Business Strategy

Business Strategy

Industry Scenarios

Business process management can be applied to a number of functional areas within the enterprise in a number of industries. Common industries for this type of solution include those where there are requirements for dynamic and complex business processes such as within the energy industry, financial services industry, and the telecommunications industry. Typical functional areas include customer relationship management, enterprise resource planning, and supply chain management.

Benefits

The business benefits for business process management include the establishment of a holistic approach that includes people, process and technology, increased agility, reduction of complexity, decreased cost of ownership, and faster return on investment. These business benefits can be both tangible and intangible in terms of how they contribute toward a traditional return on investment. Reduced cost of ownership and operational efficiencies can yield measurable returns on investment, but benefits such as increased agility, although harder to quantify, are equally significant. In fact, some of the strongest benefits of business process management relate to the ability to monitor business processes in real time and to be able to change or redesign the process steps as business conditions dictate. Another benefit is that the knowledge behind the business processes that relates to their design and usage is captured in an electronic system of record. This system of record is similar in approach to the way in which relational database designs are captured in a database management system such as Oracle.

Holistic approach

One of the main benefits of business process management is that it can enable a holistic approach to solving business problems that incorporates people, process, and technology and can span multiple enterprise boundaries. It is most relevant for complex, lengthy processes that involve numerous applications and business partners and are of high business value. Traditional application integration techniques embed business processes deeply into the code level and are often hard to modify. Traditional techniques also often fail to incorporate the human side of a business process and the full end-to-end considerations across multiple applications or business partners.

Increased agility

By managing business processes from the top down, businesses can gain considerable agility in terms of being able to modify and optimize their business processes on the fly. As application and business functionality becomes exposed as Web services components, business process orchestration can be used to execute the high-level business rules related to their interaction with other partner Web services. Both public and private business processes can be orchestrated in order to complete business transactions. Public processes are those processes made available for partners, whereas private processes are those that are kept internal and are hidden from outside view.

Reduced complexity

For the business analyst who is involved in process design, deployment, execution, maintenance, and optimization, the complexity of applications is greatly reduced since the view is abstracted to the process level. The business analyst can view process nodes as "black boxes" that execute required elements of functionality without having to be concerned with the technical details of their inner workings.

Decreased cost of ownership

Cost of ownership is reduced with business process management, since changes can ideally be made via changes to business process within the business process management system a database storing the defined business processes. This is far simpler than having to make changes to application code and then having to compile the code and issue new versions.

Faster return on investment

In certain cases, when a solid IT infrastructure is already in place, business process management can be applied as a wrapper around existing business applications in order to manage the business rules related to interaction. This can generate a fast return on investment when compared to traditional application development or integration.

Challenges

The challenges for business process management include making the shift from a technology-oriented to a process-oriented approach, the abstraction of business processes from business logic for true agility, the packaging of business logic for modularity, and enterprise training and change management for employees.

Making the paradigm shift from IT integration to process integration

Business process management is a new paradigm for the development and deployment of business applications. As such, there is a paradigm shift for the organization to embrace before the benefits can be fully realized. Since the process can be very different from traditional application integration solutions, a gradual approach via low-risk pilot projects can help to build confidence and early successes.

Abstraction of business process from business logic

To gain the most benefits from business process management, the business logic, in terms of the specific business functions and calculations that need to be performed, must be abstracted from the overarching business process orchestration. Business logic can be thought of as the software code that completes specific business functionality such as calculations or database updates. Business processes can be flexible and adaptable only if the process steps are uncoupled from this type of business logic. When business process steps are too tightly coupled with business logic, they become hard-coded into software executables and can be adjusted only via complete rewrites of the applications. Such rewrites often take weeks or months. The best candidate business scenarios for business process management are therefore megaprocesses that span a large number of smaller application modules that not do require adjustment and are self-contained.

Componentization of business logic

To achieve the abstraction of business process from business logic, the business logic must become componentized and loosely coupled. It needs to become more granular in its organization and easily integrated with other components via well-defined interfaces. For legacy applications such as mainframe and client/server systems, this is often not the case. These applications tend to be monolithic in nature, holding large amounts of presentation logic, business logic, and data logic in single executable files. For business process management to be most effective, business logic must be neatly packaged into discrete elements that can easily be orchestrated and invoked in a variety of sequences for process optimization.

Training and change management

One of the challenges in implementing business process management is that new user roles need to be defined during development and deployment. Business applications have historically been implemented by an IT-centric approach using technology-oriented analysts and developers. Ongoing maintenance has been conducted by IT administrators and operations staff. End- user involvement from the business side has historically been confined to initial input into requirements and then actual usage of the final application. The business process management approach pulls business users into the lifecycle of the application more heavily. It uses business analysts to define and orchestrate business processes as part of the overall solution development and operations. These business analysts must be trained to use the new toolsets and must maintain an ongoing job function in order to manage and continuously optimize the processes of their organization. Training and change management are therefore amplified for organizations considering business process management initiatives when compared to traditional IT application development or package implementation initiatives. The result, however, is greater business control over the solution.

Strategy Considerations

Business process management should be considered an ongoing initiative that contributes toward process excellence. It provides the business with a way to manage the entire process lifecycle from modeling, to testing and deployment, and finally to monitoring and optimization. It should therefore be approached with considerable upfront planning in order to define both the initial integration aspects and the ongoing management and monitoring aspects.

The best candidates for business process management are long-running, complex transactions that span a number of business partners. These transactions can often run for days or weeks and have complex processing requirements in terms of state management and exception handling. They can occur in most industries, including financial services, insurance, telecommunications, and manufacturing. They are often megaprocesses that include a number of individual applications. Business process management can help to optimize the process steps involved and to provide a dashboard for continual monitoring of processes while in execution. As such, business process management represents a new way to manage these long-running transactions and requires considerable end-user training and change management.

A strategy around business process management should first aim to determine which business processes are the best candidates for implementation. Before implementing a solution, the selected business processes should be analyzed in terms of efficiency and bottlenecks. Many manual process steps may be able to be automated through redesign of the business process at the design stage prior to implementing the business process management solution.

Internal projects are usually the safest early initiatives for implementation. Such projects might relate to a variety of internal workflows around customer relationship management or enterprise resource planning. Once the business has adapted to the paradigm shift in terms of business process integration versus traditional application integration, which will typically still be an underlying layer, you can start to think about how business processes may be exposed for others to utilize. As software components and elements of functionality become exposed on the internal or external network as services, you can think of the business process management system as a powerful tool to help you orchestrate these services and define the rules of engagement.

Business process management is actually affecting not only software companies in the integration marketplace but also within the service provider marketplace. Traditional ASPs and business process outsourcers are starting to think about how they can become business process providers. Instead of hosting an application such as enterprise resource planning, or a business process such as payroll, they can now serve as external business process orchestrators or business services providers. In this manner, they can help to manage megaprocesses between organizations who do not want to maintain these process competencies themselves. With the emergence of Web services, these companies can also outsource complex business processes that span multiple businesses and multiple applications that were previously too complex and too proprietary to tackle.

An example company in this space is Exigen. The company offers what they call a business process utility, or BPU, which allows companies to lower their total cost of ownership by outsourcing their critical but nondifferentiating business processes. Sample verticals and business processes that are candidates for this type of business process utility service include mortgage and loan processing in the banking industry, policy origination and claims processing in the insurance industry, and broadband service provisioning in the telecommunications industry.

A strategy for business process management should therefore consider which processes are candidates for outsourcing and which are most desirable for maintaining as an internal core competency. Critical processes that are nondifferentiating can be outsourced, providing that the service provider has the necessary track record and financial stability to become a trusted partner.

Estimating Results

Estimation of results related to business process management is highly application- and industry-dependent, but in general it allows business processes to be streamlined. Business processes can be modeled, deployed, and managed more effectively with a business process management system in place. This can improve customer loyalty and lower operating costs. It will be easier to deploy new applications and to make changes to existing applications using a BPMS in the same way that a relational database management system (RDBMS) such as Oracle helps with data design and management. In this manner, the total cost of ownership is reduced substantially when deploying complex processes throughout the organization. There are IT cost savings from using the BPMS for initial design, and business cost savings from using the system in operation. Increased revenues can result from being able to more closely match process steps with changing business requirements. The general formula for return on investment is therefore as follows:

Return on investment (business process management) = (IT cost savings from business process management system + Cost savings from improved business process management + Increased revenues) / Cost of business process management initiative

The soft benefits for business process management, once again, are related to improved customer loyalty, increased process agility, reduced complexity, and a holistic approach to solving business problems that more closely fits the business requirements.

 



Business Innovation and Disruptive Technology. Harnessing the Power of Breakthrough Technology. for Competitive Advantage
Business Innovation and Disruptive Technology: Harnessing the Power of Breakthrough Technology ...for Competitive Advantage
ISBN: 0130473979
EAN: 2147483647
Year: 2002
Pages: 81

flylib.com © 2008-2017.
If you may any questions please contact us: flylib@qtcs.net