The Process of Establishing a BPM Program

The process of launching a BPM initiative comprises six steps: defining the company's current state, defining its desired future state, defining the changes necessary to reach that future state, determining the activities required to bring about that change, identifying the project's value and goals, and developing the implementation plan. (For more on these steps, see the online-exclusive sidebar at the end of this article.) Experience shows that problems often arise when companies don't fully complete these six steps, when they don't perform them with enough attention to detail, or when they are too tactically or technically focused. To ensure their success, BPM champions need to include the following actions in the development of their performance management initiative.

Link BPM to recognized business needs. The best way to get off on the right foot with any project is to ensure that it addresses recognized business needs which are important to key stakeholders. One such example is the need to measure IT value. Despite investments in tools such as IT scorecards, organizations continue to have difficulty expressing this value in clear business terms. By integrating planned and actual data from budgeting, scorecarding, and activity-based costing systems, BPM can provide information like that in exhibit 1 below. Such information is highly valuable to senior management, especially the CIO, so providing clarity about the potential for this type of capability can be important to winning support for the project.

Identify specific value sources. BPM investments are often justified on their ability to reduce costs and improve decision-making. Such justifications have two fundamental flaws. The first is that BPM systems don't always save companies money. While they may reduce the time managers spend on activities such as budgeting and reporting, the end result is simply freeing up their time for other activities; spending isn't reduced just by taking away 5 percent of the activities performed by managers. The second flaw is that the BPM champion doesn't specify how BPM will improve decision-making. He or she doesn't identify which decisions BPM can be expected to influence or define the value associated with changing how those decisions are made.

Nevertheless, BPM can generate real value by coordinating decision-making and resource allocation across functional boundaries. A classic example of this is in accounts payable and accounts receivable. In many cases, a large proportion of work performed in these functions entails fixing errors caused by "upstream activities" in other areas of the company. These non-value-added activities are typically required because people outside of A/P and A/R are making functionally-focused decisions about how work should be done or how problems should be resolved, without considering the impact on the organization as a whole.

BPM provides three capabilities that can help organizations influence decision-making and thereby streamline cross-functional execution. First, it can measure process performance, as shown in exhibit 1, in a manner that presents information from a broader business-process perspective. Second, it can be used to establish performance measures that focus people from different functions (such as purchasing, receiving, and accounts payable) on broader business-process objectives. Third, it provides the means to establish formal budgetary and performance accountability (e.g., productivity, service, and quality objectives) for end-to-end process measures.