What is Business Process Management (BPM)?
Business Process Management (BPM) is critical for understanding how your company delivers products or services. It is a great way to identify possible improvements or detect compliance issues. No matter the size of your business, BPM can help improve your business efficiency. This guide will help you understand what business process management is, why it matters and how it can be successfully adopted in your company.
Shortcut What is the definition of Business Process Management? Why does Business Process Management matter? BPM Lifecycle: what are the five steps in Business Process Management? The biggest challenges for process management experts Main Business Process Management use cases What is Business Process Management Systems (BPMS)? Business Process Management vs Business Process Automation
What is the definition of Business Process Management?
A process is a series of repeatable tasks made by different stakeholders to achieve a result. Some processes are manual while others are software-driven to be automated. Business Process Management or BPM is a discipline to discover, design, execute and optimize processes. BPM focuses on the entire process rather than the individual tasks to improve performance. It covers a series of steps such as:
Business process discovery, to identify how the process currently existing in your organization performs.
Business process modeling, to define how you believe your process should be.
Business process simulation, to test multiple process optimization scenarios before implementing them.
Process execution, once designed, the required steps of the process are executed manually or automated using an application.
Business process optimization, analyzing process performance, by identifying existing or potential bottlenecks or opportunities to improve process efficiency.
Why does Business Process Management matter?
Business Process Management is key to enabling companies to continuously improve their operational efficiency and support business transformation. It helps eliminate inefficient processes which cost you time and money by identifying bottlenecks, and complexities and by aligning your operations with customers' needs. With business process automation organizations further improve their business efficiency by reducing manual bottlenecks.
Benefits of Business Process Management
Here are the top 8 benefits of BPM :
Business Process Management is a great way to gain visibility on how your operations deliver their products or services. In recent years companies started leveraging process mining to discover how their processes were really executed, identifying variances by comparing actual processes with planned business models. This helps you see what people and systems are doing as opposed to what you think they're doing.
A key part of the Business Process Management discipline requires gathering and analyzing data so you can assess how your process is performing. Process mining can play a key role to identify inefficiencies by returning log files and highlighting reworks and bottlenecks. Using Business Process Management Systems (BPMS) BPM managers and workers gain greater knowledge of process performance at each step of the process thanks to dashboards and KPI indicators to monitor process performance.
3. Cost reductions
Cost reduction is critically important for every organization. Reducing operational costs translates into a higher profit margin and is a key performance indicator for every Business Process Management initiative. To ensure your processes are contributing to the bottom line you need to identify the total execution cost and the total delay cost of your processes. Removing process duplicates, processes with no added value, or merging several processes into one are some of the many ways to reduce costs based on a thorough analysis of your processes' efficiency.
4. Business agility
Modern BPM platforms help organizations become more responsive to customer demands. Adopting Business Process Management can give organizations the speed and agility to adapt to changing market demands. When a problem is detected, a company mastering its business processes can quickly identify the source of the problem, make adjustments to the process and update it with minimal lost time. Process simulation can help predict the effect of changes on the overall business process ensuring the organization adopts the best possible solution.
5. Customer experience
One of the key pitfalls of BPM is to focus solely on process efficiency or cost reduction, leading to departments viewing the business just from their own perspective and losing sight of the derived customer experience. To avoid this risk business stakeholders can adopt an outside-in perspective associating BPM with Customer Journey Mapping to understand how customers perceive the value delivered by each process step.
Organizations are subject to an ever-increasing number of regulations and are struggling to stay up to date with compliance requirements. They need to implement a robust internal control environment to make sure their processes are efficient and secured and comply with all the applicable regulations. Integrating internal controls and compliance into your organization's processes helps avoid regulatory fines and reputational damages. This is why many regulations explicitly require that business processes are documented to demonstrate that the company operates in compliance with regulations.
7. Risk mitigation
Risk is inherent within any business process and requires that it be managed within every process. Business process modeling is key to helping organizations understand the context of risks. By identifying risks in business processes organizations can decide what level of risk they are ready to accept and implement the right control framework to avoid process failures.
8. Business knowledge transfer
Business process knowledge often relies on a few individuals who understand how a particular process is executed. With each retirement or change of position, companies are faced with a potential loss of knowledge. The implementation of a business process management solution is an excellent way to record, archive, and share company knowledge with all employees. It is therefore essential that the business process repository be set up in a way that allows the company to maintain its knowledge and use well-documented process maps to train and orient employees.
BPM Lifecycle: what are the five steps in Business Process Management?
The BPM lifecycle consists of five stages including setting goals, analyzing, designing, executing, and monitoring.
Before starting any BPM initiative, make sure to clearly identify the goals and the scope of the work you are about to start. Mapping business processes can quickly become an overwhelming task requiring interviewing multiple process experts to gather data about the way things really work. Do not try to boil the ocean, limit process mapping to just enough data to quickly show value.
The goal is to analyze how existing processes work to see if they support the business strategy and if they work efficiently. Process mining is a great way to see how processes really work to identify reworks, inefficiencies, and deviances compared to the way process experts think the process works. This phase helps understand the root cause of process inefficiencies, highlight bottlenecks and define how to update the process to improve operational excellence.
Thanks to the data gathered during the analysis phase, the process can be redesigned to be improved. Using a process simulation engine process designers can compare different optimization options and evaluate the impact of changes before implementing them. Process design is also an excellent communication tool. By obtaining a visual representation of a process, all stakeholders have a better understanding of their role and can more easily collaborate with other employees.
It is now time to implement the process as it has been planned. This phase cannot succeed without good change management. Implementing a new process often results in automating part of the process previously done manually, changing the way people are used to working. Failing to address the concerns of people impacted by these changes may jeopardize the process improvement initiative.
Once implemented, it is critical to monitor your new process to see if it is really executed as planned, if it performs as expected, and determine if an additional redesign is required. Business process improvement is a continuous exercise requiring constant monitoring.
The biggest challenges for process management experts
Now, we look at the 5 biggest challenges for BPM in today’s environment.
Lack of executive support
In many organizations, executives see BPM as a necessary evil, to ensure the company can prove that the controls imposed by industry regulations such as SOX or Solvency II have been effectively implemented. They do not see process management as a mean to improve business efficiency because in the past many BPM initiatives have failed to deliver value in a timely manner. This perception is rapidly changing as the new business process management systems are much more efficient in supporting process transformation with process mining, process simulation, and process automation.
Poor buy-in from end-users
BPM experts understand the importance of gaining the support of end-users before deploying a change. For users, changing a process means changing the way they are used to work and could even be considered a risk to their jobs when a manual process is automated. It is therefore essential that Business Process Management champions work with end-users to reassure them that they are not at risk of being replaced, but rather will have the opportunity to do their jobs more efficiently, focusing on higher-value tasks.
Lack of clear KPIs
The main risk for any process management initiative is to be perceived as an academic exercise with no clear value for the company. This is why it is critical to start by communicating clearly the business purpose of any BPM initiative and to define clear KPIs articulating a measurable value in a way that businesses understand.
Poor customer focus
The purpose of any process is to serve a customer (internal or external). The challenge for process management experts is to understand which customer is served and what the customer's expectations are. Customer Journey Mapping can help answer these questions and recent BPMS solutions include a module to map customer journeys and link each touchpoint with a specific step of the process.
Business processes are not owned
Activities are traditionally managed vertically by business lines, whereas a process flows horizontally across departments as the customer journey has multiple touchpoints that cross the organization. To improve the customer experience, management must establish individual ownership of processes that cross boundaries and functions aligned with the overall customer experience. To do this, traditional silos must be eliminated.
Main Business Process Management use cases
Faced with an ever more competitive landscape, organizations are striving for operational excellence by optimizing business processes. Process optimization enables organizations to achieve many objectives, such as:
Standardizing the way services are being delivered to customers ( both internal and external )
Identifying and implementing the most effective processes to reduce costs and delays
Adapting more swiftly to new market demands
Process governance refers to how an organization manages process initiatives through standards, rules, and guidelines to achieve its objectives. Its purpose is to prevent isolated and disconnected process management initiatives that yield only limited and localized results.
Some of the key objectives of process governance are to standardize process initiatives, encourage alignment, clarify roles and responsibilities, and determine who has the authority to decide on procedures.
In summary, process governance should be able to facilitate the direction and leadership of process management to drive synergies across initiatives and achieve continuous improvement.
Quality Management Systems
A quality management system (QMS) coordinates the activities of an organization to meet customer and regulatory requirements. It is a formalized system that documents processes, procedures, and responsibilities for meeting quality objectives. ISO 9001:2015 is the most globally recognized and implemented quality management system standard. The main benefits of having a QMS in place are to inspire customers' confidence in the organization and to achieve regulatory compliance to prevent fines.
What is Business Process Management Systems (BPMS)
A business process management system provides a suite of functionalities enabling organizations to optimize their business processes according to market and customers' demands. The main features allow users to model, design, test, execute and monitor processes performance to ensure continuous optimal efficiency.
Examples of BPM key software features
Some examples where it has been applied successfully include :
Process diagramming tool
With a simple drag and drop UI, this tool helps process owners to quickly model processes in a visually appealing way.
Process knowledge often requires contextual discussions to emerge and needs clear validation workflows.
To select between multiple possible changes a simulation engine helps identify the impact of a change before implementing it.
To Monitor KPI indicators on process performance and govern process compliance.
Customer Journey Mapping
To adopt a customer-centric process design and make sure process improvements really address customers' expectations.
Enterprise portal and mobile apps
With a well-organized enterprise portal and mobile apps, your processes will be easily shared across your organization ensuring process knowledge and adherence.
Business Process Management vs Business Process Automation
Business processes are composed of a mix of tasks performed manually by humans, such as data entry or validations, and automated tasks done by a machine or software. Organizations try to automate processes whenever possible as it brings many benefits such as higher efficiency, reduced time and cost, or a better ability to scale. Yet not all processes can be automated or even should be.
Customers may prefer human-to-machine interactions, especially when they do not fit the exact use case that has been automated. That's why it's important to understand the difference between business process management (BPM) and business process automation (BPA).
What is Business Process Automation (BPA)?
In their quest to reduce operating expenses and grow their bottom line, organizations see process automation as the solution to reduce labor costs by minimizing repetitive tasks and replacing manually-based processes.
Business Process Automation (BPA) focuses on how to best automate a process while Business Process Management (BPM) adopts a more holistic approach to process improvements, seeking improved efficiency of both manual and automated processes.
By definition, process automation relies on technology to automate repetitive tasks to ensure processes run smoother.
Common examples of processes benefiting from automation:
Procurement to pay
What is Robotic Process Automation (RPA)?
In recent years, Robotic Process Automation (RPA) emerged as a new type of process automation making extensive usage of the latest technology in robotics and artificial intelligence (AI).
An RPA software automates small repetitive tasks by training a bot using AI. The main promise of RPA is to free workers from tedious tasks allowing them to focus on higher-value work. Yet, deploying and managing hundreds or thousands of bots proves to be complex and according to several studies many companies have to scale down their programs as they struggle to manage that complexity.
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