BPM in Action

Don’t mix up business process outsourcing (BPO) and business process management (BPM).

I posted recently asking if anyone can identify the beginnings of the term business process management (BPM).

More to come on that subject. However in the process of researching the genesis of BPM myself I came across a lot of blogging and vendor web sites that inadvertently – or advertently – mixed up BPM with BPO. OK, “two out of three ain’t bad,” as the song goes, but be careful to find out if, when your C-level boss suggests BPM, he or she doesn’t really mean BPO. (That’s especially problematic if the BP he or she is thinking of O’ing is IT, but that’s a subject for a different blog post.)

BPO is all about where and how your enterprise can best use IT to establish competitive advantage. Most business processes in an enterprise —human-centric or able to be processed straight-through—do not provide any particular competitive advantage. For example, payroll processing, benefits administration in highly regulated jurisdictions, purchasing office supplies, shipping small packages, demand deposit accounting in banks, anything that follows an ACORD form in insurance/assurance, scheduling worker hours in any kind of retail operation, and so forth. All of these are good candidates for BPO. It’s pretty much a standard make-or-buy decision. Whether the O also stands for “offshore” can also be considered.

Anything that provides competitive advantage (or just plain better service if you are a non-profit) is a candidate for inhouse responsibility. That typically includes anything that involves your ability to improve your supply chain or increase customer loyalty.

But BPM is all about how best to automate the BPs either way, whether or not they are outsourced or responsibility is retained inside your enterprise. As IT guys, it is just as important to know what BPM product and tools your organization’s outsourcers are using as it is to know your own BPM product and tools.

-- Dennis Byron