BPM: Definition, Benefits, and Role in Business Processes
When BPM (Business Performance Management) was introduced into the vocabulary of business intelligence, a lot of confusing persisted as to what actually are the differentiators between these terms. The main question that circulated was how both were different and how their intuitions overlapped with one another. While the debate never actually brought out clear focus on the advantages of using BMP or BI in improving the efficiency of the organization, combining both definitely brought out significant results.
However here is a list of few differences BI and BPM bring out while playing their roles in an organization.
What is BPM?
BPM, Business performance management is a set of analytical and management processes, supported by technology, that enable organizations to define strategic goals and thus manage and measure the performance against the goals set. The core BPM processes include operational and financial planning, consolidating and reporting, analysis, business modeling and monitoring key performance indicators that are linked to strategy. In most of the cases, BPM software tailors the needs of the responsibilities of planning, budgeting, activity based costing, etc.
While the goal of BPM is to support business processes (operational and financial) by using technology, the solutions developed focus more on moving through the set of steps which enable completion of those processes.
For example, while planning specific initiatives for an organization, there might happen that the individuals lead to over planning which is not a good sign for the organization. But by using Business performance management solutions, the responsibility of each person can be built into one overall design by taking into account dependencies. An example for dependency is setting up a rule or parameter that doesn’t let person B to start his role without getting a required confirmation from person A. Also, this kind of overall collaboration enables the users to communicate with one another at every stage of the process. The basic idea that surrounds the concept of business process management is to create a better and hostile approach to the way operational, financial and other processes are handled within the day to day tasks of decision makers within the enterprise.
Where does Business Intelligence play role?
The meaning of business intelligence becomes much obvious when the enterprise wants to move beyond capturing just transaction based data but towards understanding of those business transactions and its affect on the organization and thus optimize the internal processes accordingly. Within BI, information generated is captured, analyzed and then pushed out to the end users through certain analytical applications that ensure better view of the organization. As and when the role of Business Intelligence starts shifting towards maintaining an operational view of data, its convergence with Business Process Management increases.
BI: Meaning, Importance, and Role in Understanding Business Transactions
BI and BPM
The convergence of BI and BPM helps organization move to the next level. Combining their analytical framework and business processes, the organizations can gain a much broader view of weather they are meeting or exceeding their defined targets. In general, the use of business intelligence and BPM tools depend on the business requirements. Applying BPM enables the decision makers to evaluate the planning and budgetary requirements as opposed to organizational goals and set targets.
Why use BI and BPM together?
Most of the business processes revolve around complex value based decision points like up-sell opportunities, loan approvals, etc. Automating and optimizing these processes becomes a challenge as the individuals involved in making decisions result in slow work flows and might even create bottlenecks. Also, certain processes might need data that might not be included in the improvement cycle, creating a dead end. Whatever the approach, the information gathering step includes additional processing time for decision making and also deviate the employees from performing more important tasks leading to inefficiency.
These problems can be effectively mitigated by incorporating the right analytic report from a BI system. When the workflow is routed to a decision maker, all the relevant information that supports decision making is accompanied. This enables faster decisions and one can quickly act on items that need quick attention.
Integration of BI report into a business process workflow helps in extending the reach of analytics from selected and few analysts to vast number of teams including marketing, production, finance, etc. This ensures the decision makers are armed with the right information and spread the culture of analytics in the organization. This also helps the organizations identify the right type of reports that needs to be generated.
Combining BI and BPM can tremendously aid the healthcare payers reduce the processing claims cost by reducing the fraud at the same time. Automation of claims management process increases the efficiency and reduces the costs of handling claims. Using analytics on the history of the medical provider helps the claims specialist in identifying fraudulent claims. BPM can be extended to the users of BI and thus provide the analysts with end to end business visibility and allow quick insights into action.
If analytics and BPM tools were integrated, they could map to how best a change can be made to a business process given a particular insight from the data. Connecting analytics to business process means creating data warehouses in order to collect information from multiple systems to study it.
Combining BPM and BI: Advantages, Business Requirements, and Common Challenges
For analytics to be actionable, the analysis should work hand in hand with the process. Business intelligence and analytics result in intelligent business process management.
Performance management is nothing but the process by which companies align their resources, employees, systems to achieve strategic objectives and priorities.
By using performance analytics, companies can achieve
- Improved performance
- Establish a single truth version
- Make better use of time and money
- Improve overall quality of services
- Decrease the service cost
- Improve availability of services by enabling automation and self service
- Anticipate trends
- Prioritize resources
The advent of mobile, social and cloud when combined with sophisticated data analytics is making business process management the cornerstone of success.
Understanding how analytics works to support intelligent business process and offer peak customer experience involves taking a hard look at the two different but related camps of an enterprise- data and related software.
EDP Renewables, one of the largest wind turbine companies in the world, located at United States has 28 geographically separated and dispersed wind farms. Each of these wind farms is populated with massive 300 foot tall turbine generators. This company’s wind farms generate about 3.3 gigawatts of green wind energy.
The energy market fluctuated tremendously. The margin on a watt of energy sold versus a watt produced is constantly changing. The fluctuations depend on the weather and usage patterns. Recognizing the areas where the market is good i.e. the areas where the fluctuations are less and climate is under control most of the times might help in prioritizing the maintenance of that equipment.
EDP makes use of this kind of real time streaming data analytics information in order to prioritize how the company maintains its assets. Weather patterns and the related North American weather events are streamed continuously into the organization’s business process management application as big data information. It is by analyzing this information in context with turbine maintenance issues, EDP anticipates weather patterns and corresponding energy output, price of that energy and special conditions at different farms. This is extremely important to prioritize the remediation of turbine issue fixes and thereby maximize the profitability of the company.
With several with turbine components bought from different variety of vendors, EDP can analyze the relative quality of the turbines and compare their performance over time against the cost of maintenance and repair of these equipment pieces.
Here is an image depicting the market share cost of EDP renewable before and after implementation fo Performance Analytics.
BI augments the efforts of BPM in several ways. Organizations can leverage these benefits in a number of ways. Social, Mobile, analytics and cloud fuels the ways in which the business processes can be tremendously automated. The organizations can let their employees connect to the data and thus letting them make use of whatever information they require to deliver the best service.
CUNA Mutual started using analytics to understand the member of credit unions is it serving. It provides financial products to 7000 credit unions and individual members. Though the credit unions have grown by 14%, the company’s primary customer base was shrinking. To keep up the remaining credit unions, VUNA mutual has to understand what steps trigger the credit union members to buy new product or service. In the year 2009, the company launched an analytics project named Voyager. It used Microsoft’s SQL server database along with analytics tools from CA Technologies and SAP Business Objects that segment its credit union customers based on several attributes including product, demographics and profitability.
The business analysts explored the data by using several iterative queries and canned reports. They found out that half of CUNA Mutual’s $2.8billion revenue comes from three of its total 12 customer segments. This analysis helps them understand the need to develop products to attract the remaining nine customer segments. This new thinking of CUNA’s mutual pushed their market and revenue to a great extent. They were successful in analyzing and realizing the requirements of its customer base accurately and on time.
Conclusion
Data ,data everywhere. The amount of data being created everyday is increasing exponentially and as per the reports it is expected to double each year. This data available offers a chance for the companies to get closer to their potential customers simply by using the insights and inform their strategies in order to retain and attract business. For companies, It is important than ever to obtain data, put it in an understandable context and turn it into quick responsive action. All this can be achieved by effectively using BI and BMP tools.
References:
Ryan Gates, D. (2016) BPM and the Changing Role of Analytics. Available at : https://www.itproportal.com/2016/05/23/bpm-and-the-changing-role-of-data-analytics/
Malcolm Ross, D. (2013) Analytics and Business Process Management. Available at: https://analytics-magazine.org/analytics-and-business-process-management/
IBM(2008) Business Optimization Driven by BI and BPM. Available at : ftp://public.dhe.ibm.com/software/solutions/soa/pdfs/WSB14015-USEN-00.pdf
Brain McKenna, BPM and BI Take Place in “IT Without Boundaries”. Available at : https://www.computerweekly.com/feature/IBM-BPM-and-BI-take-place-in-IT-without-boundaries
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