BPMInstitute.org defines Business Process Management (BPM) as the definition, improvement and management of a firm’s end-to-end enterprise business processes in order to achieve three outcomes crucial to a performance-based, customer-driven firm: 1) clarity on strategic direction, 2) alignment of the firm’s resources, and 3) increased discipline in daily operations.
Traditional methods of performance management focus on department & functional unit performance. BPM focuses on the management and continuous improvement of cross functional processes. This involves continuous monitoring, evaluation, measurement and process innovation. These cross-functional processes must be clearly defined and documented. Process performance objectives in terms of time, quality, cost and productivity must be defined. Process teams and process owners must be established.
To fully achieve the value of BPM an organization should make it part of its culture – i.e. its beliefs and practices – just as it may have done with respect to customer satisfaction or quality. It must evolve to become a process-managed enterprise. BPM Institute defines a process-managed enterprise as one that is structured, organized, managed and measured in terms of its core business processes. A process-managed enterprise exhibits these attributes:
- Process improvement is embedded in the business strategy
- Competitive advantage is supported throughout the value chain
- It practices process-driven budgeting and resource allocation
- Key processes flow seamlessly through the value chain
In 2006, the Babson College Process Management Center identified six critical success factors for transforming to a process-managed enterprise. The Center advised that leading organizations take a balanced approach to managing these six factors. The six factors are:
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The continual tight linkage of organizational priorities and enterprise processes, enabling achievement of business goals. |
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The collective values and beliefs that shape process-related attitudes and behaviors. |
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The individuals and groups who continually enhance and apply their process-related expertise and knowledge. |
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The relevant and transparent accountability, decision-making, and reward processes that guide actions. |
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The approaches and techniques that support and enable consistent process actions and outcomes. |
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The software, hardware, and information management systems that enable and support process activities. |
Companies have historically viewed BPM as a one-time transformation or improvement project. However, the continuous change in a business environment requires adopting BPM as a permanent management discipline that provides a sustainable capability to adjust to requirements and improve critical processes. Two necessary undertakings are establishing Process Governance and a building a Center of Excellence.
Process Governance is an extension of Corporate Governance that defines the decision-making rights associated with the definition and deployment of enterprise process improvement initiatives. It includes the mechanisms and policies used to measure and control the way enterprise processes are defined, deployed, maintained and monitored. It answers the following questions:
- Who is responsible for ensuring a process is working smoothly?
- How can you be sure a new process is compliant with IT, business and regulatory policies?
- What decisions need to be made and who makes them?
- How do we organize the decision-making process and roles?
- How do we ensure the process is properly supporting the business strategy?
- How do we select processes for improvement?
- How do we fund cross-functional improvement initiatives?
If organizations have a strong culture of Governance then they probably have Corporate Governance models and have established IT Governance as well. Process Governance can then be implemented as another example of establishing decision-making and oversight. However, many organizations do not have this culture so they approach BPM by first establishing a Center of Excellence (CoE).
Nothing happens in companies unless someone takes responsibility to make it happen and nothing happens repeatedly unless that responsibility and attitude is embedded in the enterprise. In many organizations a BPM Center of Excellence is that place that brings strategic focus to becoming a process-managed enterprise. It explores how BPM can be integrated into an enterprise. A CoE can be established in a centralized, decentralized or hybrid approach and the executive sponsor can start out as the CEO, COO, or CIO. The sponsor will influence the initial charter of the CoE. The steps to establish a CoE are as follows:
- Obtain executive sponsorship (e.g. CEO, COO, CIO)
- Define charter for CoE – endorsed by sponsor
- Define team member roles and responsibilities
- Define goals and success criteria
- Define operating principles
- Establish a Business Process Architecture
- Set up a process library and repository
- Initiate creation of a process inventory
- Develop criteria for selecting a process for improvement – based on business strategy
- Define the rules, guidelines, methodologies, tools and standards that should be used to change business processes
When first starting out a CoE might have a small charter to facilitate information sharing and provide internal consultants to process improvement initiatives. In this charter it will have responsibility to define tools, technologies, and improvement methodologies as well as create and maintain the process repository. It will contain skilled process modelers that are assigned to various projects to do process discovery and capture.
A CoE may be given a more strategic charter to drive the adoption of BPM throughout the enterprise – and ensure that it will be sustained over time. It not only develops process excellence but it champions its usage and enforces it to be practiced as a management discipline throughout the enterprise. It ensures that all major processes in a company’s value chain are explicitly defined including how these major processes fit together. It establishes a disciplined and measurable process management program. It communicates throughout the company a shared understanding of the key business processes that deliver value to customers. It analyzes existing processes, prioritizes processes for improvement, creates a roadmap for implementing those improvements and sets in place a form of governance.
When implemented strategically across the enterprise, BPM enables the evolution to a well-connected “process-managed enterprise” where existing silos can be bridged to deliver better visibility of fast-changing business events and critical information. A process-managed enterprise embraces the concept of increasing business velocity and achieves the following strategic goals:
- A more succinct expression of purpose and strategic direction;
- A shared understanding at the top team level of what needs to be improved by how much by when;
- An integrated view of cross-group linkages and interdependencies;
- A greater focus on the timeliness and quality of key customer-touching business process outputs; and,
- Tighter alignment of strategy, structure, business process and technology.
