to the system.

The key focus of Process Deployment is integrating participating systems and training the different stakeholders of the processes.

Process improvement involves analysis and optimization. Analysis identifies bottlenecks in the processes. Analysis also measures the time taken per work step, per person and per process. The role of optimization is to redesign processes so that bottlenecks identified during analysis are removed.

A key component of BPM is Business Activity Monitoring (BAM). As the name implies, it is essentially a facility to enable automated monitoring of business process activity related to an organization. Before a BAM facility is put in place, it is very important to define the Key Performance Indicators (KPI) that need to be tracked using BAM. This will prevent information overload and overreaction to business exceptions. Once the KPIs are defined, a system need to be created that allows monitoring and responding to changes, ideally in real time. Business Activity Monitoring allows an organization to respond faster to new opportunities and threats appearing in the business scenario. The core concept of Business Activity Monitoring is recognizing an enterprise’s key performance indicators and implementing the right technology in place to monitor them. A typical BAM system provides real-time, graphical Key Performance Indicators and analysis, enables control, and manages ongoing business operations using closed-loop visibility. It also enables zoom in on cross-process metrics with real-time analysis to determine which processes are creating bottlenecks or which customer is most profitable. BAM also enables organizations to respond quickly to change based on business events in real-time.

BPM makes it easy for enterprises to program their current processes, automate their execution, monitor their current performance, and make on-the-fly changes to improve the current processes. BPM software enables you to automate those tasks that are currently being performed manually. Many of these tasks require some type of application process, approval or rejection process, notifications and status reports. Handling exceptions is an area where BPM really excels. Organizations have few problems when their processes run smoothly ninety-nine percent of the time. However, it is the one percent, where the exceptions are, that dominate the majority of the organization’s time and resources. BPM is ideal for processes that extend beyond the boundaries of an enterprise and communicate with processes of the partners, customers, suppliers, and vendors. BPM gives companies the agility to stay competitive and reduces the time elapsed in a business process. BPM also increases the productivity per person. Business process consists of many steps and a typical BPM initiative reduces the number of steps by half. A business process needs many people and resources and a good BPM should reduce the number of resources needed for the same business process. BPM also helps improve coordination across departments and geographic locations of an organization.

This concludes the blog post on Business Process Management (BPM). Thanks for your interest.

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