What is Business Process Management (BPM)?
Business Process Management (BPM) is the design, implementation, use and adaptation of business processes for optimization and standardization purposes. The term business process management encompasses how organizations analyze, identify, change and control different processes so that the company runs like a train on rails. It is an important part of business operations because an aloof or bad process limits the organisation’s ability.
Business Process Management can best be seen as a structured business practice method. These methods identify existing inefficient processes and modify them to better reflect the future state of affairs.
Business Process Management is not a one-time task, but an ongoing activity that involves various other forms of process management. For example, within BPM, use is made of Lean management, Six Sigma, Business Process Mapping and Business Process Re-engineering.
How does Business Process Management (BPM) work?
With Business Process Management, a company takes a step back and looks at all the business processes individually. It analyzes the current status of the processes and identifies areas for improvement to pursue an efficient and effective organization. That organization pursues goals, for example in the delivery of products or services to the consumer, or the transformation of raw materials into parts that are then assembled at another location and by another organization into an end product.
Achieving these goals requires the performance of specific tasks and activities. These day-to-day activities are called business processes. The daily activities of companies and organizations essentially consist of separate business processes. An example of a business process is the production process. Within that production process, however, there are several other processes that together form the production. Business Process Management (BPM) is about managing all processes, from large to small.
Some business processes are simple and consist of two or three steps. Other business processes are much more complex, with multiple steps, multiple executors and many variables involved. Because these processes are repeated regularly, it is up to the organization to find new ways to optimize and standardize these processes. This is where Business Process Management (BPM) comes in handy.
There is no one right way to do Business Process Management (BPM). Rather, it is a loose term, and indicates that individual processes are constantly being analyzed and improved.
Business Process Management (BPM) does generally work according to a cycle. Opinions and beliefs about each phase differ depending on who is asked, but in general the following cycle is representative of the practice.
Business Process Management Life Cycle
The Business Process Management Life Cycle consists of the following phases:
Phase 1: Process planning
Everything starts with making a schedule. This plan should serve as a guideline to be followed by those who implement the plan. BPM starts with the development of a plan that clearly maps out the strategy and direction of the BPM initiatives. The strategy must be process-driven, and the plan must be designed to ensure the delivery of value to the consumer.
Process planning and strategy include the following:
- Insight into the strategy and goals of the organization (guideline for BPM).
- Identification and enumeration of current processes with an in-depth analysis of process architecture
Phase 2: Process analysis
Listing business processes is not enough. There is a need for an understanding of current processes as they are the subject of every BPM initiative. No one is able to manage something he or she does not understand. Therefore, the purpose of this phase is to find out whether the current business processes are aligned and in line with the business objectives.
The first step often involves collecting information and data about the business processes. These are obtained from parent company documentation, strategic plans, process models and employee experiences. The analysis provides an insight into the weaknesses and strengths of each individual business process, and provides an opportunity to understand how these affect the overall performance of the organization. Both qualitative and quantitative analyzes are used.
Qualitative analysis is used to uncover inefficiencies and to analyze and solve affected problems. Well-known tools that can help with this are:
- Value-added analysis
- Cause-effect analysis
- Pareto analysis
Quantitative analyzes revolve around relationships between numbers, figures, models and statistics. Tools and methods used are:
- Process simulations
- Flow analyzes
Phase 3: Design & modeling
Depending on the results of the various analyzes, it may be necessary to adapt or redesign existing processes. This step of the Business Process Management (BPM) life cycle is about devising a new process design. The most important activity in this phase is to determine if the process is good as it is, or if it needs to be redesigned for a better business process. The blueprint of a process is drawn using Business Process Mapping (BPM), but often enough descriptions, diagrams and illustrations are also used. Most importantly, the method provides an end-to-end perspective of all processes within the organization, be they primary, support or management processes.
When it is decided that the process needs to be modified or redesigned, the user has several options. First, there is continuous process improvement. In this approach, solutions are sought step by step for a problem within a process. There is also Business Process Reengineering (BPR). In this approach, the entire process structure is looked at and completely redesigned. The goal of BPR is to streamline processes better, or to make processes more effective and efficient.
Phase 4: Process implementation
When the design and model are ready, it is time to implement the modified process structure. Systemic implementation involves the use of software and technologies. Non-systemic implementation is when these technological auxiliary tools are not used. The choice between the two will depend on the nature of the process and, to a lesser extent, the resources of the organization. After all, the use of assistive technology will cost the organization money.
Phase 5: Monitor process
Once the new or revised process is implemented, it must be monitored, measured and monitored. This must be done on a continuous basis. The purpose of the process monitoring is to obtain necessary information to determine whether the changes or adjustments need to be made in the process design. Data to be monitored by the process is also known about the performance of the process. These can be used to check whether the reforms have indeed led to the achievement of organizational objectives. Business process analysis is the main source of input in this phase. Business process monitoring is often performed using dashboards.
Phase 6: Process refinement
Business Process Management (BPM) enables organizations to achieve and maintain high quality business processes. By monitoring and controlling performance, they are also able to continue to innovate and improve. This is mainly achieved through redesign and BPR.
This phase aims to improve or refine three aspects:
- Process performance
- Process management
- Organization as a whole
Key points BPM
Various studies have revealed at least five key points of Business Process Management.
Business processes should all be optimized in accordance with overall business objectives.
Governance & Responsibilities
From the first phase of the BPM life cycle, the responsibilities and roles for the different levels must be clearly stated. The same document should also include clear guidelines on the decision-making process, as well as sanctions and rewards. It is important that these are sent accurately to all members of the organization. This guarantees transparency and accountability.
Methods and tools
BPM activities are often carried out using methods or tools and techniques that facilitate and support BPM. The most common tool is Six Sigma.
Over the years, BPM has been increasingly associated with information technology. This is because modern process management is largely carried out with advanced IT solutions. IT thus plays a very important role in the execution and planning of BPM activities.
Business Process Management (BPM) is not an independent unit within the organization. BPM must be implemented in all areas and within every domain. That is why it is important that the collective values within the organization match the desire and urge to carry out BPM activities. It is partly thanks to the corporate culture that BPM initiatives succeed or fail.
Why apply Business Process Management (BPM)?
The fact that almost all organizations engage in active Business Process Management is significant. They do this for the following effects, among other things:
BPM helps to tailor business processes and various functions to the needs of the customer. That automatically means higher customer satisfaction, an improved reputation, and ultimately a higher turnover with increased profit figures.
Inefficiencies and waste of scarce resources are clear reasons for excessive costs in organizations. Effective BPM provides a way to control the distribution of resources and puts management in charge when adjustments need to be made to address inefficiencies.
BPM standardizes the business system with roles and responsibilities for each department. This means that each position and the tasks of each employee are carefully defined. This minimizes the risk due to human error in the performance of functions. At the same time, it minimizes the risk of fraud and negligence.
Productivity is affected by a variety of factors. This includes the correct use of resources and capital, human resources and physical working conditions. BPM comes with a set of best practices that improve overall productivity and efficiency.
Your company need help with the BMP process? Hilkon would be happy to help you with it.