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The divided world of Business Process Management

The world of Business Process Management (BPM) is rather sharply divided into two groups:   1. “Process as Purpose”: BPM is about  – Strategic alignment along a hierarchy of business processes  – High-level process improvement.  Enterprise-wide performance targets are drilled down to process objectives. Every process is defined as a contribution to the overall targets. Why is this useful? The only way for a company to gain and sustain competitive advantage is by running faster than the competition. You innovate, your competitor innovates. If you innovate faster than your competitor, you win.  Innovation extends from PRODUCT to PROCESS innovation: Dell does not necessarily make the best computers, but they have the best supply chain. Walmart hardly sells anything the competition doesn’t sell, but they have the more efficient business processes. “Process as Purpose”-BPM provides tools to make process innovation more efficient:  – Reference models such as the Supply Chain Council’s “Supply Chain Operational Reference” (SCOR) come with process metrics, best practices and (important!) they explain the integration between processes on a business level (not on an IT-level). This allows for short, highly efficient improvement projects. Improvements may need IT-enablement, but most big improvements (E.g., Outsourcing) are not IT-focused. – Project Portfolio Management ensures that various improvement projects are strategically aligned, again taking advantage of a system of KPIs defined and synchronized along the hierarchy of business processes. “Process as Purpose” focuses on shortening the innovation cycle for business processes and alignment to company objectives. IT is merely a tool to help in the alignment.  2. “Process as Workflow”: For this group, BPM refers to workflow modeling techniques (ex. UML) and an architecture (SOA etc.) supporting integration between different engines.  Why is this useful? Even modern ERP systems are perceived as rigid. During programming and implementation, the IT people need to anticipate every possible process variation. This can be zillions. In practice they will limit themselves to some key proces variations. The objective of “Process as workflow” is to allow users to create variations of a business on-the-fly. Users become less dependent on the IT-department and can take advantage of the new flexibility. To make this happen, two things are required: – A technology layer that facilitates a seamless workflow across multiple system platforms. Netweaver is a fine example of such a platform. – A modeling environment where users create variations of a process in real-time. This is where modeling languages such as UML come into play. As opposed to the first group, IT is at the very core of the effort.  In order to create a substantial value, the second school of thought needs the first. Why is this?  “Process as Purpose” is about gaining and sustaining competitive advantage. It refocuses the way a business valuates operations: Rather than just looking at the cost , “Process as Purpose” looks at the entire process performance. Take the example of a supply chain operation. Any supply chain operation has four performance parameters that can be measured: On-time delivery, lead-time, cost, and asset utilization. If you want to position yourself as the low-cost provider, every supply chain process obviously must focus on cost. However, you cannot ignore the other 3 parameters. There is no point in having the lowest cost if your lead-time is unacceptable to customers. Even as the low-cost vendor your performance in lead-time, on-time delivery and asset utilization needs to at least come close to the industry average – or you are out of business. “Process as Purpose” provides this balanced view and helps a business to get focused (EITHER on cost OR on-time-delivery OR lead-time etc.).   Now the market changes. A business can react in two ways: Through operational innovation or a strategy change. In both cases, business processes need to adapt to new benchmarks. “Process as Purpose” guides management to performance gaps and helps to quickly fill them through new or improved processes. In fact, Business Process Management in the sense of “Process as Purpose” is the first approach that addresses the EFFICIENCY of process innovation. This innovation of the innovation process becomes key to the competitive advantage of any business.  “Process as Workflow” provides a supporting infrastructure to extend the required efficiency of process innovation to IT. Management often perceives IT as a roadblock to change. “Process as Workflow”-BPM removes this roadblock. This is of value to any business, even those where management does embrace “Process as Purpose”: There is lower cost of ownership, more flexibility in the selection of service providers etc. Still, this leaves most of the potential of “Proces as Workflow” untapped. It is like driving a Porsche at 55 mph. “Process as Workflow” develops its full potential only, when process innovation becomes the first order of the business. Flexibility gained from the new technology turns into a contribution to reach and sustain competitive advantage. This is a world where business leaders thrive to innovate the innovation process and who turn “Process as Workflow” into the infrastructure of the “Process as Purpose”-driven, agile company.
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