On the surface, the name really does say it all: Business Process Management software helps organizations manage their business processes. It’s a deceptively simple concept, however, because there is no single accepted definition of BPM, a hodgepodge term that seems to encompass everything from workflow to Enterprise Resource Planning (ERP) to Enterprise Application Integration (EAI). This lack of a uniform understanding has created confusion in the marketplace and has made buying decisions incredibly challenging, as purchasing managers are forced to compare apples to oranges when selecting which BPM suite to buy. Fortunately, there is a straightforward way to eliminate much of this confusion by segregating business process management into its three major classes.
The initial step in understanding BPM is defining it. While experts may quibble about the scope of its functionality, META Group characterized it as “an integrated management approach that includes Web-based analytical applications (to gather and analyze data), business plans to achieve desired metrics and the necessary reporting and forecasting to ensure performance goals.” On a more theoretical level, process guru Howard Smith, author of Business Process Management: The Third Wave, says that BPM is “a synthesis of process representation and collaboration technologies that removes the obstacles blocking the execution of management intentions.”
Whichever definition one chooses to use, it makes sense to think of BPM as an approach to, rather than an application for, managing work. In this conceptual framework, business process management systems codify the sequence of activities needed to:
Move data between applications to change status in "systems of record"
Present documents to clerical workers along with a predetermined set of rules to assure completeness and accuracy before taking actions
Facilitate interactions between knowledge workers as they use their expertise and judgment to decide upon actions in uncertain situations
Each of these functions forms the basis of the three distinct types of BPM software in use today. The first major class is comprised of system-to-system packages that allow disparate software and hardware devices to integrate with each other without human involvement or intervention. For example, a distributed global enterprise such as Amazon needs to allow its inventory and delivery systems to work together to ensure that products are properly sent to customers. All of this information must then be relayed to a variety of departments within the company, including accounting, shipping, and inventory, as well as outside parties such as UPS, that all rely on different technology infrastructures. Without a good system-to-system BPM tool to manage these interactions, it would be almost impossible for the company to function effectively. In the financial world, a common use of this technology can be found in straight through processing, in which all aspects of a stock transaction can be conducted without re-entering data manually. This is critically important to ensure that trades cannot only occur instantaneously, but will have lower error rates and reduced risks.
Person-to-system packages make up the second category of BPM. In essence, these are designed to improve the productivity of clerical workers or people involved in repetitive tasks. An excellent illustration of this is found in the insurance industry, where clerical workers - who have very little discretion in the decisions they make - process claims. There is very little knowledge work involved in claims processing, as employees make binary decisions that have very little, if any, variation. For example, the amount of money that a policyholder would receive for a damaged car is based on pre-set values established by the insurer’s actuaries, and claims processors do not have the latitude to deviate from these parameters. In essence, person-to-system BPM is ideal for work processes that do not require individuals to make knowledge-based decisions. These packages tend to use a “checklist” approach, in which a defined set of information must be collected before a rules-based decision is reached.
Person-to-system BPM has its place, but it serves a finite need in the marketplace. The percentage of the American workforce involved in clerical or purely administrative work has slowly decreased over the last several decades, and now only about 11 percent of employees fall into this category. As a result, the need for systems that facilitate interactions between computers and unskilled or semi-skilled workers is not really the future of BPM innovation. On the other hand, more than half of the U.S. workforce is now comprised of knowledge workers - people whose knowledge, experience, judgment and innovation are critical to organizational success. Enhancing the productivity of these employees is the single most important opportunity organizations have to reduce their costs and increase profitability, and person-to-person BPM provides the framework to accomplish this.
The fundamental distinguishing characteristic of this approach is that knowledge workers, rather than rules and processes, drive decisions, Whereas insurance claims processing and other clerical tasks are guided by defined (and inflexible) algorithms, person-to-person BPM systems allow users to interact with each other and set their own parameters. This can only work, however, if knowledge workers are allowed to make commitments with each other based on a negotiation process. Instead of assigning a task with the expectation of a binary outcome (done/not done), managers must make a request to the relevant knowledge workers within their organizations. Once this request is received, knowledge workers must then evaluate the request and, if necessary, propose alternatives. Their decisions drive the sequence, participants, and timing for these process types. For example, a director of marketing may want 10 new pieces of collateral produced in a quarter, but the designer may feel that he can only produce five. Instead of rejecting the initial proposal outright, the designer comes back with an alternative proposal. Through a negotiated series of offers and counteroffers, a commitment is finally reached. The commitment serves not only as a mutual understanding of expectations, but also as the benchmark against which knowledge workers are evaluated.
In an ideal world, the negotiated commitment should be the essential unit of person-to-person BPM software solutions. The problem with most of these packages, however, is that they are built on the “command and control” framework used in person-to-system BPM, in which orders are given and expected to be followed. While this approach may work for simple decisions, it can’t handle complex processes with a large number of variables and inputs. It’s one thing for a CEO to order new blinds for his or her office; it’s quite another to assign someone to design and build a new car model in 20 months.
Both system-to-system and person-to-system BPM software work well in environments where data and information can be hierarchically managed based on repetitive, pre-defined rules and sequences that have very little flexibility. They can benefit organizations only as far as they allow the simplification and automation of basic decisions and interactions, but what they cannot do is facilitate the work of people whose jobs require them to invent, decide and collaborate to accomplish complicated multi-faceted work. In blunt terms, the inherent inability of system-to-system and person-to-system software to support negotiated commitments makes them ineffective tools to manage knowledge work, and a BPM system that cannot make the distinction between a simple work item and a complicated process is just not going to create real value in today’s business climate.
About the Author
Bill Welty is CEO of Action Technologies (www.actiontech.com), a 20-year-old Bay Area software firm whose products improve the productivity of knowledge workers interacting in complex business processes. Please contact email@example.com.
For more than 20 years Action Technologies (www.actiontech.com) has delivered award-winning Business Process Management (BPM) software that increases the productivity of knowledge workers, reducing the time and cost of knowledge-driven processes by 40-60% and typically generating returns of more than 300%. The ActionWorks Suite enables leading global companies to analyze, redesign, implement and continuously improve their operations through a patented system for managing negotiations and commitments.