MANAGEMENT & ACCOUNTING

BUSINESS PROCESS MANAGEMENT:

Connecting People,
Process and Technology
by Patrick PC Ow

How can I reduce my operating costs? How can I reduce inefficiencies and increase leverage
on our human and physical capital investments? How can I improve the quality of my
products, services, and information? How can I be more flexible with today’s changing
business environment? How can I enforce business process excellence across the organisation?
How can I be more responsive to my partners, customers, and employees?

30 ACCOUNTANTS TODAY • August 2006


U
nfor tunately, in most
organisations, people, pro-
cesses, and systems are di-
vided and isolated. This
makes it difficult to change, as quickly as
necessar y in order to react to changing
market conditions.
Most business executives remember busi-
ness-process reengineering efforts during the
1990s, the attempt to overhaul and automate
processes by using information technology,
such as workflow software. In some cases,
productivity and efficiency were improved. In
many cases, companies just automated bad
processes rather than really taking the time
to plan what they wanted to accomplish up
front, and how best to use information tech-
nology/ systems to accomplish it.
Departments and subsidiaries are divided
from one another, which are themselves
separated from customers and suppliers. In
spite of efforts at automating work and inte-
grating applications, today’s organisations
often labour with islands of technology/ sys-
tems that work in isolation from one another,
defeating collaboration and keeping employ-
ees from ready access to the information they
need and the work they are supposed to do
to achieve corporate objectives.
Companies are under pressure to perform
better and faster — to do more with less, and
to be super-pleasing to customers. This
means changing the way companies manage
their business processes so they can inno-
vate, collaborate with trading partners, and
bring compelling new value to customers.
It is therefore more important than ever
for executives to gain control of their opera-
tions and their resources, to gain a top-down
view into their entire organisation, and to be
able to manage their activities in order to in-
crease productivity and profitability.
The solution that can deliver the control
and visibility that executives need to man-
age their organisations for success, the so-
lution for connecting isolated gears into a
single, unified machine that supports produc-
tivity across the organisation is business pro-
cess management, or BPM. It is the aligning
and co-ordinating of people, activities and re-
sources to achieve organisational goals.
The practical and strategic value of busi-
ness process management is captured in an
observation by Gartner: “Business process
management wins the ‘triple crown’ of sav-
August 2006 • ACCOUNTANTS TODAY
Business Process Management: Connecting People, Process and Technology
ing money, saving time and adding value. It
also spans the business and technological
gap to create synergy, with proven results.”
BPM eliminates the silos within an
organisation, bridges the gaps among people
and systems, allowing organisations to auto-
mate, deploy, and modify business processes
across the organisation, align people and re-
sources to achieve organisational goals, and
connect the organisation with customers and
partners.
The growing interest in BPM is driven by
economics and business results rather than
a compulsion to add another layer of software
to an already burdened IT environment.
Defining BPM
Business process management has
evolved from roots in workflow, group-ware,
and enterprise application integration (EAI).
From Workflow …
Step 1 Step 2 Step 3
Early workflow software solutions were
linear sequences of events, routing elec-
tronic documents from person to person,
perhaps allowing for some parallel work on
a particular task. Most systems could per-
form only simple, repetitive work due to
strictly defined work processes.
… to Enterprise Application
Integration (EAI)…
System 1 System 2 System 3
Next came enterprise application integra-
tion (EAI). It is integration without the ben-
efit of human interaction. Businesses had
to make their rules and models conform to
the limits of their proprietary EAI platform.
Further, EAI solutions did not allow for the
human factor. If a problem occurred and
someone needed to make a judgement call
on how to handle it, the systems were not
set up to accommodate human intervention.
… to Business Process Management
(BPM).
Step 1 System 2 if System 3
Step 3
Step 2
When business process management is ma-
ture, people and tasks in a business process
are integrated with systems/technology that
supports business activities. BPM does this
by separating the process logic from the ap-
plications that run them, managing relation-
ships among process participants, integrat-
ing internal and external process resources,
and monitoring process performance.
In this ideal setting, when a worker or
customer initiates a business process, it be-
gins a sequence of co-ordinated activities
that include the people, information, and
supporting systems at each step. Just as
important, the data or business application
needed to complete the work is presented
along with the work, so that the person do-
ing the work does not have to guess which
tools or information are needed to com-
plete the task. Wherever possible, these ac-
tivities are automated according to the busi-
ness rules of the process, to increase the
efficiency of the process and to minimise
errors such as sending a work item to the
wrong person.
Benefits of BPM
By capturing and enforcing a business
process in this way, the BPM platform al-
lows process owners and decision-makers
to model their processes, automate the
tasks of the process, monitor and measure
its performance, archive valuable informa-
tion about each instance of the process, and
then adapt the process as needed.
Contrary to the hype, BPM is not going
to completely revolutionise the way a busi-
ness operates. It will, however, help to gain
a level of management and control over
processes and, over time, simplify the task
of adapting processes in line with business
strategy.
BPM gives the business a framework for
managing complex processes, and ensures
that process changes can be made in-line
with regulations. Without some form of
process control, the cost and risk associ-
ated with compliance and governance in
general could spiral.
The benefits of business process man-
agement are more than just theory. In his
sur vey of thousands of organisations,
Michael Hammer discovered that business
process management:
䡲 Reduced order fulfilment cycle times by
60 to 90 per cent.
䡲 Slashed the cost of procurement trans-
31
Business Process Management: Connecting People, Process and Technology
actions by more than 80 per cent, while
shrinking procurement times by 90 per
cent.
䡲 Boosted the percentage of successful
product launches by 30 to 50 per cent,
while cutting the time needed to bring
new products to market by 50 to 75 per
cent.
Applying BPM
Organisations are looking to BPM to
help overcome some of the following kinds
of challenges:
Financial
䡲 Expense report processing.
䡲 Travel expense reimbursement.
䡲 Invoice processing and exceptions.
䡲 Credit processes.
䡲 Enhanced accuracy of forecasts.
Internal/administrative —
purchasing requests/procurement
䡲 Contracts management.
䡲 Equipment management
䡲 Facilities management
䡲 Customer complaints
Human resources
䡲 New hire processes
䡲 Performance reviews
䡲 Benefits administration
䡲 Leave requests
䡲 Travel requests
Cost Savings in BPM
How can businesses expect to realise
cost savings by automation (of a BPM so-
lution)? The META group has published a
chart of projected savings as illustrated in
Table 1.
As the chart illustrates, the expected cost
savings from fully automating a business
process is about half of the current cost of
completing the same process. To examine
how business units will realise these cost
savings, it is important to measure savings
by cost category. Other benefits include:
䡲 Reduced cycle time — A fundamental
benefit of BPM is the ability to automate
steps in the process. By routing work
according to pre-defined business rules to
the people and systems that have to act
on them, BPM collapses the time it takes
to move paperwork through a process
32
or to handle complex transactions.
䡲 Balanced workloads — A related ben-
efit is balancing workloads and getting
the right work to the right people. For
example, if the process involves the pro-
cessing of claim forms by a team of
clerks, the system can sense which
clerks are ready to take on new items in
their electronic in-basket. It can also
route a particular work item to specific
personnel who are qualified to handle
that kind of work.
䡲 Consistent process handling — Consis-
tency comes from having an established
procedure and ensuring this procedure
is followed every time.
䡲 Eliminate paper-based operations — A
major advantage to an automated busi-
ness process is the reduction or elimi-
Table 1 Benefits of Implementing an Automated BPM Solution
Touches
Currently 100
After Application
80
Rationalisation
After Modernisation (Web
40
Services, XML, Modelling)
Source: Translating Strategy to Execution: The Role of Strategic Metrics as a Change-Management
and Business Process Management Tool, META Group, 18 June 2004.
nation of paper work. By using online
documents, an organisation can elimi-
nate much of the cost of creating, stor-
ing, managing, and routing paper docu-
ments.
䡲 Gain visibility into the organisation —
Ability to know the status of an activity,
where and why it has been delayed, and
what is being done to fix the problem,
providing managers with the insights
they need on how well their units are
performing, in their own work and as
part of a larger process.
䡲 Improve quality and reduce errors —
Based on real-time and historical perfor-
mance, managers can reduce errors at
each step of the process. The use of elec-
tronic forms in an automated business
process reduces data-entr y errors by
using data imported from other applica-
tions.
䡲 Improve customer satisfaction — Cus-
tomers, employees, partners, and others
in a collaborative environment expect
near-instantaneous handling of their or-
ders, issues, and problems. BPM en-
ables organisations to handle transac-
tions faster and with fewer errors, and
to take action when problems do arise.
Manual processes are prone to human
error.
䡲 Increased productivity — In an environ-
ment where we are all asked to do more
with less, the best method to achieve the
desired result will give companies a com-
petitive advantage.
䡲 Increased profits, reduced cost — By
automating many of the processes that
we are currently completing manually,
we will allow these same individuals to
work more efficiently and take on new
Time Cost Quality Impact
6 mos. $10x 5%
6 mos. $8x 4%
3 mos. $5x 2.5%
tasks. Any reduction in labour equates
to an immediate cost saving.
䡲 Manage, measure, and improve pro-
cesses — BPM gives executives more
tools for managing, measuring, and im-
proving their business processes. Espe-
cially in the era of Six Sigma and other
quality initiatives, organisations need to
have quantitative data in order to validate
the decisions they have made in their
process re-design.
䡲 Shorter cycle times — Time is money.
By automating such activities as invoice
processing, order processing, we can
significantly shor ten the processing
time. Shorter cycle times can lead to
monies coming in the door much more
quickly than by using manual pro-
cesses. AT
The author can be contacted at patrickow
@gmail.com.
ACCOUNTANTS TODAY • August 2006