Business process management
Business process management (BPM) is a field of management focussed on aligning organizations with the wants and needs of clients. It is a holistic management approach that promotes business effectiveness and efficiency while striving for innovation, flexibility and integration with technology. As organizations strive for attainment of their objectives,
Business process management attempts to continuously improve processes - the process to define, measure and improve your processes – a "process optimization" process.
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Overview
A business process is a collection of related, structured activities that produce a service or product that meet the needs of a client. These processes are critical to any organization as they generate revenue and often represent a significant proportion of costs. BPM articles and pundits often discuss BPM from one of two viewpoints: people and technology.
Roughly speaking, the idea of (business) process is as traditional as concepts of tasks, department, production, outputs. On the other hand, the current management and improvement approach, with formal definitions and technical modeling has been around since the early 1990s (see business process modeling). However, in recent years, there has been a common confusion in the IT community when the term 'business process' is often used as synonymous of management of middleware processes; or integrating application software tasks. Therefore, this must be kept in mind when reading software engineering papers using this, or the 'business process modeling' terms.
Although the initial focus of BPM was on the automation of mechanistic business processes, it has since been extended to integrate human-driven processes in which human interaction takes place in series or parallel with the mechanistic processes. A common form is where individual steps in the business process which require human intuition or judgment to be performed are assigned to the appropriate members of an organization (as with workflow systems).
More advanced forms such as human interaction management are in the complex interaction between human workers in performing a workgroup task. In this case many people and system interact in structured, ad-hoc, and sometimes completely dynamic ways to complete one to many transactions.
BPM can be used to understand organizations through expanded views that would not otherwise be available to organize and present. These views include the relationships of processes to each other which, when included in the process model, provide for advanced reporting and analysis that would not otherwise be available. BPM is regarded by some as the backbone of enterprise content management.
BPM life-cycle
The activities which constitute business process management can be grouped into five categories: design, modeling, execution, monitoring, and optimization.
Design
Process Design encompasses both the identification of existing processes and designing the "to-be" process. Areas of focus include: representation of the process flow, the actors within it, alerts & notifications, escalations, Standard Operating Procedures, Service Level Agreements, and task hand-over mechanisms.
Good design reduces the number of problems over the lifetime of the process. Whether or not existing processes are considered, the aim of this step is to ensure that a correct and efficient theoretical design is prepared.
The proposed improvement could be in human to human, human to system, and system to system workflows, and might target regulatory, market, or competitive challenges faced by the businesses.
Modelling
Modelling takes the theoretical design and introduces combinations of variables, for instance, changes in the cost of materials or increased rent, that determine how the process might operate under different circumstances.
It also involves running "what-if analysis" on the processes: What if I have 75% of resources to do the same task? What if I want to do the same job for 80% of the current cost?
Execution
One way to automate processes is to develop or purchase an application that executes the required steps of the process; however, in practice, these applications rarely execute all the steps of the process accurately or completely. Another approach is to use a combination of software and human intervention; however this approach is more complex, making documenting process difficult.
As a response to these problems, software has been developed that enables the full business process (as developed in the process design activity) to be defined in a computer language which can be directly executed by the computer. The system will either use services in connected applications to perform business operations (e.g. calculating a repayment plan for a loan) or, when a step is too complex to automate, will message a human requesting input. Compared to either of the previous approaches, directly executing a process definition can be more straightforward and therefore easier to improve. However, automating a process definition requires flexible and comprehensive infrastructure which typically rules out implementing these systems in a legacy IT environment.
Business rules have been used by systems to provide definitions for governing behavior, and a business rule engine can be used to drive process execution and resolution.
Monitoring
Monitoring encompasses the tracking of individual processes so that information on their state can be easily seen and statistics on the performance of one or more processes provided. An example of the tracking is being able to determine the state of a customer order (e.g. ordered arrived, awaiting delivery, invoice paid) so that problems in its operation can be identified and corrected.
In addition, this information can be used to work with customers and suppliers to improve their connected processes. Examples of the statistics are the generation of measures on how quickly a customer order is processed or how many orders were processed in the last month. These measures tend to fit into three categories: cycle time, defect rate and productivity.
The degree of monitoring depends on what information the business wants to evaluate and analyze and how business wants it to be monitored, in real-time or ad-hoc. Here, business activity monitoring (BAM) extends and expands the monitoring tools in generally provided by BPMS.
Process mining is a collection of methods and tools related to process monitoring. The aim of process mining is to analyze event logs extracted through process monitoring and to compare them with an 'a priori' process model. Process mining allows process analysts to detect discrepancies between the actual process execution and the a priori model as well as to analyze bottlenecks.
Optimisation
Process optimisation includes retrieving process performance information from modeling or monitoring phase and identifying the potential or actual bottlenecks and potential rooms for cost savings or other improvements and then applying those enhancements in the design of the process thus continuing the value cycle of business process management.
Practice
Whilst the steps can be viewed as a cycle, economic or time constraints are likely to limit the process to one or more iterations.
In addition, organizations often start a BPM project or program with the objective to optimize an area which has been identified as an area for improvement.
In financial sector, BPM is critical to make sure the system delivers a quality service while the regulatory compliance is also not compromised.[2]
Currently, the international standards for the task have only limited to the application for IT sectors and ISO/IEC 15944 covers the operational aspects of the business. However, some corporations with the culture of good business practices do use standard operating procedures to regulate their operational process [3]
BPM Technology
BPM System (BPMS) is sometimes seen as the whole of BPM. Some see that information moves between enterprise software packages and immediately think of Service Oriented Architecture (SOA); while others believe that modeling is the only way to create the ‘perfect’ process, so they think of modeling as BPM.
Both of these concepts go into the definition of Business Process Management. For instance, the size and complexity of daily tasks often requires the use of technology to model efficiently. Bringing the power of technology to staff is part of the BPM credo. Many thought of BPM as the bridge between Information Technology (IT) and Business.
BPMS could be industrial specific and can be driven by a software such as Agilent OpenLAB BPM. Some other products may focus on Enterprise Resource Planning and warehouse management. Validation of BPMS is another technical issue which vendors and users need to be aware of, if regulatory compliances are mandatory [4] The task could be performed either by an authenticated third party or by user themselves. In either way, validation documentation need to be generated. The validation document usually can either be published officially or well retained by users[5]
Use of software
Some say that not all activities can be effectively modeled with BPMS, and so some processes are best left alone. Taking this viewpoint, the value in BPMS is not in automating very simple or very complex tasks, it is in modeling processes where there is the most opportunity.
The alternate view is that a complete process modeling language, supported by a BPMS, is needed; the purpose is not purely automation to replace manual tasks, but to enhance manual tasks with computer assisted automation. In this sense, the argument over whether BPM is about replacing human activity with automation or simply analyzing for greater understanding of process is a sterile debate; all processes modeled using BPMS must be executable in order to bring to life the software application that the human users interact with at run time.
See also
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References
- ↑ NIH (2007). Business Process Management (BPM) Service Pattern. Accessed 29 Nov 2008.
- ↑ Oracle.com Business Process Management in the Finance Sector. Accessed 16 July 2008.
- ↑ NTAID (2008). Invoice Processing Procedures for Contracts Accessed 17 Sept 2008.
- ↑ FDA Guidance for Industry : Part 11, Electronic Records; Electronic Signatures - Scope and Application. Accessed 16 March 2008.
- ↑ Mettler ToledoEfficient system validation. Accessed 17 march 2008.
Further reading
- James F. Chang (2006). Business Process Management Systems. ISBN 0-8493-2310-X
- Roger Burlton (2001). Business Process Management: Profiting From Process. ISBN 0-672-32063-0
- Jean-Noël Gillot (2008). The complete guide to Business Process Management. ISBN 978-2-9528-2662-4
- Keith Harrison-Broninski (2005). Human Interactions: The Heart and Soul of Business Process Management ISBN 0-929652-44-4
- John Jeston and Johan Nelis (2006) Business Process Management: Practical Guidelines to Successful Implementations ISBN 0-7506-6921-7
- Martyn Ould (2005). Business Process Management: A Rigorous Approach. ISBN 1-902505-60-3
- Howard Smith, Peter Fingar (2003). Business Process Management: The Third Wave.
- Andrew Spanyi (2003). Business Process Management Is a Team Sport: Play It to Win! ISBN 0-929652-02-3