BUSINESS PROCESS

MANAGEMENT
Businesses, in order to achieve its goals and objectives, design, implement and use
business processes which they, in turn, manage for optimization and standardization
purposes, using what is known as Business Process Management.

Business Process Management (BPM) is a management discipline describing the

systematic approach to “identify, execute, document, measure, monitor and control both
automated and non-automated business processes to achieve consistent, targeted
results aligned with an organization’s strategic goals.” To put it simply, it is the
systematic approach to improving the business processes of an organization, making
the workflow more efficient and effective, and improve its overall ability to adapt to an
ever-changing business environment.

Management of business processes through BPM involves modeling, analysis, design

and measurement of these processes. It sounds like a lot of work, which is why BPM is
designed to be technology-enabled. This means that it makes use of various
technological tools in carrying out its roles.

Aside from the obvious, which is the improvement of business processes to achieve its
goals and objectives, why is it so important for businesses to have a BPM system in
place?

 BPM facilitates the improvement and management of processes that drive optimized
business results, leading to lower costs, higher revenues and high customer satisfaction,
to name a few.

 BPM enables businesses to align its processes with the needs of their customers.

 BPM aids decision-making on matters such as deployment, measurement and

monitoring of the resources of the organization.

 BPM contributes to the maintenance of a sound financial management system of the

company.

 BPM allows the organization to keep track of its progress in meeting and achieving its
goals.

o understand it better, let us take a deeper look at the benefits that organizations can
derive from the implementation of Business Process Management.

 Revenue growth. Increased revenue potentially means increase in the net profit earned
by the company. BPM, as mentioned earlier, helps align business processes and
functions to the needs of customers. This means higher customer satisfaction and
improved reputation for the company, which ultimately contribute to more revenue and,
consequently, profit.

 Reduced costs. Another component of increased profit is having lower costs and
expenditures. Inefficiencies and waste of resources – two definite reasons for cost
 hemorrhage in organizations – may also result from poor planning and subsequent
tracking or monitoring of the usage of these resources. An effective BPM system
provides a means for tracking the resources, and gives management the heads up in the
event that some adjustments have to be made to address these inefficiencies.

 Higher accountability. BPM establishes a system of checks and balances within

the organization, so the functions and corresponding responsibilities and
accountabilities of each department, each officer, and each employee are clearly
defined. This minimizes (and may even eliminate) the risk of losses due to human
error in the conduct of their respective tasks and activities, as well as the
potential of fraud and negligence.

 Improved and increased productivity. Productivity is affected by various

factors, including proper utilization of capital and resources, human resource
management, and physical working conditions, among others. Best practices in
BPM have an impact on these aspects or areas of the business, ensuring that
overall productivity is boosted.

 Improved reliability of information. Having a working and effective BPM

system can increase the reliability of generated business information which, in
turn, will be used by management for decision-making, and other stakeholders.
Information retrieval and dissemination is also easier, saving time and effort that
would have been wasted in looking them up.

 Simplified and assured compliance. Many businesses unwittingly find

themselves facing issues regarding non-compliance with regulations and rules
imposed by legislation and industrial standards. Having a BPM system in place
allows the organization to cover all its bases and keep track of their duties and
obligations. Obviously, non-compliance issues can be costly to settle, not to
mention other legal repercussions that may threaten even the right of the
business to operate.

 Tighter security measures. The resources, as well as information, that belong

to the company will be safer from loss, theft and misuse, since BPM measures
are also designed to protect them. Proper documentation and dissemination of
information ensures that they will not fall into the wrong hands, especially those
of a confidential nature. Compliance monitoring also sees to it that the company
and its employees are protected from possibilities of litigation and other legal
repercussions.

CORE ELEMENTS OF BUSINESS

PROCESS MANAGEMENT
Researchers suggested six elements that every effective BPM should have.

1. Strategic alignment or synchronization: The alignment referred to is that of the BPM

and the overall strategy of the organization, meaning the business processes must be
designed, implemented and managed (through the BPM) in accordance with the
strategic priorities, objectives and goals of the organization. There has to be a direct and
identifiable linkage or connection between these priorities and the processes. Otherwise,
you will have wasted your resources on an ineffective BPM system.
2. Governance: From the outset, the roles and responsibilities for the different levels of
BPM must be clearly established and communicated to all members of the organization
and other stakeholders. This is to ensure transparency and accountability. This also
involves setting out clear guidelines on the decision-making process, as well as rewards
and sanction programs.

3. Methodologies: The conduct of BPM initiatives entail the utilization of methods, or tools and
techniques that facilitate management of business processes. The most common example often
used is the Six Sigma, a set of techniques developed by Motorola engineer Bill Smith in an effort to
improve the capability of business processes.

4. Information Technology: BPM has become increasingly associated with technology, mostly because
of how heavily it depends on IT-based solutions. Thus, information technology plays a very
important role in the execution of BPM initiatives.

5. People: Technology and information systems are pretty much useless by themselves, without any
human factor. Therefore, organizations assign specific manpower solely dedicated to carry out its
BPM initiatives. These people possess all the necessary knowledge and skills in process
management, while seeing to it that they are in alignment with the goals of the organization.

6. Culture: This mostly pertains to the organizational culture, or the collective values within the
organization. First and foremost, the organization must have a culture or environment that
facilitates, complements and supports its BPM initiatives. After all, BPM is not a standalone unit of
the organization, since it cuts across the entire organizational structure.

THE BUSINESS PROCESS

MANAGEMENT LIFE CYCLE
The BMP Life Cycle is characterized by iterative set of activities, done in phases. This means
that the cycle can be repeated, instead of ending once the final phase is over.

There are six phases in the BPM life cycle.

Phase 1: Process Planning and Strategy

In business, everything begins with a plan. This plan will serve as the guidelines to be
followed by those who will implement it.

BPM begins with the development of a plan that clearly maps out the strategy and the
direction of the organization’s BPM initiatives. In order to be useful for BPM, the strategy
must be process-driven, and the plan must be designed and structured in a way that will
ensure the delivery of value to customers.

Process planning and strategy involve the following:

 Understanding of the organization’s strategies and goals. These will serve as a guide in setting the
objectives and strategies of BPM, since the two must be aligned.

 Identification and enumeration of current processes, requiring an in-depth look at the existing
process architecture of the organization.
 There are three types of processes or activities that exist in organizations:

1. Primary processes
These are the core processes of the company, which are readily identifiable because of their
cross-functional nature, and the fact that these are the processes that directly deliver value to
customers. These processes arise from the main activities of the business.

Geary Rummler categorized primary or core processes into three:

1. Processes that imagine and create the product or service (ex. Product development, prototyping,
conduct of feasibility studies)

2. Processes that produce or make the product or service (ex. Production process, raw materials
procurement)

3. Processes that sell or deliver the product or service to the customers (ex. Sales, distribution)

2. Secondary processes
These are processes that are in place purposely to provide support to the primary processes,
which is why they are also referred to as “support processes”. Unlike the primary processes,
they do not directly deliver value, and are usually restricted to the functional areas of the
organization.

The most common examples of support processes are:

1. Human resource management

2. Technology development

3. Information technology management

4. Supplies procurement

5. Facilities management

3. Management processes
All organizations strive for efficiency and effectiveness, and the task of monitoring that falls
on the shoulders of management, who are responsible for performing management processes.
These processes take a look at both the primary and secondary processes, mainly to monitor
whether they are on track in meeting the company’s operational and financial goals. They are
also in place to ensure compliance of the primary and secondary processes to regulatory and
legal guidelines.

Just like the support processes, management processes also do not directly provide value, but
are nonetheless vital to the organization.
 Identification of appropriate BPM roles and responsibilities within the organization. Who are the key
players in BPM? What level of support will the organization’s BPM initiatives get from top
management and the other members of the organization?

 Identification of methodologies and performance measures to be used in BPM.

Phase 2: Analysis of Business Processes

There is a need to understand the current or existing business processes since they are the
very object of BPM. Obviously, one will not be able to manage something that it does not
understand. The objective of this phase is to find out whether the business processes currently
in place are aligned with the goals and objectives of the organization.

Certain methodologies are applied in the analysis phase. The most common, and usually first,
step undertaken is the gathering of data and information on the business processes. These are
obtained from currently maintained company or organization documentation, strategic plans
and process models. It may also require more than a peek into the performance measurements
being used by the company.

Analysis will provide insights on the strengths and weaknesses of the business processes, and
open windows to understanding how they impact the overall performance of the organization.

The process analysis techniques can be classified into two.

Qualitative analysis
Qualitative analysis is performed for two reasons: to identify wastes, redundancies, or losses
incurred in the processes and eliminate them, and to identify and understand all the issues
involved, and prioritize them accordingly.

Some of the most commonly used techniques are:

1. Value-added analysis – In this technique, each step in the processes are classified on whether they
are value-adding (VA), business value-adding (BVA), or non-value-adding (NVA). A step is considered
VA if it produces value to the customer, denoted by a willingness on the part of the latter to pay for
that specific step. An example is the assembly process of a product. After completion of the
production process, but before delivery to customers, the finished product is required by law to
undergo physical inspection by an independent third-party. This does not add value to the customer,
but it adds value to the business, since it is a requirement for the continuous operation of the
business. This is BVA activity. Rework costs in case the product was defective due to worker
negligence, as well as costs of delay in shipment or delivery, on the other hand, do not add value to
the customer. This is NVA. Basically, any other activity that does not fall under the VA and BVA
categories will fall under this.

2. Root-Cause analysis – This issue analysis technique often makes use of cause-and-effect diagrams
and why-why diagrams, highlighting causal factors and seeking answers to the “Why” questions
regarding the processes. This makes the technique effective for getting to the root of the problems
or issues.

3. Pareto analysis – Pareto bar charts are primarily used in this technique. The bar chart presents the
impact of all the relevant issues or problems. The higher or taller bars are those that require more
attention, which means they should be prioritized.
 Quantitative analysis
Quantitative analysis techniques are centered around numbers, figures and statistics. These
often include:

1. Quantitative flow analysis: There are several flow analysis techniques being used, depending on the
process being analyzed. Flow analysis is usually used in the analysis of capacity requirements, error
rates in the process level, as well as costs. Cycle time analysis is also a common application of flow
analysis, where the average duration or cycle time for an entire process – or a step in the process –
is calculated, in order to assess efficiency and effectiveness.

2. Queuing analysis: Unlike the flow analysis, queuing takes waiting time into consideration. Variability
in service times, delays and rework times, are factored in, in recognition of the fact that these
capacity problems are unavoidable and should, therefore, play a role in process design and redesign.

3. Process simulation: Process simulation also considers waiting times, but it is also applicable for
processes that involve parallel activities running simultaneously. Queuing generally does not apply
to these types of activities. In process simulation, the process is modeled into a simulation model,
which is enhanced with simulation data, and undergoes simulation. The outputs are then analyzed.
In the event that there are multiple scenarios, the simulation model can be tweaked accordingly and
undergo simulation again until all alternative scenarios are covered.
Findings during this phase will usually point to either one of two: it is either the business
processes are aligned with organizational goals and objectives, or they are not. The findings
will be used in the next phase of the BPM life cycle.

Phase 3: Design and Modeling of Business

Processes
Depending on the results of the business process analysis, there may be a need to design new
processes, or redesign the existing ones. The objective is to come up with a process design
that provides a full picture of the work, from end to end, to guarantee the delivery of value to
customers.

The main concern in this phase is to determine whether the process is good “as is”, or if it
should be redesigned in a better, more appropriate “to be” process.

This phase entails the following:

 Understanding of the intention of the organization with respect to the business process, such as
what they want to achieve and how they are going to use the process to achieve them.

 Documentation of the work to be performed through process modeling, in detail:

 Nature of the work

 Time, duration and frequency of performance of work

 Location of performance of work

 The workers primarily and secondarily involved in the work performance

 Methodologies, tools and techniques used

 Sequence of activities within the work process

 Identification and understanding of the environmental factors that have an impact on the process,
as these are likely to influence the design (or redesign, as the case may be) of processes.
Business process modeling is basically the activity of representing the processes of the
organization in a structural form. It serves two main purposes: documentation and analysis.
The business process model serves as a ready reference for members of the organization for
any future projects or process evaluations. It is also a useful training aid in the case of new
employees.

Further, the process model will play a central role when management evaluates the
performance of the departments or units, and when it is looking for opportunities for change.
In the event that there are plans for business expansion and growth, the documentation will
also be a great help.

This can be in the form of a narrative description, a diagram or an illustration, as long as it

provides an end-to-end perspective of all the processes of the organization – whether they are
primary, support, or management processes.

Perhaps the most identifiable form is a workflow chart or diagram, which maps out the
logical flow of activities within the process in a unit or department of the organization. Some
companies prefer the representation to be in the form of a map, since it offers more precision.
In other cases, the preference is for a model, which are highly precise and highly detailed,
and also require a lot of work.

When it comes to process redesign, there are two approaches:

 Continuous Process Improvement: In this approach, there is an implied acceptance of the current
processes. Therefore, the main focus is to identify the problems or issues that were previously
unnoticed, and seek solutions for them. This approach looks for these solutions incrementally, taking
one issue at a time.

 Business Process Re-engineering: Unlike the Continuous Process Improvement, Re-engineering

takes a look at the entire process structure and aims to rework it entirely, with the aim of
streamlining it or making it more effective and efficient. It is decidedly a more sweeping approach.

Phase 4: Process Implementation

The designed (or redesigned) process will be implemented. Implementation is performed
either systemically or non-systemically.

 Systemic implementation entails the use of specific software and technologies in implementing the
process design.

 Non-systemic implementation is when these technological BPM tools are not used.
The choice between the two will largely depend on the nature of the business process and, in
a small part, on the resources of the organization. After all, the use of technology is bound to
cost the company.

Phase 5: Process Monitoring and Controlling

The process, once implemented, requires tracking, measuring, and controlling, which is
supposed to be done on a continuous basis. The purpose of these is to:
 Obtain necessary information to ascertain whether changes or adjustments must be made to the
process design, or even to the resources and tools used in its implementation.

 Measure performance of the process to gauge whether it, indeed, leads to the achievement of
organizational goals and objectives.
Business process analytics are the main inputs in this phase, where historical analytics are
used for process controlling purposes. Monitoring of the business activities are usually done
through the use of dashboards and rule-based notifications, particularly in organizations that
have their own IT infrastructure that they can use for the BPM initiatives.

Phase 6: Process Refinement or Improvement

BPM allows organizations to maintain the high level of quality and performance of its
business processes. Through monitoring and control of process performance, the organization
will be able to innovate and improve its processes primarily through redesign and
reengineering.

Basically, the results of all that analysis and design (and redesign) work will be implemented
to “fine-tune” the process. Remember that the company aims to optimize its processes
through BPM, and that is mostly fulfilled in this phase.

This phase targets the improvement or refinement of three aspects: performance of the
processes, of process management, and of the organization as a whole.

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