Business Process Management

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What Is Business Process Management?

Definition

To understand Business Process Management, you also need to understand the definitions for process and business process. Below you can find one way to open all these terms [1]:

  • Process. Process refers to a collection of interrelated tasks and activities that are initiated in response to an event. Process always aims to achieve a specific result for the consumer of the process.
  • Business Process. In a business process, the tasks and activities mentioned above are business operations and tasks, and the goal (specific result above) is to design, create, and deliver a product or service.
  • Business Process Management (BPM). BPM refers to “the art and science of overseeing how work is performed in an organization to ensure consistent outcomes and to take advantage of improvement opportunities”. [2] In other words, BPM takes a process-oriented approach contrary to a function-oriented approach.

Classification and Categorization

Business process can be classified and categorized in multiple ways [1]:

  • Process decomposition. The manner by which the process components are broken down into simpler forms of objects. See more information in the section ‘Process decomposition’ below.
  • A process type. Categorizes the process based on the role of the process: 1) Management processes – focus on planning and control. 2) Main processes – to produce output. 3) Support processes – necessary for the main processes to execute.
  • The process nature. Categorizing processes based e.g. on their complexity.
  • Process tiers. Classify processes into one of three tiers: 1) Strategic 2) Tactical 3) Operational.

Process Decomposition

Processes should always be viewed in an integrated manner. Below you can find explanations for the objects on different levels. [1]

  • Process Area. A high-level, abstract combination of Process Groups.
  • Process Group. Combines a coherent and complete set of processes, which together produce a final output, with a specific benefit or value, to specific stakeholders. Within a Process Group, there is exactly one process that delivers the output for which the Process Group is valued. All other processes are there to ensure that the main process has everything it needs to ensure the value is delivered.
  • Process. Each Process Group consists of the set of processes required to plan, prepare, and deliver its valued output. A process will produce a single, usable, and complete business object, for example a product or information object.
  • Process Step. A Process can be broken down into Process Steps. The work of the steps is specific but at this level, there is nothing to indicate or specify how each action will be accomplished.
  • Activity. Process Steps can be broken down into Process Activities. Activities describe work – in other words, they provide the details of the complete set of actions required to produce an output from a process step.
  • Work System. The work system is composed of the combination of human work performing an activity.
  • Procedure. Whereas process activities describe tangible work, procedure specifies how the work is done. Procedures capture the behaviour and information aspects of systems or machines at the lowest externally observable level. Procedures are captured within the product design and the operation manuals.

Systems Thinking vs. Process Thinking

As organizations become more complex, effective managers need an overview that allows anyone to see how their work fits within the larger whole. Systems thinking puts the emphasis on understanding the organization as a whole. [3]

Process thinking, in turn, is just a subset of systems thinking. It stresses thinking about a portion of the system that produces a specific set of results. The key is to think of the entire process, to understand how it fits within the larger process and, ultimately, within the value chain. [3]

Business Process Management Life Cycle

The Business Process Life Cycle model can be applied to any process-oriented projects. It can also be used in combination of various process methods and approaches such as Business Process Reengineering (BPR), Lean, and Six Sigma. [1]

The BPM Life Cycle Model presented by von Rosing, von Scheel, and Scheer [1] has been used as a starting point in the following section. However, the model has been simplified and restructured.

Analyse

The goal in this phase is to describe what the organization does. Information needed for this work comes from many sources and in many forms.

The process analysis phase can be used to understand how the process operates, determine potential development targets, and improve process alignment with business goals.

The analysis phase includes the following tasks:

  • Identify critical business factors. Identify all internal and external drivers and areas that are vital to success.
  • Describe process goals. Goals must be clearly defined, documented, and agreed upon by all relevant stakeholders.
  • Choose reusable pieces of content. These can include e.g. vision & mission (strategic content), organizational structure, process models, and technology capabilities.
  • Check if ‘as-is’ process reference content is available. Today, many organizations already have a process landscape, so remember to use what is already available.
  • Define as-is high-level process landscape. If the process landscape is not well defined or documented, it is essential to clearly define and document the existing process landscape of the organization.

Design

Business process design helps an organization understand and define the business activities that enable it to function and add value.

In this phase you design new processes from scratch and/or redesign and reengineer existing processes. The level of detail of documentation is now increased dramatically.

Change in the process can be primarily organizational, technical, or a combination of the two.

The design phase includes the following tasks:

  • Define ‘as-is’ process maps and flow charts. Define the current process maps, matrices, and models (e.g. process decomposition, process flows, responsibilities, resources etc.) more in detail. In addition, on all process levels, create flow charts to give a clear, graphical indication of what happens when.
  • Create ‘to-be’ value-driven process design. The future process solution is designed and documented with the help of the materials created in the previous step.
  • Document how the ‘to-be’ processes relate to the organizational structure. The to-be definitions of the process, its structure, and how it relates to the (as-is and to-be) organizational structure.
  • Manage process requirements. Process requirements need to be clearly defined and documented.
  • Standardize and integrate. The definitions of the previously designed solution must be agreed and documented. Categorize which processes can (or should) be standardized, and how they will be integrated with each other.
  • Harmonize variants. Define the extent of standards and how they fit together. Do not try to make different standards uniform but avoid inconsistencies between standards.
  • Match the ‘as-is’ processes to the ‘to-be’ processes. This enables reducing the number of processes that are used by the organization, and reduces the chance of overly complex process portfolios.

Deploy/Implement

In this phase the organization implements and transitions the processes to execution (go live).

The movement of releases to live environments needs to be planned, scheduled, and controlled. The implementation phase involves multiple aspects like for example coordination with process owners, change management, process training, and risk management.

The implementation phase includes the following tasks:

  • Plan process implementation (based on requirements). Develop a plan which describes how to efficiently move from the organization’s current state to the release and deployment state.
  • Establish process ownership. Process owners are responsible for the management of processes within the organization. They can be current leaders/managers or taken from non-leadership positions. It is essential to agree and document definitions around process roles, responsibilities, and the who-does-what structure.
  • Implement business processes (process rollout). This phase includes tasks like testing all areas of change together in the business environment to check that everything is ready to ‘go live’, and giving training concerning the new processes and the associated systems, organization, and infrastructure.
  • Add process rewards. Process reward recognition acts as a communication tool – by recognizing people effectively, you reinforce the actions and behaviours you most want to see people repeat.
  • Measure process performance. Collect, analyse, and report information regarding the process performance of a group of processes or an individual process.
  • Define performance indicators. Define performance indicators that are based on predefined value drivers.
  • Harmonize terms. Harmonize terms and definitions across process groups and process areas and ensure documentation for these. Remember that the harmonization of process terms across the process landscape must be continuously evaluated and managed by process owners and teams.

Run/Maintain

In this phase the active processes, that have been deployed and implemented, are governed (steered) and monitored.

The goal of both business governance and process governance is to optimize business processes and implement and use the built-in continuous improvement concept (see the next section on Continuous Improvement below).

The run/maintain phase includes the following tasks:

  • Monitor and govern the processes. Establish an effective way of monitoring and governing the processes (process measurements, monitoring, reporting, and audits), and utilize real-time data on measurements.
  • Use documentation. Use the documentation also in the run/maintain phase to govern and monitor the active processes that have been deployed. If the business value is not realized as expected, corrective measures should be taken.
  • Identify performance gaps. Review, identify, and classify all running processes in the organization’s process portfolio. Then scope for performance gaps, irregularities, and other kinds of process performance problems and misbehaviour.
  • Analyse variances. Analysing process variances is important to identify duplication and a potential for integration, and for the standardization of the various processes. It requires detailed business process or workflow analysis, in which one examines processes using various techniques, such as BPR, Six Sigma, or Lean.
  • Identify needs for new processes/reengineering. The need for implementing new processes and/or reengineering existing processes can be triggered by e.g. performance gaps.
  • Estimate impact of new/reengineered processes. Assess the possible impact that new and/or reengineered processes have upon many different business aspects – most importantly, what their execution will mean for the value-generating cycle. This analysis helps to identify which business units/departments and processes are essential. You can identify business impacts based on worst-case scenarios that assume that the physical infrastructure supporting each respective business unit has been destroyed and all records, equipment, etc. are not accessible for a longer time.

Continuous Improvement

Business Process Improvement (BPI) is a systematic approach to help an organization optimize its underlying processes to achieve better results.

Many frameworks, methods, and approaches (e.g. Business Process Reengineering, Six Sigma, Lean, Kaizen) have some sort of CI (Continuous Improvement) and or CPI (Continuous Process Improvement) incorporated in one way or another.

However, there have been some claims that these methods are more cost-cutting-focused and that this comes at the expense of fair labour practices and quality products.

The criticism furthermore argue that real continuous improvement governance models would have to incorporate both performance/cost drivers as well as value drivers.

Continuous improvement includes the following tasks:

  • Prioritize improvement areas. Define, document, and select improvement areas through collaborative efforts between business, IT, and technology units.
  • Ensure process management. Processes must be continuously updated and managed by a dedicated process unit/team.
  • Manage change. In the world of constant change, adapting internal and external changes is a common challenge. Therefore, an organization must actively manage the changes befalling the organization, and the change of their business processes.
  • Enable business innovation and transformation. This goes hand-in-hand with the change management described above. Go into detail around suggested process changes and their impact.

Three important approaches of BPM

There are some beneficial approaches to take into account when working with Business Process Design and Management. [1]

Value-Oriented BPM

Research has shown that organizations compete with only about 5% of their processes. 15% are important processes supporting their competitive advantage. Around 80% of the processes are commodity processes that do not add to the differentiation or competitiveness of an organization.

A value-oriented process design and implementation factors this in by focusing innovation and optimization initiatives, as well as company specific software development, on the 20% high-impact processes.

The commodity processes are designed based on industry reference models and implemented through standard software, as far as possible.

Sustainability Oriented BPM

Sustainability is becoming a part of organizations and all their processes. It is one of the most relevant challenges that organizations and societies need to address.

Elkington’s Triple Bottom Line asserts that business performance must deliver value in three key areas: social, environmental (or ecological) and financial. [4]

The ability to meet this challenge is hindered by the complexity of integrating sustainability into the strategy, the business model, and the different business functions of an organization. Sustainability oriented process modelling tries to respond to this challenge.

Evidence-Based BPM

Evidence-based business process management is about the practice of systematically using data produced during the execution of business processes to discover, analyse, and continuously monitor and improve business processes.

A family of techniques, known as process mining, supports this data-driven approach by extracting useful information from business process event logs (a collection of event records relevant to a given business process).

Process mining techniques can be broadly classified into descriptive techniques (providing insights about the process as it is or as it has been) and predictive techniques (predicting how a process as a whole or a specific case of the process will behave in the future).

Applying Agile Principles to BPM

Agility has five fundamental agile characteristics: responsiveness, flexibility, speed, leanness, and learning. Agility is also about the ability to structure an organization in such a way that it is possible to embrace change and adapt quickly to service the customers in their changing needs. [1]

Agile concepts can be applied across various disciplines and industry verticals, such as agile software development, agile project management, agile supply chain, agile manufacturing, agile service management, agile enterprise, etc. Respectively, agile concepts can also be applied to business process management (BPM) planning, analysis, architecture, design, implementation, operation, monitoring, and improvement. [1]

Traditional business process management takes a waterfall approach – it focuses on detailed up-front planning, requirements analysis, process analysis, process design, process implementation, and continuous improvement to adjust changes. With the agile way of working, in turn, you for example do not try to get the complete detailed requirements upfront. You make an initial high-level project plan which is further developed as the project progresses. And so on.


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Sources

  1. von Rosing, Mark; von Scheel, Henrik; Scheer, August-Wilhelm (2014). The Complete Business Process Handbook: Body of Knowledge from Process Modeling to BPM, Volume 1. Elsevier Science.
  2. Dumas, Marlon; La Rosa, Marcello; Mendling, Jan; Reijers, Hajo A. (2013). Fundamentals of Business Process Management.
  3. Harmon, Paul (2014). Business Process Change (Third Edition). Elsevier Science.
  4. Wikipedia. Triple Bottom Line. Retrieved 4 December 2020.