Read the following Case Process management: making complex business

This case gives a modern perspective on approaches to improve business processes using information systems. It summarises the tools, benefits and some of the problems associated with business process management.

Steven S. Smith, chief technology officer for the US bank Wells Fargo Financial, introduced his company to business process management last year.

Note how he did it: I didnt go to our divisional chief executive and say: We are going to invest in this tool. Instead, we brought the technology in and worked together with the business on a specific issue. It was the business manager who presented to the divisional CEO. He said: Look at the benefits of this new technology.

All the IT people were sitting in the room with big smiles on their faces. They didnt have to say a word. It was the business bragging about how wonderful it is, he says.

When the business side of an organisation has good things to say, unprompted, about a new technology, something unusual is happening and, for many companies, that something is business process management.

It is a methodology underpinned by a technology and it is a hot ticket.

Accenture, the worlds largest consultancy, already has a global director for BPM, Jim Adamczyk.

He describes it as a mindset: It is something that has mostly been going on for a long time. What has changed is the convergence of the business need for process engineering with the evolution of technology that lets people build systems flexible enough to supply the need.

In a new book, Kiran Garimella, Michael Lees and Bruce Williams (2008) of Software AG, the European consultancy, say that BPM represents a culmination of all the collective experience, thinking and professional development in business management over the past several decades.

Its customer first. Its business focused, it empowers people in all corners of a business to be more successful. It brings people and systems together. BPM is where all the lofty goals and best strategies are coming home to roost, they say.

It sounds too good to be true and it has already attracted the attention of a string of software houses and consultancies from the pure play vendors such as Pegasystems, Savvion and Lombardi at one end to the big stack vendors including Oracle and IBM at the other.

It is easy to see why Mr Adamczyk worries: I fear that this is being hyped as one of our endless series of silver bullets, but at core we are trying to align the domain of the business what the business needs with what IT can understand and build.

What is driving the adoption of BPM? Ram Menon, head of worldwide marketing for the pure play vendor Tibco, argues that increasing business complexity is the chief cause: At the core, its about agility, efficiency and productivity. Businesses are continually under pressure to get more work done with fewer resources.

Regulatory compliance is another driver. Rules such as the European Unions Markets in Financial Instruments directive (MiFID) and SarbanesOxley in the US have a significant process dimension. In healthcare, its HIPAA. Almost every industry has its list of compliance requirements.

Used appropriately, BPM helps companies stream- line processes, reduce cycle times and get things done faster. This frees employees to focus on areas where they can add real value.

BPM provides the tools to enable organisations to examine, analyse and improve their processes, with a process being anything that transforms resources and materials into products or services.

This transformation is how a business works; its the magic elixir of the enterprise, say the Software AG authors. The more effective this transformation, the more successfully you create value.

BPM software provides the technological underpinning that facilitates communication and mobility of data across applications. Only in the past few years has the software become mature enough to be used reliably for this purpose.

There are four main phases: process analysis, pro- cess design, process automation and business activity monitoring which provides the feedback for further improvements.

Here are two examples of BPM in action.

University College London Hospitals comprises seven large hospitals in central London treating hundreds of thousands of in and out-patients each year through a bewilderingly large number of specialisms.

Government targets demand that no more than 18 weeks elapse between first referral and the start of treatment. James Thomas, UCLH IT director, knew the existing manual methods of tracking patients through what are known as care pathways could not cope. He wanted to introduce technology that would enable tracking by exception. Only if a staging post on the care pathway failed a missing laboratory report, for example would a warning flag be raised. The UCLH system sends an email to the individual responsible to alert them to the deficiency.

In conjunction with Logica CMG, the consultancy, Mr Thomas used BPM software from Lombardi to map the care pathway for a single specialism, discovering in the process that the first and last thirds of the process are identical. The middle third depends on the particular specialism involved.

Business activity monitoring (BAM) software was used to monitor the progress of the patient along the pathway. Its your conscience. Its an incredibly good policeman, Mr Thomas says.

The system will be live across one hospital in the group by the end of this month; the whole of UCLH by the end of the year. But it has not been easy: Getting people to acknowledge that they work to processes and to document those processes and then work through harmonising those processes is not easy. Youre talking about administrative and clinical staff in different hospital buildings.

Potentially, people might see this as a form of electronic Big Brother that sends them emails when they havent done something. We have to turn that on its head and say the task facing us is too big for our current way of working this is something to help us break up and digest the problem.

At Wells Fargo Financial, Mr Smith was concerned that it was taking too long to complete certain business processes. The test bed for the BPM software that he brought in was the process that tracked the answers the bank gave customers who asked for a loan.

The specific issue was: how to track the salespersons response to the customer after a decision had been made on a loan. If the customer failed to take up the loan even if it was approved, what was the reason, Mr Smith says.

Tracking the process manually would have required hiring another 20 staff across the US; four were already in place.

The BPM software took four months to install Mr Smith blames the delay on his teams reluctance to use agile development methods rather than the tried and tested waterfall technique but it resulted in auto- mating the process for the whole of North America using three rather than the four existing staff.

The bank has implemented a number of BPM systems after that first deployment. In one, the process for adding a new merchant to the banks private label credit card product, which used to take weeks now takes only a day or so.

Mr Smith says that, with so many BPM vendors, it is important to choose the most appropriate by bringing them into the facility and asking them to interface with the existing systems.

These two examples demonstrate important principles of BPM deployment.

First, the need to start in a small way a single process such as Mr Thomass patient care pathway or Mr Smiths loan agreement is enough for proof of concept.

Second, the need to capture the hearts and the minds of the people who have to use the system. Mr Thomas insisted, for example, that hospital staff would not have to use new techniques or undergo extra training to make full use of the system.

Rod Favaron, chief executive of Lombardi, says companies will see three kinds of benefits from BPM, properly deployed: efficiency, effectiveness and agility.

In the era of Service Oriented Architecture and on-demand market messages, agility is a well under- stood concept. In the world of process management, the ability to change quickly is essential, he says.

Customers on average change their key processes between four and seven times a year. New opportunities can arise. New partners or customers need you to sup- port a different way of doing business.

Government regulations can require companies to change their processes. BPM provides the platform they need to be able to change processes faster and in a more controlled fashion than any other option.

Source: Alan Cane, Process Management: Making complex business a lot simpler? The Financial Times, 14 May 2008. Reprinted with permission.

Tutorial Questions - Debate in classes

1. How does the article suggest that business thinking and practice has evolved since the exhortations for business process re-engineering in the 1990s?
2. Summarise the benefits for BPM discussed in the article.
3. Discuss the need for a concept such as BPM when all new information systems and digital business initiatives are ultimately driven by process improvement.