Small and medium enterprises rarely focus on formally establishing business processes or how they will be managed from the outset. After all, businesses are typically started through the enthusiasm and passion of one or two individuals – and that passion is purely focused on just “doing the business”. Having (hopefully) identified a market need, the aim is to get the sales through the door and start making money. Isn’t that how all businesses start off? Surely the rest will “take care of itself”?

While this approach may produce monetary results in the short term, and maybe even a profit, what happens as enthusiasm brings in more and more results? The business grows, more resources are required, and things start to become complicated. More staff are added to cover the growing workload. Profit becomes eroded. But everyone does what’s necessary to “get the job done”. The interesting thing about business growth is that it takes some time before individuals can afford to dedicate their time to specialist roles. So while employees may be employed in a specific role, very typically they are actually multi-tasking across multiple roles. And rarely does anyone stop long enough to focus the efforts of everyone and ensure that the product or service is being delivered to the customers consistently. How do you communicate the requirements of what needs to be delivered? How can results be delivered to customers consistently if the processes to produce them are inconsistent? How would you measure these inconsistencies anyway, if you haven’t benchmarked what it is you are delivering?

But this doesn’t just occur within small businesses. The reality is that these inconsistencies occur across organisations that employ 10, 50 and 500+ staff. And it is invariably evident within organisations that have been allowed to just evolve.

So at what point should processes, functions and strategic goals be aligned?

- As soon as the vision of the business is established and documented.

This is the point in time when all required roles within a business should be identified. Position descriptions (functions) for all roles should be documented. The overall business structure should also be documented in the form of an organisation chart.

With the strategic goals documented and functions defined, the processes of the business can also be documented – what needs to happen between receiving an order and delivering the goods/services? Importantly, all of this should be completed independently of whether individuals are available or have been identified to fulfill the roles of the business.

So why would a small business place any of its limited resources into documentation of the business? The biggest benefit in doing this is that it provides the basis of a plan for the business to move forward, and forms a tool for communicating this plan to others (new staff, clients, suppliers, etc). And no matter what label you attach to this exercise, the management of business processes starts with effective documentation of those processes. It is at this point when you start Business Process Management.

Top 5 myths about business process management BPM.

BusinessFinanceMag.com has released its BPM Buyer’s Guide for 2009.

While this review of BI and ERP software vendors is focussed on the USA market, it does highlight some of those areas seen as important to assess when reviewing the options for software selection.

BPM Buyer’s Guide 2009: BPM Goes Mainstream | Business Finance.

Given all the doom and gloom about the economy that is appearing in recent media stories, can companies maintain, let alone implement new systems for Business Process Management in 2009? How do organisations need to change their decision making and business strategy to ensure future success? What changes are needed in business fundamentals or business focus?

Increased external stresses to an organisation will increase pressure on management teams to implement changes within the organisation. These same external stresses can translate to increased performance expectations of individual employees. The challenge then is for the management team to manage the required organisational changes. The way in which an organisation manages change, and its capacity to maintain or expand its business processes will be a reflection of its level of maturity. There are a number of Capability Maturity Models that have been published. The Carnegie Mellon Software Engineering Institute (SEI)[1. Carnegie Mellon Software Engineering Institute website - http://www.sei.cmu.edu/cmmi/] defines 5 levels of levels of maturity within their Capability Maturity Model (CMM).

The SEI Capability Maturity Model (CMM) level definitions:

Level 1 – Initial (ad-hoc processes)
Level 2 – Repeatable (basic processes conceptualised and demonstrated)
Level 3 – Defined (processes are documented, standardised and linked to goals)
Level 4 – Managed (processes are quantified, measured and controlled)
Level 5 – Optimising (continuous process improvement)

Although developed by the Software Engineering Institute, these levels of process maturity are broad enough to apply equally across all types of organisations within any industry. As Harmon (2007, p. xxxv)[2. Harmon, P. 2007, Business Process Change, Second edn, Morgan Kaufmann Publishers] notes, this model is in the same spirit of Total Quality Management (TQM) and leading companies today are focused on moving from from level 4 to level 5.

It’s important to realise the distinction between those companies that have established, documented and linked procedures in place (Level 3, ‘Defined’ processes, or better), and those companies that have identified and completed the initial mapping of their procedures but are yet to refine them, master them and train their staff on the use of the procedures (Level 2, ‘Repeatable’ processes). This distinction sets apart companies that are capable of continuing their Business Process Management (BPM) procedures in times of stress. In times of stress (such as increased economic pressures), companies that are yet to reach a level of established procedures within their BPM system will typically drop their procedures, reverting back to the “old way” of doing things. This is because procedures that are still embryonic rely on individuals to constantly push them into day-to-day operations – they are not “endemic” to the organisation and are readily abandoned when performance expectations of individual employees increase.

Organisations that struggle to maintain their procedures and business systems in times of stress are typically characterised by situations within their organisation such as:

Organisations whose procedures and business systems continue to be used in times of stress are characterised where the organisation:

It could be argued that much of the current economic climate can be attributed to poor decisions made (particularly) by large organisations. Poor decision making may be a reflection of a lack of quality business data and failing to apply good risk analysis to the business data that is available. Putting risk analysis aside for a future post, often business data exists, but it is not collated, presented or communicated to decision makers. To effectively evaluate risk, reliable business data needs to be well presented and communicated effectively to the management team to give them the best opportunity of eliminating poor strategic decisions.

Business data is typically collected through the IT systems in an organisation. At a minimum, IT systems will be used to collate and present business data. Even in tough times, IT still has a role to play. However, I believe it is less likely to involve the implementation of new enterprise-wide (eg. ERP) systems, particularly where they have not been committed to in company budgets to date. Typically there will be a greater focus on analysis of the root cause of process failures leading to more targeted and potentially independent solutions to those failures.

An organisation with established processes that are quantified and have Key Performance Indicators (KPIs) established that are tied to strategic goals will find themselves in a much better position to weather the stresses applied to them from external sources. The requirement remains for people, processes and technology to work together and be aligned with overall business strategy. At what level of maturity an organisation sits, will greatly determine their success in hard economic times.

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Bibliography -
SEI Capability Maturity Model
Wikipedia.org article
Portfolio, Programme & Project Management Maturity Model
UK Office of Government Commerce article

What does “BPM” stand for anyway? Depending on who you talk to, BPM may be considered to be “Business Performance Measurement” or “Business Process Modelling”. However, BPM is increasingly recognised as “Business Process Management”.

Back in the mid Eighties, Six Sigma was prevalent in the corporate world along with Total Quality Management (TQM). This was followed in the early Nineties by Business Process Re-engineering (BPR), workflow management and the establishment and recognition of the ISO9000 quality standard. In the Nineties Business Process Improvement (BPI) became the new business management strategy.

In parallel with these developments, IT was also evolving from Relational Databases (1980′s), to Enterprise Relational Databases (ERD) (early 1990′s) and Enterprise Application Integration (EAI) (late 1990′s).

It is this convergence of business processes with IT that have led to what is now generically known as Business Process Management. But is also important to recognise that BPM does not always rely on IT to be effective – it is much more important for good business processes to be established before IT is added to them. After all, applying an IT system to inefficient processes just makes those processes run faster.

Recently on his blog, Dennis Byron raised the question of “Who first used the term ‘Business Process Management?’”

While maybe not a definitive answer, the first issue of Business Process Management Journal was published in 1995. However, it wasn’t until 2002 that the emphasis within this journal started to shift from Business Process Re-engineering (BPR) to Business Process Management (BPM). 2002 also saw the publication of “Business Process Management – The Third Wave“, by Smith and Fingar, published by Meghan-Kiffer Press.

BPM is increasingly recognised as focussing on effective management practices for managing and improving essential business processes that are aligned with strategic objectives.

It is not just about software and it is not just about re-engineering processes. It is definitely about a top-down management approach to ensuring the effectiveness of essential business processes. BPM combines management responsibility, process management and support systems.

Most of us hate being subjected to unnecessary jargon and TLAs (three-letter acronyms). However every subject inherently has its own lingo and it seems that there is always some new term being developed every day.

To aid in sifting through all the confusing terms that are associated with the lingo of “business systems”, you can now use the menu link above, to link to a page of Abbreviations and Acronyms. Of course, if you still have unanswered questions, please feel free to use the Feedback page to request further information.