BPM explained

(Adapted from  http://bpmtutorial.com, June 2005)

Business Process Management or BPM, is the practice of improving the efficiency and effectiveness of any organization by automating the organization's business processes.

Many companies have business processes that are unique to its business model. Since these processes tend to evolve over time as the business reacts to market conditions, the BPM solution you choose must be easily adaptable to the new conditions and requirements and continue to be a perfect fit for the company.

In order to use BPM effectively, organizations must stop focusing exclusively on data and data management, and adopt a process-oriented approach that makes no distinction between work done by a human and a computer.

• The idea of BPM is to bring processes, people and information together.
• Dynamic infrastructure requires separation of flows, business rules and services.
• Identifying the business processes is relatively easy. Breaking down the barriers between business areas, and finding owners for the processes is difficult.
• BPM not only involves managing business processes within the enterprise but also involves real-time integration of the processes of a company with those of its suppliers, business partners, and customers.
• BPM involves looking at automation horizontally instead of vertically.
• Business Activity Monitoring (BAM) is essential for measurement of BPM impact.

Examples of BPM tasks that your organization performs that should be automated include:

• Expense Reports
• Travel Requests
• Purchase Orders
• Human Resource Management
• New Accounts Opening
• Credit Authorizations Sales Orders
• Project Management
• Software Change Management

The following example illustrates the power of BPM:

When a Business-to-Business (B2B) partner needs some inventory, he can log into the web site and order required inventory. An email will be generated and sent to the supervisor responsible for the partner's inventory. The supervisor can click on the link in the email, login to the site and approve the inventory. The partner will be notified of the allocation and the inventory will be shipped.

A BPM Solution has six components

1. BPM IDE. Business Process Management (BPM) IDE is an integrated design environment used to design processes, rules, events and exceptions. Creating a structured definition of each process is very important to any business and the IDE enables a business user to design all processes with no help from IT.

2. Process Engine. The process engine of a Business Process Management solution keeps track of the states and variables for all of the active processes. Within a complex system, there could be thousands of processes with interlocking records and data.

3. User Directory. Administrators define people in the system by name, department, role and even potential authority level. This directory will enable tasks to be sent automatically to the defined resources.

4. Workflow. This is the communication infrastructure that forwards tasks to the appropriate individual.

5. Reporting/Process Monitoring. This Enables users to track the performance of their current processes and the performance of personnel who are executing these processes. This functionality is often referred to as Business Activity Monitoring (BAM).

6. Integration. Enterprise Application Integration (EAI) and/or Web services are critical to BPM as business processes will require data from disparate systems throughout the organization.

What is BAM

Business Activity Monitoring or BAM, is the automated monitoring of business process activity affecting an enterprise. BAM is generally implemented as a module of Enterprise Resource Planning (ERP), Business Intelligence (BI), Electronic Application Integration (EAI) or BPM products. BAM requires a business to identify its Key Performance Indicators (KPI's) and create a system that allows monitoring and responding to changes, preferably real time.

Virtually everyone in an organization can benefit from BAM. Business Activity Monitoring enables a company to respond faster to new opportunities and threats. BAM is not just about technology, but about recognizing a business' KPIs and implementing the right technology to monitor them.

• BAM provides Real-Time, Graphical Key Performance Indicators & Analysis
• BAM enables control and manage ongoing business operations using closed-loop visibility.
• BAM will enable you to respond quickly to change based on business events as they occur.
• BAM enables zoom in on cross-process metrics with real-time analysis to determine which processes are creating bottlenecks or which customer is most profitable.

The Right Metrics

Creating an effective BAM environment is not only about having the right technology and processes. Enterprises should define the right set of metrics upon which they measure performance to prevent information overload and misinterpretation of business exception reports.

Advantages of BPM

BPM makes it easy for companies to program their current processes, automate their execution, monitor their current performance and make on-the-fly changes to improve the current processes. The process managed enterprise is the company of the future.

BPM software enables you to automate those tasks that are currently being performed manually. Many of these tasks require some type of application process, approval or rejection process, notifications and status reports. A BPM solution can make these processes automatic.

Handling exceptions is an area where BPM really shines. Organizations have few problems when its processes run smoothly ninety nine percent of the time. However, it's the one percent of exceptions that dominate the majority of a company's time and resources.

• BPM is excellent for processes that extend beyond the boundaries of an enterprise and communicate with processes of the partners, customers, suppliers and vendors.
• BPM Gives businesses the agility to stay competitive
• BPM reduces the time elapsed in a business process
• BPM Increases the productivity per person

Business process consists of many steps. A typical BPM initiative reduces the number of steps by 50%. A Business Process needs many people and resources. A good BPM should reduce the number of resources needed for the same process.

BPM helps improve coordination across departments and geographic locations of a company

What is Workflow

Workflow is an essential element of business process management (BPM).

• Workflow is a term used to describe how work is defined and how work is allocated and scheduled.
• Workflow defines the sequence and conditions based upon which work flows.
• Workflow handles the routing of work between resources. The resources can be people, systems or machines.
• Workflow manages the order in which these steps are handled.
• Workflow enables employees to monitor and, reconfigure the flow of a business process as needed.

The following example illustrates a BPM workflow:

In a content management business process, an editor edits the content and the manager approves the content. If you define editing of the content as a unit of work and approving the job as another unit of work, then the editing job needs to happen first for the approval job to start. Further, if the editing job fails, the approval job can't start.