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Business process management (BPM) is a field of management focused on aligning organizations with the wants and needs of clients. It is a holistic management approach^{[citation needed]} that promotes business effectiveness and efficiency while striving for innovation, flexibility and integration with technology. Business process management attempts to continuously improve processes. It could therefore be described as a "process optimization process".

Example of Business Process Management (BPM) Service Pattern : This pattern shows how business process management (BPM) tools can be used to implement business processes through the orchestration of activities between people and systems.^[1]

[edit] Overview

A business process is "a collection of related, structured activities that produce a service or product that meet the needs of a client."^{[citation needed]} These processes are critical to any organization as they generate revenue and often represent a significant proportion of costs. BPM articles and pundits often discuss BPM from one of two viewpoints: people and technology.

Roughly speaking, the idea of (business) process is as traditional as concepts of tasks, department, production, outputs. The current management and improvement approach, with formal definitions and technical modeling, has been around since the early 1990s (see business process modeling). However there has been a common confusion in the IT community, as the term 'business process' is often used as synonymous of management of middleware processes; or integrating application software tasks. This viewpoint may be overly restrictive. This should be kept in mind when reading software engineering papers which refer to 'business processes' or 'business process modeling.'

Although the initial focus of BPM was on the automation of mechanistic business processes, it has since been extended to integrate human-driven processes in which human interaction takes place in series or parallel with the mechanistic processes. A common form is where individual steps in the business process which require human intuition or judgment to be performed are assigned to the appropriate members of an organization (as with workflow systems).

More advanced forms such as human interaction management are in the complex interaction between human workers in performing a workgroup task. In this case many people and systems interact in structured, ad-hoc, and sometimes completely dynamic ways to complete one to many transactions.

BPM can be used to understand organizations through expanded views that would not otherwise be available to organize and present. These views include the relationships of processes to each other which, when included in the process model, provide for advanced reporting and analysis that would not otherwise be available. BPM is regarded by some as the backbone of enterprise content management.

[edit] BPM life-cycle

The activities which constitute business process management can be grouped into five categories: design, modeling, execution, monitoring, and optimization.

[edit] Design

Process Design encompasses both the identification of existing processes and the design of "to-be" processes. Areas of focus include: representation of the process flow, the actors within it, alerts & notifications, escalations, Standard Operating Procedures, Service Level Agreements, and task hand-over mechanisms.

Good design reduces the number of problems over the lifetime of the process. Whether or not existing processes are considered, the aim of this step is to ensure that a correct and efficient theoretical design is prepared.

The proposed improvement could be in human to human, human to system, and system to system workflows, and might target regulatory, market, or competitive challenges faced by the businesses.

[edit] Modeling

Modeling takes the theoretical design and introduces combinations of variables, for instance, changes in the cost of materials or increased rent, that determine how the process might operate under different circumstances.

It also involves running "what-if analysis" on the processes: "What if I have 75% of resources to do the same task?" "What if I want to do the same job for 80% of the current cost?"

[edit] Execution

One of the ways to automate processes is to develop or purchase an application that executes the required steps of the process; however, in practice, these applications rarely execute all the steps of the process accurately or completely. Another approach is to use a combination of software and human intervention; however this approach is more complex, making the documentation process difficult.

As a response to these problems, software has been developed that enables the full business process (as developed in the process design activity) to be defined in a computer language which can be directly executed by the computer. The system will either use services in connected applications to perform business operations (e.g. calculating a repayment plan for a loan) or, when a step is too complex to automate, will ask for human input. Compared to either of the previous approaches, directly executing a process definition can be more straightforward and therefore easier to improve. However, automating a process definition requires flexible and comprehensive infrastructure, which typically rules out implementing these systems in a legacy IT environment.

Business rules have been used by systems to provide definitions for governing behavior, and a business rule engine can be used to drive process execution and resolution.

[edit] Monitoring

Monitoring encompasses the tracking of individual processes, so that information on their state can be easily seen, and statistics on the performance of one or more processes can be provided. An example of the tracking is being able to determine the state of a customer order (e.g. ordered arrived, awaiting delivery, invoice paid) so that problems in its operation can be identified and corrected.

In addition, this information can be used to work with customers and suppliers to improve their connected processes. Examples of the statistics are the generation of measures on how quickly a customer order is processed or how many orders were processed in the last month. These measures tend to fit into three categories: cycle time, defect rate and productivity.

The degree of monitoring depends on what information the business wants to evaluate and analyze and how business wants it to be monitored, in real-time or ad-hoc. Here, business activity monitoring (BAM) extends and expands the monitoring tools in generally provided by BPMS.

Process mining is a collection of methods and tools related to process monitoring. The aim of process mining is to analyze event logs extracted through process monitoring and to compare them with an 'a priori' process model. Process mining allows process analysts to detect discrepancies between the actual process execution and the a priori model as well as to analyze bottlenecks.

[edit] Optimization

Process optimization includes: retrieving process performance information from modeling or monitoring phase; identifying the potential or actual bottlenecks and the potential opportunities for cost savings or other improvements; and then, applying those enhancements in the design of the process. Overall, this creates greater business value.

[edit] Practice

Whilst the steps can be viewed as a cycle, economic or time constraints are likely to limit the process to one or more iterations.

In addition, organizations often start a BPM project or program with the objective to optimize an area which has been identified as an area for improvement.

In financial sector, BPM is critical to make sure the system delivers a quality service while maintaining regulatory compliance.^[2]

Currently, the international standards for the task have only limited to the application for IT sectors and ISO/IEC 15944 covers the operational aspects of the business. However, some corporations with the culture of best practices do use standard operating procedures to regulate their operational process ^[3]

[edit] BPM Technology

BPM System (BPMS) is sometimes seen as "the whole of BPM." Some see that information moves between enterprise software packages and immediately think of Service Oriented Architecture (SOA). Others believe that "modeling is the only way to create the ‘perfect’ process," so they think of modeling as BPM.

Both of these concepts go into the definition of Business Process Management. For instance, the size and complexity of daily tasks often requires the use of technology to model efficiently. Some people view BPM as "the bridge between Information Technology (IT) and Business."

BPMS can be industry-specific, and might be driven by a specific software package such as Agilent OpenLAB BPM. Other products may focus on Enterprise Resource Planning and warehouse management.

Validation of BPMS is another technical issue which vendors and users need to be aware of, if regulatory compliance is mandatory.^[4] The validation task could be performed either by an authenticated third party or by the users themselves. Either way, validation documentation will need to be generated. The validation document usually can either be published officially or retained by users^[5]

[edit] Use of software

Some say that "not all activities can be effectively modeled with BPMS, and so, some processes are best left alone."^[who?] Taking this viewpoint, the value in BPMS is not in automating "very simple" or "very complex" tasks: it is to be found in modeling processes where there is the most opportunity.

The alternate view is that a complete process modeling language, supported by a BPMS, is needed. The purpose of this is not purely "automation to replace manual tasks," but rather "to enhance manual tasks with computer assisted automation." In this sense, the argument over whether BPM is about "replacing human activity with automation," or simply, "analyzing for greater understanding of process," is a sterile debate. All processes that are modeled using BPMS must be executable in order to "bring to life" the software application that the human users interact with at run time.

Enterprise Application Integration (EAI) is defined as the use of software and computer systems architectural principles to integrate a set of enterprise computer applications.

[edit] Overview

Supply chain management applications (for managing inventory and shipping), customer relationship management applications (for managing current and potential customers), business intelligence applications (for finding patterns from existing data from operations), and other types of applications (for managing data such as human resources data, health care, internal communications, etc) typically cannot communicate with one another in order to share data or business rules. For this reason, such applications are sometimes referred to as islands of automation or information silos. This lack of communication leads to inefficiencies, wherein identical data are stored in multiple locations, or straightforward processes are unable to be automated.

Enterprise application integration (EAI) is the process of linking such applications within a single organization together in order to simplify and automate business processes to the greatest extent possible, while at the same time avoiding having to make sweeping changes to the existing applications or data structures. In the words of the Gartner Group, EAI is the “unrestricted sharing of data and business processes among any connected application or data sources in the enterprise.”^[1]

One large challenge of EAI is that the various systems that need to be linked together often reside on different operating systems, use different database solutions and different computer languages, and in some cases are legacy systems that are no longer supported by the vendor who originally created them. In some cases, such systems are dubbed "stovepipe systems" because they consist of components that have been jammed together in a way that makes it very hard to modify them in any way.

[edit] Purposes of EAI

EAI can be used for different purposes:

• Data (information) Integration: Ensuring that information in multiple systems is kept consistent. This is also known as EII (Enterprise Information Integration).
• Process Integration: Linking business processes across applications.
• Vendor independence: Extracting business policies or rules from applications and implementing them in the EAI system, so that even if one of the business applications is replaced with a different vendor's application, the business rules do not have to be re-implemented.
• Common Facade: An EAI system could front-end a cluster of applications, providing a single consistent access interface to these applications and shielding users from having to learn to interact with different software packages.