BPMInstitute.org defines Business Process Management as the definition, improvement and management of a firm's end-to-end enterprise business processes in order to achieve three outcomes crucial to a performance-based, customer-driven firm: 1) clarity on strategic direction, 2) alignment of the firm's resources, and 3) increased discipline in daily operations.
BPM is an enterprise-wide, structured approach to providing the products and services that your customer's value most. It is grounded in the premise that you must take a process view of your company in order to understand what products and services your customer values most. By understanding the key business processes your company uses to meet these customer needs, the gap between customer expectations and your ability to perform begins to emerge.
Processes that are inefficient or ineffective in delivering what customers require are clearly identified and targeted for improvement. An efficient process is one in which the resources consumed in the process are at the minimum possible levels. An effective process is able to deliver products or services according to specifications. As the entire organization begins to measure performance in terms of critical, customer-driven requirements, employees no longer think of themselves as functional managers responsible for functional outputs. Instead, they see their roles in the context of a greater, more important goal - satisfying and creating loyal customers. As process thinkers, they consider the potential impact of their actions and decisions upstream and downstream and ultimately on the company's ability to deliver what it promises its customers.
BPM is a deliberative discipline used to manage process improvement, and includes the use of process discovery, mapping and modeling, metrics, key performance indicators (KPI), collaboration, decision-making and process monitoring. The institute distinguishes BPM as a discipline as opposed to a methodology. A discipline is a form of training that produces a pattern of behavior. In this case BPM produces "process-thinking". By contrast, a methodology is a specific approach consisting of principles or rules from which specific procedures are derived to understand different situations or solve different problems within the scope of a particular discipline. BPM is a discipline; Six Sigma and Lean are continuous improvement methodologies.
Applying the BPM discipline strategically requires the practice of the following nine areas in a cohesive program:
Becoming skilled and experienced in all nine practice areas as part of a strategic investment in the BPM discipline will accelerate its adoption throughout the enterprise and sustain its use over many years.
What does BPM do for a business?
It allows business and technology to better understand implications of how work is performed. It visually identifies problems with processes. It allows the business to define improved business processes and test them prior to implementation. BPM provides value throughout an organization by:
Today's business environment has shown alarming decline. Bankruptcy filings are increasing, consumer confidence is low, unemployment is high, recovery from the recession is slow and revenues are spirally downward. A blue chip company is one that is very strong financially, with a solid track record of producing earnings and only a moderate amount of debt. A blue chip company also has a strong name in its industry with dominant products or services. Typically, blue-chip companies are large corporations that have been in business for many years and are considered to be very stable. However, many of these “blue chip” companies – e.g., Bank of America, Citigroup, General Electric, Microsoft and Motorola – have reported disappointing results and forecasted bleak short-term futures.
In these times of significant uncertainty about future revenues, companies are naturally renewing their focus on reducing costs. Businesses are examining ways to improve operational efficiency by paying more attention to process management and improvement. BPMInstitute.org has observed an increased interest in introducing the concepts and principles of business process management to the company's office workforce. Sponsored by the CEO and CFO, process awareness and process thinking is getting renewed attention, resulting in initiatives to understand how current operational activities are executed. Businesses are looking to identify company weaknesses in an effort to remove them. Executives are looking for ways to reduce defects, waste, cycle time, and bottlenecks – and their related costs.
Businesses are identifying and forming teams of 10-to-20 subject matter experts that understand the company's core business processes and obtaining process training for them. These individuals each understand their own stove-piped functional area. Supporting these individuals are business analysts who are responsible for capturing business requirements for improving business applications. The first assignment the team undertakes is to model the current processes in order to document each process with clarity and establish a baseline for analysis in identifying opportunities for improvement. Once created, the model also serves as a training aide and as a basis for communication and discussion.
In the past year, BPMInstitute.org has observed a transitional approach to process thinking at most companies at which it has conducted training. The end-to-end process approach is still new to the employees forming these process teams. Funded improvement efforts in the past have been the result of requirements analysis of existing operations within functional stovepipes and the context for these requirements have been the existing business applications. The new end-to-end process models being developed will provide a new context from the customer's point of view. However, BPMInstitute.org has observed just how entrenched the more traditional mindset is and how the new outside-in approach to process improvement will take awhile to be thoroughly understood and practiced.
Prior to receiving process training, the team uses models to capture information about existing business operations. Reflecting the entrenched traditional approach to process capture, the models are often built from the company perspective and not from the customer perspective. They are constructed in a linear flow from process start to finish without a focus on the outputs of the process that are important to the customer. The lack of focus on outputs that are important to the customer is accompanied by a lack of understanding of the customer's expectation for these outputs. After receiving process training the approach to process capture is completely reversed. Rather than work from start to finish the team is taught to develop the model from the end to the beginning. First, the modeler identifies the customer, then identifies the outputs of interest to the customer and lastly identifies the customer's expectation for theses outputs in terms of time, cost and quality.
Taking this top-down, outside-in approach replaces the existing model with a much simpler one. The next step is to peel away the complexity of the top-level process by creating hierarchical levels of detail composed of sub-processes. This process decomposition is built using the same approach followed when the top-level was created. Each sub-process has a customer, an output and a customer expectation of that output in terms of time, cost and quality. Building models in this fashion prepares the modeler to define metrics from the customer's perspective in terms of time, cost and quality. It is generally acknowledged that the disciplined practice of measuring the right set of performance metrics is fundamental to the formulation and implementation of strategy, as it provides the needed focus for implementation initiatives. Examples of the most meaningful metrics include cycle time, defect rate, stock-out, variance to promise date, and variance to promise budget.
The current economic climate has company executives rethinking ways to achieve operational efficiency. They are asking senior executives to examine current processes and suggest ways of streamlining operations and reducing waste. Senior executives are looking at process skills such as modeling, analysis and improvement to explore if new approaches will establish a new discipline for improving organizational performance. This new approach will take some time to completely implement as so much of the current company behavior is aligned with older traditional approaches based on task and function efficiency. To implement this change companies must first establish a small team of process improvement specialist trained in BPM. They then need to assign these specialists to work as internal consultants on process improvement projects. The specialists will consistently apply the discipline on a project-by-project basis to slowly transform the company to be more process-driven. BPMInstitute.org has created a BPM certification exam to support the advancement of BPM professionals by providing a way to measure and document the knowledge and skills required to be recognized as a competent practitioner.
In today's demanding business environment which prioritizes flexibility, speed, quality, efficiency, effectiveness and innovation, a competitive business strategy and its operational execution is critical. BPM helps an enterprise achieve these characteristics in its business strategy – and in its execution of that strategy – by providing the enterprise organizational performance improvements based on process improvements.