Business process management (BPM) can be a source of confusion. Is it under the purview of IT? Is it operations? Is it just A/B testing?
Or is it just another word for digital transformation?
Explaining the value of why organizations should consider their business processes is difficult when it’s not clear what they’re supposed to be managing.
In this article, we take an in-depth look at what BPM is, what it looks like, and how it relates to digital transformation.
Part 1: What is business process management?
Business process management has different definitions based on who you ask. But to us, BPM is:
Analyzing a business process end to end using models and scenarios to understand how a large organization actually works and leveraging that new understanding to recommend and test optimizations and improvements. Then, starting the process over again for a continually improving and optimizing a process.
This definition hits two key points.
First, that BPM is all about identifying and optimizing the way a business delivers its products and services, how its employees work, and how well it serves both the people who work there and the people who buy its products.
Second, BPM isn’t a one-time fix. It’s about identifying how things work and then continuously tweaking to achieve measurable results for the business.
These results usually boil down to improving just one from a list of a few key metrics:
- Increase profits
- Decreased operating costs
- Increase customer value, measure against lifetime value
- Decreased customer churn
- Decreased staff churn.
There are systems within a business that impact these metrics, like streamlining supplier management processes to decrease operating costs or improving the sales process to increase revenue.
But ultimately BPM will usually come down to hitting these goals.
Part 2: What BPM actually looks like
Now that we have a clearer idea of what BPM is, how does it manifest itself in reality?
Every business is different, but a business process management project will usually align with the following format:
Step 1: identify your key metric
While many of the key metrics we mentioned will overlap (e.g. revenue and profit), it’s important to identify exactly what specific business metric you’re trying to move before you get into process mapping/identification and optimization.
This step is usually completed at the highest level of the organization and can involve the entire executive team and even the board of directors (if applicable).
Step 2: map existing processes
You can’t know what to improve and tweak unless you know how work is being completed to start with.
And that means business process mapping.
Business process mapping is what it sounds like: it’s mapping how a business process works and then mapping all the processes it touches.
Over time, you build up a process map of an entire organization. Depending on the complexity of the product offering and the size of the business, this might be a dense diagram or a simple workflow.
It’s also important to note that many organizations will do this once when processes are built (e.g. when they’re scaling a sales team, opening a new division/office, or offering a new product line). But over time, the documented process and the way people actually work drift apart.
So a big part of process mapping is sitting down and talking to people about how they do their jobs – effectively treating it more like requirements gathering than actual business process mapping with diagrams.
3. Create the ideal
When you map your existing documented processes and ways of working, you’ll likely uncover bottlenecks and inefficiencies as well as project and process risk (e.g. there’s only one “approver” at a set stage and no backup in case that person is unavailable).
So the next step in BPM is creating an ideal model. How should the process work? How can it be made more efficient? What’s needed to improve it?
This stage generally looks more at the problem (e.g. we only have one approver - we need more) rather than specific solutions (e.g. Keith should have approver authority).
4. Model your new business process across different scenarios
BPM is all about optimization. Or in other words, testing.
But unlike a simple A/B test, business processes are often long and convoluted with potentially expensive repercussions if something doesn’t work out.
That’s why there’s an extra step between identifying and testing: modelling.
Imagine, for example, you’re completing a business process management project on a car assembly line.
If you make an error in your testing, cars will roll off with mistakes – which either have to be fixed or, if unchecked, might lead to a product recall.
Both of these outcomes might cost hundreds of millions of dollars.
So BPM methodology will usually build multiple models of different scenarios to see how change impacts outcomes.
5. Implement the chosen scenario and monitor outcomes
Next is implementation. this is when the winning model is deployed in a standardized, repeatable, and trackable way.
Outcomes are monitored and linked back to the original KPI. Did it get the business closer to achieving their goal? Were there unintended consequences?
Naturally, not everything is going to be right the first time.
Which is why BPM is in itself almost more of a methodology.
Because the next step…
6. Rinse and repeat
… is rinse and repeat. What new challenges does your business process have since your last round of optimizations?
What problems have you caused?
If you’ve improved your KPI by a factor of 2, can you tweak the process so you improve it by a factor of 3?
Over time, a business process evolves that’s more efficient and optimized for the business who uses it.
Part 3: How does BPM relate to digital transformation?
BPM and digital transformation dovetail for a few reasons which is why it’s worth considering how they relate to one another.
First, when organizations embark on digital transformation initiatives, they’re not just buying new technology.
Rather, they’re considering how they can make their systems more efficient by:
- Changing how people work
- Changing the attitudes people have
- Giving them the tools that empower them to be more efficient
- Automating boring tasks so employees can refocus on high-value, non-automatable jobs.
All this means that businesses are usually looking at changing their processes anyways, which is why it’s the perfect opportunity for BPM to get involved.
Basically, it’s better to fix your processes when you’ve popped the hood on how a business works.
Second, more often than not, BPM recommendations will revolve around technology acquisitions to design out mistakes, errors, or manual processes. This then leaves more time for employees to do other tasks, which BPM consultants usually assume will be productive (because it usually is).
Therefore, the questions and recommendations for business process management are the same questions and recommendation for digital transformation, especially when it comes to acquiring and implementing new technology. It makes sense to kill two birds with one stone, especially because digital transformation initiatives often have a longer pay-off than BPM.
If done in tandem, organizations can offset upfront costs that with both short-term gains from BPM and long-term benefits from digital transformation.
So what is business process management?
We define it as analyzing a business process and using models and scenarios to understand how it works. Then, optimizing and testing changes over time to hit key business objectives.
In reality, BPM is more of a methodology than a product or project. It’s about working to understand how your business works, where the problems are, and what you can do to change them and move the needle for the business.
And that’s often easier said than done.
The challenge of BPM isn’t getting people to understand the value of the project. Rather, we often see clients struggle with securing buy-in for what can be a radical departure in how things work.
And that’s where digital transformation can offer a helping hand. Digital transformation initiatives tend to focus on culture and people shifts, which can help secure buy-in for the process changes that will deliver returns in the short- to mid-term.
BPM and digital transformation, if executed in tandem, can be quite the combo to reshape how a business works, what tools it uses, and the lives of the people who work there.
And to think people said process was boring.