Business Process Management

Dr. Neeta Baporikar Email: neetajb@rediffmail.com

Abstract
In todays business environment it is impossible for one or one group of people to fully know or understand all the dynamics associated with the operational business processes within an organization. This is why it is essential that companies map, monitor, analyze and collaborate on process knowledge and management improvement. It is here that organizations are looking towards Business Process Management (BPM), which would help to maximize the bottom-line impact of process improvement efforts through effective

communication. It supports all elements of business processes - from modeling and documentation, communicating, measurement and analysis, to continuous process management and improvement. BPM is the orchestration of various business systems into identifiable and controllable systems. This paper attempts to look at what BPM means, what it includes and how it would be advantageous if the organizations adopt it. However in order to use BPM effectively, organizations must stop focusing exclusively on data and data management, and adopt a process-oriented approach that makes no distinction between work done by a human and a computer.

Keywords: Business, Environment, Process Management, Maximization

Business Processing Management

Definitions BPM (business process management): A general term describing a set of services and tools that provide for explicit process management, including process analysis, definition, execution, monitoring and administration. Ideally, BPM should include support for both human and application level interactions. The workflow market has been a significant source of BPM, although forms of BPM are now emerging from many other sources, such as collaborative applications, integration brokers, Web integration servers, development tools, rules engines and e-commerce offerings.

BPM (business process modeling): A process that links business strategy to IT system development to ensure business value. It combines workflow, functional, organizational and data/resource views with underlying metrics such as costs, cycle times and responsibilities to provide a foundation for analyzing value chains, activity-based costs, bottlenecks, critical paths and inefficiencies.

BPO (business process outsourcing): The delegation of one or more ITintensive business processes to an external provider that, in turn, owns, administers and manages the selected processes, based on defined and measurable performance metrics.

BPR (business process re-engineering): The fundamental analysis and radical redesign of business processes and management systems to accomplish change or performance improvement. BPR uses objective, quantitative methods and tools to analyze, redesign and transform business processes, including supporting organization structures, information systems, job responsibilities and performance standards.

BPR methodology: An integrated set of management policies, project management procedures, and modeling, analysis, design and testing techniques for analyzing established business processes and systems; designing new processes and systems; testing, simulating and prototyping new designs prior to implementation; and managing the implementation process.

Sourcing: The procurement of resources whether from internal or external sources to accomplish business objectives. Sourcing purely from external sources is known as "outsourcing" (see outsourcing).

Global sourcing: A service delivery model in which work is performed by a virtual team, which may consist of personnel that are on-site, domestic, near shore or offshore.

Near shore: An outsourcing term describing the provision of services from a country that is close to the client enterprise's country for example, services provided to a US enterprise from a service provider located in Mexico.

Offshore: An outsourcing term describing the provision of services from a country that is geographically remote from the client enterprises for example, services provided to a U.S. enterprise from a service provider located in India.

ITES: IT enabled services where IT is used a tool to execute various other functions like finance and accounting, HR, payroll processing etc.

SOA (service-oriented architecture): An application topology in which the business logic of the application is organized in modules (services) with clear identity, purpose and programmatic-access interfaces. Services behave as "black boxes": Their internal design is independent of the nature and purpose of the requestor. In SOA, data and business logic are encapsulated in modular business components with documented interfaces. This clarifies design and facilitates incremental development and future extensions. An SOA application can also be integrated with heterogeneous, external legacy and purchased applications more easily than a monolithic, non-SOA application can.

(Source: The Gartner Glossary of Information Technology Acronyms and Terms)

Introduction

A good place to start the discussion on global services sourcing (GSS) is to talk about what has been happening in this space for over a decade, long before it became a debated, and a headline-grabbing topic.

Services sourcing is all about outsourcing and off shoring, in line with timetested corporate philosophy of produce where it is cheapest and sell where it fetches the best price. While GSS is more than a decade old phenomenon, over the last couple of years in particular, global corporations are resorting to cost cutting measures by off shoring a variety of service sector jobs at a frantic pace to global low cost centers.

Since the early to mid-1970s, outsourcing across the continents as a concept, has proven to be successful with the substantial movement of manufacturing operations from the United States and Western Europe to Asian and Latin American countries.

In the late 1970s and 1980s, jobs were exported from developed countries to East Asian countries like Korea, Malaysia and Singapore. The late 1980s and early 1990s saw an increased focus by American companies to move their key manufacturing operations to Mainland China to take advantage of its cheap labor and a variety of fiscal and other incentives offered to foreign investors in Chinas

Special Economic Zones (SEZs) across coastal China. The success of NAFTA brought Mexico into focus as an effective manufacturing base as well due to its geographical proximity to the U.S.

Though outsourcing of manufacturing operations has proved itself to be a timetested and successful phenomenon, outsourcing of services was never considered to be feasible until a decade ago. It was assumed that good quality services could not be sourced from the developing countries, and also that the technology needed for such operations was not at hand. Services were considered far too personalized and required face-to-face interaction, or at least geographical proximity, between the recipient and the provider.

The pioneers of outsourcing namely, Nortel Networks, Citibank and General Electric (GE) took the leap in this direction in the late 1980s and early 1990s, a trend which saw a huge surge in outsourcing activities across the globe in the late 1990s by when the proven success of offshore outsourcing of software development and maintenance, global corporations began to explore the possibility of outsourcing both non-core and critical core tasks and processes to lower cost locations in Asia. And the major candidate countries were the same as those popular for IT outsourcing: India, Ireland and Philippines. This led to the need for the development of Business Process management. (BPM) When things go wrong, is it a statement of incompetence or poor process management? It usually is the latter!

In todays business environment it is impossible for one or one group of people to fully know or understand all the dynamics associated with the operational business processes within an organization. This is why it is essential that companies map, monitor, analyze and collaborate on process knowledge and management improvement. BPM helps one to manage ones processes! BPM helps to maximize the bottom-line impact of process improvement efforts through effective communication. It supports all elements of business processes from modeling and documentation, communicating, measurement and analysis, to continuous process management and improvement. With the powerful, easy-to-use BPM method one can:

Create comprehensive business process models to illustrate the current status of operations

Standardize work practices by designing uniform guidelines e.g. for quality systems

Reengineer and improve your business processes to ensure optimized flow of materials, resources and information

Communicate processes effectively with graphically attractive flowcharts via the interactive web client

Work with action plans and comments in the same web client. Inform about changes with Briefing Booklets Provide strategic process mapping or performance management solution by integrating processes with Balanced Scorecard measures

Simulate processes to identify potential bottlenecks, optimize resource utilization and validate improvements

Analyze processes, illustrate and benchmark results with the highly visual and easy-to-understand graphs and reports. A business process is any broad collection of activities within a company that is involved in the ultimate goal of developing product or service for the customer, whether that customer is internal or external for the business. Business processes are typically evaluated from the customer's viewpoint. Effective business processes are essential in maximizing the added value provided to your customers. Managing the key processes efficiently is thus critical to the success of the company. Managing processes is harder than it may seem at first - mostly because these processes do not stand alone, but interact with one another. There are many types of business processes such as key processes, support processes and sub-processes. Typical business processes include:

Procurement: Securing the materials and equipment necessary to produce your goods or services.

Product development: Planning new goods or services for your customers or refining existing products.

Production: Creating those goods or services. Order delivery: Receiving orders from customers and ensuring that those orders are fulfilled.

Distribution: Ensuring smooth distribution of goods to customers. Customer support: Providing assistance to customers after they've bought your product or service. The further one takes the process work, the greater the potential return is. To ensure continuous, successful process development and improvement you need to consider important key issues.

Targets should be clear and measurable. Ensuring strong commitment from both management and personnel is essential. Your personnel are a valuable source of information. Involvement greatly assists in creating the commitment and ensuring the acceptance of proposed changes.

Communication is what helps you create involvement, commitment, and target setting. Building a process-oriented model can solve many problems that are hidden from a traditional functional viewpoint. A process model (Figure 1) is designed to help all people involved understand the whole picture and their part in it. Building such a model requires teamwork, to ensure that all available knowledge is used in the model. A basic model can consist of specific activities, process steps, organizational functions, information and material. The model can also contain notes about potential problems in the business process, ideas for improvement and other comments. Quality documentation is an important part of business process management. Documenting all the processes in your company aids communication throughout

the organization. The greatest challenge in the organization is to keep the quality documentation up-to-date and accessible to those involved. A great help in keeping the documentation up-to-date is to use the company's Intranet. Documentation is also a crucial element in any quality project e.g. when implementing ISO 9000/14000.

Source: Harrington, J.H., (1991). Business Process Improvement: The Breakthrough Strategy for Total Quality, Productivity, and Competitiveness.

Figure 1 Business processing management or BPM is the orchestration of various business systems into identifiable and controllable systems. BPM can be used to solve a single glitch or inefficiency in your company, or it may be used to create a single unifying system to consolidate a myriad of different company processes.

Business Process Management or BPM is the practice of improving the efficiency and effectiveness of any organization by automating the organization's business processes. BPM used to be also known as Business Process Reengineering (BPR).

Many companies have business processes that are unique to its business model. Since these processes tend to evolve over time as the business reacts to market conditions, the BPM solution you choose must be easily adaptable to the new conditions and requirements and continue to be a perfect fit for the company.

In order to use BPM effectively, organizations must stop focusing exclusively on data and data management, and adopt a process-oriented approach that makes no distinction between work done by a human and a computer.

The idea of BPM is to bring processes, people and information together. Dynamic infrastructure requires separation of flows, business rules and

services. Identifying the business processes is relatively easy. Breaking down the

barriers between business areas, and finding owners for the processes is difficult. BPM not only involves managing business processes within the enterprise but

also involves real-time integration of the processes of a company with those of its suppliers, business partners, and customers. BPM involves looking at automation horizontally instead of vertically.

Business Activity Monitoring (BAM) is essential for measurement of BPM

impact.

Examples of BPM tasks that your organization performs that should be automated include:

Expense Reports Travel Requests Purchase Orders Human Resource Management New Accounts and Credit Authorizations Sales Orders Project Management Software Change Management

The following example illustrates the power of BPM:

When a B2B partner needs some inventory, he can log into the web site and order required inventory. An email will be generated and sent to the supervisor responsible for the partner's inventory. The supervisor can click on the link in the email, login to the site and approve the inventory. The partner will be notified of the allocation and the inventory will be shipped.

Components of a Business Process Management (BPM) Solution

BPM IDE: Business Process Management (BPM) IDE is an integrated design environment used to design processes, rules, events and exceptions. Creating a

structured definition of each process is very important to any business and the IDE enables a business user to design all processes with no help from IT.

Process Engine: The process engine of a Business Process Management solution keeps track of the states and variables for all of the active processes. Within a complex system, there could be thousands of processes with interlocking records and data.

User Directory: Administrators define people in the system by name, department, role and even potential authority level. This directory will enable tasks to be sent automatically to the defined resources.

Workflow: This is the communication infrastructure that forwards tasks to the appropriate individual.

Reporting/Process monitoring: Enables users to track the performance of their current processes and the performance of personnel who are executing these processes.

Integration Enterprise Application Integration (EAI): EAI and/or Web service is critical to BPM, as business processes will require data from disparate systems throughout the organization.

What is Business Activity Monitoring or BAM?

Business Activity Monitoring or BAM is the automated monitoring of business process activity affecting an enterprise. BAM is generally implemented as a module of ERP, BI, EAI or BPM products. BAM requires a business to identify its Key Performance Indicators (KPIs) and create a system that allows monitoring and responding to changes, preferably real time.

Virtually for everyone in a organization can benefit from BAM.

Business

Activity Monitoring enables a company to respond faster to new opportunities and threats. BAM is not just about technology, but about recognizing a business' KPIs and implementing the right technology in place to monitor them.

BAM provides Real-Time, Graphical Key Performance Indicators & Analysis.

BAM enables control and manage ongoing business operations using closed-loop visibility.

BAM will enable you to respond quickly to change based on business events as they occur.

BAM enables zoom in on cross-process metrics with real-time analysis to determine which processes are creating bottlenecks or which customer is most profitable.

Creating an effective BAM environment is not only about having the right technology and processes. Enterprises should define the right set of metrics, which will prevent information overload and overreaction to business exception reports.

Advantages of BPM

BPM makes it easy for companies to program their current processes, automate their execution, monitor their current performance and make on-the-fly changes to improve the current processes. The process-managed enterprise is the company of the future.

BPM software enables you to automate those tasks that are currently being performed manually. Many of these tasks require some type of application process, approval or rejection process, notifications and status reports. A BPM solution can make these processes automatic.

Handling exceptions is an area where BPM really shines. Organizations have few problems when its process runs smoothly ninety nine percent of the time. However, it's the one percent that are exceptions that dominate the majority of the company's time and resources.

BPM is excellent for processes that extend beyond the boundaries of an enterprise and communicate with processes of the partners, customers, suppliers and vendors.

BPM gives businesses the agility to stay competitive.

BPM reduces the time elapsed in a business process.

BPM increases the productivity per person.

Business process consists of many steps. A typical BPM initiative reduces the number of steps by 50%.

A Business Process needs many people and resources. A good BPM should reduce the number of resources needed for the same process.

BPM helps improve coordination across departments and geographic locations of a company.

Importance of Workflow

Workflow is an essential element of business process management (BPM).

Workflow is a term used to describe how work is defined and how work is allocated and scheduled.

Workflow defines the sequence and conditions based upon which work flows.

Workflow handles the routing of work between resources.

The resources can be people, systems or machines.

Workflow manages the order in which these steps are handled.

Workflow enables employees to monitor and, reconfigure the flow of a business process as needed.

The following example illustrates a BPM workflow:

In a content management business process, an editor edits the content and the manager approves the content. If you define editing of the content as a unit of

work and approving the job as another unit of work, then the editing job needs to happen first for the approval job to start. Further, if the editing job fails, the approval job can't start. Conclusion The greatest advantage of process orientation is that it helps you understand how things are really done in your organization, revealing problems, bottlenecks and inefficiencies that could remain hidden in a typical organization that is on the face of it functioning normally. Process Management also helps you:

Reduce lead times Decrease costs Improve internal efficiency Improve overall quality Increase customer and employee satisfaction Process orientation also contributes to a better understanding of the ultimate goal and output of the company and the individual's role in it. But most important is the notion that the processes and their output are the real interface with your customers - not just individual functions of your organization. Modeling and analyzing your business processes enables you to develop your organization and improve its effectiveness and quality of work. A few years ago, many organizations turned to BPM for straightforward improvements in their business processes through automation and integration. At

the time, they were looking for the next step beyond traditional integration solutions or EAI productssomething with more of a process-orientation. But in most cases, organizations were considering BPM as an alternative to enterprise application integration solutions, which tended to be optimized for system-to-system problems and frequently did not provide business-oriented approaches for dealing with human input or exception handling. Thus, many of the early BPM implementations were companies looking for increased automation of the processes, but from a business perspective, not simply a systems-level orientation. As a result, the focus of the integration efforts shifted from pure system-to-system towards a business process level that frequently involved users, exception handling or human input. Today, the scene is many companies are considering BPM and BPM solutions as an alternative or incremental approach to traditional system- or applicationoriented integration solutions. But we have also seen the rise of companies that are looking to deploy BPM solutions for additional benefits beyond integration or automation goals, and the companies that have already deployed BPM solutions who are looking to gain incremental advantages from their initial deployments. For example, many companies are looking to BPM to help them solve a range of problems that go beyond the original scope of integration or automation found in many first-generation BPM projects. Todays companies are deploying BPM technologies to address issues such as regulatory compliance, process

optimization and increased business agility. Theyre also looking to leverage BPM and service orchestration to drive new SOA-based applications and services. Using BPM in conjunction with SOA enables organizations to respond faster to changing business requirements. For example, an organization that is growing through acquisition and has the need to integrate diverse applications or process steps into an integrated process could potentially benefit from BPM running on top of an SOA. For many companies, SOA is becoming an important foundation for BPM, since it supports the rapid assembly and coordination of process components and services into larger components that address an entire business process. *****

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