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Management of Business Processes: What Is It and Why Do You Need It?

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Management of Business Processes: What Is It and Why Do You Need It?

Today, business process management (BPM) is a hot topic. But that has not always been like that – although the concept has been around for over 20 years. When I first moved from Indore to the Gujarat in 1996, I expected that every company we consulted would be discussing business processes and BPM. Familiar with the process orientation, I was certain that BPM was a hot topic in consulting business.

However, this expectation proved to be an illusion. I still remember the first time I met the executives of a manufacturing company. I was so excited to discuss how BPM could help them overcome some of their challenges. But they looked at me and said: “Please implement this software system. Don’t waste our time or money with your ideas about business processes. We don’t know anything about BPM, we don’t want it and we don’t need it. So, please discuss those subjects with your academic friends and let’s get back to real business here.” At that point, I realized that it would not be easy to position the topic of BPM, and it would take quite a bit of “missionary” work before business process orientation would become mainstream.

This situation only began to change around 2000 with the advent of the e-business hype. Suddenly, companies were forced to talk to each other, about how to best organize their collaboration. They had to discuss business processes. It soon became clear that the concept of “process” and BPM is extremely useful and that it can also be applied within an organization to drive high performance. In parallel, the development of methods, tools, and technologies facilitated process oriented approaches, also helping to push BPM to the forefront. In the last years, it has really become an exciting and mainstream topic – in India and all around the world.
Almost everyone talks about business processes. But when you participate in more in-depth discussions, it also becomes clear that many people are unsure what a business process is and what BPM really means. Consequently, many organizations face great challenges in finding the right approach to it, in using process orientation as a management paradigm that really moves an enterprise forward and produces value – immediately. Therefore, I would like to introduce the basic definitions ofbusiness process and BPM.

Let us consider a situation that occurred at a company in the machinery manufacturing industry in Ahmedabad. We were engaged to support a company-wide process-improvement initiative. At the beginning of the project, the head of the sales department received an award from the company president because he was able to reduce the sales cycle time from 10 days to less than 6 days. That meant an incoming order was forwarded to the manufacturing department in less than a week. This seemed to be a great success.

However, when we later discussed this “improvement” with the head of production, the downside became clear. He explained that he had to organize a team of people collecting the information that had formerly been included in the order sheets coming from the sales department. But because his team did not have close contact with the customer and the engineering department, this collection took a lot of time, often up to 2 weeks. This means, if you look at the reorganization from a customer’s point of view, it takes up to a week longer to get the desired product.

The customer does not care if sales activities are fast or slow, he only cares about the total time he has to wait for the product he ordered. At that point, only the effects of a truly business processoriented approach lead to real improvements. The term “process” is used in many different ways. Hence it is important to define what we mean when we talk about a business process. A business process is a set of functions in a certain sequence that delivers at the end a value for an internal or external client. Its start is also clearly defined by an external event.

This means every process is a defined sub-set of an overall organization. Each organizational unit is assigned a responsible person, who is generally called the “process owner.” Because the process delivers a value for a customer, its performance can always be measured on the basis of this value. The result is a customer-focused organization because the customer basically sets the metrics by which the process performance is measured. It can react quickly to the market since trends are reflected in changing customer requests.

Every function in a process can again be interpreted as a process by itself, a so-called sub-process. This sub-process is triggered by the previous sub-process (or the overall starting event) and delivers a result of value for the next sub-process (or the final customer and his processes, if it is the last sub-process of an end-to-end process). Such a hierarchical decomposition of a process allows increasingly higher detail of examination of the process. However, the key is to start with an end-to-end view, ensuring an overall process orientation.

I have often been asked how much one can detail the description of a process. This answer is simple – a business process can be decomposed as long as the resulting functions still make sense from a business point of view. The sub-process “handle sales order” may be described in detail using functions, such as “enter sales order.”
The aforementioned company did improve the entire business process from the point the customer order arrives (start of the process) until the product is delivered to the client (end of the process with result of value for the customer) not only improved one function (sales), which led to overall higher performance of the entire business process.

Situations can be improved through a consequent business process orientation. This leads to an integrated view of an organization. In a process-oriented organization, people always wonder how their work affects that of others. Employees do not just execute one activity, but they contribute to the overall process and its deliverables. To achieve such a process focus, we must examine more in detail what the components of a process are and how they can be described so that the business process can be managed.

A business process can be described from five different points of view, answering all relevant questions regarding the process:

  • Organization view: Who (people, departments, enterprises, etc.) is involved in the process?
  • Function view: What functions are carried out within the process?
  • Data view: What data (information) are needed or produced in the process?
  • Deliverable view: What are the deliverables of the process, why do I need it?
  • Control view: How do all those views fit together, that means who is doing what by means of which data to produce which deliverable and in which logical sequence are the functions carried out?

This classification helps to cover all business processes of an organization in a process management approach. There are many additional ways of classifying processes (e.g., in core and supporting processes). To identify the processes of an organization, one can either use existing industry best-practice models or apply a more analytic approach. Industry best-practice models, so-called reference models, can be applied to a specific company. In other words, the models can be used as a sort of checklist to determine the processes of an enterprise. Another possibility is the analytic identification of processes, using the relevant objects with which a process interacts, especially the products and services of an organization or the targeted markets and channels used. After identification of all market offerings, one defines which processes it takes to sell and deliver those offerings, as well as to manage and govern those processes.

Now we know what a business process is and how it can be described, but what does it mean to manage it? What is BPM all about?
BPM is a management discipline that provides governance for a process-oriented organization with the goal of agility and operational performance. Therefore, it uses methods, policies, metrics, management practices, and software tools to manage and continuously improve an organization’s business processes.

It also requires a general “process thinking,” as explained at the beginning of this chapter. Consequently, approaches like the “agile organization,” the “real-time enterprise,” or similar concepts are nothing other than the result of the consequent use of BPM. This means BPM is more than just the improvement of a single process. It is more than a single project. Such a focused initiative may be the entry point into BPM, but no more. Also, it is not just about technology. There are more and more vendors in today’s market that develop and deliver BPM software. However, that is also only a part of a holistic BPM approach, a building block for the infrastructure. The systematic management of business processes can lead to standardized processes (e.g., in various sales subsidiaries of an enterprise). But BPM does not mean standardization for the sake of standardization. Organizations should standardize when it makes sense for process performance. It also does not necessarily mean the implementation of great changes in an organization. On the contrary, a BPM approach can be used to adjust the size of a change to fit the needs and capabilities of an enterprise.

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