Are You Overlooking Your Processes? Here’s Why You Should Focus on BPM to Prepare for Digital Transformation
November 13, 2019
Can BPM prepare your organization for digital transformation? Can it actually be used to scale a business? How are companies using BPM to improve product offerings and customer relationships?
In this article, I will address all this and more by covering the following:
- What BPM is and is not
- 3 BPM frameworks
- The BPM lifecycle and BPM methodology
- BPM technology (BPMS and iBPMS)
- BPM’s role in integrating systems, humans and things
- BPM examples
- BPM benefits
What Is BPM?
Business process management (BPM) is a discipline in operations management that focuses on improving business processes. It views businesses as a set of connected processes and aims to analyze and optimize them. It is an ongoing process that constantly looks at the situation “as is” and what a better version could be. It enables businesses to be agile and efficient, driving innovation and digital transformation.
BPM is a business practice – it is something you do, not a thing to own or buy.
BPM has different frameworks and methodologies.
The BPM technology or product is called a BPM Suite or System (BPMS).
Processes are crucial to an organization’s success. They are the blueprint to all business operations as they enable different departments to collaborate and interact with suppliers and customers.
BPM aims to understand, manage and develop processes to achieve an organizational objective. It takes a holistic view of processes, not a functional approach. This means that it looks at the “big picture” and views processes as interrelated business activities that fulfill a business outcome. In contrast, businesses that take a functional approach look at independent activities and develop processes in isolation from one another. Instead of simply improving individual tasks, BPM aims to improve end-to-end processes that span across systems, employees, customers, partners and suppliers.
- Participating in a process
- Improving a single step of a process
- Making suggestions for process improvement
- Implementing or coding the process application
The Association of Business Process Management Professionals defines BPM as:
“Business process management (BPM) is a disciplined approach to identify, design, execute, document, measure, monitor, and control both automated and non-automated business processes to achieve consistent, targeted results aligned with an organization’s strategic goals. BPM involves the deliberate, collaborative and increasingly technology-aided definition, improvement, innovation, and management of end-to-end business processes that drive business results, create value, and enable an organization to meet its business objectives with more agility. BPM enables an enterprise to align its business processes to its business strategy, leading to effective overall company performance through improvements of specific work activities either within a specific department, across the enterprise, or between organizations.”
BPM can be applied across various businesses and industries, such as:
- Finance – invoicing, billing, risk management
- Banking – customer onboarding, credit checks, online banking
- HR – employee onboarding, payroll, leave requests, building security
- Manufacturing – product assembly, quality assurance, maintenance
What’s the Difference Between a Process, Project and Task?
Process – Repeatable steps to achieve a business goal, done on a regular basis
Project – Often a specific thing, done once, within a defined time frame
Task – Specific steps in a process or project
The difference between process management and project management is the repeatability and predictability in the structure and sequence of work. Process management is about replicable conditions, gateways, business rules, and process flows. It usually involves long-running processes or transactions, such as employee onboarding and product shipping. On the other hand, project management is usually an independent once-off activity, done on a situational or ad hoc basis, with a specific deadline – for instance, creating a marketing campaign for a specific client.
Business Process Management (BPM)Framework
A BPM framework facilitates the implementation, management and improvement of an organization’s processes. It structures BPM standards and regulations. There are three main frameworks:
Horizontal BPM framework
This framework focuses on using technology for process design and development. It involves formulating new technology to create new processes and/or reuses existing technology to improve existing processes. The horizontal BPM framework and its supporting solutions can be applied across several different industries.
Vertical BPM framework
This framework focuses on coordinating tasks and building templates for each business process, to guide and analyze specific objectives. This might require building new templates or re-configuring existing ones before launch. The vertical BPM framework and its supporting solutions are targeted to a particular type of process or industry.
Full-service BPM framework
This framework delivers the full breadth and depth of the BPM approach by combining both horizontal and vertical frameworks. It covers the following components: process discovery, project scoping, process modeling, process design, business rules engine management, workflow engine management, simulation and testing. The full-service BPM framework can be applied across different industries.
BPM lifecycle of continuous improvement
While most sources refer to 5-6 main steps in the BPM lifecycle, I‘ve included all the steps for a comprehensive overview.
What issue needs to be solved? What are the current processes around it? What is the situation “as is”?
How can the process be improved? What resources are required? Define or redefine key performance indicators (KPIs).
Design (a new process) or redesign (an existing process)
Create a theoretical design of the improved process (“to be”).
Create a model representing the complete process.
Consider “what if”. Introduce different variables to the theoretical design and model how it would work in different scenarios.
Implement the improved processes by enacting the process design and model. This could be systemic implementation (using specific tools) or non-systemic implementation, human-driven and/or software-driven, manual and/or automated.
During execution, conduct process documentation.
Use real-time, near-time or ad–hoc tracking to monitor processes for optimization. Use business activity monitoring (BAM) tools to help aggregate, analyze and present real-time information about business activities.
Measure and control
Measure progress by using statistics and analytics to quantitatively determine how well the new process is working and to check if they’re meeting KPIs.
Controls can be strict or loose. The aim is to ensure the process follows its designed course. Methods include training, guidelines and more.
Analyze bottlenecks and opportunities with techniques like process mining.
Apply improvements in the process design.
BPM is an ongoing activity which involves constant optimization!
If the process is still not achieving its desired output, re-engineer the entire process. Business process reengineering (BPR) requires the fundamental restructuring of processes to achieve optimal productivity and efficiency.
According to the BPM Institute, a BPM methodology is an approach with specific principles and procedures that provide guidelines for how to approach different scenarios within the BPM discipline.
The most common BPM methodology utilizes the lifecycle stages: Design, Model, Execute, Monitor and Optimize (DMEMO). This is similar to the DMAIC process which involves Define, Measure, Analyze, Improve and Control.
While the general BPM approach is to use steps in the BPM lifecycle like DMEMO or DMAIC, more specific BPM methodologies include Six Sigma, Lean and Rummler–Brache. Six Sigma aims to minimize process variability and errors to improve the quality of process outputs. Lean aims to minimize waste and maximize value.
Which methodology your organization chooses to use will depend on your resources and objectives. While initially, most of the steps appear to be similar, each methodology demands different analytical resources. Six Sigma, for instance, is a specialized methodology that relies heavily on statistical analysis of process data. This may be required for more complex processes.
Some organizations might even choose to build their own methodology by incorporating procedures and techniques from existing methodologies that best suit their needs.
BPM Technology – BPMS and iBPMS
A BPM Suite or System (BPMS) is a means of using technology to execute BPM. They have functions such as:
- Process mapping: Use digital process models to depict process flows to enable better comprehension and analysis.
- Organizational architecture modeling: Model end-to-end value chain processes for a big picture view of the organization’s entire business operations
- Management dashboards: Get full visibility across all processes and identify bottlenecks.
- Verification: Ensure logical compliance. Find and help to solve errors and handle malfunctions.
- Analytics: Track processes with real-time monitoring. Measure KPIs. Identify problems and opportunities. Create reports.
- Collaboration: Enable collaboration between departments and prevent work duplication with functions like document sharing and discussions.
A BPMS helps to enforce new processes changes as making a change in the BPMS ensures that everyone will use the new process.
Intelligent BPMS, or iBPMS, is an integrated set of technologies that coordinates people, machines and things. It offers advanced capabilities such as artificial intelligence (AI), enhanced collaboration tools, adaptive analytics and real-time decision management to dynamically manage different types of end-to-end experiences.
An iBPMS is a high-productivity, low-code/no-code platform that allows end-users and professional developers to collaborate on business process improvement and transformation. Business users or “citizen developers” are empowered with the ability to make dynamic process changes in operating models and procedures, such as security administration and system integrations.
These advanced collaboration capabilities encourage wider adoption across departments and greater improvement within existing processes.
By optimizing outcomes in real-time and enabling new practices and offerings to launch quickly, iBPMS increases the agility and scalability of business operations.
According to Gartner, iBPMS allows organizations to:
- Manage the reinvention of existing business processes and the creation of novel business processes in support of both digital optimization and digital transformation efforts
- Support top-down and bottom-up redesign of its business operations and processes
- Improve the business outcomes of all types of work, not just structured and repeatable business processes
For current information on iBPMS, check out Gartner’s 2019 report: Magic Quadrant for Intelligent Business Process Management Suites (iBPMS).
BPM – Integrating Systems, Humans and Odd-Ends
BPM orchestrates between different systems and people to improve the overall function of business processes. It addresses integration issues like interoperability, compatibility and secure data migration by enhancing communication capabilities and preventing malfunctions during the process.
Process mapping and modeling simulate and analyze processes under varied conditions, making the business prepared for all possible scenarios. BPM also ensures the integration process is monitored and optimized to ensure it achieves its peak potential.
As BPM creates more flexibility, productivity, transparency and consistency in processes (more on this in the next section), it helps to create seamless transitions during new system integrations.
There are two main approaches to BPM – human-centric and system-centric (or integration-centric).
Human-centric BPM focuses on people and communication. The task is communicated to a person, instead of being automatically moved through the system, to facilitate the process. Automation here plays a supporting role and is not the main function. Examples of human-centric processes include customer service, employee onboarding and expense reporting.
System-centric (or integration-centric) BPM focuses on the technology aspects of processes. These processes work within and between applications and systems. An example of an integration-centric process is online banking, which often requires different software systems to work together.
BPMS are often used for system integrations as they enable the merging of data across different software and applications. BPM facilitates human-to-human, human-to-system and system-to-system processes and workflows, thus supporting the integration of new systems across the organization and beyond (with vendors and customers). This is also increasingly being extended to integration with “things”, as business processes start to rely on more data generated from the Internet of Things (IoT). For instance, a BPMS could manage the employee onboarding process which involves multiple systems such as HR, payroll and building security.
According to a 2017 Forrester Research report “BPM Platforms for Digital Automation”, BPM priorities are now about “facilitating cross-channel communication among employees, customers, partners, and things”. In a survey of companies using BPM, the report found that:
- 64% are using BPM to improve customer servicing
- 52% are using BPM to improve customer on-boarding
- 35% are using BPM to improve sales-related processes
- 26% are using BPM to improve order management
- 26% are using BPM to improve supply chain and partner-facing processes
- 25% are using BPM to improve accounting and financial processes
- 12% are using BPM to improve human resources
A customer orders a product from a website. The e–commerce vendor checks with the product manufacturer for availability and shipping costs. Within a few seconds, the customer receives this information on the same webpage. BPM streamlines this process by integrating the different systems involved, facilitating quick and accurate communication, resulting in more prospects converting into buyers.
BPM is applied to issues related to customer relationship management by providing solutions such as:
- Ensuring the activities between the customer service, sales and marketing departments are fully aligned
- Improving collaboration and feedback between the office-based sales department and on-site service staff
- Setting up help desks and service call centers for customers
A service-based business like a bank can employ BPM to speed up the approval process for opening an account. Customers won’t have to join a queue in person or wait up to three business days for approval, instead they can have their new accounts approved within minutes. The bank is, therefore, able to attend to more clients at a quicker rate. Additionally, BPM can integrate different systems to create online banking capabilities.
BPM ensures continuous improvement, which enables organizations to keep up with industry and market trends. With its constant optimization of end-to-end processes, BPM encourages businesses to utilize emerging technologies to support and automate new and existing tasks. It helps to maintain a quick learning curve. Such organizations are well equipped for digital transformation. Furthermore, by having clear and efficient processes, businesses are able to deal with situations in times of crisis.
BPM fosters a culture of innovation as it creates an environment where employees are accustomed to change. With this internal flexibility, it is easier to innovate and there is less resistance to overall changes.
BPM helps to streamline processes by cutting out redundant tasks and automating menial work. This enables employees to focus on their core functions, resulting in higher work output in terms of quality, quantity and speed. By enabling processes to move more smoothly, BPM helps to eliminate bottlenecks and malfunctions.
Higher efficiency also reduces waste and creates a lower output-to-expense ratio. This means there is bigger output for the same process cost, or the same output for lower cost. According to AIIM research, companies that implemented BPM increased their ROI by 41 percent within a year.
By automating menial (and often unenjoyable) work, employees get to focus on more engaging and meaningful tasks, thus increasing work satisfaction. Using employee feedback to improve business processes also fosters a sense of worth and inclusion, thereby boosting staff morale.
BPM requires that organizations track and quantify their processes to measure efficiency. It is only by measuring processes over time that it becomes possible to identify potential improvements.
As business processes continuously adapt to technological changes, it becomes increasingly important to ensure compliance with organizational strategies, industry policies and government regulations. By documenting all processes and following them strictly, the organization ensures that they won’t be violating any rules and regulations. Having complete transparency enables them to demonstrate compliance with regulatory bodies and management. Such visibility can also prevent internal fraud and abuse.
Process standardization establishes the single best way of doing things. This means that no one is ever required to rely on memory or guesswork. This makes employees more accountable and causes less variations in results.
As a result of complete transparency and standardization, employees are less likely to make mistakes. In addition, BPMS analytics will flag mistakes as soon as they occur, enabling them to be addressed quickly. This minimizes errors in overall processes.
Efficient and optimized processes generate better products and services, resulting in happier customers! The ability to be transparent with customers demonstrates trustworthiness. BPM’s focus on continuous improvement also means that customer feedback is not only valued but required. This encourages interaction and relationship building between the business and its customers.
You’re now familiar with how BPM perpetuates a continuous cycle of improvement in business processes and end-to-end organizational outcomes. It provides the structure and clarity required when integrating systems, while offering organizational agility and scalability for digital transformation. Change is inevitable – is your organization prepared for it? To see how you can optimize your pricing strategies and push your profitability to the max, sign up for a demo today.