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Wednesday, 24 February 2016

What is BPM in plain English? Explained to Small and Medium Enterprises

What is BPM really? When we think of BPM or business process management, we often think of ‘expensive’, ‘for large companies’, ‘takes up too much management time’ or ‘we are not ready for that yet’. Is that really what lies behind BPM?
All those perceptions are wrong. In fact, a Small or Medium Enterprise should worry the most about its business processes in order to grow faster. No organization should postpone this issue until it’s too late because the solution might not be as simple.
SMEs that want to have a chance in the market should start by managing its business processes;maximize customer satisfaction and its inner efficiency, all of which is crucial to grow.
In a previous post we discussed the main difficulties and fears of a SME when using BPM and we suggested specific solutions to face those issues before they become irreversible.
Now we will present the BPM discipline in a simple and specific SME-oriented language, taking into account their problems and worries, showing why this is such an urgent issue. The sooner you start applying BPM solutions, the better will your company function.

What is a business process?

A business process is a sequence of activities that take place in your company to achieve any of its objectives. Usually a business process involves several people who contribute with a particular task.
Let’s think of the following example: Your company receives queries and products requests via email, telephone, website, call center, or through direct contact with salesmen. In any case, after receiving the request, it is assigned to a vendor, who communicates with customers to better understand their needs and build a business proposal for them. There are standard proposals, which go directly to the customer via mail. And there are complex proposals that require additional approval of commercial managers and then go to the customer. Let’s say that the client can only do three things: buy, reject the proposal or ask for modifications. If they buy, your process continues through the seller, who coordinates the delivery.

Modeling a business process

The previous example could be illustrated with a diagram (or workflow):
Hooray! We have the first version of a workflow for our selling process. Using a diagram helps us to:
  • Understand how our process is working and raises questions: Do we want this logic to complete a sale? Or a different one?
  • Identify bottlenecks: The Commercial Manager is able to review everything in time to send to the customer?

Process automation

Ok, the workflow is ready, now what? Automate a process using a BPMS (BPM System). That means ‘translating’ the process into a computer system that allows us to automate each process stage.
In our example, once the vendor completed a complex proposal, it is sent directly to the ‘Inbox’ of the Commercial Manager, without having to send physical documents or exchange mails. The BPMS “knows” that after the Seller, if the proposal was marked as complex, it should be delivered to the Manager, who can approve or return it.
The most important concept here is the ‘Inbox’. There the users will find the tasks that have been assigned to them in the previous stage of the process. And once the user completes the task, it will go to the ‘Inbox’ of the next user
In our example, the proposal will reach the ‘Inbox’ of the Commercial Manager, who will have two buttons: ‘Approve’ or ‘Return’. If returned, the proposal will be sent to the ‘Inbox’ of the person who wrote it in the first place. If approved, the proposal will be sent to the client (via email if he has no access to the system).
In addition to managing ‘inboxes’, the process automation allows us to:
  • Create new instances of processes in different ways. In our example, create new business applications, regardless of their origin (call center, salesman, etc.).
  • For each of these instances, facilitate collaboration and show at which stage is each instance.
  • Set deadlines for each stage. In our example, we could make sure that the client gets our quote before a certain time limit.
Plus, all instances of the process (in the example, the commercial proposals) are stored in the system, the history is recorded (who wrote it, when it was approved, etc.) and all related documentation is stored (different versions of the proposal, comments, observations, etc.). Thus, in a single system we have all relevant information of all commercial proposals (instead of having it scattered in countless mails or Excel ® spreadsheets).

Process analysis

After having automated a process with a BPMS, you need to identify:
  • How many proposals are at each stage (i.e., how many opportunities at each stage)
  • Set alerts with deadlines in each stage (How much does the client have to wait for a quote?)
  • Exactly how much work is each person responsible for (Are we really swamped in work or just a few stages are stuck and impact on the entire process?)
Measuring tools in a BPMS allows us to:
  • Issue reports that show the number of quotes, the time required at each stage and the productivity of everyone involved in the process.  In our example:
  • How many applications I quote the last month?
  • For which product?
  • How many ended in a closed sale?
  • How many belonged to each seller?
  • How long did the process take?
  • How long did each stage take?
  • Is the Commercial Manager a bottleneck?
  • How long does the Commercial Manager take to review each proposal?
  • How many proposals are pending review?
This is called measuring and analyzing the processes. This way you can know for sure how well each process is working and where there are problems. This is helpful beacause you know where to use your resources and where not to waste your time and money.

Summary

When an SME starts functioning, each process is quite simple. But once you start growing, can you handle everything manually? What will happen when you have 10 processes per week? Or 100? Or 1000?
The answer, although obvious, is not always considered in SMEs: You simply can’t grow if you manage your processes manually. So many SMEs start using tools like the email or Excel spreadsheets. Both are temporary solutions. Excel spreadsheets become unmanageable and useless. Something similar happens with the emails.
The example that was presented in this post shows clearly these effects. But it is important to understand that all other processes in an SME eventually face this reality, regardless if they are production, administrative, or customer-related processes.
When we put it like that, it seems quite clear that it is impossible for an SME to grow beyond a certain size unless its processes are optimized. This is done in four stages, which are the pillars of BPM:
  1. Model your processes using a diagram to visualize how they work.
  2. Automate processes using Flokzu.
  3. Measure time and quantity of work done, to draw objective conclusions about where and what to improve.
  4. Introduce improvements and repeat stage one.
SMEs shouldn’t first worry about surviving and competing, and then think of BPM. It should be the other way around: adopt BPM to achieve efficiency grow faster.
If you want to get started in the world of BPM but don’t know where to start, don’t worry. We designed a form that will help you identify the key processes that you must work on and how to start automating them. It also includes an estimation of the required time for each stage of the automation.

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