Your Guide to Business Process Management
What is Business Process Management?
Although experts largely disagree on a uniform definition, business process management is, in its simplest terms, a discipline that seeks to improve business activity workflows. Business process management also knows as BPM is a business practice for professionals to use when identifying and optimizing their organization's processes.
BPM is not a one time event consisting of accomplishing set activities and then abandoning the practice. Process management is a business practice that should be continuously performed.
A consistent evaluation of business processes encourages continuous improvement. Business process management uses business intelligence to identify actionable areas for process improvement or replacement.
Through BPM, business professionals can identify issues and gaps that stop a specific business process from being as effective as possible. These gaps and issues may appear as a disruption in digital business or frequent within organization miscommunication.
Different Types of Business Processes
Any successful business professional knows that there are virtually endless business processes to consider. It is helpful to break down business processes by type to simplify BPM. The three types of business processes are-
1. Managing- These processes manage the functionality of a system. Workflow management or project management are common business management processes.
2. Operating- These processes optimize business revenue and support business interactions. Marketing and sales are examples of operating business processes.
3. Supporting- These processes serve the basic business. Technical support and employee onboarding are two examples of supporting business processes.
For every business process, there should be a manager designated as responsible for its effectiveness. This helps with accountability and avoids a process being overlooked.
BPM should avoid any unnecessary activities that are not working towards increasing effectiveness. There are also various classifications of business processes for business professionals to consider including-
1. Main business processes- The main goal of a business process is to produce a profit for a business. As such, these processes seek to add value to a product or produce a product that is valuable for customers.
A product is not valuable if external customers do not want to pay for it. A successful main business process will produce a valuable product that generates profit when sold to an external customer.
2. Providing business processes- These processes are necessary for both a company's infrastructure and to support main business processes. Instead of appealing to external customers, providing business processes appeal to internal customers within the organization.
Internal customers may be within organization employees or company divisions. Instead of a customer paying for this business process, these processes must exist in order for the company itself to exist.
3. Management business processes- Management business processes exist under providing business processes umbrella. These processes are necessary for company development.
Management business processes are also not sold to external customers but are used by internal customers alike other providing business processes.
4. Development business processes- These processes evaluate both business processes and main business processes. The objective of a development business process is to generate a profit in the long term while also improving the company.
Investments are a great example of a development business processes as their objective is to both improve business processes and generate profit in the long term.
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Business Process Management Life Cycle
The BPM life cycle can be broken down into six phases. These phases are-
1. Planning- Business professionals must develop a plan that aligns with set business process objectives. Any current or preexisting processes should be identified.
2. Analysis- A continuation of the above step, a thorough analysis of current business processes must be undertaken. Preexisting processes should be evaluated for their compliance with business objectives.
The most common first step includes data compilation through various means, ranging from business strategy plans to process models.
The analysis seeks to understand the role of a process as well as its performance. Additionally, analysis defines the strengths and weaknesses of the current process.
Key performance measures should be thoroughly analyzed for their relevance during this step. The qualitative analysis serves to prioritize identified issues and decrease inefficiencies.
The quantitative analysis focuses on numbers including how much time processes or steps require. The overall objective of this step is to decide if business processes are aligned with your business goals and as effective as possible.
3. Design- This step applies if the above step indicates that process improvement or a replacement process is necessary. Process design should be undertaken with the ultimate objective of providing value to customers.
Developing a clear business strategy for your process will help avoid issues from arising. Process modeling represents the process in its structural form in order to document and analyze it.
The process model is immensely helpful for employee onboarding and for current employees to review. When the need arises to optimize business processes or support business expansion, these documents are crucial to consult.
A design can be represented in different forms, ranging from a diagram to a narrative description. A commonly used form is a workflow chart that can easily represent the process from its start to finish.
4. Implementation- Systemic implementation uses software and technologies. Nonsystemic implementation occurs when bmp tools are not utilized.
Business technology ranges from robotic process automation to workflow software programs. Digital business technology used throughout the supply chain can optimize business processes.
Process automation and various management software types can be costly ventures for a business to undertake. Therefore, the choice of systemic or nonsystemic implementation may depend mostly on a business's available capital.
5. Monitoring- Tracking a newly implemented process is not a one time event. Continuous measuring and monitoring will indicate if changes to the process design are necessary.
Measuring performance will reveal if the newly implemented process is meeting business objectives. Monitoring that would be incredibly complex if undertaken by staff members is simplified through the use of BPM tools and software.
6. Refinement- Redesigning and reengineering processes may be necessary in order for them to become as ideal as possible. The above steps will indicate where there is room for improvement and corrective action.
Refining the newly implemented process will not only perfect the new process but increase within organization efficiency as a whole.
The Benefits of Business Process Management
By 2023, the BPM market is expected to reach $16 billion. This figure is unsurprising considering the massive benefits that BMP provides businesses including-
1. Cost reduction- 50% of businesses report that the main reason they started using BPM was in order to save more money. With increasing competition and volatile markets, reducing costs is necessary for the survival of many businesses.
BPM can also optimize business process prioritization and identify which processes would be better outsourced. Whether through process automation or outsourcing, BPM can pinpoint where a process does not require inhouse staff efforts.
2. Responsiveness- Business strategy has increased its focus on customer satisfaction and retention rates. Whereas before the focus was more on productivity, businesses are now asking themselves how their processes can be more customer-focused.
Acquiring new customers is much more expensive than retaining existing customers. With 67% of customers reporting a poor experience as the main reason for ceasing business with a company, a customer-focused business strategy is more important than ever before.
A customer-focus actually oftentimes indirectly leads to increased productivity. Additionally, a customer-focus guides a business towards changing trends and industry standards.
An evaluation of customer needs is not a one time occurrence, but rather a continuous process that keeps your business as relevant and competitive as possible. Innovation and flexibility are encouraged when business processes focus on customers.
3. Productivity- BPM is known to increase productivity and efficiency. Pinpointing and replacing outdated business processes allows a company to stay competitive.
Inefficiency is difficult to identify without proper BPM in place. BPM provides set activities to improve or replace outdated processes.
4. Growth- Decreasing the wastefulness and inefficiency of processes provides business professionals with additional time to focus on development and growth. Repetitive tasks can be consolidated or eliminated in order to optimize business processes and free up valuable staff time.
5. Standardization- There are many benefits to standardizing business processes. Creating templates, checklists, applying automation, and measuring performance each time you engage in BPM will help standardize your processes.
For example, a specific business process automation may be reviewed and replicated when another workflow automation is considered. Identifying the best standardization processes allows for process improvement across all business operations.
Employee onboarding is also simplified with standardization. Instead of needing to retrain employees, all new hire employees will receive the same information through their employee onboarding process.
6. Compliance- BPM supports business compliance by notifying staff members whenever there is a breach so that corrective action can be undertaken. Additionally, BPM can warn staff members if a breach is near in order to avoid it altogether.
BPM can factor in and monitor a wide variety of different compliance guidelines simultaneously. Not only does this decrease mistakes but it also allows your business to run more efficiently.
The Cost of Improper Business Process Management
Inefficient business processes are estimated to have 500% more impact on a customer than poor product delivery. Costs of improper BPM are vast, ranging from inadequate customer support to badly trained employees.
Business intelligence and project management are important but without BPM customers may bring their business elsewhere. Workflow management and process automation allow businesses to focus more on customer support rather than on outdated processes.
When customers are dissatisfied they often vent to the internet instead of the company itself. Bad customer reviews on social media or third party websites can majorly damage your business's brand and future profit potential.
When a company is negatively affected by bad customer reviews they may be forced to trim costs by laying off workers. As workers are laid off your work environment is damaged and staff members are less able to focus on customer support.
Outstanding customer support can stop this vicious cycle before it begins. With over half of employees reporting they are already disengaged at work, changes within organization are very necessary.
Employee engagement is strongly linked with revenue, development, and innovation of a business. Process improvement and robotic process automation decrease the menial and unrewarding tasks an employee is responsible for performing.
The digital transformation of a company can further increase employee engagement levels. When employees feel apart of an exciting and innovative business, they are less likely to disengage or become dissatisfied in their role.
Another cost that is nearly impossible to quantify is the missed opportunities due to outdated business processes. Staying current and competitive in the global market allows companies to take risks and pursue opportunities that they would not be able to without improving or replacing outdated processes.
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- Business process management helps businesses to identify, improve, and replace processes.
- BPM is an important management tool that allows businesses to consistently improve their processes.
- BPM is not a one time occurrence but rather a continual activity that evolves with your business over time.
- Process management software and bpm tools help optimize business operations in ways a human staff member could not.
- The three types of business processes are managing, operating, and supporting. Classifications of business processes are main, providing, management, and development.
- The BPM life cycle consists of planning, analysis, design, implementation, monitoring, and refinement.
- Benefits of BPM software and proper management range from cost reduction to improved employee onboarding processes.
- Improper BPM results in unsatisfactory customer support and disengaged employee