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What is Business Process Management (BPM)?

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What is Business Process Management (BPM)?

Business Process Management (or BPM for short) is a process-centric approach for improving business performance. It combines information technology with governance methodologies.

So what is a business process exactly? A business process is essentially a standardized way to convert a set of inputs into a desired output. All business have processes, whether it’s fulfilling a customer’s order (think Amazon) or processing a loan application (think mortgage bank). It is a combination of the people, assignments, and tasks and the connections between those. Business processes typically involve many people with specific skills.

As businesses grow, processes can become quite complex – involving multiple departments, people, and tasks. As this occurs, it is easy to lose sight on the status of where work is in your business and where the bottlenecks exist. Tasks are often duplicated and mistakes are made because there are no formal controls in place.

This is where BPM comes in. BPM helps to formalize a business process by establishing and documenting how it should be executed. It also helps in analyzing performance and implementing continuous improvement methodologies as the business process is executed over time. This is all executed through the use of technology. BPM software (or BPMS) allows the business to visually design and model their business process and the flow of work. BPMS products at their core are driven by powerful workflow engines which can take the steps, tasks, and routing that you design and translate that into the code that distributes work for your business process. It enables the creation of controls to enforce the conditions you want to place on your business. A BPMS rules engine lets the business control all of the rules that dictate a particular business process.

  • Who should perform the tasks at each step?
  • What specific tasks should be performed?
  • What is the SLA or deadline for completing the work?
  • Where does the work get routed after it is completed?
  • Who should be notified?

BPM software also provides the tools to setup and organize the forms which collect data for each task. For example, if a step in your workflow is to capture customer information, the form which collects that data can be customized to the specific needs of that task. Let’s say you want to do something simple such as categorize each customer into one of three categories. You would create a new dropdown option called “Customer Category”, enter the available options, and choose where the place that on the form.

The data that is entered on the forms can then determine the routing rules that are applied. For example, if a loan application with a customer credit score of under 500 requires a second level review, logic can be setup on the credit score field to route the application to another employee who performs these reviews.

Since all of the data about your workflow is captured in the BPMS system, powerful analytics can be run on top to monitor, measure, track, and improve the process. You can drill down into the status of each individual item throughout the workflow (like you would track a package) and data can be aggregated so we can view data such as average completion time, productivity, number of rejects, etc.

One growing use of Business Process Management technology is the enforcement of policies, procedures, and management directives. Many companies have hundreds of policy and procedure documents that outline the best practices, dos and don’ts, and steps to complete a specific job. Often times, however, there are no controls in place that ensure these policies are being adhered to. By systematically defining the people, logic, rules, SLAs, and data that drive each business process, compliance controls can be easily enforced and monitored. For example, using the mortgage example above, if a customer must have a certain minimum credit score to proceed with the mortgage application, a systematic check can be built into the loan origination process that restricts an employee from proceeding with the application if the credit score is not above the threshold.

When executed correctly the benefits from BPM software are tremendous:

  • Reduced error rate
  • Increased adherence to service level agreements (SLAs)
  • Reduced cycle times
  • Improved visibility of work throughout the business process
  • Increased operational efficiency
  • Better execution of governance directives
  • Improved compliance controls
  • Increased regulatory compliance
  • Better insight into operational risk
  • Collection of data points throughout the business process

As organizations grow larger yet continue to prioritize speed, flexibility, and quality, BPM and specifically BPM software is becoming a necessity for businesses to achieve their goals.

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