What is BPM?
According to Howard Smith and Peter Fingar, authors of Business Process Management - the third wave:
“A business process is the complete and dynamically coordinated set of
collaborative and transactional activities that deliver value to customers.”
“The three most fundamental characteristics of a business process have little to do
In other words, processes work only if the all elements of the process share all necessary information.
with the obvious inputs and outputs of individual work tasks. They are coordination,
coordination, and coordination”
Roger Maull, Director of the Exeter University Centre for Research in Strategic Processes & Operations, defines essential characteristics of processes:
- Processes have customers, internal and external
- Processes are independent of formal organizational structure
- Processes may cross organizational boundaries
- Processes should be linked to strategic objectives
- Processes exist in a hierarchy
BPM and Value Creation
Companies rely on a range of core and support processes to create value for their customers. Every business has unique characteristics embedded in its core processes that help it achieve its goals and create competitive advantage. Strategic business processes, such as new product design or high-sensitivity customer care, provide unique and durable business advantages to organizations. Those that depend on people's intelligence, experience, knowledge, judgment and creativity
are the hardest for rivals to duplicate. Mastering business processes with ActionWorks can yield the 300% ROIs enjoyed by our customers.
An organization has many types of processes for achieving its goals, ranging from simple data exchanges to those demanding human knowledge, experience, judgment and creativity. Each depends on enabling technology, which BPM experts generally classify as:
The type of process determines the appropriateness of one process technology over another. Each process technology is positioned in the exhibit above according to processes they are most suited to manage. The importance people play in business processes varies considerably, because of the different levels of human interaction required from one element of the process to the next to ensure success. Some processes require no people (e.g., EAI). Others, usually those producing the most value, are people-interaction-intensive, such as negotiating agreements, inventing new products, and managing critical issues (person-to-person). (See our White Paper: Enabling Business Process Management for a more complete discussion of these technologies.)
- Connecting one business software application or system to another to share data and automate routine processes (enterprise application integration, EAI).
- Creating interfaces between software applications (and people) that facilitate generic routing and approvals (inter-application).
- Organizing a business process into series
of discrete tasks that occur in an organized sequence (workflow), such as handling a routine insurance claim.
- Managing work that demands human judgment and creativity among a number of people, primarily knowledge workers, where the ultimate deliverable, who will do the work, and when it will be delivered is negotiated among the people (person-to-person).
A complete Business Process may require all of these technologies.
Differing Perspectives: Business and IT
Executive Management and IT professionals often view processes from very different perspectives.
Management focuses on business benefits:
IT is concerned with the 'nuts and bolts' of how a process works on a technical level:
- “What can we do to permanently cut the costs of our operations?”
- “How can we boost revenue?”
- "How can we get first-mover advantage?"
A business executive asked to define a business process might reply: "I don't have a general
definition but I can tell you about my strategic planning process or new client acquisition process."
BPM success demands bringing these views together to focus on important processes that propel an organization forward.
- “What starts the process?”
- “What are the rules that cause the process to branch here?”
- “When is the process complete?”
An IT person will usually define a process as "a set of sequential tasks or transactions, with
predefined inputs and outputs."
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