Business Process Management - Connecting People, Process and Technology

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How can I reduce my operating costs? How can I reduce inefficiencies and increase leverage on our human and physical capital investments? How can I improve the quality of my products, services, and information? How can I be more flexible with today’s changing business environment? How can I enforce business process excellence across the organisation? How can I be more responsive to my partners, customers, and employees?
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Connecting People, Process and Technology 30 ACCOUNTANTS TODAY \u2022 August 2006 MANAGEMENT & ACCOUNTING BUSINESS PROCESS MANAGEMENT: by Patrick PC Ow How can I reduce my operating costs? How can I reduce inefficiencies and increase leverage on our human and physical capital investments? How can I improve the quality of my products, services, and information? How can I be more flexible with today\u2019s changing business environment? How can I enforce business process excellence across the organisation? How can I be more responsive to my partners, customers, and employees?U 31 August 2006 \u2022 ACCOUNTANTS TODAY nfortunately, in most organisations, people, pro- cesses, and systems are di- vided and isolated. This makes it difficult to change, as quickly as necessary in order to react to changing market conditions. Most business executives remember busi- ness-process reengineering efforts during the 1990s, the attempt to overhaul and automate processes by using information technology, such as workflow software. In some cases, productivity and efficiency were improved. In many cases, companies just automated bad processes rather than really taking the time to plan what they wanted to accomplish up front, and how best to use information tech- nology/ systems to accomplish it. Departments and subsidiaries are divided from one another, which are themselves separated from customers and suppliers. In spite of efforts at automating work and inte- grating applications, today\u2019s organisations often labour with islands of technology/ sys- tems that work in isolation from one another, defeating collaboration and keeping employ- ees from ready access to the information they need and the work they are supposed to do to achieve corporate objectives. Companies are under pressure to perform better and faster \u2014 to do more with less, and to be super-pleasing to customers. This means changing the way companies manage their business processes so they can inno- vate, collaborate with trading partners, and bring compelling new value to customers. It is therefore more important than ever for executives to gain control of their opera- tions and their resources, to gain a top-down view into their entire organisation, and to be able to manage their activities in order to in- crease productivity and profitability. The solution that can deliver the control and visibility that executives need to man- age their organisations for success, the so- lution for connecting isolated gears into a single, unified machine that supports produc- tivity across the organisation is business pro- cess management, or BPM. It is the aligning and co-ordinating of people, activities and re- sources to achieve organisational goals. The practical and strategic value of busi- ness process management is captured in an obser vation by Gartner: \u201cBusiness process management wins the \u2018triple crown\u2019 of sav- ing money, saving time and adding value. It also spans the business and technological gap to create synergy, with proven results.\u201d BPM eliminates the silos within an organisation, bridges the gaps among people and systems, allowing organisations to auto- mate, deploy, and modify business processes across the organisation, align people and re- sources to achieve organisational goals, and connect the organisation with customers and partners. The growing interest in BPM is driven by economics and business results rather than a compulsion to add another layer of software to an already burdened IT environment. Defining BPM Business process management has evolved from roots in workflow, group-ware, and enterprise application integration (EAI). From Workflow \u2026 Earlyworkflow software solutions were linear sequences of events, routing elec- tronic documents from person to person, perhaps allowing for some parallel work on a particular task. Most systems could per- form only simple, repetitive work due to strictly defined work processes. \u2026 to Enterprise Application Integration (EAI)\u2026 Next came enterprise application integra- tion (EAI). It is integration without the ben- efit of human interaction. Businesses had to make their rules and models conform to the limits of their proprietar y EAI platform. Further, EAI solutions did not allow for the human factor. If a problem occurred and someone needed to make a judgement call on how to handle it, the systems were not set up to accommodate human intervention. \u2026 to Business Process Management (BPM). Whenbusiness process management is ma- ture, people and tasks in a business process are integrated with systems/technology that supports business activities. BPM does this by separating the process logic from the ap- plications that run them, managing relation- ships among process participants, integrat- ing internal and external process resources, and monitoring process performance. In this ideal setting, when a worker or customer initiates a business process, it be- gins a sequence of co-ordinated activities that include the people, information, and supporting systems at each step. Just as important, the data or business application needed to complete the work is presented along with the work, so that the person do- ing the work does not have to guess which tools or information are needed to com- plete the task. Wherever possible, these ac- tivities are automated according to thebusi- ness rules of the process, to increase the efficiency of the process and to minimise errors such as sending a work item to the wrong person. Benefits of BPM By capturing and enforcing a business process in this way, the BPM platform al- lows process owners and decision-makers to model their processes, automate the tasks of the process, monitor and measure its performance, archive valuable informa- tion about each instance of the process, and then adapt the process as needed. Contrar y to the hype, BPM is not going to completely revolutionise the way a busi- ness operates. It will, however, help to gain a level of management and control over processes and, over time, simplify the task of adapting processes in line with business strategy. BPM gives the business a framework for managing complex processes, and ensures that process changes can be made in-line with regulations. Without some form of process control, the cost and risk associ- ated with compliance and governance in general could spiral. The benefits of business process man- agement are more than just theor y. In his survey of thousands of organisations, Michael Hammer discovered that business process management: \ue000Reduced order fulfilment cycle times by 60 to 90 per cent. \ue000Slashed the cost of procurement trans- Business Process Management: Connecting People, Process and Technology Step 1 Step 2 Step 3 System 1 System 2 System 3 Step 1 System 2 System 3 Step 3 Step 2 if32 ACCOUNTANTS TODAY ã August 2006 actions by more than 80 per cent, while shrinking procurement times by 90 per cent. Boosted the percentage of successful product launches by 30 to 50 per cent, while cutting the time needed to bring new products to market by 50 to 75 per cent. Applying BPM Organisations are looking to BPM to help overcome some of the following kinds of challenges: Financial Expense report processing. Travel expense reimbursement. Invoice processing and exceptions. Credit processes. Enhanced accuracy of forecasts. Internal/administrative — purchasing requests/procurement Contracts management. Equipment management Facilities management Customer complaints Human resources New hire processes Performance reviews Benefits administration Leave requests Travel requests Cost Savings in BPM How can businesses expect to realise cost savings by automation (of a BPM so- lution)? The META group has published a chart of projected savings as illustrated in Table 1. As the chart illustrates, the expected cost savings from fully automating a business process is about half of the current cost of completing the same process. To examine how business units will realise these cost savings, it is important to measure savings by cost category. Other benefits include: Reduced cycle time — A fundamental benefit of BPM is the ability to automate steps in the process. By routing work according to pre-defined business rules to the people and systems that have to act on them, BPM collapses the time it takes to move paperwork through a process Business Process Management: Connecting People, Process and Technology or to handle complex transactions. Balanced workloads — A related ben- efit is balancing workloads and getting the right work to the right people. For example, if the process involves the pro- cessing of claim forms by a team of clerks, the system can sense which clerks are ready to take on new items in their electronic in-basket. It can also route a particular work item to specific personnel who are qualified to handle that kind of work. Consistent process handling — Consis- tency comes from having an established procedure and ensuring this procedure is followed every time. Eliminate paper-based operations— A major advantage to an automated busi- ness process is the reduction or elimi- nation of paperwork. By using online documents, an organisation can elimi- nate much of the cost of creating, stor- ing, managing, and routing paper docu- ments. Gain visibility into the organisation— Ability to know the status of an activity, where and why it has been delayed, and what is being done to fix the problem, providing managers with the insights they need on how well their units are performing, in their own work and as part of a larger process. Improve quality and reduce errors— Based on real-time and historical perfor- mance, managers can reduce errors at each step of the process. The use of elec- tronic forms in an automated business process reduces data-entry errors by using data imported from other applica- tions. Improve customer satisfaction — Cus- tomers, employees, partners, and others in a collaborative environment expect near-instantaneous handling of their or- ders, issues, and problems. BPM en- ables organisations to handle transac- tions faster and with fewer errors, and to take action when problems do arise. Manual processes are prone to human error. Increased productivity — In an environ- ment where we are all asked to do more with less, the best method to achieve the desired result will give companies a com- petitive advantage. Increased profits, reduced cost — By automating many of the processes that we are currently completing manually, we will allow these same individuals to work more efficiently and take on new tasks. Any reduction in labour equates to an immediate cost saving. Manage, measure, and improve pro- cesses — BPM gives executives more tools for managing, measuring, and im- proving their business processes. Espe- cially in the era of Six Sigma and other quality initiatives, organisations need to have quantitative data in order to validate the decisions they have made in their process re-design. Shorter cycle times — Time is money. By automating such activities as invoice processing, order processing, we can significantly shorten the processing time. Shorter cycle times can lead to monies coming in the door much more quickly than by using manual pro- cesses. The author can be contacted at patrickow @gmail.com. Table 1 Benefits of Implementing an Automated BPM Solution Touches Time Cost Quality Impact Currently 100 6 mos. $10x 5% After Application 80 6 mos. $8x 4% Rationalisation After Modernisation (Web 40 3 mos. $5x 2.5% Services, XML, Modelling) Source: Translating Strategy to Execution: The Role of Strategic Metrics as a Change-Management and Business Process Management Tool, META Group, 18 June 2004. AT
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