Business Process Management
Achieving the highest level of efficiency in terms of time and cost in performing any business activity has been the guiding principle of successful businesses for a long time. In 1911, Frederick Winslow Taylor, the father of scientific management, published the following four principles of scientific management:
- Replace rule-of-thumb work methods with methods based on a scientific study of the tasks
- Scientifically select, train, and develop each employee rather than leave them to train themselves
- Provide detailed instructions and supervise how each worker performs in his or her discrete task
- Divide work equally between managers and workers, so that the managers apply scientific management principles to plan the work, and the workers actually perform the tasks
These ideas of sequencing tasks and allocating them to workers to produce results with business values are known today as business processes.
Taylor defined ideas precisely on how to implement business processes efficiently. His belief was that this is possible only through enforced standardization of methods, adoption of best practices and working conditions, and cooperation.
Today, these thoughts are grouped under BPM, which is a method for aligning a business organization with the needs of its clients. BPM fosters business effectiveness and efficiency while striving for innovation, flexibility, and integration with technology. The major objective of BPM is to continuously improve the processes, both within the company and with other companies (such as in supply chain management).
IT and BPM
As companies started to use IT to automate tasks and make work more efficient, IT started to influence business processes. To understand this, let us briefly elaborate on how IT was used in companies to automate tasks. The simplest usage of IT was the automation of simple tasks such as sending invoices or other documents by email rather than over fax or mail, calculating interest, getting stock information on different products, and so on. However, such simple automation influenced only distinct business activities and not the business processes as a whole.
Soon it was recognized that the role of IT could be larger than just automation of business tasks. IT could provide support for all business processes. Once IT became more integrated into business processes, three important things happened:
- IT could not be considered just as system and data anymore. It had become a central element of business processes.
- With IT's support for business processes, it became apparent that IT influenced processes. This made more sense, if business processes changed— they could be re‑engineered at the same time they were supported by IT technologies. In this way the value of IT could be better leveraged.
- IT also opened new opportunities in public business processes (those processes that spanned several companies such as supply chain), and in global processes.
The facts mentioned here have, together with changes in global economy (which in turn required changes in companies), resulted in an increased awareness of the value of business processes.
Interestingly, in many companies, awareness of the value of business processes has been most evident in the IT departments. Sometimes, IT departments have a better understanding of the value of business processes and design than the management. This is in contrast to "common sense" and the findings of professionals such as Taylor. Instead of discussing whether this is appropriate or not, let us think about the new opportunities for IT departments to evolve from technology centers to the most important core of each company: innovation centers.
To be able to understand business processes and improve them, it is first necessary to understand how the existing processes work. Hence, it is necessary to develop the as-is model of business processes. Developing the as-is model is also called business process modeling. Only when we understand how business processes work, can we carry out the following steps:
- Develop applications that provide end-to-end support for business processes
- Optimize business processes to make them better
Of course, it is not necessary to perform these two tasks sequentially. We can optimize some processes and then develop applications. Alternatively, we can even develop applications and optimize processes in parallel. It is particularly important to understand that business processes are not static. Business processes evolve over time because companies have to adapt and change the way they perform business operations in order to stay competitive.
Finally, IT opens new perspectives for business opportunities. This way, it can be seen as a catalyst of new, innovative business processes, which can open new customer channels, define innovative ways to collaborate with business partners, and use IT for establishing better connections with customers, and sensing their wishes.
To sum it up, the role of IT in business processes is three-fold. It can be used for:
- Automation of tasks and activities
- End-to-end automation of business processes
- Definition of innovative business processes that leverage the IT technologies in new ways