The benefits of business process monitoring and management are hardly a revelation. It has been known for over half of this century that optimizing business processes yields measurable results. In the 1950s, Dr. W. Edwards Deming, a mathematician and statistician, proved that improvements in managing business processes lead to improvements in overall business and significant competitive advantage. As a result of Deming’s work, Japanese manufacturing companies were able to produce higher quality products at a lower cost and gain competitive advantage. For his efforts, in May 1960, the Emperor of Japan decorated Deming with the Second Order Medal of the Sacred Treasure, and Japanese manufacturers created the annual Deming Prize in his honor.
Deming taught that variation is created at every step in a production process, and variations have the potential to cause defects. Therefore, the causes of variation need to be identified and reduced, and companies need to practice continuous product and process improvement to improve quality and productivity and decrease costs. Deming proposed a continuous feedback and measurement cycle to reduce defects and improve product quality. To achieve measurable results and business benefits, companies must practice continuous process improvement. Several management disciplines, including the Balanced Scorecard and Six Sigma, are based on Deming’s work.
Business process monitoring and management are prerequisites for continuous process improvement. Providing real-time visibility into business processes through process monitoring is a first step toward business process improvement. In order to improve processes, companies must first understand where the bottlenecks are. However, identifying the fact that there is a problem is just the first step. Continuous process improvement requires all levels of the organization to have visibility and control into the business processes, including IT management, business operations, and business management. Business process monitoring and management are becoming prerequisites for companies seeking to optimize business processes, reduce operational costs, gain real-time visibility into key performance indicators, and ultimately increase competitiveness.
The good news is that there are a large number of solutions on the market. The bad news is that the shake-out has not yet occurred, and there is also a great deal of confusion. For example, the BPM acronym stands for business process management (which usually includes monitoring and reporting on end-to-end business processes and may include process simulation for optimizing processes), business process monitoring (which refers to the real time visibility into business processes, also called business activity monitoring (BAM) to distinguish it from BPM), business process modeling (usually the first step in automating and monitoring business processes), as well as business performance management (which includes business KPIs, business intelligence, and business event correlation).
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