Why business process re-engineering is more relevant than ever
BPM or business process management (popularized as ‘reengineering’) first rose to prominence in the 1990’s when enterprise resource planning (ERP) systems emerged onto the scene. Today, digital transformation seems to be the hot topic of discussion. However in an age of rapid change, why are some organisations engineering their processes while others are focusing on digitization and why is this so relevant in business today?
“Digital” versus “Process” Businesses are set up along processes and managers, generally, try develop world-class processes. Six Sigma and other are designed to refine and improve those processes to create efficiency, focus and improvement in quality. By contrast, digital transformation shrinks down processes that a business currently does or could do, automates work people were doing and turns the process into software.
Data is very much a part of process transformation With digital, the focus is very much on software and therefore, data. Let’s use stock ordering in a mine planning scenario as an example. If the re-order points have not been properly set-up on the system taking into account normal consumption during lead time and required safety stock levels, the process becomes inefficient. Therefore the setup and intelligent use of data is key to efficiency.
Taking a look at another example, this time Procurement: in terms of data entry, if the organisation manually scans invoices onto the ERP system and then as an additional step, keys in the data to enter the invoice as part of its process, then the process is very manual and likely prone to error. The organisation would be able to streamline the process and improve data capture by making use of invoice recognition software.
In both examples, better use of data is very much a core part of the improvement initiative.
Why transformation is necessary You may have heard the phrase “It’s all about the customer”? Leading companies today are revolutionising their customer engagement and looking for innovative ways to improve the customer experience and gain access to new markets. In retail parlance, a good example could be the movement away from in-store shopping towards online shopping and on-time delivery.
Even where organisations are not quite innovating their customer strategies, change may be high up on the strategic agenda because of their desire to streamline and/or use technology to gain a competitive advantage. For this type of organisation, continuous improvement and automation will always be near the top of the strategic agenda.
For others, change initiatives may be centered on a process that is not working properly. Often this is the result of an ERP system that has not been implemented correctly; or where the users are not using the system the way they should as a result of inadequate training or not being able to keep up with the software’s capabilities. The lead on from this is that staff become frustrated with the software and lay the blame squarely on the shoulders of the system.
The impact on decision support Inefficient or broken processes often has a negative impact on both the quality and timing of reports, which may prohibit the managers from making good decisions. This can also lead to all sorts of insecurities, such as the fear of fraud where the process flaw is seen as a black hole, especially those that relate to asset management or maintenance.
Interestingly, BPM has traditionally been associated with ‘transformation’ creating the false impression of ‘big’ or ‘dramatic’ effort. Very often, just a small change or tweak to the system can have a big impact and sometimes, even a small positive outcome can lead to peace of mind. It does not have to a major, expensive initiative.
For all these reasons, making processes more efficient and relevant to both customers and decision makers is very relevant today.
The benefit of using a vendor agnostic partner Deciding on whether to improve the process or move over to a different ERP or feeder system is not always as simple as it seems. Asking software vendors for advice is one way to go however they have a tendency to be biased; a software vendor does not always understand your business or the intricacies of the industry you’re in. What they do understand is the way their software works and this is what they will try and sell you … so that they can meet their sales targets.
A more effective way to go could be to work with a vendor agnostic business partner. They should be able to assess your systems and processes based on your needs and give you are range of options so that you can meet your targets.
