“We already know how we do what we do, why do I need BPM?”
John Doe, BPM sceptic
Before diving into an explanation about the criticality of BPM, let’s first go through the mandatory step of defining what these three letters are all about: “Business Process Management is a structured, coherent and consistent way of understanding, documenting, modelling, analysing, simulating, executing, measuring and continuously changing end-to-end business processes and all involved resources in light of their contribution to business improvement.”[1]
The definition deed being complete, let’s look at why it is critical.
Why is Business Process Management Critical?
BPM is critical because processes are how you make your money, deliver value, meet your targets, achieve your objectives, and much more. Processes are critical because they are the way an organisation realises its strategic intent. Is your business about selling cars? You sell cars through a process. Do you evaluate loan applications? You evaluate your loans through a process. Ad infinitum.
BPM is critical because it works: there is a common consensus that if business process management projects are implemented correctly, it stilts significant advancement of organisational performance.[2]
What are the Benefits of Business Process Management ?
If ‘bad’ processes can lead to a company’s downfall, managing them can put you on the path to success and help you stay on it. So, what is it that BPM brings to your organisation, you ask? BPM’s benefits make a long list, but a popular view is that it mostly comes down to efficiency saving. While this makes a big part of the benefits of BPM endeavours – such as Process Improvement Projects (PIPs) – operational efficiency is only one of many favourable outcomes that can arise from knowing your processes and acting on that knowledge. Other benefits include: increased scalability and customer satisfaction; increased business flexibility; quicker introduction of new products; and stronger competitive differentiation. BPM also has an undeniable strategic value – by mapping end-to-end processes, a holistic perspective of the organisation unfolds, facilitating endeavours like planning or accountability definition.
Automation and Business Process Management
Notice that, so far, no word has been written about what some people automatically associate with the BPM discipline: automation. There is a common misconception that you need to automate processes to get benefits from BPM. Some BPMS (Business Process Management Suite) implementations help automate some process work and deliver significant benefits: but, as per the example on the left, there is no shortage of success stories about organisations achieving significant benefits from BPM work without automation.
Hopefully, now convinced of the importance of managing processes, you might wonder why BPM is not more engrained in management culture. One reason is that most organisations, even though participating in some BPM-related activities, do not seem to consider BPM a strategic tool. It is not seen as a tool or an enabler, but mostly as a project – and what is the main tool for project selection? Return on investment (ROI). Organisations evaluate the cost and benefits of their different projects, compute an ROI, and select the ones that score the highest on this indicator.
ROI on Business Process Management
In that paradigm, investment in BPM is often lacklustre because it has an unknown ROI. BPM is a discipline, not a project, and estimating the return on investment for tasks like process modelling can be difficult. In this respect, it is important to go beyond the pure percentage or dollar value associated with BPM: the intangible areas of an organisation affected by process changes can also indirectly contribute to the financial results of the organisation. (An intangible area such as customer satisfaction is linked through customer loyalty to repeat customers to greater revenue.)[3]
Download the discussion paper below to read more about:
- How to Make Business Process Management Critical
- Which Processes You Should Manage
- How to Search for Problems and Opportunities in Your Processes
[1] Definition by the Australian BPM Community of Practice (www.bpm-roundtable.com)
[2] Bandara, Wasana and Alibabaei, Ahmad and Aghdasi, Mohammad (2009), Means of achieving Business Process Management success factors, Proceedings of the 4th Mediterranean Conference on Information Systems, 25-27 September 2009 , Athens University of Economics and Business, Athens.
[3] Norton and Kaplan, 2001, The Strategy-Focussed Organisation, Harvard Business Press
