Business process management (BPM) takes a systems approach to an organization’s processes. Its purpose is to make the business more competitive and successful by better serving its customers. BPM focuses process effectiveness, efficiency and flexibility to adapt to the constantly changing business environment. In BPM, processes are not isolated events. A process in a department links to the processes in other departments. Although based on process improvement models, such as Six Sigma, Total Quality Management and Continuous Improvement, it goes beyond these models by combining information technology (IT) with employee activities and work processes.
BPM and Information-based Businesses
BPM is most effective in process intensive industries such as health care, insurance, finance, utilities and government. These businesses rely on human knowledge, information databases and process flows to produce an end result, such as a home loan or a business license. These are paper-based businesses that rely on forms that must be completed and information gathered in order to produce the end result. BPM provides the infrastructure to support person-to person, system-to-system, person-to-system and system-to-person interactions by automating data collection, storage and use.
BPM Life Cycle
The BPM Life Cycle is similar to the Six Sigma DMAIC model (define, measure, analyze, improve and control). Its steps include design, model, execute, monitor and optimize. Its purpose is to support continuous process improvement. The design phase involved understanding the current process along with its customer, information and technology requirements and designing an improved process that will reduce existing problems and prevent future ones. The model stage involves what-if and scenario analysis by examining various combinations of factors to determine how they affect the end result. In the execution phase, the optimal combination of factors, process steps and supporting technology is implemented and then measured and analyzed in the monitoring phase. Finally, steps are taken to standardize the factors that are working well and begin the next cycle by examining and designing changes in those factors that need improvement.
BPM Informtion Technology Systems
Information technology systems are an integral part of the BPM process. One of the goals of IT is to share information among systems, departments and teams in an organization. An effective BPM IT system must include a data warehouse for capturing, storing and analyzing data to inform a company’s operational and strategic decision-making processes. There must also be a content management component that securely stores documents, images, spreadsheets and other files. The system must support coordinated work efforts among teams and departments throughout the business using an internal company intranet, on-line forums and collaboration software. Finally, the BPM system must have a robust process engine that can run process-based programs, such as payroll, billing and collections using firm-specific business rules and protocols.
Why Implement BPM
In 2010, Markus Kohlbacher, a professor at Graz University of Technology, published the results of his study on the outcomes of business process management in the Business Process Management Journal. He found that BPM has a significant positive impact on customer service and retention, timeliness of service and service quality, along with efficient use of resources. He also found that BPM success does not depend on the size of the business or the nature of the business.