In the last blog entry on drivers for BPM, I indentified drivers around process outsourcing, package implementations and process standardization.

In this blog entry, I will explore people automation, value chain enablement, optimization, and compliance and process scenarios.

When deciding what processes should go into a “human-to-human” or “system-to-system” process flow, process models can be analyzed for candidates. I believe that process models will start momentum toward automating the management of human activities through facilities found in BPM suites.

These are normally processes visible to humans (above the water line), but the models can also illustrate processes captured in computing systems (below the water line) and identify tasks that would economically move from human hands to system components or service-oriented business activities.

Additionally, human-centric processes implemented in a BPMS engine can be studied to determine if the process steps can be replaced with rules or even services. If you expect that the logic is volatile, then a rules engine might make sense. If not, hard coding might be a good alternative. So you can automate pure manual processes into a BPMS and take certain tasks below the water line when it appears that the human tasks managed by the BPMS are too mundane and repeatable.

Value/Supply Chain Creation/Maintenance

This is much like new process creation, but the process model serves as a crucial input to the partner negotiation process. Through methods that are “swim-lane oriented,” process models can help determine which partner/party is responsible for what portion of the process. BPM tools can also simulate interactions and outcomes for value chain behavior under unanticipated conditions.

There are even system dynamic models available for supply chain design and management. The models can be used to plan and manage partner/party impacts implied in pending changes. Much the same processes can be applied to internal process fusion, but the internal organization negotiates roles among the human and systematized processes.

Modeling can also be the gateway for the fusion between the business process and the supporting technical infrastructure. Care must be taken to make sure all parties agree on the meaning of the data underlying the shared process model when going across functions and legal entities.

Do Things Better With Optimized Processes

Processes can easily be managed for optimized cost, time to market, resource loading, risk and quality through the use of process models for initial design and ongoing improvements. This can work in conjunction with methods such as six-sigma and round-trip engineering.

Process models are no longer just logical/theoretical representations. They can accept near-real-time input from the real process flows and be re-simulated for incremental improvements. I have even seen BPM tools that can perform “champion-challenger” and “surround simulation” that automatically drives the process solution towards pre-determined business targets.

Stay Out of Trouble by Staying Ahead of Compliance

Typically, compliance is focused in a reactive matter where the actions are caught by auditing history after the fact. BPM allows one to build the compliance constraints into the process, so things get done properly. Process models can be helpful for instrumenting processes with compliance controls. As the costs of remaining compliant go up, and as governing boards and societies require more-responsible behavior, modeling changes in compliance with the business process will increase in importance.

Stay Hungry: Move Faster Through Scenario Building for Agility and Policy Management

Process models can be used to create reactions to opportunistic and threatening scenarios. Obvious process strengths can be applied in a model to different business, market and geopolitical conditions. The same would apply to obvious or subtle weaknesses. The accepted planning scenarios could be waiting for out-of-tolerance conditions or threat markers, with associated policies linked to ready-to-implement and pretested packages of rules that can be plugged into business processes.

These initiatives will serve as the foundation for these enterprises’ improved capabilities to cut costs and boost competitive advantage. Simulation can also be used to try out good or bad scenarios and explicit rules will allow the agility needed to adjust to a scenario as it is sensed in near real time with BPM.

Bottom Line:

Good business leaders understand that process disciplines can be applied in multiple directions, but care must be applied to set priorities and stay focused. Rome wasn’t built in a day, but a solid understanding of the real process goes a long way in helping guide results.

In my first blog entry on drivers for BPM, I identified drivers around current process understanding, creating new processes, and process activity around mergers and acquisitions. In this blog entry, I will explore process outsourcing, package implementations, and process standardization.

Get Someone Else to Do the Dull Stuff with Business Process Outsourcing

Business process outsourcing (BPO) activities require enterprises to document their current processes, so they can ensure that the BPO provider will handle their processes properly. The process models will also be crucial in identifying opportunities for crafting service-level agreements (SLAs).

The side benefit to the BPO provider will be having a process road map for accurate servicing of the business process. Everybody wins with an accurate process model done at the appropriate level of detail. If the BPO provider identifies an industry best practice, a process model will be a strong way to communicate the effect on constituency relationships.

No enterprise wants to lose clients because of a bad process fit. This way everybody understands the process and/or has an opportunity to question this explicit process and the governing rules.

Another opportunity revolves around how some BPM players leverage explicit processes and rules. Most organizations outsource commodity processes that do not differentiate them. The implications here are that organizations do not want their unique and profit producing processes and rules available for others to copy and/or leverage with competitors of any kind. If the originating organization controls the flows and rules so that they are invisible, even the operation of differentiating processes can be run in an outsource mode. I have seen a few organizations take this next step.

Implement Packages Better

There are many examples of the effects of failing to understand the implied business processes contained in the package and the effects of taking those implied processes directly into an organization without understanding their long-term impact on the organization, the constituencies and the employees.

Although a “force fit” may work, the amount of pain and cost is sometimes so high that it takes years for an organization to regain momentum. Understanding the potential “pain points” and corresponding customization necessary to implement packages is a natural application of process modeling. An increasing number of organizations are attempting this process match activity with great success.

There is emerging availability of vertical and horizontal process templates. Patterns and frameworks are becoming available as package alternatives, and they are best evaluated through BPM (which are quicker, less expensive and more standardized than packages). I have found that larger organizations are attracted to these kinds of process templates and patterns because they have many habits that can be molded into a process that is 70% defined and be quite happy filling in the rest of the details.

Even if the packaged alternative is chosen over the BPM-based templates, process patterns and reusable process frameworks, BPM can help surround the standard package system transactions to allow for the customization and extension of standard package function. This surround strategy will allow for the processes to ideally customize applications around organizations and individuals.

This is a definite “win - win” combination that even the package vendors see as an opportunity. The problem with their offerings is that they are likely to be early versions of BPM; not the new forms of BPM (sometimes called BPM 2.0 or Human Interaction Management - HIM).

Get Control of Proliferating Processes by Consolidating to Core Processes

Enterprises often create separate, but similar, business processes to enter new markets for anticipated revenue lifts. This usually includes copying a process at a point in time and enabling the copied process to evolve into something that has a life of its own. Although this lifts the careers of the revenue gleaners who cloned the process, the total cost of ownership (TCO) tends to eat away at overall profitability. It’s hard to reconcile these processes/system variants without some business process representation to help normalize them back into a core process with local variations for product type or region.

Many organizations are trying to standardize on core processes with variations added for local customization. These unique customizations are easier to manage than multiple copies of the core processes that have to be maintained in a duplicity fashion. This is a much more economical way of dealing with customizations for unique countries, legal frameworks and/or constituents.

Bottom Line:

Good business leaders understand that process disciplines can be applied in many directions. The above money makers also leverage the individuality of processes, organizations and constituents.

There is a trend toward more emphasis on process activity; even process excellence these days. It’s because business leaders know that there is money to be made in BPM. Because processes are in the critical path of progressive business change, business processes are coming under intense scrutiny.

The need for process understanding and automation will create significant business process management activity. I take heart in the success of recent BPM projects. The numbers that are emerging from BPM projects are more than encouraging, but it will take true justification efforts to spring the cash to invest in BPM up front (See Justifying BPM blog posting).

Here are some things that are driving business process activities today and where it is proven that money can be made.

Determining if Your Processes are Right or Wrong Through Current Process Understanding:

Traditionally, business people will continue to do their work the same way unless they run up against some operational problem and/or exception. Although it’s not common knowledge, most enterprises don’t really understand the depth and breadth of their business processes, if they haven’t had a recent business processing discovery effort.

In fact, there are a lot of shadow processes that are not seen nor understood. This isn’t intentional; however, processes that were designed years ago have been adapted for volume changes, exceptions, managerial regime changes and additional regional activities. Processes tend to become costly and burdensome as a result of process entropy (what non-engineering types call “decay”).

During down economic times, the studying of processes shows opportunities for cost savings that enterprises thirst for during tough times. I believe that this is an ongoing opportunity, but enterprises tend to forget this when new opportunities burgeon in an up economy.

Build Better Processes Faster for Fun and Profit:

During the mid-1990s, business process “gurus” asserted that enterprises needed to break their established processes and start over. They believed that creating new processes was the primary reason to perform modeling exercises.

Although these gurus, who were active during the business process reengineering (BPR) era, almost killed business modeling as viable activity, designing new business models is still a major activity. This is especially true for new products and services. During up economic cycles, this is a common way of understanding and simulating the kinds of processes that need to be put into place to support progressive new offerings.

There are numerous areas of opportunity that are available to the business leaders. The first place to look is manual activities that are ripe for improvement. These activities could include collaborative knowledge work where best practices emerge or just for standardization for more consistent results. One does not have to look far to find process opportunities, but I would recommend going after a “hot button” area where you could solve a significant point of pain for an organization.

If you do not view yourself as a risk taker, then there are tons of small manual processes that are available for discovery and some form of automation.

Leverage Processes in Mergers and Acquisitions:

Mergers and acquisitions are common during all economic cycles and are great opportunities to normalize and standardize processes across combined organizational entities immediately or in the future. Some dominant acquirers insist on using proven business processes; however, modeling the acquired entity’s processes will be crucial in building a transition plan.

Other acquirers look to pick the best-of-breed business processes, and comparing business models is a proven technique for success. Some acquiring enterprises exhibit different behaviors on a case-by-case basis, but understanding the explicit or implied processes goes a long way in M&A activities. BPM-driven SOA can play an important role here in the resulting processes by publishing a SOA interface into legacy applications and processes.

Bottom Line:

Good business leaders understand that it is wise to invest during down times, so that when they get busy again, they will not have the opportunity to focus resources anywhere, but supporting the business operationally. BPM is as good as any investment that I have seen to invest in going forward.

It’s not easy to justify any kind of capital budget item, especially in light of some of the recent economic challenges. However, BPM is rich with opportunity and documenting benefits is easier than anything else I have had to justify in my career.

It is not my intention to provide you with a formula, but to list opportunities that you can turn into a business case. In fact, the kind of benefits might change depending on your driver(s). If you are trying to do more with less, hard benefits will appeal. If you are looking for better client retention, the softer benefits will appeal.

Hard Benefits:

Benefits in this category are easier to convert into real economic numbers. Time and cost savings can be calculated without a lot of effort unless you want real time and motion studies.

With a little imagination, one can calculate the probability and frequency of a compliance event linked with probable costs. Once this is calculated, one can take a fraction of the financial impact and make the case for BPM. This category can even put a smile on the face of your dower accounting types.

• Cost Savings
• Reduced Elapsed Time
• Resource Optimization
• Automation of Human Tasks
• Manage End to End Processes
• Fewer Errors
• Ensure Compliance
• Smart Processes
• Goal Driven Processes
• Adjudicate Conflicting Goals
• Business Scenario Driven Processes
• Business Dynamics Guided
• Leveraged Labor Pools

Soft Benefits:

This is the mushy side of your justification effort. Equating this list of benefits to hard costs requires a special person. What is the value of a reputation? What is shared knowledge worth?

It takes a visionary business professional to convince top management of the economic value of any item on this list. Most folks will come up with enough on the hard benefits side and add these benefits for flavor to add some spice to your business case. Feel free to leverage these going forward.

• Higher Customer Satisfaction
• Visible Processes
• Shared Knowledge
• Identify Overlapping Processes
• Higher Employee Satisfaction
• Rule Driven
• Constituent Differentiation
• Departmental Harmony
• Lower Risk of Lawsuits
• Real Time Agile Business Behavior
• Policy Driven
• Competitive Advantage
• Process Focused Culture
• Company Image

Rule of Thumb for BPM Budgets:

Any justification requires the cost side of the equation, so I would like to provide some guidance for you. I promised that I was not going to provide you with any kind of formula, but I think I might be able to get closer to something that seems to fit logic on the cost side.

Start with the cost of the software (hopefully you have not sliced this cost to a ridiculously low level to invalidate this approach). Take this amount and multiply it by a factor of 2 for simple efforts and up to 4 for large scoped processes (for pilots this can be lower). This will give you the outside services costs. Double this amount for the amount of internal labor you are likely to expend.

Fortunately there is no cash flow with internal resources beyond the sunk costs you are already absorbing with salaries and benefits. You can adjust this up or down depending on complexity factors, such as difficult people to work with and technology pioneering. This is where your judgment comes into play.

Bottom Line:

Justifying BPM efforts is an art; not a science, but there are many opportunities on the benefit side of your home grown equation. Hopefully I have given you some fodder for your justification efforts. Additional reading for you is available in a few of my previous blog postings (Process is Free) & (BPM Yields Steady Returns in Good times and Bad).

PPM stands for program and portfolio management, but that alone is not clear enough. It’s much clearer to say that PPM is about managing projects and aggregations of projects generally leveraging a project management office (PMO). Basically PPM is all about projects, but more mature organizations extend beyond IT to business projects and manage application and project portfolios as well.

There is confusion because projects leverage processes in creating project deliverables, thus attaining project milestones. Some would go so far as to say that a project is a process. Others would still consider a process an asset that would fit in a portfolio that could be managed like projects. After all, don’t processes have dashboards similar to those found in a mature PMO?

Some say that the process center of excellence (PCE) views that process portfolio management is much different than project management, because projects are temporary and processes are institutional for supporting business on an ongoing basis. Still others would say that the management techniques for processes are very different than those for projects. BPM is all about business processes.

The PPM View: There is Process in my Projects

PPM practitioners believe that project management is a discipline aimed at meeting deadlines and budgets allocated to project efforts, and that it is performed more consistently in IT than in the business; but a few project managers see the applicability of BPM to projects. It is clear to them that PM is crucial to BPM efforts.

Processes can really help PPM in recognizing best practices in creating deliverables and making these best practices a repeatable process that is leveraged in many future projects that need to create the same deliverable.

In fact, there are a number of BPM-minded folks that believe a project can be imported into a BPM engine an executed like any other process.

The BPM View: Project Management is Just another Business Process

Some BPM folks would view project management as just another enterprise process that can be managed and tracked like other business outcomes, but business processes are more predictable and repeatable, whereas projects are more flexible by nature. There is, however, a stream of best practice processes that can be leveraged in producing project deliverables.

Project management can help BPM during the process building phase by leveraging scaled down project methods that are iterative in nature. These methods are likely to include the following:

• Common terminology for projects
• Project charter template
• Schedule template
• Formal client feedback procedure
• Defined project meeting formats
• Scope statement templates

Project managementstops once the process is built and another set of improvement techniques take hold. I like to use the analogy of the manufacturing line. PM can be used to build the manufacturing line, yet managing the running manufacturing line is not a project, but an ongoing effort. BPM provides for process measurement and improvement for correct and consistent products done in a timely fashion for the cheapest cost while leveraging resource utilization like a manufacturing line.

Bottom Line:

Both projects and processes need governance, and though there is common ground around building processes with great project management and running a good project with repeatable processes that are best practice towards accomplishing deliverables, the deliverables and skills are quite different In the future, I expect that processes will become more nimble as they learn to leverage process snippets dynamically to support knowledge workers, but most busines processes are quite repeatable today. As this evolves, the commonality between BPM & PPM will grow, but PPM is about projects and BPM is about processes.