Business Process Management, Process Maturity Model and Implementation

Introduction

The businesses are required to continuously change and improve to meet their customer needs and to achieve their goals. For any organisation to be able to achieve growth one of the important criteria is to have a solid operational excellence for effective and efficient operations management. For operational excellence and growth, organisations have to have clearly defined ways of working and full visibility of end to end business process value chains. The term end to end means clear visibility of Idea to Market, Market to Order and Order to Cash processes and supporting internal processes for HR, Legal, Finance and IT departments.

On one hand the organisations are under pressure to remain agile and flexible for adapting change while on the other hand for operational excellence it’s important to have a structured way of working and execution to be able to achieve the results with required level of quality. Organisations have to identify business areas that are their unique competitive advantage Vs business areas that are industry best practice standard and can be kept compliant with industry best practice standards.

For achieving the standard and structured business processes and their compliance, a framework and process maturity model is essential. The framework and process maturity model will help in identifying, implementing and continuously improve the organisations business processes.

Overview of Business Process Management

Business process management as the name suggests focuses on end to end activities involved in managing business processes. This starts from business process requirement definition, design, deployment and post deployment monitoring and control followed by continuous improvement.

Although most organisation have business process management done using one or the other method, the challenge is to ensure that its tailored to meet the real needs of the organisation. Starting and implementing business process management initiative requires time, efforts and commitment from all levels of the organisation especially from the management team. These initiatives involves multiple departments and so are executed as business transformation program instead of just one department making steps for business process management. It is also essential that such initiatives are done first time right as failure could lead to high business impact especially in the area of operational excellence.

Business Process Maturity Model

For effective business process management implementation as well as continued monitoring and control post implementation, it’s essential for organisations to use either market standard or own business process maturity model. A business process maturity model allows organisation to check their current maturity level / state of respective business process. This not just help in identifying but also defining improvement actions that would help strengthen the process maturity level. It also helps the organisation in identifying and ear marking the business processes where they need high level of maturity Vs. those where they can live with a slightly lower level of maturity.

Over past decade as more organisations realize the need for effective business process management; many maturity models have come to existence. However, only few are successful and used widely, namely Capability Maturity Model Integration (CMMI) and Business Process Management Maturity Model (BPMM).

One of the most widely used models is Capability Maturity Model also known as CMM developed by software engineering institute at Carnegie Mellon University. It came in existence in year 1989 and was shaped as a maturity assessment model in year 1993. During past 15 years it further evolved and become broader and being used in different areas of an organisation from IT to People to Product and Services. This maturity model helps organisation evaluate the business process maturity on 5 levels named as Initial, Managed, Standardized, Predictable and Innovating. The organisation can measure their process maturity against each process area at various levels and decide to take up best practices specified.

The other widely used model is Business Process Management Maturity Model (BPMM) developed by Object Management Group (OMG). It came in existence in year 2007 and is based on Humphrey’s Process Maturity Framework and CMM. This maturity model helps organisation evaluate the business process maturity on 5 levels named as Initial, Repeatable, Defined, Managed and Optimized. The organisation can measure their process maturity by answering the standard questions with evidences for each level of maturity.

After words

Business process management is essential and important for all organisations. In this era of change its important that business processes are standardized and optimized for use. Its even more important to differentiate the amount of efforts and time that need to be spent in specific business areas in standardizing. This allows one end for organisation to use best practice standards and on the other end help them measure and continuously improve the business process management within the organisation. From the review of this paper following are the key points to note,

– Depending on the size of the organisation the approach used for BPM Implementation can vary

– For Large multi-national organisation, business process management initiative must be run as business transformation program

– The program must have support for organisation management team and must be ready for required governance and culture change

– The execution must be planned based prioritized end to end business process value chains with highest priority for processes adding direct value to business growth

– Post implementation for ongoing improvement, a robust process maturity model must be adapted and put to use through the organisations business process management organisation

– Industry standard business processes in the area of support departments must be adapted using industry standards and tools

– BPM implementation and process standardization lead to application rationalizations and lower IT costs for the organisation

Looking forward the business processes management will continue to get stronger and standard. For all organisations to be able to do business in effective and efficient manner, it is necessary to have a strong BPM implementation. BPM is further evolving where organisations are faced with Agile and Lean concepts which required organization’s business processes to be equally agile and lean. Agility is important for faster change while Lean supports the organisation in faster adaption of change.

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Enterprise Resource Planning Systems – Part II

Today’s ERP Systems

Today’s ERP Systems are vast and cover end to end business process integration and automation. Key features of them can be listed as follows,

  • End two End enterprise wide business process integration and automation
  • Ready to use industry based solutions that are made from industry practices
  • Fully configurable system with possibility to customize specific areas for business needs
  • Faster and effective decision making using self configurable and drill down reporting
  • Standard interfacing based on industry standard data interchange standards making it easier to interface and integrate existing applications with ERP Systems
  • Internet and Collaboration capabilities making it easier to collaborate with customers, colleagues, partners and vendors.
  • Software as a service solutions for small and medium enterprises to able to afford and use industry standard based ERP systems at lower costs

Top ERP vendors in today’s market

There are many ERP vendors for different industries and business sizes. Key vendors that standout and are world known are SAP, Oracle and Microsoft.

SAP

SAP is world’s largest ERP vendor with high market share and revenues. SAP was founded in 1972 by a group of ex-IBM German employees. The product has its own evolution cycle over past three decades and its now the market leader in wide range of industries. SAP has created various solutions based on industry best practices and packaged the solutions with power of full customization (meant for multi nationals/fortune 500 companies), minor customization (medium to large size companies) and out of the box (for small and medium size companies). It further continues to develop a complete suite of ERP solutions consisting of end to end business processes.

Oracle

Next to SAP, Oracle is the second largest / known vendor in ERP market. Oracle was founded with focus on relational database management software and systems. Even for SAP the backend database many of the times would be Oracle. Oracle entered in the field of ERP systems over a period of past decade and has gained momentum with acquisition of some of the 1990s well known ERP software companies like PeopleSoft who had before acquired JD Edwards. This gave Oracle a big base of customers to expand its ERP Systems and solutions. Oracles recent acquisition of Sun Java further adds a feather in Oracle’s capability to build and deliver sound ERP Systems

Microsoft

Microsoft entered the ERP Systems with a product named Dynamics and has started emerging in last decade with focus on small and medium enterprises ERP Systems and Solutions. Microsoft Dynamics has a positive point as it combines the full end to end software needs as Microsoft makes the server and client operating systems (world known as windows), the relational database management system (known as MS SQL) and the thin browser client (known as Internet explorer). On top Microsoft is well known for its collaboration tools like Microsoft office range of products, Microsoft Sharepoint and Microsoft Duet solutions which help combine ERP systems with collaboration functionality.

ERP Systems – Further Evolution

Given the importance, dependency and need for ERP Systems, the evolution of ERP systems will continue with even more speed to bring more agility in the solution provided and adaption/implementation of ERP solutions.

ERP Systems in coming years can focus on and evolve in the areas of,

  1. Enhancing the internet based system performance and user experience. By doing so discontinuation of any client software need to use ERP systems. The need also arises from the speed with which business needs ERP systems changes done and implemented. In doing so the user experience of ERP systems usage will further help to reduce the time and effort spent on training/re-training users on ERP System functionality.
  1. Cloud based offering in the area of Software as a Service could open up easy and affordable ERP solutions for small and medium enterprises. ERP vendors are already having Software as a Service solution available for businesses. These would further evolve in cloud based low costs and easy ready solutions.
  1. The transformation of PCs to laptops and laptops to tablets on hand and other hand mobile devices becoming as powerful as laptop computers in processing speed and functionality. This opens the need for at least part of the ERP Systems solutions to be available on mobile devices.

After Thought

ERP systems have came long way over several decades and in doing so they improved the functionality offered, user experience, industry best practices and focusing on standardized solutions.

The evolution will continue towards cloud based offerings for possible small and medium business enterprises making process automations available on internet at a click of a button. The evolution will also continue in the areas of making ERP systems available on tablets and mobile devices.

As the speed of business change continues to grow higher, the ERP systems would be under constant need to become highly Agile in the area of change implementation, user experience and execution.

Enterprise Resource Planning Systems – Part I

Background

Enterprise Resource Planning (ERP) Systems started in 1970s the years’ when business and markets were heavily focused on mass production of materials and industrialization was on the peak. The so called enterprise, five to six decades back was in need of automation of industrial materials and their effective plus efficient management. The prime focus remained on materials and resources management.

In this fast changing business environment and heavy dependency of businesses on automated processes running using various IT Systems; the value and need for a reliable ERP System is constantly on rise.

ERP Systems have evolved over several decades and still continuing to evolve to become more fit for today’s business needs.

Legacy Systems

Legacy systems are generally any systems that are old systems built using software and hardware platform that is more than a decade old. Systems that are built using old programming languages like ‘COBOL’ and are running on mainframes, considered legacy systems. In some organisation such systems are still in use as they are complex, costly and difficult to replace. Legacy systems are difficult to interface with and make changes.

In organisations systems that are archived or not actively used and kept for audit purposes are also referred to as Legacy systems. These systems normally were built and used 7 or more years back and consist of business transactions and information that are of use for historical referencing. Older ERP systems are also termed as legacy if they are kept running and used for historical transactions referencing.

ERP System Contents

The enterprise resource planning system is software package that brings together various business processes by automating plus integrating them and maintaining a central database with all relevant master data and transaction data. One of the Key benefits of using ERP systems is they are normally having real time availability of information which is key for businesses.

Enterprise resource planning systems cover a wide range of business processes management namely Manufacturing, Supply Chain, Financials, Human Resources, Projects and Customer Relationship.

ERP Systems structure is made up of various modules ideally focused on respective functional domain like Manufacturing, Finance, Supply Chain, Human Resources. The system needs one central database which consists of Master and Transactions data for various modules.

Decades of ERP Evolution

ERP Systems have evolved over 4 decades. If we look at the evolution in each decade major steps happened.

1970s – MRP

In 1970s all systems were standalone and separate systems. Given the ear of industrialization 1970s ERPs started with MRP systems called Material Requirements Planning System. MRP offered production planning which helped businesses in inventory management. In the same decade the standalone financial and human resource systems evolved.

1980s – MRP II

In 1980s MRP systems where further enhanced as MRPII which helped bringing inventory management and production management together. In the same decade for financials management, FMIS systems arrived.

1990s – ERP

In 1990s major evolution happened and ERP Systems emerged which offered one integrated MRP, FMIS and HR system. In the same decade Supply Chain Management systems emerged to take care of planning, scheduling and distribution of products. As this was also the decade of Internet boom customer facing systems like e-commerce, sales force automation and customer relationship management emerged.

2000s – ERP End 2 End

In last decade (2000s) ERP systems have become robust and evolved as one end to end system covering the entire business portfolio needs. ERP systems took a turn to become industry based and various standard industry best practice based industry specific solutions emerged. In the same decade ERP vendors increased focus on making ERP systems web based and making it available as viable out of the box solutions for small and medium enterprises.

Continued in Part II …

Application Convergence – What, Why, Who and How?

More then ever the businesses are getting automated and enabled using IT solutions. Every part of the organisation are dependent on one of more IT solutions, some in house and some bought from the market. The IT solutions are made with the need for enabling the business and often leaving the useful ones rest are forgotten and left as legacy/archives to be referred only when needed.

With fast changing business needs applications are created, used and left even faster then we all could think about. Day in and day out business creates document libraries, project team rooms, intranets and a lot more. Over years this turns out to be a huge mess and close to unmanageable. The result is higher maintenance and infrastructure costs. Legacy / archive appls, as they are hardly used result in Loss of knowledge.

In the era of acquisitions and disentanglements to speed up innovation and change business directions, its even more essential to ensure companies have defined and controlled solution catalogue which is well managed and serviced.

For MNCs this is extremely essential as MNCs have multiple office locations, the applications appear like mushrooms in those locations and then grow into a huge architectural and landscape mess to manage and maintain. The issue starts with slight differences in global and local process and document needs. Ones allowed localize the changes continue one after another leading into a fully customized monster application and that too not just in one location but many. The result is enormous costs to maintain, control and change business applications and processes.

Application convergence can be addressed by addressing the following in order mentioned,

Bottom Up Dos

  1. Ensure the As is application portfolio is clearly documented with ownership from IT and business
  2. Collect relevant solution changes and yearly maintenance costs to ensure full visibility
  3. Get the collected data well categorized by business process, functions, platforms, location etc.
  4. Create some data analysis and reports showing number of applications in different dimensions of the categories to be able to see the duplicates, expenditure and other information useful to make decisions.
  5. Ensure the 1st hand bottom up approach analysis and output is shared with the top management and local businesses alike in condensed and relevant manner.
  6. Identify the champions that helped in bottom up approach and they should be used for the application convergence activities going forwards.
  7. Identify the road blockers and how they can be kept in control or convinced that application convergence is good for the whole organisation
  8. Ensure during the whole process that current business and activities are not affected as they will create –ve publicity and barriers for progress

Top Down Dos

  1. At the company level define the Application convergence initiative ensuring full business buy in and management support throughout the organisation
  2. Adapt an Enterprise wide architecture framework (like TOGAF, Zachman, DoDAF etc.)
  3. Start with the Business process layer to define the core business processes. Ensure core functions, business processes are well documented and have clear global ownership.
  4. Short list and select the required architecture and portfolio management tooling as these would be needed for ongoing use, structure, control and management.
  5. Business process by business process start harmonizing the processes and select the best solutions from existing ones or new ones (from the market or built in house)
  6. Focus on quick wins by choosing the valuable but easy transitioned business processes and start filling up the solution catalogue with global solutions. This also means start closing down by transitioning old solution towards new ones and launching them as one global solution
  7. Focus on clean ups that can aid to reduce the infrastructure and maintenance costs and hence result in better use of resources across organization
  8. All new business demands should fit in to new way of working with only one solution at company level.

Another important point to keep in mind is Application convergence in MNCs could take from up to 1 to 5 years although a lot will be achieved in 2 years while the complex applications convergence would require a lot of time and efforts and proper strategic planning to make it happen with business change.

If the above is done in write order with proper management support and control then it ideally should lead to globalised solutions which if made with agile and service oriented architecture would result in agility to cope with business process and tools changes done fast enough and efficiently across the organisation. On the other hand running application convergence will lead to whole IT landscape clean up and steam lining ideally resulting in savings.

Importance of Business Process Management

In the era of fast changing world where there is hardly time to catch up breath, we still must care about the core and that is business process management. Business process management is used around identifying and documenting core business processes within the organisation. It also focuses on everything around core business process like roles, responsibilities, time taken from A to B, inputs required and outputs expected.

Although a lot has been done by companies to manage business processes effectively, identify core ones to keep in house and noncore to outsourced to manage through the vendors. With all the more fast changing needs and directions of business is making companies to increase their focus on business process management.

Business process management is important and seen useful because of following,

Good business process management ensures,

  1. Great returns in terms of process automation and use of technology to enable & enrich the business user’s experience
  2. Agility to be able to identify and change as per changing business needs
  3. Ability to create one understanding of the business process flow across the organisation
  4. Ability to identify and outsource or buy business as a service for non core business processes
  5. Ability to better control and comply with audits and regulatory needs

Bad business process management leads to,

  1. Poor response to changing business needs requiring business process change
  2. Agility to adapt only for local situation leading to duplicity and unmanageable change
  3. Duplicate business processes and their automation for various locations due to slightly different adaptation in different places
  4. Increased business process management, trainings and IT costs
  5. Unclear understanding of business processes would lead to control, compliance and regulatory issues

No matter how fast the change becomes, its still very essential to have full ownership and effective business process management in place. The value of the same is long lasting and could be the make or break of the success of the company.