BPM Seeks to Optimize Customer Need Fulfillment and Business Costs
Business process management focuses on the basic business objective of survival and prosperity through continuous improvement of the value delivered to the customer.
BPM is a continuing exercise to analyze existing business processes and improve them. The improvements can take different forms such as using technology for better performance and/or quality, removing bottlenecks or reducing costs. Delivering better value at lower costs keeps a business competitive, and this is the basic objective.
What Exactly Are Business Processes?
A business process consists of a series of related, structured activities that achieves a predetermined goal. The goal can be getting a customer order, producing a certain quantity of products meeting required quality standards, or even producing an accounting report. In a typical business, a large number of processes will be taking place at the same time.
There are management processes such as strategy development that focus on governance, operational processes such as production and marketing to execute the core business operations, and supporting processes such as maintenance, accounting and HR that are incidental to the core operations. Managing all the processes to work together to provide customer value at optimal costs is the overall business objective.
Businesses start with a customer need, develop processes and sub processes down to activity level to meet that need, and complete the overall process on fulfilling the customer need. It is this focus on customer needs that helps design and implement best practice processes. In the absence of such a focus, businesses tend to get compartmentalized into ‘functional silos’ with each functional department trying to further its own priorities.
Well-designed business processes eliminate activities that do not add customer value.
Business Process Management in Operation
Systematic BPM involves Designing, Modeling, Implementation, Monitoring and Optimizing.
- Design: All elements of the existing business process such as process flow, human actions, standard procedures, alerts and handovers are mapped. New designs that seek to improve the process are developed.
- Model: Alternatives are evaluated by checking how they are likely to operate if implemented. “What if” scenarios are simulated. Tools like graphic flowcharts, data flow diagrams and PERT charts, and computer simulations of complex scenarios are used to help analysis and evaluation.
- Implement: The trend these days is towards automation. Computer applications use business rules to automate tasks wherever possible. Provisions are made for human input where the task is too complex for automation.
- Monitor: Monitoring has two dimensions. It checks the current status of a process and generates alerts in real-time or on an ad hoc basis. Secondly, it mines data logs to compare performance against the model and generates reports.
- Optimize: Performance reports and observations during the implementation and monitoring stages are reviewed to identify bottlenecks and the potential for performance improvement or cost reduction. The findings are used to revise the design and the cycle of value improvement starts again.
BPM and Business Competitiveness
It is the continuing exercise of business process management that keeps a business competitive by creating better performing products, marketing it more effectively or reducing costs of operations. BPM seeks to exploit the potential of new technologies for improving business processes. BPM also seeks to manage continuing changes effectively by attending to the people aspects involved.
Business processes are the groups of activities and tasks that, together, keep the business operating. In typical businesses, numerous processes of managerial, operational and supporting nature will be taking place simultaneously. The task of coordinating all these processes becomes more efficient when the common goal of adding customer value governs all the different processes. Elements that do not add value for customers are eliminated from processes. Business Process Management (or BPM) is an exercise that seeks to improve customer value addition and cost reduction on a continuing basis.