Case study
Business process management
This case gives a modern perspective on approaches to improving business processes using information systems. It summarizes the tools, benefits and some of the problems associated with business process management.
With competition becoming seemingly tougher every quarter, companies are starting to experiment with a series of interlinked technologies that allow them to optimise their business processes and to react quickly when market conditions change.
These technologies are collectively known as business process management (BPM). They include tools for business process modelling, workflow management, process monitoring, enterprise application integration and managing organisational change, all of which greatly help information to flow through organisations by co-ordinating and sometimes supplementing companies' key enterprise software packages, such as application suites supplied by SAP, Oracle and Siebel.
A furniture manufacturer, for example, could plan how it wants its customer orders processed, from initial confirmation to cash in the bank, using a process modelling tool that designs each stage in the order's evolution.
This tool then helps the manufacturer to create "workflow" software that automatically routes the customer order and all the work associated with it to the right people and places, in the right order. The workflow application takes decisions on how to advance the order, using pre-defined business rules. It closely monitors the order's progress, and if the order gets held up or seems to encounter problems, it sends an alert in real time to the appropriate manager.
BPM has obvious advantages. Remodelled processes are usually more effective than their predecessors, generating immediate cost savings and competitive advantages. MSB International, an agency supplying workers on temporary contracts to companies, used BPM tools from Metastorm to revamp its contract processing. Previously, each new contract took an hour of a salesperson's time to process after it was agreed. Now the work takes five minutes and is far less prone to error.
Rob Marston, infrastructure manager at MSB, says the business benefit is "astounding". The software cost £50,000 and generated a return of £100,000 within a year by making sales people more effective, he says.
Just as importantly, BPM can help businesses change processes more quickly, perhaps with only minor changes to workflow rules, which minimises maintenance costs. "Hardly a week goes by when we don't change our business processes", says Mr Marston. "The board recently changed some authorisation procedures, and that took about ten minutes to implement. It sounds small, but in the old days, that would have taken a week."
BPM can help align IT infrastructures more closely with business needs. "It helps to break down the traditional barriers between the business way of describing a process and the IT way of implementing a process. That makes it more likely that developers can deliver what the business is asking them to deliver", says Derek Payne, fulfilment technology manager at Leica Microsystems, an optical product manufacturer.
BPM can also help organisations collaborate by aligning their business processes more closely. As web services technologies start to make information flows between organisations easier, supply chains should become shorter and more effective. "This helps to enhance the ability to work outside your own environment with trading partners", says Mr Payne.
Questions
1 How does the article suggest that business thinking and practice has evolved since the exhortations for business process re-engineering in the 1990s?
2 Summarize the benefits for BPM discussed in the article.
3 Discuss the need for a concept such as BPM when all new information systems and information management initiatives are ultimately driven by process improvement.
Lastly, by defining processes carefully, BPM clears the way for the radical outsourcing of entire business processes, such as manufacturing or accounting. "The success of BPM will come less from allowing business processes to be redesigned, and more from making it easier to source parts of the business process offshore", predicts Will Cappelli, a research fellow at Forrester Research.
Mr Cappelli sees BPM as a Trojan horse for big IT services companies, enabling them to sell business process outsourcing (BPO) to corporations. BPO is the fastest-growing service in their market, and Mr Cappelli expects IT companies to absorb best-ofbreed BPM experts such as Metastorm and Sterling Commerce to support this push.
Nevertheless, BPM is no walkover. As a complex set of technologies that do not always work together easily, it requires great effort and discipline to implement. "The hardest part is understanding the business processes," warns Mr Marston. "Initially, we tried to analyse everything about each process, but either the analysis was wrong, or the business had changed by the time it was implemented. So now we evolve our processes continually."
A big danger is that over-enthusiastic companies may use BPM to create too many new business processes, says David Stephenson, European managing director of supply chain specialist Yantra. "You can create a proliferation of business processes, and the simplification of your business processes gets lost as a result. You have to keep a tight control over the design process", Mr Stephenson warns.
BPM technologies are also not as sophisticated as some vendors claim. "Many people are going to be sucked into an idea that sounds very seductive until they get into the detail", warns Rakesh Kumar, a vice president of technology research at analyst Meta Group. "Integration between technologies is a critical problem. Even if you have the technology problems solved, mapping internal business processes to core IT processes is another problem."
Gartner, the IT consultancy, said in a research note in December 2002 that corporate satisfaction with BPM is already high and is continuing to rise making it a rarity in the IT world. Gartner urged clients to adopt BPM, predicting that it would deliver them a 10 to 15 per cent return on their investment over the next two years. BPM "will hold the key to creating new revenue opportunities and shortening product creation processes", it added.
Nevertheless, BPM is no panacea. Businesses must educate their staff and trading partners carefully about the changes it will bring to the business, or resistance to change whether conscious or not will emerge.
Source: Douglas Hayward, Smoothing the workflow, FT.com; 15 May 2003.