What is the value of BPM?
The foremost value of business process management is transparency. Transparency enables everyone to have a deep understanding of how the organisation works so that we are able to manage it effectively, no matter how complex it might be. However, as you will soon see, BPM offers much more.
Video 1-6-What is the value of BPM?
So, we’ve talked about what business processes are, and what business process management is. Now, let’s talk about values that we can achieve with business-process management.
So the first and foremost value that we can achieve with business-process management is transparency. Transparency means obtaining a deep understanding of how the organisation works, and this is indeed the requirement in order to be able to effectively manage the complexity of a modern organisation, and the way we can do that is by capturing the essence of a business process by means of a model. In essence, a process model captures three main perspectives of a business process – the control flow, which is the chain of activities, events and decisions performed as part of the process; the artefacts, so the business subjects that are manipulated in the business process, both physical and electronic; as well as the resources or actors that perform the various activities.
Now, transparency is the starting point, it’s not the target value for BPM. However, what happens is that sometimes organisations invest a lot of resources into building extremely precise and detailed process models, and over time, these collections of process models grow to the point that they become hard to manage, to the point that the business-process models inside these collections become almost irrelevant or lose their value because they get out of synch with reality.
Video 1-7-What else besides transparency?
So, transparency should be seen as an enabler in order to achieve other values that are aligned to the strategic objectives of our organisation. So, the two foremost values that we can obtain once we have raised awareness of how our organisation works, so once we have achieved transparency, are efficiency, which is an internal value, and quality, which is an external value.
Efficiency deals with increasing operational performance, with increasing the performance of a business process, whereas quality deals with increasing the quality of our products and services, and clearly, as we said, we can define KPIs to measure the achievement of each of these values.
For example, for efficiency, we can measure the cycle time, the overall duration of a business process, but we can also measure the overall cost, in order to avoid our business process to run into cost overruns. So, essentially, efficiency can be translated according to these KPIs – cycle time and overall cost – into making our processes faster, and cheaper.
For quality, we can measure the number of defects, the degree of variation in our business process, as well as customer satisfaction, so we can measure the impact of our business processes on customer satisfaction e.g., through customer feedback. So quality is about making business processes better.
However, there is more than that. Another important value that we can achieve with BPM is compliance, meaning making our processes more predictable and compliant to the regulatory framework, as well as agility, which is an external value, also known as flexibility, making our processes more responsive to changes in the business environment.
And then we have integration, which is about improving the integration with internal staff, with the employees of the organisation. And then an external one, networking, which is about improving the networking with customers as well as suppliers partners and more in general, with external resources.
Now, we see that these values are organised in pairs, this is because the two values that belong to the same pair are oppositional in nature. For example, quality and efficiency relate to the well-established dichotomy in the strategic objectives of an organisation according to Michael Porter. In fact, if you tend to reduce costs of a business process, then you may have an impact on the quality of the outcomes of this business process, likewise, vice versa, if you want to improve the quality of a business process, that typically will come at a cost, so efficiency will decrease along the cost dimension, and this is the same for the other pairs. So, for example, compliance tends to make our processes more rigid, whereas agility is rightfully the opposite of it, and similarly, integration, internal integration versus networking with external resources. However, BPM acts as a mitigating factor between the two values that belong to the same pair. In fact, we will see techniques that will work on the improvement on one dimension, without necessarily affecting or by minimising the impact on the other dimension. We will mainly focus on quality and efficiency but we will also see techniques for improving flexibility, agility and compliance.
BPM and related disciplines