Smartening up your business processes

It's easy to be cynical when you come across what appears to be yet more market speak and claptrap. And at first sight the notion of business process analysis and management software (BAM and BPM) or business activity monitoring software (BAM again), as another management layer, is right up there. Advocates (mostly those that sell it), however, point to the proven value of business process automation and electronic workflow – not just information flow – in hugely improving manufacturers' efficiencies and responsiveness. And they point out that the first requirement is understanding your business – how it really works (the big picture and the detail), who does what, with what applications – both as it is now and as it might need to be. The second is making your required improvements happen. This they argue is where BAM (both kinds) and subsequently BPM come in: the former offering modelling and simulation that helps you understand your resources, interactions, costs and the implications; the latter executing on the new, better business framework – for example, escalating exceptions automatically to the right people, or providing management visibility into existing systems. And they back their argument for yet more management software by pointing out that, with the exception of the '80s and '90s era of business process re-engineering, firms have largely concerned themselves with departmental, or at best bounded project improvements, and that includes those concerning ERP implementations. They explain that now that most companies have done much of the cost reduction around their financials, business planning, production processes and the rest, BAM/BPM software is the best route to the next level of achieving competitiveness at whatever levels you need – quality, lead times, customer service – through structured, graphically-assisted business process re-engineering and automation. BAM/BPM, they say, is best viewed as: first, for discovering and documenting end-to-end business processes that are otherwise difficult to nail down; second, for building on and, where necessary, repurposing the existing IT and resources (including people); and, third, for automating where possible and for providing exception management and alerts, where that's not possible. A helping hand "If companies think they are running their business processes adequately, that's fine," says Franz Schubert, marketing and communications manager with BPM software firm Ultimus. "But if they think they could significantly improve the way they work because they lack co-ordination, or systems and processes have grown up piecemeal, they could benefit from BPM." He's one of many that suggest that manufacturers do have problems with reinventing themselves. "A lot have relatively small admin teams, so they're not aware of the possibilities. For others, the average age of employees is quite high and they've been doing their jobs for a very long time. So they're also going to fear for their jobs if there's business change. This isn't easy." Hence again, software tools to demonstrate balance, independence and the real world: as Schubert says, many companies that think they know their business processes don't. Using a tool that captures what's actually happening, and allows people in departments and across the senior management team to quickly modify processes and simulate the results, can take a lot of the time and politics out of the business of change management. Couldn't you do this stuff on the back of a fag packet? Well, yes you could, but as Andy Bailey, vice president of marketing for BAM/BPM software firm CommerceQuest, says, this way you get speed, accuracy and understanding, and you can also port your model over to a run-time engine for execution if you choose to go that way. "Some businesses spend a lot of money on consultants, but then they walk away and the business doesn't know how to take their recommendations forward. The tools help with the modelling and provide the foundation for the execution of the changes, also highlighting the critical areas and the priorities." He also takes the execution aspect further, insisting that many organisations will need an additional layer of enterprise IT on top of their ERP systems, not least because their existing IT infrastructure (and the processes) may well now be a barrier to business development, especially where a mix of legacy systems has had to be retained. It's the least cost route. It's a moot point, and there's scope for confusion and different purposes here. On the one hand he argues that packaged ERP systems alone may be incapable of fulfiling what BAM analysis reveals you need because you're bound to have unique and unsupported requirements for managing supply, sales, operations, whatever. "BPM technology can help at the demand and supply end of the supply chain, for example, or in operations – making them more efficient. The benefits include management at the control level, ensuring adherence to the compliance rules, or making the business processes more flexible." On the other hand, he suggests that where merger and acquisition activity is an issue, you need a 'buffer' for your IT. "Companies need to understand that if their IT infrastructure is quite old or heavily customised, it can be a serious barrier to 'on-boarding' acquired companies – getting them working and communicating at all levels under the new ownership… Companies need a flexible layer that enables them to change: an application architecture involving integration technologies and an additional layer that works with the existing IT investments." Both may be fair points: Spencer Marlow, European marketing manager for BPM competitor Sterling Commerce, puts it a different way: "Most companies' IT assets have been developed over time to deal with specific, often departmental requirements. They're very good at what they do, but very bad at cross-functional processes. We're providing integration to legacy systems, systems for visualisation and systems to control, manage, optimise and extend the existing systems to deal with the bigger picture." So for him, much of the execution end of BPM is about an integration broker platform acting as a hub between legacy systems – essentially the integration piece. Oh really? OK, enough. For those of you who thought their ERP systems should be doing most, if not all of this, despite what's been said, the answer is, they should. Unless (a) you have a complex mix of legacy systems and either can't afford to move them onto a more modern integrated ERP system, or are so dependent on them for their uniqueness that to do so would be commercial suicide, or (b) you are highly acquisitive and genuinely need a flexible top-end interface, there seems little point in investing in yet another layer of management software. Pat McCarthy, managing director of Syspro ERP developer and system integrator Information Engineering, puts it well: "Adding a business process management system on top of ERP is an admission of failure… There's no doubt that the biggest issues for manufacturing companies today are around their business processes and people: there are few problems now in terms of the IT itself alone. But change should then come through their ERP implementation." "We're working with a company now that has 25 different business units within the group. The CEO wants them all to work in a better and more similar fashion. So we've created what he calls a blueprint of end-to-end business processes using our templates, and unless there are genuine reasons, those will be the standard group-wide. That also means they can set up shared services, like group purchasing, group IT and so on." The bottom line: ERP can cut it. He agrees that business process management tools, like all tools, can be good in the right hands, and that analysis – either simply with people, paper and pen or the sophistication of graphical BAM tools – is a good discipline for directing prioritised improvement whatever your infrastructure. But ultimately, he insists, "Actually, what you need to do is simplify things – and that takes a lot of bottle. Everyone is easy about making a 5% improvement with little risk. It takes a lot more bravery to tear up what you've been doing and go for a 50–60% improvement." Bottom line Last couple of thoughts. First, of course the focus on cost cutting has to continue, but most of us recognise it's no longer (and never has been) sufficient. You need to demonstrate to your stakeholders that you have a plan for growth and improvement. Lean thinking, lean supply chains, stripping time and inventory away from the business, improving cycle times and, above all, gearing the business to be able to change to meet new opportunities are certainly critical. BAM tools can help steer those initiatives. Second, as Wendy Cohen, sales and operations director at BPM software firm HandySoft, says: "People don't buy BPM as a tool… The reality is ERP systems are very good at the high volume transaction stuff that passes the test. But if goods receiving at the customer says 'This isn't what I needed' or 'There's not enough' – the 10% that cause problems – then BPM becomes very valuable in managing the exceptions that ERP doesn't see." She suggests BPM be considered in this light for tactical problem solving.