Business process management is a process centric approach for improving business performance. Basically, this process combines IT with governance methodologies, to create a new workflow or process.
What is a business process exactly?
A business process is a standardised way to convert a set of inputs into a desired output. For an example, let’s say a mortgage application process at an Australian credit union. The customer supplies an electronic application form typically via the credit union’s website. This information then becomes the input into the mortgage application process.
The business process itself may then consist of background credit checks, as well as other activities that will enable the mortgage department to make an informed decision about whether to approve the mortgage application or not.
The output of the business process is a decision that is communicated to the customer, followed by the money being paid into the correct customers account. So the business process successfully takes in several inputs, and then converts these into more valuable outputs. That is, we define the process output as anything that emerges from this specific process.
The primary output is what is requested by the customer. For example, in this case, the money they wanted to borrow. The secondary output is perhaps an email notifying the customer of the decision. The customer can also be an internal customer, for example a manager at the credit union, or they could be an external customer, such as the person who applied for the mortgage.
Three pillars of Business Process Management
The three pillars of Business Process Management, aka BPM, is technology, people and processes. All three of these aspects need to work for a BPM project to be a success. The business process needs to be fit for purpose and actually satisfy the demands of all the stakeholders. The people aspect also needs to work.
Let’s say in the above example, the customer forgets somehow, to provide all of the required information in the mortgage application form. The credit union’s webpage will alert her that the application form is incomplete. If a manager forgets to approve a certain process step, then she will get an alert and if she still ignores it, the alert will escalate to her manager and the “process owner” will also get an alert that the process is stuck.
This level of visibility is impossible to achieve without good technology. For the automation to work smoothly, the IT systems need to work seamlessly all of the time. It can take a large team of experts with IT and business knowledge to implement the BPM project. The project team will study a related set of business processes in great detail and then try to redesign it with the objective of optimising it, so it is fit for purpose.
This happens during the design phase of the project with the processes are carefully designed to be as simple and straightforward as possible, so it can be completed in the shortest possible amount of time without making mistakes during the modelling and simulation phase of the project. The process is then documented in the form of an activity model. It is then possible to simulate the behaviour of the system and try out different scenarios through a what-if approach. Once the process is approved by management, it is then deployed.
This occurs during the execution phase of the project. The project team will then monitor the resulting performance of the revised business process to see if anything goes astray. This is called the monitoring phase. If any issues subsequently arise, changes will then be executed, to further optimise the process to take care of exceptions. This occurs during the optimisation phase of the project.
A good BPM implementation will increase the visibility of the credit union’s activities, making it easy to monitor and control the critical business processes of the branch. It provides management with an increased ability to identify bottlenecks, making improvements we need. It may feed data into business intelligence software, or provide automated reports of process.
It also provides an increased ability to identify further areas of optimisation that will improve customer satisfaction or lower transaction costs. A good PBM system will normally contribute significantly to reduce lead times. Using the above example again, the customer will hear about the mortgage application decision of the credit union within days rather than weeks. Business process management ensures better definition of the duties and the roles of the employees of the company.
It’s also a very valuable tool for the credit union, for fraud prevention, auditing and assessment of regulatory compliance, A good BPM system also prevents the unfortunate situation where a customer who phoned to inquire about a mortgage application is transferred from one individual to the next and to the next with all of them saying “Oh, I’m sorry, it’s not my decision”.
Business process management uses a cross-functional approach, so the work is automatically moved from one desk to the next without any need for manual intervention. Of course, efficient training is crucial to ensure that all affected employees and people are aware of what is expected of them. Before a BPM initiative is launched, it is really important to get the buy-in and active support of senior management. The project leader needs to manage the expectation of all the stakeholders.
Once the system is operational, the project is not yet complete. The team needs to listen to the customer feedback and make further improvements. In general, all the principles of change management needs to be followed to ensure success, because everybody’s job will be a bit different after the project is done.
Common BPM implementation mistakes
It is a bad idea to start configuring the software too early. Well before the business process has been studied and potentially re-engineered. Thinking in silos is also a bad idea. Many functions need to contribute to a business process and unless it crosses functional boundaries, it is unlikely to create true value for either the company or the customer.
Ignoring end-users of a system or process can be a solid recipe for disaster. Their needs and wants must be paramount. If the redesigned and newly automated process does not improve their experience of the service, then it is unlikely to be a success. You should never use a BPM project to reduce headcount. As the primary objective, people will find out and do their best to sabotage the project. People like to say do it right the first time, however this is often unrealistic.
In a complex business environment, the idea is to build a flexible system that can be quickly adapted to changes in the business environment. For example, changes in banking regulations. It is a very bad idea to hardwire the framework. Not supporting users through adequate training and support is also a common mistake.
Don’t forget to celebrate when the system starts to deliver good results. People need to see that their efforts are appreciated. Relying on long-held beliefs or gut feel is dangerous and it is better to trust the analytical data that the system generates to decide a way to move your resources. Automating failure is a very common mistake.
A bad business process that becomes fully automated will simply do the wrong thing more quickly, however if BPM is implemented in the correct way and a good change management process is followed, it can have dramatic benefits for the business.