Picture this. You’re one of the largest beer manufacturers in the world, with thousands of employees and global name recognition. Your products have prominent locations in nearly every liquor store.
But your inventory management processes—including ordering new products and getting those products out to retailers—is an administrative nightmare. People in the field need to keep track of inventory, sales, product specs and more. But that information isn’t updated in real-time: instead, the back office emails spreadsheets to the field sales team every few hours. This leads to poor inventory control, frustrated sales people and unhappy customers.
This is the situation Carlsberg found themselves in at the end of 2013.
But just a few months later, Carlsberg had:
- cut administrative time by up to 90%
- drastically improved data quality and speed
- eliminated their dependance on spreadsheets
How did they do it?
Through business process management.
Specifically, Carlsberg analyzed their business processes, discovered inefficiencies, and used BPM software to digitalize their inventory management and ordering processes. These changes meant that:
- administrative staff weren’t constantly updating spreadsheets
- field sales reps could check inventory in real-time
- all employees were more productive and could devote time to more valuable tasks
The results Carlsberg saw from their BPM initiatives are great. But more importantly: they’re not unique. Nearly every business—from the biggest corporations to tiny startups—can benefit from BPM.
But before you jump in and start changing up your processes, it’s important to know what BPM is (and isn’t), how the BPM lifecycle works and how to measure the success of your BPM efforts.
The team here at Novacura have been helping businesses achieve BPM success for over 14 years. We’ve even created our own business process management tool, called Novacura Flow, that you can use to map, analyze, model and optimize your business processes—and connect your processes directly to your business systems, like your ERP, MES, CRM, and WMS. So it’s safe to say that we’re experts in business process management, and we know the ins and outs of BPM initiatives both large and small.
And now, we want to share our BPM knowledge with you.
So let’s get started.
What is business process management (BPM)?
BPM is a group of principles, methods and tools to design, analyze, execute and track business processes with the goal of getting more value out of them. This value might be internal—better efficiency, higher quality products, faster shipping times—or it might be customer value (better service, faster reply times, etc.).
The official definition of BPM, according to bpm.com, is this:
“Business Process Management (BPM) is a discipline involving any combination of modeling, automation, execution, control, measurement and optimization of business activity flows, in support of enterprise goals, spanning systems, employees, customers and partners within and beyond the enterprise boundaries.”
Okay, great. But what does that actually mean?
In simple terms, business process management is the steps you take to make your business processes better. You do this by:
- analyzing what you currently have (looking at your current processes, seeing how they perform, taking note of any issues)
- brainstorming ideas to make the processes better
- changing your processes with an eye to improving them
- monitoring the results, and making additional changes when needed
So in other words: business process management is the art and science of making sure everything in your company works as well as it possibly can—and provides you with as much value as it possibly can, too.
What do you mean by a “business process”?
A business process is the way you deliver a product or service to your customers. Business processes provide structure and help you create repeatable, executable tasks. Without business processes, you wouldn’t be able to do the same thing twice—ever.
To put it another way: your business is made up of tasks, information, people, data and materials. A business process is the way these things interact with each other to reach a goal: build a unit of a product, complete an order, service a customer, close out the year-end budget, or whatever else you need to do to make your business run.
A business process might be something as simple as taking a phone message:
- answer phone with standard greeting:
- take message
- give message to recipient
But it can also be quite large and detailed, involving multiple people and departments—like the process to manufacture a car.
Business processes are an asset, just like your company’s equipment, materials, data, real estate, patents and so on. While most of your business assets have to do with the “what” of your business (what you make, what you sell), your business processes are the “how” of your business. They are the way you do what you do. They’re what sets your business apart from the competition.
And they’re as valuable as everything else your company owns.
Some companies, like Amazon, have even patented their business processes as intellectual property.
You invest a lot of money and effort to get the best machines and keep them running in tip-top shape. The same should go for your business processes.
There are three types of business processes:
- Operational processes. These are the processes where people “get things done”. In manufacturing, this might be a process for product assembly. In logistics, it might be a process for shipping deliveries. In warehouse management, it might be a process for receiving goods.
- Management processes. These are the processes that oversee operations and make sure things are working properly. Things like quality assurance, budget oversight, and so on.
- Support or governance processes. These are the processes that ensure the business is in compliance with regulations; things like accounting, technical support, staff training.
Your business—and every other business—run on a series of business processes. Sometimes those processes work really well. But sometimes, like with Carlsberg, they don’t. And that’s where business process management comes in.
Do you need BPM?
If you answer “yes” to any of the following questions, then you should definitely consider BPM:
- are my workers still managing data with a pen and paper?
- is the same data being entered multiple times into different systems?
- do workers spend a lot of time playing detective and/or searching for data in your systems?
- does your business use a bunch of different single-purpose apps to handle business issues?
- are customers complaining about bad, slow or confusing service?
Why? Because these are symptoms of processes that don’t work well. Sure, they might work in the sense that they get done. But that doesn’t mean they work efficiently, or easily, or well.
The case for business process management
If it sounds like BPM is something your company needs, great! Most—if not all—businesses can benefit from BPM. But in order for your BPM efforts to be successful, you need company buy-in. So, what can you say to your boss and colleagues to get them on board with BPM?
BPM helps workers be more productive.
BPM is all about finding and removing inefficiencies. Removing pointless, repetitive work—like, for example, uploading the same data into 3 different places—frees up time for employees to focus on the work that actually creates value for your company. Carlsberg were able to reduce administrative work by up to 90% with BPM. How much time could your company save? How much more productive would people be if they didn’t have to “work around” inefficient processes?
BPM helps you be more compliant with industry/government regulations.
Traceability is a big topic these days. There are food recalls due to illness, product recalls because of safety concerns, and so on. Governments and industry regulators are demanding more information about your products, at every stage of the supply chain. BPM helps you quickly incorporate new demands and regulations into your business, ensuring that you’re always in compliance.
BPM makes your company more agile.
The world moves faster now. Customers constantly demand higher quality and faster service for the same price. In order to meet these demands, your business needs to be flexible and adaptable. When you’re actively managing your business processes, it’s much easier to adapt your processes to the ever-changing demands of your customers.
BPM can save your company money by increasing quality and efficiency.
If your processes aren’t performing well, your business isn’t performing well either. Increasing productivity and removing inefficiencies makes things run smoother and faster, which leads to bigger profits with less effort. It’s a win-win.
In short: a strong BPM program can help your business be more productive, maximize profits, and reduce waste at the same time.
Is your business ready for BPM?
Business process management isn’t a magic wand: it takes a lot of work to do well. It also requires a lot of planning, communication and education. So before you jump in, it’s important to know if your business is ready to put in the work.
Sometimes there can be push-back on BPM efforts. BPM can mean big changes to the way people do their jobs, and some people might be content with the status quo. Others may have gone through a failed BPM effort in the past, or just don’t see the point of trying something new. If your company culture is more reactive than proactive, getting buy-in for a BPM project might be hard.
BPM maturity assessment
When you get right down to it, BPM is about fixing problems… but it’s also about changing your company culture. So before you start, it’s important to assess how ready your company is for this type of change. According to Gartner, there are 6 phases of BPM maturity. Gartner also says that the majority of business, right now, are in phase 2.
Brief descriptions of each phase are below.
Phase 1: acknowledge operational inefficiencies
In this first phase of BPM maturity, the organization becomes aware that their processes maybe aren’t as efficient as they could be. The goal is to uncover the root cause of operational issues. You might be monitoring the results of specific tasks, using dashboards for reporting, or monitoring results in some other way… and you’re noticing that there are places where things can be done better, but you’re not quite sure how to make them better.
Phase 2: become process-aware
The focus of phase 2 is to understand the organization’s existing processes and learn where/how to improve them. This usually starts by identifying and mapping the most important business processes, then analyzing those processes. People might be identified as, or assigned to become, “process owners”.
Phase 3: establish intra-process automation and control
Phase 3 is when the focus shifts from identifying and analyzing processes to actually making changes to tasks and processes. This might include automation, implementing a business process management tool (like Novacura Flow) and encouraging a collaborative approach to problem solving.
Phase 4: establish inter-process automation and control
In phase 4, the focus is to improve the relationships between processes: both processes within the organization, and processes carried out by customers or vendors. In this stage, you might look at creating new process-oriented tools such as customer or vendor self-service portals. You might also look for ways to simplify tasks across multiple processes.
Phase 5: establish enterprise valuation control
Now it’s time to make sure that any changes to the company’s strategy or strategic goals are automatically reflected in your business processes. To do this, the entire organization must have trust and faith in their own decision-making abilities, as well as in their chosen business process management tool.
Phase 6: create an agile business structure
The final phase of BPM maturity is about staying on top of changes. This is achieved by being agile. They must be willing and able to adjust processes to changing conditions, be they environmental, political, technological or anything else. It also means making pro-active changes when opportunities arise.
If your business can’t yet acknowledge that they have operational inefficiencies, then they might not be ready for BPM just yet. Instead, you might want to start by focusing on change management.
Starting your own BPM initiative
You’ve read through all the details, you’ve assessed your BPM maturity, and you’ve decided that BPM is the right thing for you. So, how do you actually do it?
There are five steps to business process management. Click on the links below to learn more about each step.
Analysis – in this section you’ll learn how to map and analyze your “as is” business processes. This is an important first step because you can’t improve what you don’t measure.
Side note: if you’re starting BPM from the very beginning, you’ll want to start by identifying your business processes. Learn more about process identification here.
Modelling – in this section you’ll learn how to create the new version of your business processes: the “to be” processes. Who should be on the BPM project team? How do you design a business process? Click here to find out.
Implementation – You’ve worked on the processes. Now it’s time to talk about the two other crucial elements of BPM: the people and the technology. In this section you’ll learn how to choose the best BPM tool, and how to manage the “people” element of BPM.
Monitoring – this section shows you how to monitor the results of your BPM initiatives. You’ll learn about things like key performance indicators (KPIs), risk management and more.
Optimization – The end is just the beginning! Now that you’ve successfully optimized your processes, it’s time to talk about continuous improvement.
What good business processes look like
According to BPM expert Marlon Dumas, the goal of all BPM efforts is to maximize value. More specifically, he has defined 7 types of value that BPM can help provide:
The first, and most important, of these values is transparency. Transparency into your business processes helps you:
- get a clear view of how tasks are actually carried out
- gain visibility into how all aspects of the business actually run
- remove silos between departments and promote collaboration
- better measure the impact of changes to processes
- make proactive (instead of reactive) changes to processes
- streamline organizational processes
- eliminate waste (of time, money or resources)
Transparency into your business processes helps you make decisions, measure changes and manage risk more effectively. Moreover: without transparency, you can’t improve the other six values… because you need to know how your processes work before you can improve them.
So above all, a good business process is transparent. This means it’s easy to see exactly how it works, how it affects other processes and whether it’s running properly.
Other qualities of a good business process include:
- It creates measurable value for your business: increased efficiency, better working conditions, better customer service, higher customer value, etc.
- You can measure and prove the success of the business process by looking at key performance indicators (KPIs).
- The process is linked to your business systems, ideally using some kind of business process management software (i.e. it’s not just a paper form or .pdf that no-one looks at: it’s something people actually use every day).
- It minimizes the steps to process completion.
- It’s easy to explain to others, especially new and/or inexperienced employees.
- The process has an owner: someone who takes responsibility for the success of the process, monitors and reports on changes, and takes charge of continuous improvement efforts.
- It’s easy to update the process and adapt it to changing conditions: it’s hard to know what your business will look like in a few years, so being able to change/update processes to fit changing business needs is very important.
“Operational” isn’t good enough
“But my business processes work fine,” you say. “The work gets done, people aren’t working a bunch of overtime, and business is steady. Why would I want to change that?”
Maybe your business processes are 100% perfect: completely optimized, running at the top of their game, 24/7. But it’s more likely that you’ve become accustomed to working around inefficiencies.
Imagine a marketing team is asked to send an email to a specific group of customers. In order to get the list of customers, they have to:
- export the data from the CRM
- upload the data into the email marketing program
Not a big deal, except:
- before they can upload the data, they have to clean it up, because the CRM export contains a whole bunch of useless fields
- they also have to cross-check the list for duplicates because the CRM allows multiple contacts to have the same email address (and the email marketing program doesn’t)
- and finally, they have to make sure every contact has the proper first name assigned because the email marketing program requires every contact to have a first name… and sometimes the data entered into the CRM isn’t complete.
The marketing team is aware that the process of downloading the data, cleaning it up, and uploading it to the email marketing program takes an hour. They’ve been through the email export/import process many times, so they’re used to it. They’ve budgeted time for that hour.
Now imagine you’re running a special promotion and want to send 40 different targeted emails to 40 different targeted lists over the course of a week.
The marketing team would probably have some objections.
It’s unfortunate, because email marketing generates a lot of sales, especially when you use those targeted lists. But they take a long time to set up, so the marketing department doesn’t send as many email campaigns as they’d like to.
Would you say this process is working?
Technically it does work: the job is completed. But if you were to connect the CRM data to the email marketing program through an API, the marketing team wouldn’t have to download, clean up, or upload data anymore—which reduces their workload by 1 hour per email. This means the marketing team can easily send out 40 different targeted emails, which in turn can lead to more sales, more profits and smiles all around.
Just because your business processes “work” doesn’t mean they’re at peak performance. It’s more than likely that with a little bit of analysis, you’ll find many places where your business processes can be better. And one little change—like the example above—can sometimes make a huge difference to your bottom line.
Ready to dive in? Start by identifying and analyzing your business processes.