Business process management

Not to be confused with Business process modeling or Business process mapping.

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Business process management (BPM) is a management approach focused on aligning all

aspects of an organization with the wants and needs of clients. It is a holistic management
approach[1] that promotes business effectiveness and efficiency while striving for innovation,
flexibility, and integration with technology. Business process management attempts to improve
processes continuously. It could therefore be described as a "process optimization process." It is
argued that BPM enables organizations to be more efficient, more effective and more capable of
change than a functionally focused, traditional hierarchical management approach.

Contents
[hide]

 1 Overview
 2 BPM life-cycle
o 2.1 Design
o 2.2 Modeling
o 2.3 Execution
o 2.4 Monitoring
o 2.5 Optimization
 3 Practice
o 3.1 BPM technology
 4 See also
 5 References

[edit] Overview
A business process is a "series or network of value-added activities, performed by their relevant
roles or collaborators, to purposefully achieve the common business goal." [2] These processes are
critical to any organization as they generate revenue and often represent a significant proportion
of costs. As a managerial approach, (BPM) considers processes to be strategic assets of an
organization that must be understood, managed, and improved to deliver value added products
and services to clients. This foundation is very similar to other Total Quality Management or
Continuous Improvement Process methodologies or approaches. BPM goes a step further by
stating that this approach can be supported, or enabled, through technology to ensure the viability
of the managerial approach in times of stress and change. In fact, BPM is an approach to
integrate a "change capability" to an organization - both human and technological. As such,
many BPM articles and pundits often discuss BPM from one of two viewpoints: people and/or
technology.

Roughly speaking, the idea of (business) process is as traditional as concepts of tasks,

department, production, outputs. The current management and improvement approach, with
formal definitions and technical modeling, has been around since the early 1990s (see business
process modeling). Note that in the IT community, the term 'business process' is often used as
synonymous of management of middleware processes; or integrating application software tasks.
This viewpoint may be overly restrictive. This should be kept in mind when reading software
engineering papers that refer to 'business processes' or 'business process modeling.'

Although the initial focus of BPM was on the automation of business processes with the use of
information technology, it has since been extended to integrate human-driven processes in which
human interaction takes place in series or parallel with the use of technology. For example (in
workflow systems), when individual steps in the business process require human intuition or
judgment to be performed, these steps are assigned to appropriate members within the
organization.

More advanced forms such as human interaction management are in the complex interaction
between human workers in performing a workgroup task. In this case, many people and systems
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.

Because BPM allows organizations to abstract business process from technology infrastructure,
it goes far beyond automating business processes (software) or solving business problems (suite).
BPM enables business to respond to changing consumer, market, and regulatory demands faster
than competitors - creating competitive advantage.

Most recently, technology has allowed the coupling of BPM to other methodologies, such as Six
Sigma. BPM tools now allow the user to:

 Define - baseline the process or the process improvement

 Model - Simulate the change to the process.
 Analyze - Compare the various simulations to determine an optimal improvement
 Improve - Select and implement the improvement
 Control - Deploy this implementation and by use of User defined dashboards monitor the
improvement in real time and feed the performance information back into the simulation
model in preparation for the next improvement iteration.
This brings with it the benefit of being able to simulate changes to your business process based
on real life data (not assumed knowledge). Also, the coupling of BPM to industry methodologies
allows users to continually streamline and optimize the process to ensure that it is tuned to its
market need.[3]

[edit] BPM life-cycle

Business process management activities can be grouped into five categories: design, modeling,
execution, monitoring, and optimization.

[edit] Design

Process Design encompasses both the identification of existing processes and the design of "to-
be" processes. 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. 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.

[edit] Modeling

Modeling takes the theoretical design and introduces combinations of variables (e.g., changes in
rent or materials costs, which 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?".

[edit] Execution
One of the ways 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 complex, making the documentation
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 ask for human 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.

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.

[edit] Monitoring

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 can be 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, near 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.

[edit] Optimization
Process optimization includes retrieving process performance information from modeling or
monitoring phase; identifying the potential or actual bottlenecks and the potential opportunities
for cost savings or other improvements; and then, applying those enhancements in the design of
the process. Overall, this creates greater business value.

[edit] Practice

Example of Business Process Management (BPM) Service Pattern: This pattern shows how
business process management (BPM) tools can be used to implement business processes through
the orchestration of activities between people and systems.[4]

Whilst the steps can be viewed as a cycle, economic or time constraints are likely to limit the
process to only a few iterations. This is often the case when an organization uses the approach
for short to medium term objectives rather than trying to transform the organizational culture.
True iterations are only possible through the collaborative efforts of process participants. In a
majority of organizations, complexity will require enabling technology (see below) to support
the process participants in these daily process management challenges.

To date, many organizations often start a BPM project or program with the objective to optimize
an area that has been identified as an area for improvement.

In financial sector, BPM is critical to make sure the system delivers a quality service while
maintaining regulatory compliance.[5]

Currently, the international standards for the task have only limited to the application for IT
sectors and ISO/IEC 15944 covers the operational aspects of the business. However, some
corporations with the culture of best practices do use standard operating procedures to regulate
their operational process.[6] Other standards are currently being worked upon to assist in BPM
implementation (BPMN, Enterprise Architecture, Business Motivation Model).

[edit] BPM technology

Some define the BPM System or Suite (BPMS) as "the whole of BPM." Others will relate the
important concept of information moving between enterprise software packages and immediately
think of Service Oriented Architecture (SOA). Still others limit the definition to "modeling... to
create the ‘perfect’ process," (see Business modeling).

These are partial answers and the technological offerings continue to evolve. The BPMS term
may not survive. Today it encompasses the concept of supporting the managerial approach
through enabling technology. The BPMS should enable all stakeholders to have a firm
understanding of an organization and its performance. The BPMS should facilitate business
process change throughout the life cycle stated above. This will assist in the automation of
activities, collaboration, integration with other systems, integrating partners through the value
chain, etc. For instance, the size and complexity of daily tasks often requires the use of
technology to model efficiently. These models facilitate automation and solutions to business
problems. These models can also become executable to assist in monitoring and controlling
business processes. As such, some people view BPM as "the bridge between Information
Technology (IT) and Business."[citation needed]. In fact, an argument can be made that this "holistic
approach" bridges organizational and technological silos.

There are four critical components of a BPM Suite:

 Process Engine – a robust platform for modeling and executing process-based

applications, including business rules
 Business Analytics — enable managers to identify business issues, trends, and
opportunities with reports and dashboards and react accordingly
 Content Management — provides a system for storing and securing electronic
documents, images, and other files
 Collaboration Tools — remove intra- and interdepartmental communication barriers
through discussion forums, dynamic workspaces, and message boards

BPM also addresses many of the critical IT issues underpinning these business drivers,
including:

 Managing end-to-end, customer-facing processes

 Consolidating data and increasing visibility into and access to associated data and
information
 Increasing the flexibility and functionality of current infrastructure and data
 Integrating with existing systems and leveraging emerging service oriented architecture
(SOAs)
 Establishing a common language for business-IT alignment

Validation of BPMS is another technical issue that vendors and users need to be aware of, if
regulatory compliance is mandatory.[7] The validation task could be performed either by an
authenticated third party or by the users themselves. Either way, validation documentation will
need to be generated. The validation document usually can either be published officially or
retained by users.[8]