Business process management (BPM) can be defined as any "activity undertaken by businesses to identify, evaluate, and improve business processes," which are the sets of activities performed to meet the organization's goals and, ultimately, drive profitability. CIO describes BPM as "the practice of aligning goals and processes as businesses evolve." As Techopedia.com points out, continuous improvement of processes is a key focus area for BPM.
6 Key Benefits of Business Process Management
Companies of all sizes - from small businesses to large enterprises - can benefit from BPM in a number of ways. Sources like Villanova University, Quality Magazine, Business.com and others identify several reasons why BPM is necessary in modern organizations. A few key BPM benefits include:
Overall efficiency can be approved when business processes are integrated from beginning to end. For example, in a company that uses BPM, process owners typically receive automatic alerts as tasks are delegated to specific team members. This makes it easier for them to keep up with the status of work, monitor potential delays, and adjust work assignments as needed. They don't have to waste time wondering where things are in the process or who is handling what. As a result, as Quality Magazine points out, "BPM aids in eliminating bottlenecks and reducing lead time in terms of implementing and enhancing business processes."
BPM can also help to optimize processes, which takes efficiency to the maximum level. To the end of optimization, BMP can help identify and remove unnecessary steps or redundant tasks. It can also be used to identify areas of operations where automation is possible, which can help reduce the likelihood that errors will occur. When errors are reduced, this means there is less of a chance that work will have to be done multiple times.
Efficiency and optimization can help streamline things, but effectiveness is also important. Fortunately, improving effectiveness is a key aspect and benefit of BPM. Once processes become more efficient through the use of BPM, effectiveness is also impacted in a positive way. For example, BPM provides decision-makers with data they can use to make truly informed decisions. In organizations that don't utilize BPM, less data is available, which puts leaders in the situation of having to make critical decisions without sufficient factual information. In terms of effectiveness, BPM can also help ensure consistency, as well as minimize the occurrence and impact of exceptions.
In the highly competitive and increasingly rapid-changing business environment, agility is critical for success. An agile organization is one that is flexible and adaptable to change - which can come from any direction (internal or external) and requires immediate action. For example, a key team member (or group of team members) may leave unexpectedly, there may be significant changes to government regulations applicable to the business, or a new approach to doing business may be acquired to win new business. Having sound BPM in place helps ensure a company is able to adapt, and even thrive, in the face of such situations.
Since advanced software applications that provide easy access to critical data in real time are typically used as part of BPM, this approach improves the visibility of key business intelligence that can be used to monitor and adjust processes, as well as keep track of outcomes. BPM provides a constant flow of important key performance indicator (KPI) measures that can be used to make sound business decisions in a timely manner, doing away with timely production of reports and spreadsheets long after the information can impact outcomes. As a result, managers have better insights based on business analytics, and they are able to use accurate, real-time information to make adjustments as needed.
6. Bottom Line Profitability
BPM can boost bottom line profitability by helping to increase revenue and reduce costs. The aspects of BPM that lead to increasing efficiency can help to reduce costs. For example:
- When redundancy in processes or the occurrence of errors is reduced through efficiency and optimization, then the cost of production can be expected to decrease.
- When the need to dedicate personnel to spending countless hours gathering data and analyzing reports is reduced, then expenses associated with labor costs can go down.
- Through optimization, companies will be able to identify and reduce or eliminate waste, thus leading to cost savings.
- With an increase in effectiveness, the company will produce higher quality products, which may well lead to high revenue through increased sales and improved repeat business and/or customer loyalty.
- Improvements in efficiency can also lead to the ability to bring innovations or other new products to market faster, also leading to increased revenue opportunities.
- With an increase in agility, the company will be better positioned to capitalize quickly on new business opportunities, leading to increased revenue.
As Quality Magazine points out, it may take a bit of time for these changes to start impacting the bottom line, but once they do, the impact can be significant.
BPM for Companies of All Sizes
As Business.com asserts, it's true that "every company needs business process management." The notion that BPM is only for large businesses is an incorrect one. It wouldn't make sense to say that efficiency and effectiveness, or any of the other benefits described here, aren't important for small businesses. So, it also doesn't make sense to say that small businesses don't need BPM - such a mindset could be one of the reasons why some small businesses fail. While a small business owner shouldn't invest in a software solution designed to automate processes in a massive operation, there are scalable solutions and ways to implement BPM in small businesses, as well as larger organizations.