Business, Legal & Accounting Glossary
Business process management (BPM) is a method of efficiently aligning an organization 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 the attainment of their objectives, BPM attempts to continuously improve processes – the process to define, measure and improve your processes – a ‘process optimization’ process.
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
BPM is considered by some to be a philosophy. BPM alignment to the customer means that customer-facing staff are best suited to understand customer needs and must be empowered to make improvements. Many of these improvements can be done without the use of new technology.
BPM Software (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 modelling is the only way to create the ‘perfect’ process, so they think of modelling as BPM.
Both of these concepts go into the definition of Business Process Management. For instance, the size and complexity of daily tasks often require the use of technology to model efficiently. Bringing the power of technology to staff is part of the BPM credo. Many tout BPM as the bridge between Information Technology (IT) and Business.
The activities which constitute business process management can be grouped into five categories: Design, Modeling, Execution, Monitoring, and Optimization.
Process Design encompasses both the identifying 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; a real-world analogy can be having an architect design a house. 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.
There are several common techniques and notations for business process mapping (or Business process modelling), including IDEF, BPWIN, Event-driven Process Chains, and BPMN.
Modelling encompasses takes the theoretical design and introduces combinations of variables, for instance, changes in the cost of materials or increased rent to 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?
A real-world analogy can be “wind-tunnel” test of an aeroplane or test flights to determine how much fuel it will consume and how many passengers it can carry.
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 complexity, making documenting a 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.
The commercial BPM software market has focused on graphical process model development, rather than text-language based process models, as a means to reduce the complexity of model development. Visual programming using graphical metaphors has increased productivity in a number of areas of computing and is well accepted by users.
Business rules have been used by systems to provide definitions for governing behaviour, and a business rule engine can be used to drive process execution and resolution.
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.
Process optimization includes retrieving process performance information from modelling 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.
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 are in supporting 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.
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.
Some say that not all activities can be effectively modelled 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 modelling processes where there is the most opportunity.
The alternate view is that a complete process modelling 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 modelled using BPMS must be executable in order to bring to life the software application that the human users interact with at run time.
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This glossary post was last updated: 18th April, 2020 | 0 Views.