History of Business Process ManagementThe history of business process management originated with business and commerce themselves, as different people and groups became specialists for different activities and then combined them to create value for others. Formal BPM concepts Business process modeling, such as tasks, departments, functions, production and outputs, began to emerge during the early 1900’s as businesses began to address job-shop scheduling challenges. Throughout the 1900’s, these concepts continued to develop and evolve as companies expanded, restructured and sought to improve their operations.Business process modeling entered the picture in earnest during the 1990’s and became a key input to the business process automation trends approximately at the turn of the century. Quality management methodologies, such as Six Sigma, Lean and Kanban, built upon the foundations BPM set and provided an expanded toolset for companies to measure and improve operational performance.With the expanded use of technology in the business environment since approximately 1998, business process management as a set of concepts and discipline have been extended to include both manual (human-driven) processes and those that are integrated with technology. Advanced workflow-orchestration capabilities and artificial intelligence have brought business process management into the limelight during the past few years as companies undertake digital transformation of their business processes. This is leading to an increased focus on human-interaction management and the user experience as individuals interact with technology-enabled business processes.
Business Process Management LifecycleThere are many different frameworks that industry organizations, such as the Association of Business Process Management Professionals and the Business Process Institute have developed, that describe the key elements of business process management and a BPM lifecycle. In general, BPM activities are grouped into the following key areas:
- Optimization & Re-engineering
Business process management relates to more than just individual activities – it is the management of end-to-end processes. Many of these processes will include multiple departments, job functions and IT systems. Identifying business processes is the first step to controlling and optimizing their performance and effectiveness. The identification process includes determining the scope of a process, the activities and actors involved, the linkages and connections used to drive workflow and the objective/outcome the process is intended to achieve.
Design and Modeling
Business process design is more detailed than identification and is related to both as-is and to-be processes. Design efforts will often include a more detailed review of process flow, business rules, triggering events, decision points, the creation and use of data and the interfaces/handoffs between process actors. A formalized business process modeling notation (BPMN) enables processes to be designed in a consistent way that can be used for analysis and simulation and to drive automated execution of the process. Read our introduction to process mapping.
Business process modeling can help you to:
- Provide a visualization of the process flow and related components
- Perform “what-if” analysis and simulate how a designed process is intended to operate and perform under various circumstances
- Assess the impact of changes on the cost of executing the process
- Anticipate the expected performance of a business process
- Identify hidden process dependencies and test the process before introducing it into the live business environment
- Implement changes to process quicker while mitigating the risk of change-related process problems
Business Process Automation
Most modern business processes have some level of technology involved, either to replace manual tasks or to support them. Business process automation is performed for many reasons, including to achieve digital transformation goals, increase service quality, improve operational productivity and scalability and to contain costs. BPA can be as simple as standalone task automation or as complex as automating end-to-end workflows with multiple integrations.
Business process execution is enacting your discovered and/or designed processes within your operations. Process execution may involve any combination of manual and/or automated tasks defined as part of the process design as well as any business rules that guide the progression of work through the process workflow.Process execution is where a company realizes value from the business processes and also where costs are incurred. Some of the key considerations to evaluate your process execution are scalability, cost, time to execute, effectiveness in achieving the processes objectives, efficiency/productivity of employees, waste produced, product/output quality and the consistency of execution.
Monitoring and Control
Process monitoring is tracking and measuring the various processes within your organization, so you can understand how well they are executing, how effective they are and where refinement and optimization is needed. Process control is the use of monitored information as the basis for initiating actions that keep your processes operating in the ways they were designed and intended.Monitoring can take different forms and the approach you use will be dependent on the nature of your business processes.
- Transactional monitoring provides insight into the progress of individual transactions (pieces of work) progressing through your business process. This type of monitoring reveals the route of the transaction through your process workflow and how much time it spent at various states to determine how efficiently the process is operating.
- Variability tracking (control charts) are a type of monitoring often used in manufacturing processes to evaluate how consistently a process is operating and how that affects the consistency of process outputs.
- Process mining (also called log analysis) is often used as a view of the performance of automated processes (and activities) during time to identify anomalies that need attention.
- Predictive business process monitoring, involving modern technologies, such as machine learning and forecasting analytics, are enabling companies to correlate past performance and the environmental factors that influenced the process to anticipate how the process is likely to perform during the future.
The degree of monitoring detail, frequency and level of monitoring automation you will need is dependent on the level of process control you are seeking to achieve. Processes that must be highly efficient (for cost reasons), operate in real-time (such as online financial transactions), or those which must produce high levels of quality and consistency (such as medical processes) will likely require more intense and detailed monitoring.
Optimization & Re-engineering
Business process optimization is the continuous-improvement aspect of business process management. As your processes execute, monitoring data will identify opportunities for improvement and process tuning to improve the process performance factors (cost, speed, quality, consistency and effectiveness). Process optimization is the means to understand why your processes are operating as they are and to identify what actions must be taken or changes made to achieve more desirable results. This often includes returning to the design and modeling stage of business process management to evaluate alternatives. Once a change has been implemented, the results of the change can be measured through continuous process-monitoring activities.
In situations where continuous improvement is not sufficient and/or forces in the business environment have resulted in a change to the objectives that your processes are tasked with achieving, business process re-engineering may be necessary. This may include a major re-design of an existing process, merging multiple processes and/or discontinuing some processes and replacing them with others.
Why is Business Process Management Important?Since approximately 2008, the business environment in which companies operate has become much more fluid (changing rapidly) and competitive. Causes for this include technology advances, greater access to information, employee’s job-hopping between companies and greater demands of quality and efficiency from customers. For companies to develop a sustainable competitive advantage and maximum profitability, their internal operational processes and customer-facing interactions must be both effective and highly efficient. Business process management is the set of tools companies use to achieve the levels of optimization and performance they require.In addition to driving performance, modern business process management is extremely focused on governance (decision making), risk and compliance and organizational agility. Companies must evolve both quickly and safely to take advantage of near-term opportunities and address threats while still maintaining strategic focus. The BPM Institute explained this in the context of three outcomes crucial to a performance-based, customer-driven firm:
- Provide clarity on strategic direction
- Align the firm’s resources
- Increase discipline in daily operations
Top Benefits of Business Process Management
- Improved business agility – Business process management provides companies with greater control and agility by allowing them to alter workflows and reuse or customize them to adapt to changing business needs.
- Reduced costs and higher revenues – Financial performance is improved through more efficient use of resources, reduced waste and faster time to market for new products and services.
- Higher efficiency and productivity – Managing end-to-end business processes enables the reduction of bottlenecks (queueing) and increases capacity utilization.
- Better visibility – Monitoring of business processes provides enhanced transparency to process performance and the ability to recognize and respond to issues quickly.
- Compliance, safety and security – Structured processes and the ability to demonstrate process adherence are essential to compliance as well as ensuring the safety and security of your employees and customers.
- Customer focus – Business process design and modeling techniques are increasingly used to demonstrate the company’s capability to serve customers’ needs, including the use of simulations and proof-of-concepts.
- Process consistency – BPM helps with process standardization by creating a single way of executing tasks, activities, etc. within your organization. Consistent execution is the key to consistent results.
Business Process Management in Modern CompaniesThe Association of Business Process Management Professionals describes the purpose of business process management as, ”BPM involves the deliberate, collaborative and increasingly technology-aided definition, improvement and innovation of end-to-end business processes that drive business results, create value and enable an organization to achieve its business objectives with more agility.” For modern companies to operate at the levels of efficiency success in the marketplace requires, they must control their business processes. Structured business processes also provide the foundation for automation and the effective use of technology within the organization.Business process management in modern organizations is not just a set of manual analysis activities. It is a data-driven exercise, which technology supports in the form of a BPM Suite (BPMS) – a set of tools designed specifically to help BPM professionals accomplish their goals. BPM suites have a core set of analysis tools and are often integrated with enterprise architecture, application development, process automation and solution development tools to help a company monitor and manage the many facets of its operations and to drive improvements. BPM tools are used to help companies with:
- Visualization and modeling
- Measurement and analysis
- Operational optimization
- Monitoring and control