Process Thoughts

A collection of blog posts

Authored by: Pieter van Schalkwyk

February 2010
 Process Thoughts
A collection of blog posts

Contents
1. THE FUTURE OF BPM IS BPPM ......................................................................2
2. THE BUSINESS DRIVERS..............................................................................3
3. BUSINESS RULES IMPACT BUSINESS PERFORMANCE ...................................................5
4. BPPM IN AN ECONOMIC DOWNTURN .................................................................6
5. PRESERVING CAPABILITY AND AGILITY ...............................................................7
6. DO PROCESSES MATTER?.............................................................................8
7. ON EVOLUTION, DARWIN AND BPPM .............................................................. 10
8. SPLIT TESTING PROCESSES FOR PERFORMANCE .................................................... 13
9. WHAT'S THE BEST WAY TO PITCH BPM TO A COMPANY THAT DOESN'T KNOW THAT IT NEEDS IT? .... 14
10. JOB WANTED - CHIEF PERFORMANCE OFFICER ................................................... 15
11. CA = BPI X BPMS ............................................................................... 16
12. THE DIFFERENCE BETWEEN BPM AND WORKFLOW ................................................ 20
13. IS THE CIO THE NEW CPO? ...................................................................... 21

This is a collection of blog posts by Pieter van Schalkwyk of eXomin that was previously
published at www.bpmjournal.com.

BPM Journal is currently being updated in line with the eXomin XMPro Way of Work and these
blog posts will be made available in the archive of the new blog.

See www.exomin.com/bpmblog for Pieter’s thoughts on work and process management

Process Thoughts |

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1. The future of BPM is BPPM
BPM is one of those acronyms that have different meanings to different interest groups in the
same market. Business executives and managers commonly refer to Business Process
Management or Business Performance Management as BPM. But they are distinctly different
concepts. Or so we have believed up to now. We’ve had different consultants, methodologies,
supporting technologies and we’ve even been reading different books on these subjects. But
are these really different sides of a coin? Or are they different perspectives on how to achieve
the same business objectives.

Executives are not really interested in performance measures, dashboards and processes if it
doesn’t assist them achieving their single most important goal. Improve overall business
performance. That is really the task assigned by company shareholders to the management
team that they employ that manage the business on their behalf. That is really the only
overall objective that a CEO, President or Managing Director drive in an organization.
Continuous improvement not only in terms of shareholder value, but also in overall financial
performance, customer relations and satisfaction and employee productivity to name a few.
These principles also apply to non-business environments like charities, public sector and non-
profit organizations. BPM, in both flavors, is equally as important in these organizations as
their business counterparts even though BPM have business in the names of both acronyms.

In my experience as a business consultant, process practitioner, technology solution provider

and businessman, I have not come across a single top executive that want to buy business
intelligence tools, process management suites and business rules engines or portal
technology. They all just want to manage the performance of their businesses and they try to
use these methodologies and tools to achieve that. That is the only thing that they really
want.

The objective of this blog is to provide some strategic perspectives on how to use BPM both
from a performance and process perspective to provide a holistic management approach that
accelerate continuous improvement by combining the two perspectives in Business
Performance and Process Management or BPPM. The approach will show that performance
management is the foundation of such a methodology and process management is the means
to achieve the quickest sustainable results. Business Process Management is the best practical
means to deliver on improved business performance requirements.

The blog also serves to structure the content and my thoughts for a book called “The
Performance Focused Process-Centric Organization” or PFPC organization. I will provide
regular posts over the next couple of months with some of the ideas and content of the book
to get feedback on some of the opportunities and challenges with this approach.
Process Thoughts |

2
 2. The Business Drivers
Shareholders employ managers with specific skills to run businesses on their behalf. Their
expectation is that the management teams will increase the value of their interest and
generate wealth. It is as simple as that. Non-profit organisations have the same requirements
in many instances where the management teams are required to maximise the available funds
to the benefit of the beneficiaries. The overall objective remains to increase the value of the
organisation.

To create sustainable increasing shareholder value can only really be achieved by managing
the business performance on an ongoing basis. It requires a strategic approach to identify the
functions required in the business to consistently deliver the desired business outputs that
will in turn increase the value of the business. It requires the identification of the business
critical outputs of each function and the subsequent continuous monitoring of those outputs.
It is business performance management that ensures sustainable increase in shareholder value
of an organisation.

There are 6 business value drivers identified by Jack Alexander in his book Performance
Dashboards and Analysis for Value Creation that are under management’s control to
influence.

 Sales Growth
 Relative Pricing Strength
 Operating Effectiveness
 Capital Management
 Cost of Capital
 Intangibles, Credibility, Future Expectations

These business value drivers can be influenced through a pro-active performance

management approach. Improving the business performance can be achieved through a
number of mechanisms both hard and soft in the organisation. Business processes are one of
the tangible mechanisms that can easily be addressed to impact business performance. Pro-
active process management impact most of the value drivers in a direct fashion. It can
influence sales growth, drive and manage operating effectiveness, assist with capital
management and manage intangibles.
Process Thoughts |

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Business Process Management is the one business methodology that can have a significant
impact on business performance and value. I will address the concept of effective
performance management through business process management in future posts.

Process Thoughts |

4
 3. Business Rules impact Business Performance
“Hindsight is an exact science” the saying goes. Nothing is more true in the turmoil that
we’ve seen in the financial markets in the past few weeks. Taking “toxic” financial assets and
turning them into derivative investment assets seem to be the root cause of the current
financial crisis. Major players in that market, for example Lehman Bros., collapsed and the
performance in that segment in the market lead to overall panic that now cripples financial
institutions that were not even involved in these “toxic” assets. “Toxic assets” is a new term
to me as we always just described it as the outcome of a bad investment deal or decision. No
one has offered to bail out my toxic assets, but I suppose mine doesn’t impact the world
economy as the current situation that we face.

The financial services industry is probably the most regulated in the world, and still they got
it wrong. There are rules and regulations to manage anything and everything but it seems that
the business rules weren’t “integrated” with the business processes. Legislation and
regulation worked in isolation from the operational processes that manage those businesses.
It was possible to design and launch investment products that sold the financial risk as an
opportunity and it was able to circumvent the rules that were in place for conventional
products.

South Africa’s exposure to the financial crisis was limited by a number of factors but the
introduction of the National Credit Act in 2007 was probably one of the biggest. Instead of
creating products that would make it possible to obtain credit beyond the creditworthiness of
an individual, the NCA forced financial institutions to implement more comprehensive and
stricter business rules. This limits the “toxic” assets in South Africa. Asian banks seem to have
their business rules in place and also had limited exposure to the “toxic” assets. Australia, on
the other hand, allowed a “No docs” mortgage loan where individuals could borrow money
with a 30% deposit and proof of income. Very slack business rules.

I am pretty sure that we will see a renewed interested in improved integration of a new set of
business rules into the new product development process of financial institutions across the
world. Sustainable business performance can only be achieved through appropriate and agile
business rules integrated with appropriate and agile business process.
Process Thoughts |

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4. BPPM in an economic downturn
As mentioned in a previous post in this blog, Business Process and Performance Management
(BPPM) support the business value drivers that determine the valuation of a business in the
long term. I listed 6 drivers from Jack Alexander’s book and 3 of them are crucial in an
economic downturn as we see it now. We can’t do too much now around sales growth, but we
can actively manage those processes that impact on the operational effectiveness, capital
management and those intangibles that have an impact on the value of a business.

Operational effectiveness is crucial to the survival of businesses even though growth is

slowing down, access to operating capital is restricted and many of the larger organisations
cut jobs to balance the books. The challenge remains that the business continues, customers
have the same expectations and processes need to deliver the at even higher services levels
to capture those customers from competitors. Operational effectiveness does not only address
faster, better and without the quality requirements, but it also impacts operational risk
where organizations are exposed to higher levels of risk due to increased workload on those
that remain, new skills that need to be acquired to do the jobs of those that left and the new
compliance requirements, specifically in the financial sector. Focusing on improving business
process performance through business process management will highlight those areas of
increased exposure that can be supported through a BPMS. Defining Process Performance
Indicators for customer facing and business critical processes will allow organisations to track
lead process indicators that will provide guidance on how to effectively manage these
changing circumstances.

Effective Capital Management and managing those intangibles in a business that drive the
business value in the long term can be supported by improved business process and
performance management systems. It will provide consistency, transparency, business rules
that can be adapted to the requirements of the changing environment and a governance
framework that give management teams some level of comfort during the current economic
challenges.

Process Thoughts |

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 5. Preserving Capability and Agility
I am taking the headline from a newspaper article in the Australian Financial Review. I
couldn’t have said it better. It is an article by Fiona Balfour, former CIO of Qantas and
Telstra, on how to best manage IT projects and applications in tough times when budgets are
under scrutiny. It is paid subscription to the newspaper, so I will paraphrase the article. Fiona
says that in addition to being budget conscious, IT leaders must also preserve capability and
organisational competitive agility and it requires a focussed plan. She highlights 3 typical
types of IT investment projects:

Major Strategic that are generally multi-year and they deliver significant competitive and /or
operational advantage to the organisation. These projects are formally managed and are
focussed on a combination of a variety of benefits – cost savings, cost reductions or cost
avoidance and revenue growth as well as some competitive elements – such as improving
customer service. They might also serve to reduce operational or regulatory risk.

Non-strategic projects that add or evolve functionality of existing investments.

Then, finally, application maintenance that includes “break/fix”, upgrades, preventative

maintenance and minor enhancements.

The responsibility of IT managers to provide solutions that will preserve capability with fewer
employees serving the same number of customers as well as remain flexible in changing
market conditions requires those managers to consider the processes that drive their
businesses. Business Process and Performance Management (BPPM) links the operational
enterprise workflow capabilities of products like XMPro to strategic performance management
requirements to steer businesses through these though times.

BPPM projects should typically be high priority initiatives in times like this as it supports all
the major objectives set by Fiona as major strategic projects. BPPM projects define the
required process performance measures upfront and then set out to achieve those through
enterprise workflow automation and constant process monitoring. It optimises the use of
scarce people resources and reduces process lag time in email inboxes waiting for actions. It
notifies and escalates tasks and informs managers when service levels to customers are not
met. It actively manages business processes on autopilot with the necessary feedback systems
to those in charge.

It is really the only way I can see how organisations can preserve capability, remain agile and
work within organisational and regulatory requirements.

Interestingly enough, the same newspaper has an interview with Mr. Barry Simpson, CIO for
Coca Cola Amatil in Australia, and he suggested that they are looking to accelerate some of
Process Thoughts |

their IT projects that give them strategic advantage in an attempt to turn up the heat on
competitors. “When business is though, and the economy is though, that’s when strong
companies get stronger. This is when you want to be investing in business to drive that
growth and to take advantage of weakened competitors”.

Definitely a strategy that could also benefit from BPPM.

7
6. Do processes matter?
The question is often asked why you would need BPM software if your business already has
implemented ERP and business specific applications. What makes a process important and
why does it matter?

If you are in a competitive market, then it does matter. Porter recognised this in the mid
eighties and wrote Competitive Advantage: Creating and Sustaining Superior Performance. In
this book Porter shows that competitive advantage depends on all of the specific activities
needed to create products and services and on the way the company organised those
activities together into processes and ultimately into value chains. Porter’s concept of value
chains links business processes across the organisation into measurable, end to end actions
that define the way the organisation delivers its value proposition.

These value chains are the entities that make companies unique. It is the specific way that
they transform their input into products or services that are deemed “valuable” by their
customers.

This Geary Rummler diagram describes Value Chains or Core Business Processes in the context
of resources, customers and markets, competition, social and regulatory environments and
the internal “silo” structure of most organisations. The structure of the internal functions
may differ from business to business but the fundamental principles remain the same. The
Value Chain of Core Business Processes drives each organisation’s unique competitive
Process Thoughts |

advantage. All businesses operate in this framework even though the internal structure may
differ.

Customer expectations are based on how effective and efficient these processes work.
Effective processes help organisations in fast growth scenarios whereas efficient processes
optimise resources without compromising service levels in slow growth or recessionary

8
 business cycles. Customer retention in these recessionary cycles is as important as finding
new customers while servicing them with fewer resources.

Business Process Management becomes a strategic initiative in this framework. It becomes a

planned approach to understand, maintain and improve the Value Chain that is at the core of
the business. Business Process Management (BPM) focuses on understanding the Value Chain
by:

 documenting (mapping and modelling) the core business processes;

 maintaining these processes through automation, process controls and integration; and
 improving the Value Chain by analysing process performance indicators, implementing
process changes in an agile process management environment and measure the results
of those changes in a continuous improvement effort.

Porter’s Value Chains evolve with and organisation as business models, conditions and the
competitive landscape change. It requires a flexible environment and processes can’t be
“cast in concrete” as many failed ERP implementations show. The challenge is not with the
transactional capability of the ERP solution, but rather its ability to adapt to changing
business processes that are often external to the control of the business. The competitive
advantage of most of the successful businesses today is not in the capability of their ERP but
in their ability to deliver valued products and services through flexible, adaptive and unique
processes.

Processes do matter and so does the technology that supports them. Many processes can be
maintained without systems but the November 2008 Aberdeen Research Report - BPM and
Beyond : The Human Factor of Process Management – reports that Best in Class organisations
that have implemented BPM systems achieved a 53% improvement in process consistency,
compared to a 13% improvement for the Industry Average and a 13% decline for Laggards.

The same report reveals the strategic nature of processes in the Value Chain as business
executives listed the following as the top priorities that drive the focus on process
management:

45% - Need to reduce operational cost;

41% - Need to improve process agility and innovation;

26% - Challenge of managing multiple disparate information systems;

22% - Pressure to improve customer service; and

17% - Pressure to increase sales and drive new business

Process Thoughts |

Processes do matter. It is the only leverage that a business has to distinguish itself from
competitors, operate in a compliant efficient way and deliver the unique value proposition
that will keep it in business in time to come.

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7. On Evolution, Darwin and BPPM
Sean Silverthorne, editor of Harvard Business School Working Knowledge, posted a blog article
titled “The Mother of All Disruptions” that starts off with the following statement : The
corporation is tumbling through a period of uncertainty it has never seen before, one that will
change the nature of business forever. Sean states that through all the wars, energy crises,
technology revolutions and economic instability it was only a matter of time until equilibrium
was restored and the world went on more or less as it was. But it seems that is no longer the
case. It seems that the big thinkers at Harvard believe that constant change will now be the
norm as the core technologies (computing, storage and bandwidth) that are now the utilities
in our new world, are not stabilizing. But should this be news to us? Evolution has long been
how we develop, improve and sometimes destroy our hard work.

Reading Sean’s blog reminded me of a book that I bought around 2000 or 2001 that takes
natural laws from physical sciences and applies it to business. Richard Koch’s “The Power
Laws: The Science of Success” is a compelling read and probably more applicable now than it
was in 2000. One of the paragraph headings in the introductory chapter speaks of “The
progress from order to chaos” and this statement always intrigued me. It seems that the
world becomes more complex and less explainable the more we learn and the cleverer we
get. Koch starts off in the first chapter with Darwin’s theory on Evolution by Natural
Selection. “If selection did not apply to ideas, technologies, markets, companies, teams and
products in precisely the same way as it applies to species, we would all be working on the
land struggling to avoid malnutrition and famine. Selection drives all material progress”
according to Koch.

So what does that have to do with the current economic turmoil in the market and “The
Mother of all Disruptions”? The answer may be in Koch’s analysis of Natural Selection applied
to economic sciences. First off, he states that Darwin’s theory of natural selection is based on
3 simple observations:

Creatures systematically overproduce their young, without exception. Not all the young will
survive.

Secondly, all creatures vary.

Thirdly, the sum of that variation is inherited.

The first observation can be seen in the fiercely competitive and overcrowded economic
markets and still it seems to spawn new start-ups in every industry. All these businesses and
markets vary and these variants develop from similar businesses and markets. But Darwin
observed that there is a process whereby some species survive and he coined the term
Natural Selection defined as “The preservation of favourable variations and the rejection of
Process Thoughts |

injurious variations”. The book provides a detailed explanation of Koch and Darwin’s theory
on applying natural selection to business but the fundamental ideas are:

There is variation (we breed new adapted species), then selection (only a few make it in the
new conditions), then more variation based on those that survive, the selection and so on.

10
 Variation is based on the fact that the parents of the offspring are individually unique and this
gives birth to a unique new offspring. No two entities are the same.

Being successful or “surviving” is based on fitting the “conditions of life”. The mutation from
the unique parents creates a new entity with its own characteristics and these may improve
or worsen the odds of survival. Those that don’t improve may disappear, just look at the
dinosaurs.

Diversity leads to efficient use of the land, but only those best suited to adapt to the
environment will survive.

I think you get the point and we are currently faced with a situation where conditions were
favourable for a long period of time, businesses overproduced their products, services and
their young. Conditions have changed, it is now time for selection, we have the “Mother of all
Disruptions” and it may never return to the stable state that we are used to. Those that are
not suited to adapt will not survive. It is a law of nature.

I believe that many of the large organizations that are now closing their doors, and the sad
loss of jobs, are directly related to the fact that they only marginally survived in the good
times and now that the next selection cycle is on us, they are ill-equipped to deal with
Darwin. Geoffrey Moore (author of Crossing the Chasm) released a book in 2005 titled “
Dealing with Darwin: How great companies innovate at every phase of their evolution”. I
highly recommend it.

Koch concludes in the chapter on natural selection that there are four lessons for economic
selection for products and marketing:

Product ideas will be stronger, more likely to survive and reproduce, if they have emerged
from a struggle for life from substantial competition.

New product variants will arrive sooner or later, whether you introduce them or not.

Scatter new breeds around your core product: fill up the potential product spaces so that
newcomers can’t move into these niches.

Product and service development should always be accelerated.

RA Fisher developed a theorem in 1958 based on Darwin’s law of natural selection that
markets, products, brands, technologies, companies and individuals who improve their fit
with the environment faster (than other markets…) will expand faster and be more profitable.
It sounds logical and stating the obvious, yet many businesses don’t know how to leverage this
basic law.
Process Thoughts |

Business processes are the DNA strings that make a business unique and business performance
management provides the vital signs of life in an organization, showing whether it is
improving, stagnating or dying. By combining these two methodologies into Business Process
and Performance Management (BPPM) creates an opportunity to adapt the organization to
better suit the conditions and improve the chance of survival.

11
Businesses should use this current disruptive business cycle to best adapt themselves to what
the future conditions may require, whether we return to our previous equilibrium state or
whether we have now entered the “Mother of all disruptions” and constant change will
become the norm. Take the pulse and vital signs of the business, adapt the DNA to make it
suit the environment, measure the impact of the changes and repeat the process. Establish
the key process performance indicators of your business, automate those processes that are
suited in a flexible Business Process Management Suite (BPMS), analyse the results and trends
of the performance indicators and maintain an agile approach to the business processes.
Change them to fit the environment or stand the chance to loose out in the Natural Selection
cycle. It is a law of nature.

Process Thoughts |

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 8. Split Testing Processes for Performance
Marketing gurus have long used split testing as an iterative process to find the best
performing adverts in direct mail marketing. It is a simple process where 2 different adverts
are created, sent out, and the responses to each ad are recorded. It is generally referred to
as A/B split testing. The conversion rate of ad A is measured against ad B and the worst
performing advert is then dropped. A new ad is created and put through the same process
against the remaining (better performing) ad from the previous round of A/B split testing.
Simple but effective. Many companies now do it with their Google Adwords. So what does
split testing have to do with business process and performance management. Everything…

Why don’t we split test processes for performance optimisation? Why don’t we create two
streams of a process and use some randomisation algorithm to send a particular transaction
down a specific process stream? We can then record and measure the performance of each
stream based on pre-defined process performance indicators to the process analytics module
of the BPMS and determine the best performing process. Rinse and repeat.

This iterative process will provide an alternative to modelling and simulation techniques that
many process analysts employ to try and improve process performance. It provides a practical
approach that proved successful in other areas such marketing and it is an evolutionary
approach where the best performing processes survive. Many organisations implement a
business process without ever re-visiting it. No one knows where to start looking for changes.
This split testing process will take care of that.

A word of caution thought. Make sure that the BPMS solution can support this type of
versioning of processes and that it doesn’t impact negatively on the quality of information on
the user interface and that audit trails and worklists maintain their integrity. Processes need
to be designed for split testing.

The possible benefits of A/B split testing for processes can be significant in organisations
where process improvement plays a significant role. It can possibly save jobs and improve
bottom lines in the current economic circumstances. It is worth a try.
Process Thoughts |

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9. What's the best way to pitch BPM to a company that
doesn't know that it needs it?
There is a Business Process Group on Linkedin that is very active with numerous posts on BPM
related subjects everyday. I try to comment when I get a chance and this specific thread
asked “What's the best way to pitch BPM to a company that doesn't know that it needs it?”. I
commented as follows and then got a private message from John Wurl.

PvS Comment: These are always the most difficult. In all honesty, we don't sell them BPM if
they don't know what it is. We rather engage with them and identify some "pain points" in
their business. We then solve the problem by addressing the process and we show them what
it means to "manage" their processes. This approach takes less time with a higher conversion
rate than trying to educate them at the start.

Message from John: I enjoyed reading your reply to this post. It seems that many of our
posts get into the technology agnostic debate and I was curious how you managed this? You
seem to have a very simplistic and elegant approach. Does it remain that way for long when
you integrate a tool? Thank you and I hope I am not asking a dumb question.

PvS reply to John:

Our objective is to sell our software in the end but we've learnt that we have to solve the
"business problems" if we want to have a long time relationship with our client. Taking a
business improvement approach mostly leads to the question on how to implement the
process change to make it consistent, repeatable and sustainable. That inevitably leads to
employing a tool like XMPro. We never started XMPro with a view to become a BPMS. We come
from a background of developing bespoke solutions for ERP solutions. That generally requires
solving the business problem. The focus is not on the tool but the objectives and
performance indicators of the process. We then decided to build a tool for composite process
applications with complex integration requirements and it turned out that Gartner coined it
BPMS. So our focus is on solving a business problem and you will have a customer for life.

Once they see that they have multiple process (pain point solutions) in one process portal,
they start to see the value of "managing processes" proactively. Then we introduce them to
fully fledged BPM.

I hope this answered your question and thanks for commenting.

So the best way to pitch BPM to a company that know that it needs it, is not to pitch it at all.
Show how process performance improvement can solve business problems. It is not about the
methodology, technology or the tool. It is about solving a business problem.
Process Thoughts |

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 10. Job Wanted - Chief Performance Officer
President Obama recognises the role of performance management in organizations if they
want to be relevant in the future. He was not successful in getting McKinsey consultant Nancy
Killefer on board (apparently she had some personal tax issues) as the Chief Performance
Officer but he managed to appoint Jefferey Zients a few weeks ago. Zients comes with an
impressive record. He has 20 years of business experience as a CEO, management consultant
and entrepreneur and has helped lead firms that provide performance benchmarks and best
practices across a wide range of industries. Sounds like the man for the job. There seem to be
renewed interest in the role of performance management in organizations.

Tom Davenport , a process management thought leader at Harvard, wrote in his "The Next Big
Thing" blog about "The Rise of the Chief Performance Officer" appointment. The interesting is
thing not his view on President Obama's appointment but rather his view on the convergence
of process management, knowledge management and performance management. Tom refers
to a debate on merging various thought leader discussion groups and I quote his blog
"They noted, for example, that if you want to align knowledge and learning with work, you
need to know something about business processes and how to improve them. And if you're
going to align processes with the content needed to perform them effectively, you need to
know something about the technology that would deliver the content in accordance with job
tasks. What this begins to suggest is that the era of siloed business improvement activities
will give way to applying a variety of interventions to improve work. In other words, an
organization run by a Chief Performance Officer might be called for. "

This has been the point of Performance Focused Process-Centric organizations and this blog
all along. Knowledge Management in today's organizations are tied to the hip with processes.
Every process has contextual knowledge, transactional knowledge and procedural knowledge
that makes the process work. Performance management endeavours to make processes
effective, efficient, consistent and even predictable. Performance, process and knowledge
management are inseparable in support of the business drivers mentioned in a previous post
on this blog. Processes need to designed for performance and embed critical knowledge.

Most of today's process, performance and knowledge management methodologies are

supported by IT based tools. There are content, performance and process management
solutions that can manage the transactional side of all these components, but the role of the
Chief Performance Officer (CPO) will be to ensure a synergistic approach to methodology and
tools. There is no one single solution that will work for all organisations that cover all 3 areas
(there are not even tools in the 3 areas that cater for everything in that area) and the CPO
will need to ensure that process are designed for performance and that it takes knowledge
management into consideration. Knowledge Management should support performance and
Process Thoughts |

process management while performance management solutions should be based on quality

information from knowledge based business processes. Definitely some food for thought.

Well done President Obama on recognizing the need for a Chief Performance Officer.

15
11. CA = BPI x BPMS
Organizations are all looking to improve their competitive advantage by following one of the 3
Porter strategies:

 Low cost provider;

 Differentiation; and
 Focus.

Business Processes are the primary vehicle for the implementation of anyone of these
strategies and that is the main reason why business process improvement projects are on the
top of the list of many organizations. Gartner and numerous other research organizations
have listed business process improvement on the top of the list for both CEO and CIOs. The
cost of labor in developed countries such as the USA, UK and Europe also require continuous
review and optimization of business processes to reduce the labor cost to a level where it can
compete with emerging countries like India and China where labor is cheap.

Business Process Improvement Initiatives (BPI2) differs from automation and workflow projects
in objective and scope. The scope of BPI2 is to management process improvement across the
enterprise and its objective is to support the strategic objectives of the organization. These
strategic objectives typically revolve around both growth and cost reduction plans to support
the 3 strategic approached that Porter described.

Automation and workflow focus on automating repetitive tasks in specific business areas and
the objectives are generally operational by their nature. They are in many instances the
result of a pain point or an operational issue that can be easily automated with a hard-coded
workflow. Some of these workflows may even have rigid integration into a back office system
to reduce time, errors and increase productivity of the process. (Technologies such as WF may
be ideally suited to develop these workflows.) It has a transactional perspective and is aimed
at solving an operational problem by letting a programmer write a custom application.

Workflows are useful if it can be utilized as part of a bigger business process management
solution to support BPI2. The objective of BPI2 is to support the strategic objectives of the
organizations as noted earlier and it is part of a continuous improvement process throughout
the lifecycle of the business. The processes that support the business strategies need to
change as the business move through its lifecycle. This requires an agile approach as business
strategies may change quickly in response to market events and requirements. Changes to
business processes are identified by business users and they are best suited to define the
requirements for the changes to the processes. Business Process Management Suites, such as
XMPro, is designed to support business users in the discovery of their business process
requirements and allowing them to compose and deploy new processes without coding and
Process Thoughts |

programmer involvement. This is also the promise of BPM2.0.

It doesn't mean to say that programmers and developers will disappear, but their roles will
change in the agile process driven world of the Real Time Enterprise (RTE). BPM requires a set
of new skills both in business and IT. This article will address these new roles later.

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 Business Process Management or BPM differs from workflow not just from a technology point
of view but also from a strategic perspective. The same technology tools can be used to solve
a workflow or a BPM issue. BPM is a management approach that is aimed at managing
business processes. The management action is a continuous effort to define process outcomes
(KPIs), deploy, monitor, analyze and adjust the process in a proactive manner. BPM utilizes a
broad range of support technologies to accomplish this and a BPMS like XMPro put all these
technologies together in s single suite to support the proactive management approach to
improve processes or competitive advantage.

Enterprises that embark on a formal BPI2 goes about it in a structured and methodical way
that is based on a sound BPM methodology. Developing a point solution workflow doesn't
require that same approach and are in many instances a simple specification of an operational
flow diagram and it is left to the developer's interpretation of the process to determine what
the outcome will be. A BPM methodology is based on aligning the strategic outcomes of the
value chains in an organization with the operational processes that support them. A
compliance strategy may require a less than optimum technical solution, but it will better
support the strategic objectives.

The BPMS support the business user throughout the process lifecycle and is a critical success
factor for an effective BPI2. It empowers a business user to compose strategically aligned
processes, optimize, deploy, analyze and monitor them and provides the flexibility and agility
to change them quickly to respond to changing business requirements.

Many organizations are still low on BPM maturity and use the BPMS technology primarily for
workflow and integration purposes. These organizations will increase the benefits of using the
BPMS ten or hundred fold as they move up the BPM curve towards BPI and increase their
competitive advantage.

It is clear that organizations can code workflows in a multitude of developer tools that
include a BPMS but the requirements of the Real Time Enterprise need a BPMS to deliver on
the competitive advantage of agility in strategy and operational execution.

Business Process Management is not only limited to large organizations with formal business
process improvement (BPI) initiatives, but it is just as relevant (if not more so) in mid market
businesses that operate in the same competitive landscape as those large enterprises. They
may not have the same resources available but they still have the same types of business
applications in place to support the same processes as those larger organizations. There CRM
and ERP solutions may not scale to 50 000 or 100 000 users but the core functionality remains
the same. There value chain looks very similar, if not identical, to that of the larger
organizations. Their order to cash, procure to pay, and quality management processes have
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the same inefficiencies as that of larger organizations. Their business applications are also
disconnected and rely on people to understand and drive their processes. Their workflows are
also rigid hard-wired integration solutions and their business users require the same ability to
adjust processes and business rules as the competitive environment changes.

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They have limited IT resources and IT is in many cases outsourced. Business users in the mid
market have an even bigger need to be in charge of their own destiny. Their initiatives may
not be strategically defined as BPI but are typically more tactically oriented. Take the
following business scenario:

A sales representative manages his/her prospects in the CRM solution of the organization.
They only maintain the bare minimum information that is required by the system. At some
point in time the prospect may want to be become a customer and a new account needs to be
created in the financial application. E-mails typically start flying around and the financial
person ends up trying to get the information required to create the account. There are no
controls to ensure that the credit status of the prospect is verified and that all supporting
documentation accompanies the request.

The process can be managed from start to end with a Business Process Management Suite
(BPMS) such as XMPro to connect the CRM to an approval process through to create the new
account in the ERP using drag and drop iDapters (Integration Adapters). The process can be
initiated from Microsoft Outlook and all the supporting documentation is available with the
process audit trail.

This scenario is typical of the operational process requirements that mid-market organizations
face. Managing 100 sales representatives may not have the same operational savings as
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managing the 12 000 found in some large enterprises, but the improved customer relationship
management and quicker account approval process will have significant impact on the sales
bottom line.

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 The process in the example above can be deployed in a matter of days and fine tuned to the
exact requirements of the business in weeks. The process can be expanded to include other
scenarios and grow as the business grows.

The objective is not to create workflows for requirements that the ERP or CRM can't cater for
but to manage the business processes at a tactical level with performance feedback
information, dashboards and the flexibility to change as the competitive landscape changes.

Extending business applications with XMPro in mid market organizations allow them to
compete with large business in the age of Real Time Enterprises.
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12. The difference between BPM and Workflow
I often get asked what the difference is between BPM and Workflow. I guess I'll answer it like
any consultant. "What do you want it to be?". It is really based on your point of view. If you
come from a technical or tools perspective then the difference is quite so obvious. When you
look at it from a business perspective some clear points of difference are visible.

For me BPM is about managing a business problem where workflow is a technology. BPM use
workflow as one of its dimensions to manage business processes. The thought of dimensions
led me to think of some of the other dimensions of BPM. It also reminded me of the cube as
the icon for BPM with its six sides. The six sides of the BPM cube.

 BPM has a human workflow (WF) dimension;

 BPM has a rules engine (RE) dimension;
 BPM has an enterprise application integration (EAI) dimension;
 BPM has a service oriented architecture (SOA) dimension
 BPM has a content management (CM) dimension; and
 BPM has a business intelligence (BI) dimension.

So if BPM has all these dimensions one can argue that a BPM Suite (BPMS) should allow for the
configuration of all of the dimensions from one interface or product suite. A BPMS provides
the ability to create Composite Process Solutions (CPS) with all of these elements from a
single toolset. A typical CPS may be a complex Order Management Cycle (OMC) solution with
complex business rules, human intervention, various documents and data integrated to the
CRM and ERP solutions in the business. The OMC solution needs to provide operational
feedback and notifications to line managers as well as the ability to analyze completed
processes and identify and opportunities to improve the processes by reducing bottlenecks
and redundancy.

A simplified model of the cube would be to integrate RE with WF as well as EAI and CM with
SOA. This leaves three dimensions for BPM:

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 Rules-based human-centric workflow and process automation [Automate] A

 SOA based EAI and CM [Integrate] I
 BI based Performance Management [Manage] M

Are you AIMing your processes in you organization? This should be more important than
debating workflow vs. BPM

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 13. Is the CIO the new CPO?
Is the Chief Information Officer the new Chief Process Officer? How is the role of IT
(information technology) turning into BT (business technology)? Sandy Kemsley is attending
Forrester’s Business Technology Forum in Chicago and writes in her blog“…who has
responsibility for the technology that is deployed – and turning technology back into a tool
that services the business rather than some separate entity off doing technology for its own
sake. What this looks like in practice is that the CIO is most likely now focused on business
process improvement, with success being measured in business terms (like customer
retention) rather than IT terms (like completing that ERP upgrade on time, not that that ever
happens)”. Will IT be measured on business performance targets and how will that impact
business technology like BPM tools?

The forum seems to have a strong bias towards Lean management principles and Sandy’s blog
makes quite a good read (not just on this topic but her coverage of these events are always
top notch). Lean comes from manufacturing and with an engineering background myself, the
principles makes so much sense in broader business. We have been trying to bring our
experiences from engineering and manufacturing into business especially around process
improvement with TQM, Six Sigma, FMEA and Lean to name a few. Process Improvement
changes the game for businesses and those who realize it, evolve into the survivors of the
next generation. Would you have bought GM or Toyota shares 50 years ago if you had $10 000
to invest? GM was the market leader then but Toyota is a classic case study of how process
improvement changed the game.

Who will be driving process improvement in the knowledge economy? Will it still be the
engineers or do we stand to gain the most by improving our technology base for process
management? CIOs are in a unique position where they can drive Performance Focused
Process-centric business improvement initiatives. They have the tools available to them. The
challenge is to move away from IT thinking to BT thinking. How to apply methodologies like
Lean and support it with BPM tools like XMPro to define processes from a outcomes
perspective (keeping in mind that we will probably change them to improve them – agility),
digitize them for consistency and control, and analyze the process performance metrics to
identify improvement opportunities.

I am keen to see where the CIO takes us in a Lean world.

TQM : Total Quality Management

FMEA : Failure Mode and Effects Analysis

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Office: +61(0) 2 8412 1000

Physical Address
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Email: sales@exomin.com

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