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Business Process Management and the Benefits of Automation

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  • Business Process Management

    and the

    Benefits of Automation

  • The Difference between Business Process and

    Business Process Automation

    All companies rely on Business Process Management

    (BPM) in order to run their operation effectively. These

    business processes are generally made up of a series of

    repetitive tasks performed by employees. This includes

    anything from ongoing reporting, authorizations and

    approvals, to manually tracking stock levels, contract

    renewals and key performance indicators.

    Automating these repetitive tasks will not only save

    significant amounts of time and reduce overhead costs;

    but will also provide for more efficient and reliable

    information organization-wide. Business Process

    Automation (BPA) is achieved through the

    implementation of the appropriate business process

    management software. This technology provides the

    capabilities necessary to have the computer system

    handle tasks that were traditionally performed by

    employees. Automating certain processes gives an

    organization the ability to streamline operations and

    reporting, not to mention free-up staff members to focus

    on more important tasks. Business process management

    technology is capable of much more than organizing

    simple static flows, such as task options with multiple

    choices and contingencies. Rather, it can define,

    execute, manage and refine processes that involve

    human interaction; work with multiple applications; and

    handle dynamic process rules and changes.

    Business Process Management technology is the IT

    industry’s response to problems created by employee-

    dependent applications. The resulting Business Process

    Automation allows directors, managers, suppliers and

    customers to receive instant responses to commercial

    interactions by leveraging all IT systems across an

    organization through a real-time, responsive

    infrastructure.

    Which business processes should be

    automated?

    Like any savvy business owner -or- manager, you are

    likely considering your bottom line. Will the automation

    of your business processes really save your organization

    time and money? The

    answer is: absolutely.

    The types of

    processes listed

    below are most likely

    to yield a high return

    on investment once

    automated.

    � Dynamic

    These are

    processes that

    change

    frequently such

    as those that

    must be

    regularly

    adapted in

    order to abide by regulatory compliance changes.

    For example, retailers who are required to

    regularly modify how customer information is

    managed due to changes in federal privacy law

    and Credit Card Company mandates.

    � Inter-departmental

    This category covers any processes that involve

    people and/or typically cross multiple business

    units, divisions, or departments.

    � Complex

    Complex processes are those that require the

    collaboration of a variety of people from different

    departments, who may be using different software

    applications. An example of this would be an

    organization’s Order-to-Payment process, which

    covers each step of a product purchase. From an

    order placed (via phone, web, email, etc.) to the

    sales rep, to fulfillment by your shipping

    department and payment to accounts receivable.

    � Measurable & Mission Critical

    This covers any vital processes that directly

    impact business performance.

    1

    Business Process Management and the Benefits of Automation

  • � Legacy

    This category includes any

    processes that rely on one or

    more legacy applications to be

    completed. Additionally, this also

    covers those that require a

    significant additional capability

    such as HR functionality for

    employees.

    � Manual Research

    Manual research processes are

    those that are currently handled

    by a staff-member. An example

    would be a furniture retailer’s

    reliance on physical discovery,

    and/or research into inventory

    aberrances.

    � Exceptions

    These are any processes with

    exceptions that require quick

    turnarounds.

    Sometimes however, the most important

    part of a strategy is in knowing what not

    to do, especially with a fairly horizontal

    capability like BPA. Areas that are not

    good candidates for automation include:

    � Legacy application replacement

    � High-volume transaction

    processing (such as a point-of-

    sale application, although cross-

    channel returns might be a good

    target)

    � Processes with little or no user

    interaction

    � Processes that can be simply and

    cheaply automated with other

    tools

    For a first BPA initiative, select a process

    from your organization that is important,

    but not mission-critical or overly

    complex. A good first step is to focus on

    a specific and quick solution where a

    visible business process improvement

    will foster momentum for broader and

    more sustained BPM conversions.

    The Benefits of Business Process

    Management Automation

    Software

    As a technology, Business Process

    Management software can deliver

    endless benefits to any organization, no

    matter the size. Converting your

    business processes from ‘managed’ to

    ‘automated’ reduces operational costs

    and frees up employees to concentrate

    on other activities that are important for

    the success of your business. Tasks such

    as report creation and distribution, not

    to mention monitoring and/or reporting

    on your company’s Key Performance

    Indicators (KPI’s) can now be easily

    handled by your computer application.

    Some of the direct benefits include:

    � Stronger Revenue Streams

    � Operational Savings

    � Reduction in the Administration

    Involved with Compliance and ISO

    Activities

    � Greater Company Agility

    � Higher Customer Satisfaction

    Levels

    � Eradication of Data Entry Errors

    � Critical Failure Avoidance

    Business Process Automation:

    Up Front & Hidden Costs

    A typical Business Process Automation

    project requires licensing software from

    a vendor, training internal staff and

    Automation Examples that

    Improve Business

    � Key customer

    approaching credit

    limit

    � Inventory nearing

    minimum levels

    � Notice of upcoming

    contract renewal date

    � Purchase order

    authorizations

    � Delivery schedule

    approvals

    � Data entry update

    approvals

    � Publishing of real-

    time product

    availability, and key

    performance

    indicators (KPI’s)

    � Publishing of

    employee holiday

    entitlements

    � Detail of orders

    placed

    � Stock availability

    � Distribution schedules

    � Creation and

    distribution of

    financial statements,

    delivery notes, and

    sales reports

    � Application and web

    services integration

    � Data migration

    2

  • hiring outside assistance for your first initiative. Like

    other software platforms, there are many different types

    of licenses available including enterprise wide; per

    processor; per process; per developer; per user; etc.

    Now that the concept of automation has gained traction

    in many large enterprises, vendors are pursuing mid-

    market companies and reducing license fees to match

    the budgets of the smaller organizations. Potential

    hidden costs include:

    � The licensing and deployment of multiple

    development/test/production environments to

    support multiple BPA initiatives*

    � Additional application and database server

    licenses*

    � Staff to manage the servers

    � Internal cost of direct involvement from business

    users to participate in process modeling, business

    rule definition, user interface design, testing and

    rollout activities

    � Change management and training costs

    The Impact of Automation

    Similar to other implementations, Business Process

    Management software requires both business and

    technical resources and activities. Effective BPA is based

    on an ongoing iterative design/develop/deliver process

    improvement lifecycle. Although the usual cast of

    characters will be involved (executive sponsors; project

    managers; business users; business analysts; technical

    architects; software engineers; and quality assurance/

    infrastructure specialists), the role they play may be

    different.

    In a typical software implementation, business users are

    generally included in up-front planning and

    requirements definition. After that, they don't necessarily

    get substantially involved until user acceptance testing.

    BPM software implementations, differ in that they require

    constant participation from key business users and

    analysts as process models are developed and

    application elements are implemented. Many business

    users and IT staff are not used to an ongoing

    collaborative approach to implementing software which

    can give the planning, training, and change

    management phases a higher degree of difficulty.

    However, one of the biggest challenges with the

    conversion from BPM to BPA is the behavioral change

    required by staff members in the process. The

    implementation of BPM software requires users to move

    from an event-driven to a task-driven work paradigm.

    � Event-driven

    Employees "know" what tasks to do and in which

    order because that's the way they've always done

    them; they prioritize their work based on events

    as they happen, often using the "squeaky wheel

    rule".

    � Task-driven

    The logic built into the BPM solution defines the

    tasks, their order and relative priorities; which

    employees must monitor and work from.

    For many employees, using BPM software will require

    them to monitor an inbox of tasks with prescribed

    priorities and work instructions, rather than

    concentrating on the task that seems most pressing. For

    some organizations, well-planned and executed training

    is enough to make the transition; but for others,

    implementing task-driven work processes can require a

    major cultural transformation.

    Calculating the Return on Investment (ROI)

    Many organizations are losing more money than they

    realize through lost productivity and redundant tasks. It

    may be a good idea to perform a thorough assessment of

    3

  • your company’s manual processes and the time your

    employees are spending on them in order to evaluate

    your needs. This is an important step in calculating the

    savings that can be made through automation. The costs

    associated with defining, scoping and implementing a

    business process management solution will be quickly

    defrayed as the savings is quantified. Take this example

    of a common business process:

    Each week, ABC Company distributes 10 different

    management reports from their Enterprise

    Resource Planning (ERP) software. These reports

    communicate the changes that have occurred in

    the previous 7 days in regards to cash flow, stock

    balances, sales, purchases and overall trading.

    Let’s do a quick calculation of how much this process is

    going to cost the business over the period of one month:

    The employee that processes the reports

    generally spends 5 hours per day, Monday-Friday

    on report generation, restructure, and

    distribution. For the purposes of our example we

    will presume the employee’s fully loaded labor

    rate (i.e. pay rate + taxes and benefits) is $15.00

    per hour.

    Using these figures we can determine the following:

    � Time spent per year = 1,300 hours (5 hours X 5

    days X 52 weeks)

    � Amount spent per year = $19,500 (1,300 x $15)

    � Amount spent per month = $1,625 ($19,500 / 12

    months)

    If this process was automated ABC Company would save

    $1,625 per month, and allow the employee to focus on

    other areas of the business.

    Business Process Automation ROI Metrics

    Success of Business Process Automation is almost always

    measured with a clear, simple business metric.

    Examples of these include:

    � Reduced number of returned shipments

    � Reduced cycle time for special orders

    � Increased dollars recovered from credit disputes

    � Increased consistency of task completion/

    improved productivity

    � Reduced time required to onboard new

    employees

    Defining the right metrics will help keep the project

    team focused and the business owners engaged. Since

    converting from BPM to BPA requires an iterative

    approach, keeping everyone involved is crucial to

    working through the limitations of early releases and

    actually getting the staff to use the solution. Measuring

    and reporting actual results is imperative, especially

    when changing the everyday work habits of employees.

    For example, if process exceptions are being posted as

    tasks on a user portal, management needs to monitor the

    use and throughput of that portal. If users are not going

    to the portal often enough, the BPM solution can be

    modified to deliver tasks to the user's e-mail inbox

    instead.

    In summary, maximizing your return from Business

    Process Automation requires:

    � Picking the right process targets

    � Assembling the right team

    � Following an iterative methodology

    4

  • Staying focused on the business goals to drive

    further improvements and user involvement

    Next Steps: Moving Forward with Business

    Process Automation

    Once your organization has developed a business case,

    identified the ROI and made the decision to move

    forward with an implementation, there are two very

    important steps to take.

    1. Select a Business Process Management Solution

    Provider.

    Look for someone who can help you achieve your goals.

    You may ask your current software provider or other

    organizations similar to yours who have already gone

    through this process for recommendations. Be sure to

    choose someone who has thorough knowledge of BPM

    automation and software, and has installed systems at

    companies similar to yours. Further, it is crucial that you

    select someone with whom you feel you can work with.

    Consider the following:

    � Do they listen effectively and communicate

    clearly?

    � Are they a good fit with your company’s

    philosophy and culture?

    � Can they provide training and/or ongoing support

    should your company require it?

    � Can they provide references?

    2. Do Your Homework

    It is crucial that you chose the right system for your

    organization. It should not only have the natural

    capability to work with your company’s current

    processes and existing software systems, but should also

    be scalable enough to grow with your company over

    time.

    Additionally you should seek to thoroughly vet the

    software manufacturer. Some questions you may want to

    ask:

    � Is the software manufacturer respected in the

    software community?

    � How long have they been in business?

    � How long have they been manufacturing BPM

    automation software?

    � Do they have a vision and plan for the future?

    � How do they handle product updates and new

    version releases?

    � Do they have a help-desk available, and at what

    hours?

    Conclusion

    Business Process Management automation software can

    greatly enhance the day-to-day operations of your

    company. With increasing demands and fluctuating

    profit margins – there’s never been a better time to

    invest in automation capabilities that will enable you to

    maximize performance. Business process automation will

    provide you the leverage you need to reduce costs and

    increase efficiency, enhancing your organization’s

    ability to remain competitive.

    5

  • About PositiveVision

    PositiveVision is a full service consulting firm specializing in the

    implementation and support of business management software for small to

    medium sized businesses. By leveraging out of the box technology

    PositiveVision assists our clients in streamlining inefficient processes,

    growing revenue streams and reducing costs. As a result, our clients are more

    productive, competitive and profitable. Our goal is to improve the

    performance of your business and be your long term partner by providing

    you with the resources and expertise you need along with exceptional

    customer service.

    6

  • Positive Vision, Inc. | 219 E Thorndale Avenue, Roselle, IL 60172 | p. 800-559-1323 | f. 888-315-1176 | www.PositiveVision.biz | [email protected]

    219 E Thorndale Avenue, Roselle, IL 60172

    p. 800-559-1323 | f. 888-315-1176

    www.PositiveVision.biz

    [email protected]