Top 6 Benefits of Adding Active Visibility to Business Processes
Excelling in the business processes that drive operational performance is becoming the key to success for today's business managers. Business process management (BPM) software enables organizations to improve and automate their business processes by executing processes and managing the flow of activities. Business activity monitoring (BAM) is a complementary technology that provides (near) real-time access to key performance indicators (KPIs) so people can further improve the speed and effectiveness of business operations.
Increasingly, organizations are applying BAM to assess the time, cost and quality of business KPIs. According to Gartner1, BAM and BPM are highly complementary and will be deployed together to solve business-level problems. Ventana Research concurs2, stating that forward-thinking organizations are beginning to realize that gaining intelligence about processes will guide business and IT investments that can result in reduced costs and higher return on investment.
Why are industry experts so excited about the potential of BAM for BPM? This paper discusses the top six benefits of including BAM as part of your BPM strategy:
1. Early detection;
2. Closed-loop processing;
3. Balancing and reallocation;
4. Holistic view of business processes;
5. Process benchmarking; and
6. Continuous improvement.
1. Early detection.
For mission-critical processes, many companies want to know as soon as possible if there is a deviation on a single process instance or on a step within a process. For example, if your goal is to respond within 24 hours of each service request, at a process cost of less than $20, with a customer satisfaction rating of good or better, you would want an early indication of cases that fall outside those time, cost or quality parameters.
Monitoring a single case at the process or step level, such as the service request example above, is where BAM shines. When events, conditions and situations exceed acceptable thresholds, BAM software takes immediate action to reduce the impact of the problem, whether by alerting individuals, visually displaying notifications on a dashboard or automatically triggering a business process (as described next).
2. Closed-loop processing.
For even greater degrees of process automation, BAM provides real-time operational intelligence that can be used to implement a closed-loop system. In this case, the operational intelligence is fed immediately to the process that needs to be brought under control or alerted. The goal is to resolve process flaws or boost the quality of process outputs; an organization may also save money by eliminating labor-intensive interventions. For instance, customer orders are frequently delayed due to lack of inventory, which must be manually resolved by a purchasing agent. This situation could be prevented by having a BAM solution in place that offers real-time detection when inventory levels fall below acceptable levels specified by either a BAM end user or business rules within the BPM system. When this situation is detected, the BAM solution would automatically trigger a business process to order more inventory. The inventory- level example demonstrates the immediate visibility into process performance that organizations can derive from the real-time nature of BAM; it enables organizations to take immediate corrective action in order to resolve process bottlenecks.
3. Balancing and reallocation.
Using BAM for real-time monitoring of business processes helps organizations balance workloads and eliminate bottlenecks. With the knowledge of when and where capacity is falling short of—or exceeding— requirements, managers can take immediate action to either balance demand or reallocate resources. Over time, managers can spot trends that signal the need for either longer-term expansion or downsizing. By making the best use of their valuable assets, organizations better satisfy their customers and partners, eliminate operational inefficiencies and maximize profitability.
4. Holistic view of business processes.
Large enterprises often have hundreds if not thousands of business processes. Many processes are interrelated not only within a department, but also across the enterprise. Imagine what would happen to inventory in manufacturing without knowledge of order fulfillment processes. Over- or under-stocks would be common, leading to costly inventory or to late orders. Despite the obvious need to obtain a view of multiple processes in a BPM system, this level of visibility is very difficult to achieve because it requires a horizontal view of processes across multiple applications. BAM allows BPM systems to give users the big picture across many different business processes so they can make better decisions.
Only a small percentage of a typical organization's overall processes are included in a BPM system. BAM can help bridge this gap by integrating KPIs from processes inside and outside the BPM system. Thus, BAM serves as a management system for all process-related KPIs to promote consistency and standardization.
5. Process benchmarking.
To stay competitive, organizations must constantly strive to improve process efficiency over time by understanding process trends. Comparison of process KPIs is a necessity to benchmark performance. Often, though, it is difficult to compare current with past performance. BAM is designed specifically to overcome this challenge. BAM provides time-based comparisons to answer questions such as "How do my current process cycle times compare to those last week, last month, last quarter or last year?" Further, users can easily rank or analyze current KPIs against minimums, maximums or standard deviations to gain insight on their relative performance. For planning purposes, users can compare actual indicator values against targets to determine if the organization is meeting its objectives.
6. Continuous improvement.
Unlike business intelligence tools that provide reporting by business-activity level and information aggregated by operational activities and processes, BAM offers access to timely and contextual information that is more useful for business process improvement. BAM can play an independent or complementary role in BPM systems to identify business process improvement targets. In the first instance, as recommended by Ventana Research3, before you can automate processes, you have to assess them to see what is and isn't working in order to determine where you will get the biggest return on your investment. Thus, if an organization lacks a formal BPM system, BAM can work as a standalone solution to identify process issues. If a BPM system is already in place, BAM provides real-time access to and analytics for time, cost and quality KPIs to help prioritize process improvement targets.
It's only natural that managers optimize the efficiency and effectiveness of processes that fall into their area of responsibility. Unfortunately, this may come at the expense of overall organizational performance. Think of a simple lead-generation process. Because requiring less information from the contact increases the likelihood that the contact will complete a lead-generation form, the lead-generation manager increases the number of leads generated by cutting back on the required data entry fields in the form. Next, the telesales department must make contact with the leads to qualify them, but is having difficulty doing so because there isn't enough information about the leads' interests. As a result, telesales productivity falters. BAM helps you understand these types of tradeoffs in process optimization efforts and make decisions that will maximize return on investment for the entire organization.
Apply BAM to BPM
If BAM isn't a part of your BPM strategy, you may be responding to opportunities too late, making poor decisions based on limited business process information or lacking the tools to benchmark performance over time or to identify business process improvement priorities. By applying BAM to assess the time, cost and quality of business and business process KPIs, you will gain the real-time operational intelligence you need to address business process imperatives and improve operational performance.
1 The Convergence of BPM and BAM, David W. McCoy, January 22, 2004, ID Number SPA-20-6074
2 Business Process Intelligence, Intelligent Enterprise, Mark Smith, December 5, 2002
3 Assess for Success, Mark Smith, Intelligent Enterprise, July 10, 2004
TIBCO provides software and services that help companies orchestrate assets across their enterprise in real-time. TIBCO is a leading business integration and process management software company that enables real-time business, with almost 20 years of experience and thousands of customers.