Enterprise Resource Planning

MODULE 9 : Business Process Management (BPM)

Topics

· Complexity and difficulty linked with real-world business processes

· Meaning and significance of Business Process Management (BPM)
· Step-by-step approach of BPM
· BPM examples
· Benefits of BPM

Complexity and difficulty linked with real-world business processes

Business processes are complex, dynamic, widely distributed and customized across different
systems and business units. The characteristic of real-world business processes are:

• Large and complex, involving the flow of materials, information and business
commitments
• Very dynamic, responding to demands from customers and to changing market conditions
• Widely distributed and customised across boundaries within and between businesses,
often spanning multiple applications with very different technology platforms
• Long running – a single instance of a process such as order to cash may run for months or
even years
• Automated – at least in part. Routine activities should be performed by computers where
possible, for the sake of speed and reliability
• Dependent on the intelligence and judgement of humans. People perform tasks that are
too unstructured to delegate to a computer or that require personal interaction with
customers. People also make sense of the rich information flowing though your value chain
– solving problems before they irritate your customers and devising strategies to take
advantage of new markets
• Difficult to make visible. In many companies the processes are not conscious or
explicit, but undocumented and implicit, embedded in the history of the organisation.

Businesses need technologies for the management of business processes that are genuinely
usable, very flexible and capable of integrating systems across all kinds of business and
technology barriers.

Business Process Management (BPM)

Business Process Management is the capability to discover, design, deploy, execute, interact
with, operate, optimise and analyse end to end processes, and to do it at the level of business
design, not technical implementation. It is equally concerned with the reliable completion of
simple one-off business transactions and with complex sequences that may continue for weeks,
months or even years.

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 Enterprise Resource Planning

Business process management (BPM) is a way of looking at and then controlling the business
processes that are present in an organization. It is an effective methodology to use in times of
crisis to make certain that the processes are efficient and effective, as this will result in a better
and more cost efficient organization.

BPM ensures that the right information gets to the right place at the right time, meaning that the
correct internal system, person, or external partner receives the information they need to
complete their business tasks at the appropriate times.

BPM is a systematic approach to make an organization's workflow more effective, more efficient
and more capable of adapting to an ever-changing environment. The goal of BPM is to reduce
human error and miscommunication and focus stakeholders on the requirements of their
roles. Business Process Management studies how business processes can be supported and
managed through the use of Information Technology.

BPM has become one of the most widely used approaches for the design of modern
organizational and information systems. The conscious treatment of business processes as
significant corporate assets has facilitated substantial improvements in organizational
performance but is also used to ensure the conformance of corporate activities.

BPM is a discipline that leverages software and services to provide total visibility into the
organization. It helps organizations optimize business performance by discovering, documenting,
automating, monitoring and continuously improving business processes to increase efficiency
and reduce costs.
BPM is the ability to define, implement, manage, analyze, and optimize interactions between :
Systems within the organization (for example, applications and information sources), People in
the organization; and External business partners.

It is of paramount importance for the organizations to have a powerful BPM approach that
enables it to rapidly create new, capable business processes and to improve and adapt existing
business processes to the changing environment in which the processes are executed.

Step-by-step approach of Business Process Management

BPM should not be a onetime exercise. It should involve a continuous evaluation of the
processes and include taking actions to improve the total flow of processes. The steps that can be
recognized in BPM are:
· Analyze
· Re-design and model
· Implement
· Monitor
· Manage
· Automate

The following steps outline a general approach to implementing business process management:

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 Enterprise Resource Planning

Step 1: Business analyst researches the organization’s business process to identify:

· The business tasks involved in the process; and

· The business rules that dictate the order of the business tasks and the
circumstances under which each business task is performed.
After performing this research, the business analyst then draws (or models) the business process
to give a visual overview diagram of the business process. The business analyst can add
documentation to the business process to provide participants and their roles, timing, etc.
Step 2: The technical staff continues to research the business process information provided by
the analyst. The technical staff researches the business process to identify:
· The internal systems, people, and external partners that participate in the
business process.
· The information flowing between these tasks.
· Where errors and exceptions can occur and how best to handle them.
After this research, the technical staff continues to update the process model provided by the
business analyst.
Step 3: The technical staff implements the model (that is, makes the business process
operational). At this time, the technical staff provides the additional business logic to perform the
tasks identified in the process that the business analyst has modeled.

BPM examples

Suppose a large retailer buys a human resources (HR) application to improve human resource
management capabilities. The HR department, located at corporate headquarters, gets the new
application and probably improves its HR department processes to take advantage of the
software's features. However, the day-to-day activity of hiring, firing, pay changes and so on
happens at the outlet stores, rather than at corporate headquarters. Store managers don't use the
application directly; they send information to headquarters and HR analysts to input it into the
system. Through the use of Web and integration technologies, BPM provides store managers a
defined process and user interface for performing each of the HR transactions they need to,
enforces the business rules that HR needs, and submits transactions to the HR and related
applications automatically.

The following are some more examples given in brief:

1) Adding functionality to existing business systems, such as ERP, CRM, manufacturing

execution systems (MEC), Warehouse management system (WMS), etc. In such cases, it
would be probably less expensive and quicker to extend an older existing application
using BPM than to install new software or reprogramming the existing software.
2) Designing and adding new processes as requirements change.
3) Link business systems to aggregate data and processes.

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 Enterprise Resource Planning

4) Build new processes between acquired company systems to provide a full view of
inventory information.
5) Link a number of systems to provide and support new processes.
6) Connect the manufacturing execution systems to the planning and scheduling system.
7) Develop a process that allows certain CRM users to view and exchange data with the
warehouse management and the manufacturing scheduling systems.
8) Design, build, simulate, and finalise new stand alone business processes using data from
any source.

Benefits of Business Process Management

By implementing business process management, your corporation can achieve the following
benefits:

· Better understanding and visibility of the entire business process. Modeling a business
process helps you to understand the entire process better, and lets you account for all the
resources involved to achieve the business process.
· Better error and exception handling. The error and exception handling is planned in
advance and designed into the business process. When an exception occurs, the right
person or system receives the information to handle the exception.
· Saves time. Business processes are thought out in advance and decision making designed
into the process. This saves time. If a human has to make a decision, the right person with
the right skills makes the decision at the right time in the process. If the decision can be
automated, the action occurs automatically, saving even more time.
· Reduces costs. Automating tasks and creating more efficient processes saves time and
therefore also saves money. Employee training costs are lowered because you understand
your business processes and the skills that your employees need to accomplish the human
tasks involved. You can focus your training money on the necessary skills. It also allows
you to bring new employees up to speed faster.
· Improves employee efficiency. Allows you to recognize tasks that can be automated,
allowing your employees to work on the tasks that really require their attention. Ensures
that your employees are focusing on the most important issues.

Prepared by Dr. NASINA JIGEESH