What is BPM? Business Process Management Ultimate Guide – 2023
What is BPM?
Business process management (BPM) is a discipline that proposes a systematic approach to improving and optimizing business processes. It involves 4 main steps (that will be covered in detail in this article):
- designing and modeling the processes using a graphical notation (for example, the worldwide standard BPMN)
- automating and executing those processes using a BPM Suite, that includes a process engine (for example, a BPMN Engine)
- measuring how these processes are running using Key Performance Indicators, monitoring in real-time and analyzing historical data to identify improvement opportunities
- deciding improvements to make the processes more efficient, effective, and flexiblel and restarting the improvement cycle (step 1)
BPM also involves integrating people, systems, and technology to support the process. The ultimate goal of BPM is to improve business performance by streamlining processes, reducing costs, and increasing customer satisfaction. As you may be guessing, BPM is an horizontal discipline, that can be applied to a wide range of business functions and industries, in every region of the world.
Why is BPM important?
By using a systematic approach to process management and improvement, organizations can increase efficiency, reduce costs, improve quality, and increase customer satisfaction.
Let’s explain it with a real-life very simple example. Imagine your company receives customer orders via email, website or WhatsApp. Similarly, your sales team could receive orders on the phone. Just in this initial step, there is a lot of space for improvement, using a public form to concentrate the information and launch a new process instance to deliver the goods or services to the customer. Now, there are standard orders, which go directly to the operation team. And there are complex orders that require additional approval and coordination from managers, that need to comply with SLA and rise alerts. A process will make these business rules formal and visible for everyone. Moreover, a BPM Suite will be able to interpret and execute this business process consistently over time, reducing the dependency on individuals. The savings, and improvement in efficiency and customer experience are huge, just in this very simple example. The extrapolation to a whole, complex and relevant process of the company is evident, and the benefits will be huge.
Companies that want to have a chance in the market should start by managing their business processes. Certainly, maximizing customer satisfaction and internal efficiency are crucial to survive and growth.
Relationship between Workflow and BPM
BPM and workflow are closely related, as BPM involves designing, analyzing, and improving workflows to increase efficiency and productivity. In fact, BPM Suites are the evolution of the workflow management suites of the nineties. BPM Suites build upon the basic capabilities of workflow management suites by adding additional capabilities, such as integrations with other systems and applications, simulations, real-time and historical analysis of process executions. BPM Suites allow more sophisticated process improvements and optimizations. BPM Suites also often incorporate advanced technologies, such as artificial intelligence and machine learning, to automate processes and make them more efficient. BPM Suites provide a more comprehensive approach to managing and improving business processes compared to traditional workflow management suites.
Can all companies adopt BPM?
At the beginning of the last decade, the BPM discipline was practically inaccessible for small and medium-sized companies (SMB’s). BPM Suite licensing costs were high. In addition, it required a large amount of consulting hours specialized in these tools to model the processes, programming the forms and deploy these processes in production. This meant that getting any process up and running took several months and hundreds (thousands) of consulting hours.
This situation changed radically in the second half of the last decade, with the emergence of BPM Suites under the no-code paradigm, operating in the cloud, in software as a service mode (for example, Flokzu was launched in 2016). This significantly reduced the barriers of access to the BPM discipline, making it accessible to all companies, including small and medium-sized ones. Licensing costs in the SaaS model are significantly reduced, since BPM Suite manufacturers can dilute their costs among hundreds of customers, without sacrificing the functionality and quality of the software. The no-code features allow company employees to fully model the processes and put them to work in the BPM Suite without the need for programming or technical knowledge. This significantly reduces the hours and costs of outsourced consulting.
Additionally, in recent years, and accelerated by the potential recession in the USA, we have seen that many companies that had traditional BPM Suites, have frozen investment in them, and all new processes are being implemented in SaaS no-code tools, taking advantage of the reduction in costs to automate processes for the first time, but above all, maintenance and future evolution.
What is a business process?
A business process is a collection of related, structured activities or tasks, performed by people, software or physical equipment, following a set of predefined business rules, in order to achieve one specific business goal. The business goal could be a product or service for a customer, or any intermediate asset or goal that the organization needs.
Continuing with the previous example, a business process could be “Receive, process and deliver customer orders”. As we saw before, there are several tasks involved in completing a customer order, different people are involved, and several business rules are contemplated. In the end, the execution of an instance of this process will be successful, if the customer is delivered what he ordered, respecting the quality and service level agreements (SLA).
Industrial vs administrative processes
The management and optimization of processes has always been a focus of effort in companies. Generally speaking, industrial production processes are optimized in most cases, and there are few opportunities to introduce improvements that significantly increase their efficiency. On the other hand, the administrative and support processes of companies have a much lower degree of evolution and improvement. In other words, there is an opportunity to improve them significantly. It is in these administrative and support processes where the BPM discipline has placed the greatest emphasis since its conception. Most BPM Suites are oriented to formally model these processes and then automate them to make them work more efficiently. Measuring the performance of these processes with objective indicators (KPI’s) is the last stage, key to identify problems, design solutions and restart the cycle of continuous improvement.
Types of administrative processes
Under the Business Process Management (BPM) discipline, there are several types of administrative processes that can be modeled, managed, and optimized. Some of the most common types of processes are:
- Operational processes: Operational processes are the day-to-day processes that support the core business activities. These processes can include processes such as order fulfillment, customer service, and human resources.
- Management processes: Management processes are processes that support the management and governance of the organization. These processes can include processes such as strategic planning, budgeting, and performance management.
- Support processes: Support processes are processes that support the operational and management processes. These processes can include processes such as procurement, facilities management, and information technology.
- Business-to-business (B2B) processes: B2B processes are processes that involve interactions between organizations. These processes can include processes such as supply chain management and interorganizational collaboration.
- Business-to-consumer (B2C) processes: B2C processes are processes that involve interactions between an organization and its customers. These processes can include processes such as marketing, sales, and customer service.
Each type of process has its own unique characteristics, challenges, and opportunities for optimization. By modeling, managing, and optimizing these processes through BPM management, organizations can improve their overall performance and achieve their business goals.
Measuring for improvement: the critical step.
It is well known that “you cannot improve what you cannot measure”. However, in administrative and support processes such as the ones we have discussed, performance measurement is often difficult or even non-existent. This is a very common situation in all types of companies, where industrial production processes are perfectly measured and optimized, while administrative processes are often supported with manual tasks, Excel spreadsheets, emails or WhatsApp messages. This informality makes it very difficult, if not impossible, to obtain objective measurements of their performance, and therefore makes it very difficult to make the right decisions for improvement.
The BPM discipline has, since its conception, the concept of measuring process execution as a key aspect. In fact, the best BPM Suites already include “out of the box” the measurement of the main process indicators. Of course, new indicators can be added later. But it is very important that from day 1 when a process is used, basic indicators can be measured. For example, Flokzu provides these “out of the box” indicators:
- Total process time: the time consumed from the time it started until the end of its execution. Being able to compare the time of different instances, identifying cases that do not comply with the service level agreements.
- Time in each of the intermediate tasks. This is complementary to the previous one, and allows us to identify WHERE the problems are, since we can compare the time in each task, see who is working on it, and introduce corrections.
- Number of process instances in execution. This is a real-time indicator, which allows us to see the workload of the process, in which tasks there is more work pending, and to which people are assigned, etc.
- Number of completed process instances, opening the analysis by type of instance and other relevant data, to compare against the service level agreements to be achieved.
Having these indicators in a simple and immediate way, allows to quickly adopt the healthy practice of measuring processes based on objective data, in order to improve them. And then, as needed, incorporate new useful and specific indicators for each process.
Steps of the BPM Lifecycle
Design and Model
Clearly, processes exist in the organization, even if they are not modeled or formalized. Processes support operations, and therefore, if the organization works, it is because the processes work. The problem is that many times these processes are “only in people’s heads”. This has several disadvantages. The main one is that it is impossible to improve processes if other people cannot see and discuss them. Another problem is that if the person who knows the process leaves the company, he/she takes that knowledge with him/her, and it will be very expensive to rebuild it. To solve these problems, they are modeled formally, using a certain graphical notation. From the historical state diagrams, UML activity diagrams, to the current BPMN standard, globally adopted and promoted by the OMG (currently in the version 2).
Modeling a business process under the BPM discipline involves representing a business process using a visual notation or diagram.
This notation is used to describe the steps involved in a process, the participants who carry out the steps, the inputs and outputs of the process, the business rules that should be met, and the relationships between the steps. The purpose of modeling a business process is to gain a clear understanding of the process and to identify opportunities for improvement.
Modeling a business process is an important part of the BPM discipline as it provides a clear, visual representation of the process that can be used to communicate the process to others, and to support process improvement efforts. The model can be used as the basis for process simulation and analysis, allowing the process to be tested and refined. The model can also be used as the basis for process automation, allowing the process to be automated using technology, such as process automation software with a BPMN Engine, like Flokzu BPM Suite.
The importance of using a standard notation for process modeling
Currently, the Business Process Model and Notation (BPMN) is the worldwide standard, and has been widely adopted because it provides several benefits compared to other modeling notations, including:
- Industry standard: BPMN is a widely adopted industry standard for modeling business processes. This means that it is widely recognized and understood by practitioners and organizations, making it easier to communicate process models and to share best practices.
- Improved readability: BPMN provides a clear and concise visual notation that is easy to understand, even for those who are not familiar with process modeling. They don’t need a technical or IT background to understand a BPMN model. This improved readability makes it easier to communicate complex processes and to involve stakeholders in process improvement efforts.
- Tool support: BPMN is well-supported by process modeling and automation tools, making it easier to create, manage, and most importantly, execute the process models. Flokzu for example, lets you define the BPMN diagram and deploy it in production with just one click. This significantly accelerates the improvement cycles.
Automate and Execute
Once the process is modeled, the next step in the BPM discipline is to automate the process, making it executable and available for participants (users or software). There are 3 basic steps involved in deploying a business process in production:
- Deploying the process in the BPM Suite. This involves moving the process model from a “drawing” to something that the BPM Suite can understand and run. A BPMN Engine will be able to interpret and run BPMN diagrams. For other notations, some conversions could be needed.
- Setting-up the process: After the process has been deployed, it can be configured to specify how the process should be executed. In addition to the BPMN diagram, it is usually necessary to configure additional elements in order to execute the process. For example, define the users, assign them roles and give them the necessary permissions to complete the tasks that will be assigned to them. This initial setup is done directly in the BPM Suite, since it is information that is not contained in the BPMN diagram.
- Execute the process: The final step is to execute the process. This involves creating process instances and assigning tasks to participants. The BPM Suite will then manage the process, keeping track of the progress of each process instance, rising alerts if deadlines are not meet, sending emails to notify participants, and providing reports as needed.
The BPM Suite provides a centralized repository for managing all the processes instances that are running, making it easier to manage its executing. For example, a very common feature in Flokzu is re-assigning tasks. It could be done manually, or automatically (for example when the task is overdue).
The user inbox: where the tasks are.
The Inbox in a BPM Suite is a user interface component that provides a view of tasks assigned to a user. It is a central place for users to see and manage the tasks that they are responsible for completing as part of a business process.
Tasks usually include information about their due date. Flokzu, for example, marks in green the tasks that are due in more than 24 hours, in yellow those that will be due in the next 24 hours, and in red those that are overdue. This facilitates task prioritization and compliance with service level agreements.
The usability of the Inbox is relevant for several reasons:
- Increased visibility: The Inbox provides a single location where users can see all of their assigned tasks, making it easier for them to keep track of their work.
- Improved task management: The Inbox provides tools for managing tasks, such as the ability to sort and filter tasks. This makes it easier for users to prioritize and manage their work.
- Streamlined process execution: The Inbox provides a streamlined way for users to complete tasks as part of the business process, reducing the time and effort required to complete the process.
Overall, the usability of the Inbox is an important factor in the success of a BPM Suite implementation. In other words, a bad user interface (UI) for the Inbox in a BPM system can have a significant impact on the success of a BPM project because it can decrease user adoption and demotivated them to use it.
A well-designed Inbox can make it easier for users to manage their tasks, collaborate with others, and at the of the day, successfully adopting the BPM Suite to complete business processes efficiently and effectively.
Measure in real time and historically
In a BPM Suite, Key Performance Indicators (KPIs) are metrics that are used to measure the performance of business processes. There are two types of KPIs in a BPM Suite: real-time KPIs and historical KPIs. Both are important for measuring the performance of business processes in a BPM Suite. Real-time KPIs provide a view of process performance at the moment, while historical KPIs provide a view of performance over time. Together, these metrics can provide a comprehensive view of process performance, making it possible to monitor and improve the efficiency and effectiveness of business processes.
Flokzu provides a complete “out of the box” balanced scorecard with both real-time and historical indicators (read more here)
Real-time KPIs: Real-time KPIs are metrics that are updated in real-time as the process is being executed. Examples of real-time KPIs in a BPM Suite include the number of active process instances, the average time it takes to complete a task, and the number of tasks that are currently overdue. Real-time KPIs provide a view of process performance at the moment, making it possible to quickly identify and respond to performance issues.
Flokzu offers a dashboard that incorporates several real-time KPIs, such as the number of running process instances, distributed in each process, with the load per user and identifying the tasks that are behind schedule.
Historical KPIs: Historical KPIs are metrics that are calculated based on the historical data of process execution. Examples of historical KPIs include the average time it takes to complete a process, the number of process instances that have been completed, and the number of process instances that have been cancelled. Historical KPIs provide a view of process performance over time, making it possible to track trends and identify areas for improvement.
For example, Flokzu allows you to define the range of dates, or the last month, semester, or year, and analyze how the process behaved in that period. This is also very useful to be able to compare the indicators between periods of time.
Many times we are not clear about the objective threshold of an indicator. Either because the KPI is new, or because we do not have the knowledge of what value would be the ideal. In this context, what we can do is measure the evolution of an indicator between several consecutive periods, verifying whether it improves or not.
Avoiding biases in KPI’s
Besides providing valuable insights into the performance of business processes, KPIs can also be subject to biases.
It’s key to define KPIs objectively, ensuring that they are free from personal biases. For example, instead of defining a KPI based on a subjective measure, such as “customer satisfaction,” define it based on a more objective measure, such as “number of customer complaints.”
Another good practice is ensuring data accuracy. Make sure that data is entered accurately and consistently. And data that is retrieved automatically from the BPM Suite or other systems is double-checked.
From our perspective, one of the most important recommendations is using multiple KPIs, providing a more complete picture of the measured performance. If possible, try to look at the metric from different perspectives. For example, instead of relying solely on a single KPI, such as “number of completed tasks,” consider using multiple KPIs, such as “number of completed tasks” and “task complexity”, because if a user is assigned the complex ones, then will complete a smaller number of tasks.
Over time, the performance or what is relevant in a business processes can change, and the original KPIs may no longer be effective. It is important to regularly review and adjust KPIs to ensure that they remain relevant and accurate for the decisions that you have to make.
The last step in the Business Process Management (BPM meaning) cycle is to optimize the process. It involves the continuous improvement of the process to make it more efficient, effective, and responsive to changing business requirements. Here are the key components of this step:
- Monitoring in real time and analyze the historical performance of the process through the KPIs defined in the previous step, to identify areas for improvement.
- Analyze process data, including process metrics, process logs, and feedback from process participants, to identify inefficiencies and areas for improvement.
- Based on the analysis of process data, opportunities for improvement can be identified and prioritized.
- Implement improvements through changes to the process model, the process data (forms, databases), automation, or integration with other processes or systems. This will restart the continuous improvement cycling, getting back to step 1: Modeling the process.
By continuously optimizing the process through this cycle, organizations can ensure that their business processes are efficient, effective, and responsive to changing business requirements. This can result in improved customer satisfaction, increased productivity, and reduced costs.
Testing the changes before deploying them to the users
A key aspect for the continuous improvement cycle to be repeated many times and in an agile way, is to have tools to test the changes before deploying them to the end users. At Flokzu we offer two complementary and extremely useful tools for this purpose.
The first one is version management, which allows a new version of the process to be created before making a change. This version can be tested and modified until we are sure that it is the correct one. In addition, Flokzu supports backward compatibility, to run process instances with the original version of the process with which they were created. But also, Flokzu allows the migration of those instances to the latest available version, automatically.
The second tool is the Sandbox, which is a safe place to test the new version of the process without affecting end users, or sending real mails, or impacting production databases. This functionality is highly valued by our customers, because it allows them to test a new version of the process very quickly and easily, and adjust it until they are sure that it is the correct one.
IT – Information Technology
A real-life example of a process in the IT department that could be automated using a Business Process Management Suite is the process of incident management. This is the process of identifying, resolving, and closing incidents that occur within the IT infrastructure. Here are three benefits of automating the incident management process with a BPM suite:
- IT staff can resolve incidents more quickly and efficiently. The BPM suite can provide real-time updates on the status of incidents, automate tasks such as prioritization and assignment, and provide a centralized repository for incident information.
- Improved collaboration with customers and between IT staff, as the BPM suite provides a centralized platform for communication and coordination. This can help to resolve incidents more quickly and effectively.
- IT managers can track the performance of the incident management process in real-time, allowing them to identify bottlenecks, improve response times, and allocate resources more effectively. The BPM suite can also provide relevant KPIs, like historical resolution times, enabling IT managers to measure performance over time and make data-driven decisions to further improve the process.
Sales and commercial management
A typical process in the Sales department that could be automated using a BPM Suite is the lead management process. It involves the identification, qualification, and nurturing of potential customers until they are ready to make a purchase. Here are three benefits of automating the lead management process with a BPM suite:
- Sales staff can work more efficiently and effectively. The BPM suite can automate tasks such as lead prioritization and assignment, provide real-time updates on lead status, and generate reports on the progress of leads through the sales funnel.
- Improve the customer experience by ensuring that leads receive prompt attention and are nurtured effectively. The BPM suite can provide a centralized platform for communication with leads and automate follow-up emails.
- Sales managers can track the performance of the lead management process in real-time, allowing them to identify bottlenecks, improve response times, and avoid delays that can lose the sale.
A process that several of our Bank customers have automated using Flokzu BPM Suite is the loan processing process. It involves the receipt, review, and approval of loan applications, and the subsequent disbursal of funds to approved borrowers. Here are three benefits of automating the loan processing process with a BPM suite:
- Bank staff can work more efficiently and effectively. The BPM suite can automate tasks such as application prioritization and assignment, provide real-time updates on loan status, and generate reports on the progress of loans through the approval process.
- Ensuring that loan applications are processed promptly and efficiently. The BPM suite can provide a centralized platform for communication with customers and can automate follow-up tasks such as sending them emails automatically with the status of the applications, reducing their phone calls and inquiries.
- Bank managers can track the performance of the loan processing process in real-time, allowing them to identify bottlenecks, improve response times, and allocate resources more effectively. The BPM suite can also provide historical data on loan processing times and approval rates, enabling bank managers to measure performance over time and make data-driven decisions to further improve the process.
HR – Human Resources
Human Resources is one of the areas where we have seen more processes automated with Flokzu. Just to mention one by way of example, we chose the “New Employee Onboarding” process. It includes the collection and review of new hires paperwork, completion of HR-related tasks, making sure the new employees receives the required training and their integration into the company’s systems and processes. Here are three benefits of automating this process with a BPM suite:
- HR staff can work more efficiently and effectively. The BPM suite can automate tasks such as document collection, completion of HR-related tasks, and integration into company systems.
- Improve the new hire experience by ensuring that the process is completed quickly and efficiently. The BPM suite can provide new hires with real-time updates on their progress, and automate follow-up tasks such as sending emails and scheduling appointments.
- HR managers can track the performance of the employee onboarding process in real-time, allowing them to identify bottlenecks, improve response times, and allocate resources more effectively.
In this article, you will find more specific examples of HR processes.
A simple but very useful administrative process in the Healthcare industry that can be automated using a Business Process Management suite is the request for training process. This process involves the collection and review of requests for training from healthcare professionals (for new technology, new procedures, new techniques), the approval of these requests and budget by authorities, and the scheduling and coordination of training sessions. Here are three benefits of automating the request for training process with a BPM suite:
- Improved efficiency automating tasks such as document collection, approval, and scheduling. This can reduce the time it takes to complete these tasks, freeing up time for healthcare professionals to focus on more important tasks.
- Healthcare managers can track the performance of the request for training process in real-time, allowing them to identify bottlenecks, improve response times, and allocate resources more effectively. The BPM suite can also provide historical data on training request times, enabling healthcare managers to measure performance over time and make data-driven decisions to further improve the process.
- Ensuring that the request for training process is completed in a compliant manner, reducing the risk of non-compliance with relevant regulations. This can be particularly important in the healthcare industry, where compliance is critical to maintaining high standards of patient care.
One concrete example we have seen implemented with Flokzu and providing outstanding results for manufacturing companies is the “Product Change Request” process. This process involves the collection of requests from different departments to change the specifications of a product (technical, commercial, etc), the review and approval of these requests by relevant authorities, and the implementation of the changes to the product. Here are three benefits of automating this process in a BPM suite:
- Improve efficiency by automating tasks such as document collection, approval, escalations, reporting and implementation. This can reduce the time it takes to complete these tasks, freeing up time for employees to focus on more important tasks.
- Managers can track the performance of the request for a “product change” process in real-time, ensuring that change is implemented in a timely manner. This is especially important when trying to respond to a change or demand in the market, and every delay means losing sales.
- Ensuring that all requests follow a consistent process and that all relevant regulations and policies are followed. This can reduce the risk of errors and ensure that the process is compliant with industry standards, protecting the company from potential liabilities.
What is the future of business process management?
The future of business process management (BPM) is promising as organizations continue to look for ways to optimize their processes and improve efficiency. With the advancement of technologies such as Artificial Intelligence (AI) and Robotic Process Automation (RPA), BPM is becoming increasingly integrated with these technologies to create what is known as hyperautomation. Hyperautomation combines multiple technologies to automate a wide range of processes, resulting in improved accuracy and efficiency.
Additionally, the cloud and no-code movement are playing a significant role in the future of BPM, making it possible for organizations to automate, access and improve their processes management from anywhere, at any time and without programming skills by “citizen developers”.
Citizen developers are non-IT professionals who have the skills and knowledge to develop and automate business processes. They play an important role in the future of BPM by helping organizations to quickly and efficiently automate their processes, often without the need for IT support. This empowers organizations to create and maintain custom solutions that meet their specific needs and requirements. Citizen developers also bring a unique perspective to the process design and automation, as they are often closer to the day-to-day operations of the business and have a deeper understanding of the challenges faced by the organization. By leveraging the skills and expertise of citizen developers, organizations can create a culture of innovation and continuous improvement, ultimately driving business growth and success.
Overall, the future of BPM is exciting, and organizations are poised to reap significant benefits from its continued growth and development.
What are the Benefits of Incorporating Business Process Management?
Throughout this article, we have described several applications of BPM in different industries, showing the concrete benefits achieved. Below, we summarize the 5 most important general benefits of the BPM discipline:
- Efficiency: BPM helps organizations streamline their processes and make them more efficient, reducing times and increasing productivity.
- Visibility: BPM provides organizations with a clear and comprehensive view of their processes (specially if using the BPMN notation for process modeling), enabling them to identify areas for improvement and make informed decisions.
- Collaboration: BPM facilitates collaboration between teams, departments, and even external customers and suppliers, promoting a more integrated and effective approach to business processes.
- Customer experience: BPM helps organizations to create processes that are customer-focused, delivering improved customer experiences and higher levels of customer satisfaction.
- Agility: No-code BPM Suites enables organizations to create and evolve processes quickly and effectively, to respond to changing business requirements and conditions, helping them to stay ahead of the competition and remain competitive in their market.
What is meant by business process management?
Business Process Management (BPM) is a systematic approach to improving, managing, and optimizing an organization’s processes.
What are the four steps in the business process management process?
They are modeling, automating, measuring and improving the processes to increase efficiency, visibility, and agility.
Why is BPM important?
It is relevant because it helps organizations improve their processes to increase efficiency, agility, and competitiveness. BPM also enables organizations to better align their processes with their business objectives and respond to changes in the market or internal operations. By using BPM, organizations can streamline and optimize their processes, resulting in cost savings and increased productivity.
The post What is BPM? Business Process Management Ultimate Guide – 2023 appeared first on Flokzu.
Leave a Comment
You must be logged in to post a comment.