The BPTrends group on LinkedIn.com is a lively discussion platform for all things BPM (Business Process Management). I can recommend joining the group as well as the Monthly Advisor on their website.
One of the discussions is to try and define BPM in 160 characters or less. I added my few cents and came up with 2 attempts along these lines:
- The purpose of BPM is to actively manage process events, variables and stakeholders to deliver critical, measurable process outcomes; and
- It is “applied common sense” to make sure that you do the right things the right way over and over to stay in business and that you get better at it.
Roger Tregear’s definition, however, is the best BPM for Executive Dummies that I’ve seen in a long time.
- Organisations exist to deliver value to customers and stakeholders. That’s strategy.
- They do this via a series of coordinated activities across a number of functional elements of the organisation. That’s a process.
- It makes sense to optimise these processes so that they satisfy the requirements of customers and other stakeholders. That’s process improvement.
- Taking a coordinated view of the performance of the processes by which an organisation delivers value, optimises performance. That’s process management.
- Process management allows organisations to focus on processes that create the market differentiation described by the strategy. That’s execution.
It is more than a 160 characters but it describes the essence of what BPM wants to achieve, or for that matter, the essence of what any organisation wants to achieve.
It is actually part of an article that Roger did (see the “achieving process based management” in the box.net section of his LinkedIn profile) and I recommend reading it. He lists some of the reasons for BPM in the same document, which I will comment on in a later post.
Back to the “profound sequence from strategy to execution”. Not all organisations look at their processes strategically. They should, and Roger gives the definitive reason in the five bullet points. We seldom find prospects or customers that want to start the discussion with strategy. Most are looking at bullet 2, the series of coordinated activities across a number of functions in the organisation. Most have a problem with coordinating events across functional areas of their business and want a quick fix. And that’s generally where many organisations stay. They may automate them but they don’t get the benefits associated with managing them.
It also illustrates the difference between process automation/workflow and business process management. You may require process management software tools to achieve effective BPM, but it remains a way of thinking and how you approach processes that will have the long term strategic benefit. There is a process in getting to real BPM. The good news is that it is fairly simple and not hard to do. Just take the five points and apply them to your organisation and go from strategy to execution through your processes.
(I first published this around 2004 but I often still need to provide a “simple” explanation. This is the best I could come up with. It is done from a BPM tools vs Workflow tools perspective and not BPM as a management methodology. There is a post “Process-Centric Management” that does a better job of describing BPM as a strategic approach)
I often get asked what the difference is between BPM and Workflow. I guess I’ll answer it like any consultant. “What do you want it to be?”. It is really based on your point of view. If you come from a technical or tools perspective then the difference is quite so obvious. When you look at it from a business perspective some clear points of difference are visible.
For me BPM is about managing a business problem where workflow is a technology. BPM use workflow as one of its dimensions to manage business processes. The thought of dimensions led me to think of some of the other dimensions of BPM. It also reminded me of the cube as the icon for BPM with its six sides. The six sides of the BPM cube.
- BPM has a human workflow (WF) dimension;
- BPM has a rules engine (RE) dimension;
- BPM has an enterprise application integration (EAI) dimension;
- BPM has a service oriented architecture (SOA) dimension
- BPM has a content management (CM) dimension; and
- BPM has a business intelligence (BI) dimension.
So if BPM has all these dimensions one can argue that a BPM Suite (BPMS) should allow for the configuration of all of the dimensions from one interface or product suite. A BPMS provides the ability to create Composite Process Solutions (CPS) with all of these elements from a single toolset. A typical CPS may be a complex Order Management Cycle (OMC) solution with complex business rules, human intervention, various documents and data integrated to the CRM and ERP solutions in the business. The OMC solution needs to provide operational feedback and notifications to line managers as well as the ability to analyze completed processes and identify and opportunities to improve the processes by reducing bottlenecks and redundancy.
A simplified model of the cube would be to integrate RE with WF as well as EAI and CM with SOA. This leaves three dimensions for BPM:
- Rules-based human-centric workflow and process automation [Automate] A
- SOA based EAI and CM [Integrate] I
- BI based Performance Management [Manage] M
Are you AIMing your processes in you organization? This should be more important than debating workflow vs. BPM
Competitive Advantage = Business Process Improvement x Business Process Management Suite
Organisations are all looking to improve their competitive advantage by following one of the 3 Porter strategies:
- Low cost provider;
- Differentiation; and
- Focus.
Business Processes are the primary vehicle for the implementation of anyone of these strategies and that is the main reason why business process improvement projects are on the top of the list of many organisations. Gartner and numerous other research organisations have listed business process improvement on the top of the list for both CEO and CIOs. The cost of labor in developed countries such as the USA, UK and Europe also require continuous review and optimisation of business processes to reduce the labour cost to a level where it can compete with emerging countries like India and China where labour is cheap.
Business Process Improvement Initiatives (BPI2) differs from automation and workflow projects in objective and scope. The scope of BPI2 is to management process improvement across the enterprise and its objective is to support the strategic objectives of the organisation. These strategic objectives typically revolve around both growth and cost reduction plans to support the 3 strategic approached that Porter described.
Automation and workflow focus on automating repetitive tasks in specific business areas and the objectives are generally operational by their nature. They are in many instances the result of a pain point or an operational issue that can be easily automated with a hard-coded workflow. Some of these workflows may even have rigid integration into a back office system to reduce time, errors and increase productivity of the process. (Technologies such as WF may be ideally suited to develop these workflows.) It has a transactional perspective and is aimed at solving an operational problem by letting a programmer write a custom application.
Workflows are useful if it can be utilised as part of a bigger business process management solution to support BPI2. The objective of BPI2 is to support the strategic objectives of the organisation as noted earlier and it is part of a continuous improvement process throughout the lifecycle of the business. The processes that support the business strategies need to change as the business move through its lifecycle. This requires an agile approach as business strategies may change quickly in response to market events and requirements. Changes to business processes are identified by business users and they are best suited to define the requirements for the changes to the processes. Business Process Management Suites, such as XMPro, is designed to support business users in the discovery of their business process requirements and allowing them to compose and deploy new processes without coding and programmer involvement. This is also the promise of BPM2.0.
It doesn’t mean to say that programmers and developers will disappear, but their roles will change in the agile process driven world of the Real Time Enterprise (RTE). BPM requires a set of new skills both in business and IT. This article will address these new roles later.
Business Process Management or BPM differs from workflow not just from a technology point of view but also from a strategic perspective. The same technology tools can be used to solve a workflow or a BPM issue. BPM is a management approach that is aimed at managing business processes. The management action is a continuous effort to define process outcomes (KPIs), deploy, monitor, analyse and adjust the process in a proactive manner. BPM utilises a broad range of support technologies to accomplish this and a BPMS like XMPro put all these technologies together in s single suite to support the proactive management approach to improve processes or competitive advantage.
Enterprises that embark on a formal BPI2 goes about it in a structured and methodical way that is based on a sound BPM methodology. Developing a point solution workflow doesn’t require that same approach and are in many instances a simple specification of an operational flow diagram and it is left to the developer’s interpretation of the process to determine what the outcome will be. A BPM methodology is based on aligning the strategic outcomes of the value chains in an Organisation with the operational processes that support them. A compliance strategy may require a less than optimum technical solution, but it will better support the strategic objectives.
The BPMS support the business user throughout the process lifecycle and is a critical success factor for an effective BPI2. It empowers a business user to compose strategically aligned processes, optimize, deploy, analyse and monitor them and provides the flexibility and agility to change them quickly to respond to changing business requirements.
Many Organisations are still low on BPM maturity and use the BPMS technology primarily for workflow and integration purposes. These organisations will increase the benefits of using the BPMS ten or hundred fold as they move up the BPM curve towards BPI and increase their competitive advantage.
It is clear that organisations can code workflows in a multitude of developer tools that include a BPMS but the requirements of the Real Time Enterprise need a BPMS to deliver on the competitive advantage of agility in strategy and operational execution.
Business Process Management is not only limited to large organisations with formal business process improvement (BPI) initiatives, but it is just as relevant (if not more so) in mid market businesses that operate in the same competitive landscape as those large enterprises. They may not have the same resources available but they still have the same types of business applications in place to support the same processes as those larger Organisations. There CRM and ERP solutions may not scale to 50 000 or 100 000 users but the core functionality remains the same. There value chain looks very similar, if not identical, to that of the larger organisations. Their order to cash, procure to pay, and quality management processes have the same inefficiencies as that of larger organisations. Their business applications are also disconnected and rely on people to understand and drive their processes. Their workflows are also rigid hard-wired integration solutions and their business users require the same ability to adjust processes and business rules as the competitive environment changes.
They have limited IT resources and IT is in many cases outsourced. Business users in the mid market have an even bigger need to be in charge of their own destiny. Their initiatives may not be strategically defined as BPI but are typically more tactically oriented. Take the following Customer Onboarding business scenario:
A sales representative manages his/her prospects in the CRM solution of the organisation. They only maintain the bare minimum information that is required by the system. At some point in time the prospect may want to be become a customer and a new account needs to be created in the financial application. E-mails typically start flying around and the financial person ends up trying to get the information required to create the account. There are no controls to ensure that the credit status of the prospect is verified and that all supporting documentation accompanies the request.
The process can be managed from start to end with a Business Process Management Suite (BPMS) such as XMPro to connect the CRM to an approval process through to create the new account in the ERP using drag and drop integration adapters (XMConnect) . The process can be initiated from Microsoft Outlook, SharePoint or a web interface and all the supporting documentation is available with the process audit trail.
This scenario is typical of the operational process requirements that mid-market Organisations face. Managing 50 sales representatives may not have the same operational savings as managing the 12 000 found in some large enterprises, but the improved customer relationship management and quicker account approval process will have significant impact on the sales bottom line.
The process in the example above can be deployed in a matter of days and fine tuned to the exact requirements of the business in weeks. The process can be expanded to include other scenarios and grow as the business grows.
The objective is not to create workflows for requirements that the ERP or CRM can’t cater for but to manage the business processes at a tactical level with performance feedback information, dashboards and the flexibility to change as the competitive landscape changes.
Extending business applications with BPMS applications such as XMPro in mid market organisations allow them to compete with large business in the age of Real Time Enterprises.
President Obama recognises the role of performance management in organizations if they want to be relevant in the future. He was not successful in getting McKinsey consultant Nancy Killefer on board (apparently she had some personal tax issues) as the Chief Performance Officer but he managed to appoint Jefferey Zients a while ago. Zients comes with an impressive record. He has 20 years of business experience as a CEO, management consultant and entrepreneur and has helped lead firms that provide performance benchmarks and best practices across a wide range of industries. Sounds like the man for the job. There seem to be renewed interest in the role of performance management in organizations.
Tom Davenport , a process management thought leader at Harvard, wrote in his “The Next Big Thing” blog about “The Rise of the Chief Performance Officer” appointment. The interesting is thing not his view on President Obama’s appointment but rather his view on the convergence of process management, knowledge management and performance management. Tom refers to a debate on merging various thought leader discussion groups and I quote his blog
“They noted, for example, that if you want to align knowledge and learning with work, you need to know something about business processes and how to improve them. And if you’re going to align processes with the content needed to perform them effectively, you need to know something about the technology that would deliver the content in accordance with job tasks. What this begins to suggest is that the era of siloed business improvement activities will give way to applying a variety of interventions to improve work. In other words, an organization run by a Chief Performance Officer might be called for. “
This has been the point of Performance Focused Process-Centric organizations and this blog all along. Knowledge Management in today’s organizations are tied to the hip with processes. Every process has contextual knowledge, transactional knowledge and procedural knowledge that makes the process work. Performance management endeavours to make processes effective, efficient, consistent and even predictable. Performance, process and knowledge management are inseparable in support of the business drivers mentioned in a previous post on this blog. Processes need to designed for performance and embed critical knowledge.
Most of today’s process, performance and knowledge management methodologies are supported by IT based tools. There are content, performance and process management solutions that can manage the transactional side of all these components, but the role of the Chief Performance Officer (CPO) will be to ensure a synergistic approach to methodology and tools. There is no one single solution that will work for all organisations that cover all 3 areas (there are not even tools in the 3 areas that cater for everything in that area) and the CPO will need to ensure that process are designed for performance and that it takes knowledge management into consideration. Knowledge Management should support performance and process management while performance management solutions should be based on quality information from knowledge based business processes. Definitely some food for thought.
Well done President Obama on recognizing the need for a Chief Performance Officer. Let’s see how well they perform
There is a Business Process Group on Linkedin that is very active with numerous posts on BPM related subjects everyday. I try to comment when I get a chance and this specific thread asked “What’s the best way to pitch BPM to a company that doesn’t know that it needs it?”. I commented as follows and then got a private message from John Wurl.
PvS Comment: These are always the most difficult. In all honesty, we don’t sell them BPM if they don’t know what it is. We rather engage with them and identify some “pain points” in their business. We then solve the problem by addressing the process and we show them what it means to “manage” their processes. This approach takes less time with a higher conversion rate than trying to educate them at the start.
Message from John: I enjoyed reading your reply to this post. It seems that many of our posts get into the technology agnostic debate and I was curious how you managed this? You seem to have a very simplistic and elegant approach. Does it remain that way for long when you integrate a tool? Thank you and I hope I am not asking a dumb question.
PvS reply to John:
Our objective is to sell our software in the end but we’ve learnt that we have to solve the “business problems” if we want to have a long time relationship with our client. Taking a business improvement approach mostly leads to the question on how to implement the process change to make it consistent, repeatable and sustainable. That inevitably leads to employing a tool like XMPro. We never started XMPro with a view to become a BPMS. We come from a background of developing bespoke solutions for ERP solutions. That generally requires solving the business problem. The focus is not on the tool but the objectives and performance indicators of the process. We then decided to build a tool for composite process applications with complex integration requirements and it turned out that Gartner coined it BPMS. So our focus is on solving a business problem and you will have a customer for life.
Once they see that they have multiple process (pain point solutions) in one process portal, they start to see the value of “managing processes” proactively. Then we introduce them to fully fledged BPM.
I hope this answered your question and thanks for commenting.
So the best way to pitch BPM to a company that know that it needs it, is not to pitch it at all. Show how process performance improvement can solve business problems. It is not about the methodology, technology or the tool. It is about solving a business problem.