Honour thy processes! Making BPM work
The promise of business process management is that it will bring together an organisation’s people, processes and technologies in a cohesive manner and ultimately enhance the business. But what are the secrets to making BPM work? We talk to organisations that have learned through experience...
By Heather Caulfield
In January 2008 the Queensland University of Technology (QUT) became one of the world's very few academic institutions to offer a Masters degree in business process management (BPM).
While the studies are a natural extension of the in-house courses that the University's BPM Group has been delivering to businesses and interested groups for some time, the elevation of the topic into a fully-blown degree qualification is a sign that business is beginning to take BPM very seriously indeed.
Yet it remains an acronym subject to multiple interpretations. Most analysts, software vendors and consulting organisations agree that the aim of BPM is to align operational activities with corporate strategies and to do so in such a way that promotes efficiencies, innovation and flexibility.
It should promote the analysis and optimisation of processes to reduce risk and accelerate a return on investment. All have their own take on what this means in practice and how it can actually be achieved.
“BPM is much more than just software or a process model,” says Michael Rosemann, Professor for Information Systems and co-leader of QUT's BPM Group.
“It has developed out of previous business process re-engineering, quality management and IT approaches into an holistic management practice that is centred on the belief that processes should become first-class citizens and be valued as assets with high impact on the performance and conformance of an organisation,” he says.
“It comprises strategic alignment, governance, methods, IT, people and culture. It covers process program and process portfolio management, and its project management is focused on the entire process life cycle including process identification, modelling, analysis, improvement, implementation, operations, control and change.”
Rosemann believes that BPM awareness is high within Australia's major corporations and agencies but take-up of the practice varies dramatically. “The idea of instilling a process-centred view has to compete for management attention with the demands of customers, products, locations, systems and policies.”
As a consequence, he adds, “Process awareness typically results out of urgency. A local city council looks at business processes because they are seeking a contemporary specification of their requirements before they engage in a very large IT project. A large mining company is investing significantly into process management because every day that a ship cannot leave the harbour costs them $20 million. One of the large Australian banks trained more than 650 people in business process modelling due to the need to comply with the US legislation, the Sarbanes-Oxley Act.”
A recent example of such a stimulus was the recent release of the Gershon Report.
Commissioned by the Federal Government in April, the independent study was tasked with reviewing the efficiency and effectiveness of the Australian Government’s current use of information, communications and technology (ICT), determining whether the Government is realising the greatest return from its investments in ICT, and examining whether the right institutional arrangements are in place to maximise the return.
Two key findings of the study were that: “There is weak governance of pan-government issues related to ICT”, and: “Agency governance mechanisms are weak in respect of their focus on ICT efficiency and an understanding of organisational capability to commission, manage and realise benefits from ICT-enabled projects.”
Both findings provide a strong argument for better definition, structure and management of process across government agencies. In other words, expect a flurry of government-related BPM activity.
Outsourcing has motivated many BPM projects. Before being able to hand over paperwork or activity to a third party organisation, it is necessary to first understand the process involved and to clearly delineate where the handover occurs and how it is managed.
E-commerce and electronic data interchange initiatives, speed and quality of service, risk management and a reduction in manual data entry are other common drivers.
One complication is that once process awareness does develop inside an organisation, it can be very difficult to know where to begin and how to start.
The problem, Rosemann suggests, is that process management requires the ability to abstract beyond single instances like projects, products and customers.
The BPM courses being run by QUT aim to resolve this issue by helping students to develop an understanding of process and by providing the management and modelling skills essential to undertake BPM projects.
With more than 350 people going through the University's BPM training within the past 12 months, it's an approach that has quickly garnered support.
The tools of the trade
For those who can't afford the time out to obtain a university degree, there is a variety of software tools and methodologies to help see a BPM project from conception through to deployment.
The roots of BPM software lie in the '90s technologies of work flow and process management, enterprise application integration, process modelling and analytics, rules management. More recent inclusions are collaboration portals and a service-oriented architecture (SOA).
Together these tools offer order and method by enabling the development of applications that embody and execute defined processes.
They support the drive towards better processes by instilling an organisational structure and IT architecture that is focused on process.
They help to define and graphically model business processes so that they can be turned into executable code and deployed quickly.
They break process improvement down into distinct, manageable phases comprising definition and design, implementation, deployment, monitoring and ongoing optimisation.
Above all, they create an environment in which Rosemann's “process-awareness” can flourish.
For the majority of organisations the choice of a BPM tool will boil down to the decision between a free-standing suite of BPM software (BPMS), or a packaged application or database that is delivered bundled with its own out-of-the- box BPM functionality.
BPMS is the second-generation of BPM software and according to industry analyst Gartner, (Magic Quadrant for Business Process Management Suites, 2007) it accounted for sales of US$1.7 billion in 2007 making it the world's second-fastest-growing middleware market segment.
It's a hotly-contested market with some of the leading vendors including TIBCO, Software AG, Pegasystems, Vitria, IBM Filenet, Global 360, Savion and Lombardi.
A BPMS differs from application-driven process management solutions in its emphasis on business user involvement throughout the process improvement life cycle.
Where application-driven solutions seek efficiencies through the integration of process and application for greater automation, the BPMS separates process from the underlying applications and data in order to model and develop co-ordination between people, information and systems.
The solutions work well across organisations or departments where the same processes have to be executed frequently, where there is a lot of paper traffic or where there are many individuals and applications involved.
Human resources and finance departments are good examples where process management can streamline activity and will provide economies of scale for a process that is used hundreds or even tens of thousands of times a year.
On the other hand, application-driven solutions provide the ease of an in-built answer to the problem.
A large supply-chain driven organisation that is in the process of implementing an SAP or Oracle ERP solution will need to examine and document its processes as part of the deployment.
Similarly e-commerce and EDI implementations are all about automating process.
When resources are already being routed in the direction of an application, extending the project to include use of vendor's BPM tools may be the best way to ensure that process receives due focus.
The decision as to which tool is right for an organisation is usually easily determined by the underlying business problem and can quickly be assessed through considerations such as the frequency of execution of a process; the flexibility required to change a process; the likelihood of needing to adapt to change either within the organisation or within the IT environment; what approach provides the best cultural fit for your organisation and will be capable of obtaining the optimum cooperation between business analysts and IT.
Who's using BPM?
Government, banking and financial services, retail, telecommunications and utilities lead the adoption of BPM in Australia.
The Australian Community of Practice on Business Process Management (http://bpmcollaboration.com) involves practitioners from across Australia and boasts the participation of organisations including the AMP, Australian Bureau of Statistics, Centrelink, Coles-Myer, the Department of Education, Science and Training, Energy Australia, Ergon Energy, George Weston Foods, IP Australia, Metcash, NAB, Powerlink, Smiths-Aerospace and Suncorp. It's a “who's who” of Australian business but the list also serves to confirm that BPM as yet remains the domain of medium-to-large organisations.
Woolworths turned to BPM early this decade, using the webMethods (now Software AG) BPMS to enable rapid integration of new acquisitions, streamline business processes, enhance visibility with partners and reduce transaction costs.
By 2006 the company was able to state that it had significantly improved its performance across each of these criteria and that the BPM platform had also helped to improve IT efficiency by eliminating redundant systems.
The outwards-facing service and highly transactional nature of banks has made them particularly suited to BPMS.
One early adopter was the Commonwealth Bank which initially used BPMS to automate processes such as new merchant applications and charge-backs in its credit card division.
Numerous additional projects followed such as designing a new process for requesting the retrieval of bank vouchers, and even a project to bring efficiencies to the whole process of BPM by creating a framework that would help to reduce the time and learning curve required for future BPM projects.
The move helped to reduce development time in BPM projects by at least one or two months, and has given the Bank the agility to deploy complex processes in approximately 12 to 16 weeks from conception to implementation.
Telecommunications giant Optus uses a BPMS to improve processes and provide competitive advantage. One early project called for the development of a complex 52-step process to provide local number portability.
The project was delivered within six months and within a year had achieved the desired 30 percent reduction in time to port local numbers.
The improvements opened the way for Optus to handle more orders and embedded a better work flow within the product marketing department that has since spread out to other departments.
Earlier this year the Aged Care Standards and Accreditation Agency, an independent organisation responsible for managing the accreditation and ongoing monitoring of almost 3,000 residential aged-care homes across Australia, completed an overhaul of its business process.
Using the TIBCO iProcess Suite as the foundation of its ‘Better Business’ project, the agency integrated four separate applications to provide a single national database with instant access to every compliance review. The project has improved compliance monitoring and reporting, reduced manual handling of paperwork, and given the organisation an improved ability to adapt to legislative changes.
One of the more unusual uses of BPM is occurring within Australia's film industry where QUT is supplying a tailored production solution based on its own Yet Another Workflow Language BPM and workflow software.
At first glance Hollywood blockbusters may seem an odd choice for process improvement, but when the QUT BPM Group studied the art of making feature films it found that in addition to the essential pockets of creativity, film making revolves around clearly identifiable production and post-production processes, all of which are capable of being optimised to deliver benefit.
Making a success of BPM
BPM is a journey of many little projects designed to bring about sustainable continuous improvement.
It requires an organisational structure that will help to drive consistency and involvement, especially between business analysts, IT, and the subject matter experts from the business – the people who know the work, process the work and have their fingers on the applications.
Vincent Cotte, product marketing director at TIBCO, believes the most successful projects can be defined by certain commonalities.
“Methodology is key, as is the the need to have a business sponsor. Users like Macquarie Bank and Optus have enterprise-wide deployments. In order to do this you need the right sponsor and to think through what you want to achieve,” he says.
The next requirement is to focus on just one process and make sure it is the right one. For an organisation's initial BPM project Cotte suggests, “Think big but start small. You can't start with an annual leave process. It needs to be something that has visibility if it is to drive future BPM models.”
He suggests considering the cultural impact of the process, the number of users or departments that it touches and throughput of the process.
“Whatever you pick and whatever your success factors, they must be measurable,” Cotte adds.
“BPM should also drive out cost in the bottom line of your process by reducing ad hoc exception-based tasks that aren't adding value.”
For example, when staff have to enter the same information across three separate systems, or a form is photocopied five times and then walked around to recipients' desks.
Less measurable but also of importance is what Cotte describes as the “warm and fuzzy” aspects of BPM.
“The reduction of value-less tasks should make the user experience more pleasurable. Training becomes shorter and people become productive faster because there is now just one system that holds a lot of the business rules that previously used to exist in a person's head. The process also becomes more intuitive,” he notes. Another sometimes underestimated requirement is that of resources.
As Dave Cummins, Principal of BPM consulting specialists The Frame Group points out, “BPM tries to cut across an organisation's silos and to achieve this it needs to involve stakeholders from across the business.”
If the project is being delivered by an internal team, he cautions, members need to be detached from their day-to-day tasks in order to gain a wider business perspective and to dedicate the time required of the project.
“This requires sacrifice and the change of having people not working in their normal business units.”
It's a point that raises the underlying role of culture. BPM sponsors invariably face arguments from detractors about the inability for BPM to work in the organisation's unique circumstances. Or perhaps they will be told that it's been tried before and failed.
The commitment to process change requires strong authority and acknowledgement that it's going to take effort to surmount internal resistance.
Where to next?
In the immediate future the global financial turmoil can be expected to contribute to demand for greater governance and process through BPM.
Organisations will seek to codify processes to protect themselves from the risks and errors that have typified some of the recent high-profile business collapses.
From a technical standpoint, Cummins is confident that the next generation of BPM will deliver greater model portability, more flexibility and better human interaction tools.
“With the next iterations of BPM it will be easier to diagrammatically model business processes and have them translate more seamlessly into the execution environment. The differences between the business process architect and the implementation architect will close, giving process architects much more flexibility in how they implement,” he notes.
Certainly the marriage of BPM and SOA, plus innovations from Web 2.0, is helping to deliver richer Internet applications and social computing. Gartner suggests that the idea of a model-driven environment that facilitates the drag-and-drop development of applications may be achievable within the next five to ten years.
Before then however, expect intense competition between vendors as they try to establish long-term leadership for their technologies and strategies.
QUT's Rosemann suggests that further ahead, process awareness will lead to the evolution of highly collaborative process communities in different vertical markets, especially in noncompetitive markets such as health, government and airports.
“In these communities we assume that a Wikipedia for processes will emerge. A place where experts share issues and ideas related to their business processes in very much the same way we collectively improve definitions in Wikipedia or identify high quality buyers and sellers in eBay,” he says.
It's an intriguing and appealing idea. But with competitive advantage forming one of the primary drivers for BPM projects, it is going to take some time and more than a little effort before we see such sweeping collaboration gaining the support of large commercial organisations.
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