CAN BUSINESS PROCESS MANAGEMENT MAKE A DIFFERENCE?

If you’re a large successful company, business process management might be just what you’re
looking for. AmerisourceBergen and Diebold Inc. are two examples. AmerisourceBergen is one of the
world’s largest pharmaceutical services companies and a member of the Fortune 25, with $70 billion
in revenue in 2009. It provides drug distribution and related services designed to reduce costs and
improve patient outcomes, servicing both pharmaceutical manufacturers and healthcare providers.

Because it is so large, AmerisourceBergen has numerous and complicated relationships with

manufacturers, pharmacies, and hospitals. Frequently changing business conditions cause
contract prices to fluctuate. When they do, both the distributor and manufacturer need to analyze
these changes and make sure they comply with their business rules and federal regulations.
Managing these contract and pricing details associated with each of these relationships had been
very time-consuming and paper-intensive, relying heavily on e-mail, telephone, fax, and postal mail.
Many of these processes were redundant.

AmerisourceBergen’s management believed the company had many old and inefficient business
processes. After an extensive BPM vendor analysis, the company selected Metastorm BPM software.
Metastorm BPM provides a complete set of tools for analyzing, managing, and redesigning business
processes. Business professionals, managers, and information systems specialists are able to create
rich graphical models of business processes as well as new user interfaces and business rules.
Metastorm has an engine for deploying redesigned processes along with capabilities for integrating
the processes it manages with external systems.

For its first BPM project, AmerisourceBergen decided to automate and implement an online
collaborative contract and chargeback process, which is responsible for a $10 billion annual cash
flow. This process drives the establishment of pricing and terms with each of the company’s
manufacturers and also controls compliance with pricing terms and the payment of rebates from the
manufacturer if the company is forced to sell at a lower price to compete. Any disputes or inaccurate
pricing data create costly delays in obtaining the refunds the company is owed.

Metasource BPM makes it possible for all contract changes to be recorded into the system and
validated against internal business rules, and also enables AmerisourceBergen to link with its trading
partners for collaborative BPM. All contract information is housed in a single repository, making it
much easier to investigate chargebacks and communicate contract and pricing information with
trading partners and among internal departments.

The BPM project was successful and resulted in lower headcount, fewer disputes, more accurate
pricing information, and a high return on investment. This early success encouraged the company to
expand BPM to other areas of the business and use it to support a broader business transformation
program. AmerisourceBergen used Metastorm BPM to create six new specialized processes for
managing and automating high-volume, highly specialized supplier credits which interface with its
SAP enterprise system.

To meet federal and industry-specific regulations, AmerisourceBergen must carefully track and
match all direct, indirect, and third-party credits with the appropriate product inflows and outflows.
The company used Metastorm BPM to create specialized processes that interface with SAP,
including the ability to receive, track, reconcile, and expedite all credit variances, such as
discrepancies in invoices and purchase orders. After the SAP system identifies the variances, it
passes credits to Metastorm BPM for exception handling, resolution, and reconciliation with master
credit data. Reconciled credits are then returned to the SAP system. More than 1.2 million
credit/debit adjustment documents and paper-based credits are seamlessly passed between
Metastorm and SAP this way.

To date, AmerisourceBergen has automated nearly 300 processes, benefiting from more efficient
and accurate record tracking, faster turnaround times, greater management into key performance
indicators, and an online audit trail of all activities. AmerisourceBergen’s BPM projects had such
positive outcomes that the company won a Global Excellence in BPM and Workflow award in 2009.
Diebold, Inc. is another recent convert to business process management. Diebold is a global leader in
integrated self-service delivery and security systems and services, with 17,000 associates across 90
countries .The company makes, installs, and services ATMs, vaults, currency-processing systems, and
other security equipment used in financial, retail, and government markets. Diebold hoped to use
business process management to understand and improve its order fulfillment process. The
company selected Progress Savvion’s Business Manager BPM solution for this task.

Business Manager provides a platform for defining an organization’s business processes and
deploying those processes as Web-accessible applications. The platform gives managers real-time
visibility to monitor, analyze, control, and improve the execution of those processes and can
integrate these processes with existing operational systems. Business Manager receives and
organizes data from multiple sources to provide a more complete view of the Diebold order process.
Diebold managers are able to track orders in real time at any step in the process and also predict
future performance based on past data. Since the tool enables managers to learn how long each
step of the process usually takes, they can forecast where orders ought to be and compare that with
where the system says the orders actually are. Business Manager can detect whether production of
an item is complete and where specific items are located. Pleased with these capabilities, Diebold
immediately used Business Manager for other processes, such as issue resolution. The system
aggregates input from various sources, such as workers in the field and in factories. Diebold is now
able to quickly identify issues raised by employees and customers and determine how long it takes
to resolve them.

Questions

1. Why are large companies such as AmerisourceBergen and Diebold good candidates
for business process management?
2. What were the business benefits for each company from redesigning and managing their
business processes?
3. How did BPM change the way these companies ran their businesses?
4. What might be some of the problems with extending BPM software across a large number of
business processes?
5. What companies stand to gain the most by implementing BPM?