New ERP? Don’t Forget The BPM!

Chet Harter

Giving a carpenter a hammer along with training on how to use a hammer does not teach the carpenter how to build a house. A builder or contractor needs to provide and govern the sequence of activities to manage costs, ensure high quality and compliance with building codes, and adhere to the intended design of the house. A blueprint is needed to ensure that work is consistent with the desired end results.

Likewise, giving company office workers new information tools like enterprise resource planning (ERP), manufacturing execution systems (MES), and customer relationship management (CRM) gives them what they need to do their jobs. But that doesn’t tell them when to use each tool, how each tool is to be used, and the prescribed sequence for using those tools to achieve the desired end results.

Business process management for enterprise performance

Having the right tools for a job is essential. But if three people are given the same tools without training on prescribed business processes, they will likely do things three different ways. This might result in acceptable performance but will more likely result in inconsistently performed business processes.

There is a big difference between ‘We hope to achieve 96% order fill’ and ‘We plan to achieve 96% order fill.’

Business process management (or BPM) is the critical activity of designing business processes with the end in mind. For example, processes for managing inventory should be designed purposely to achieve inventory objectives and goals. There is a big difference between “We hope to achieve 96% order fill” and “We plan to achieve 96% order fill.” In other words, smart companies specifically design their business processes to achieve desired performance, and then monitor and evaluate those processes to assess performance, reengineer processes for process improvement, and enforce compliance.

Compliance with agreed-upon processes needs to be monitored to ensure that employees are following established company policies and procedures. Failure to comply could indicate a need for more training, or could also signal the need to reengineer a process to make it more suitable for the people performing the work.

A new generation of BPM tools

BPM is not a new concept. It has literally been around for decades. What is new are the technology-enabled tools, collectively referred to as a business process management system (BPMS), for supporting the BPM processes. These tools can:

  1. Provide the foundation for governance of accepted company processes that were designed to achieve the company’s strategic objectives.
  1. Guide operational employees in their daily execution of the company’s operating processes.

Smart companies specifically design their business processes to achieve desired performance, and then monitor and evaluate those processes to assess performance, reengineer processes for process improvement, and enforce compliance with established company procedures.

A key aspect of BPMS, or iBPM in the SAP vernacular, is the mapping of end-to-end business processes to the tools to be used in each part of the process. A process-modeling tool like the SAP Cloud Platform Workflow service is used to link each process step to the prescribed tools for execution. For example, a particular process may be designed to achieve an acceptable level of customer order fill. The end-to-end process will likely comprise multiple steps and include ERP transactions, possibly across multiple ERP systems, as well as other enterprise applications and data sources.

In the SAP world, a cloud integration service is used to connect to these SAP and non-SAP applications and various data sources. Then these process models prompt the business user to execute specific tasks and also alert the user to events and circumstances that require attention. A process visibility service provides the consolidated contextual views of the data and information from the various enterprise applications for awareness of a situation and for making the best decisions.

Advantage 1: Establishing the company’s standard operating processes and guidelines

Traditional BPM has always strived to define how work will be conducted within the organization as well as external processes that involve and interact with customers, suppliers, and other business partners. Before the advent of today’s technologies, the end result of BPM was often a hard-copy document of process flowcharts, which unfortunately would frequently find its way to the bottom of a rarely used desk drawer and seldom, if ever, be looked at again. The documents lacked any sort of digital connection to the actual processes or the execution of those processes. Compliance with standard processes was assumed.

The advantage of today’s BPMS is the use of new technologies to digitally link prescribed processes to the actual tools being used to execute the processes. This allows companies to monitor compliance with the standard processes, assess process performance to corporate key performance indicators, and more effectively and consistently manage large, complex organizations. For example, a change in a particular business process can be quickly applied across the entire enterprise in a matter of minutes or hours.

Advantage 2: Keeping the daily focus and action on the right things

Perhaps the most beneficial difference between traditional BPM and today’s technology-enabled BPM is the ability to perform real-time process monitoring. In the past, office workers essentially worked blindly on a day-to-day basis, never really knowing if their actions were having the right impact. And management could only trust employees to do work “the right way.” Tribal knowledge of veteran workers was frequently relied on for getting the job done.

Modern technology-enabled BPM approaches ensure that employees are equipped with the data and information they need to do their jobs and provide them with guidance and continuous feedback on their performance. Management also benefits, as the performance of entire teams can be monitored as work is being executed.

Capabilities and benefits of modern BPM

With the two overarching goals of establishing corporate business processes and enabling real-time monitoring of daily business, the following are fundamental capabilities of a modern approach to business process management:

  • Process governance – Smart companies identify standard processes and procedures designed to achieve business objectives. Technology-enabled BPM enables linking the applications used in end-to-end business processes. This linkage allows process owners to monitor process compliance and assess the process’s ability to meet company objectives.
  • Situational awareness – Getting automatic alerts of “situations” is practically the definition of what it means to “go digital.” Threats to company performance and opportunities occur every day, but will only be acted upon if someone knows about them. The sooner they know about these situations, the sooner they can take corrective action against a threat or take advantage of an opportunity. A modern BPM program will monitor for these situations and proactively alert the appropriate users and help them take action to improve or enhance company performance.
  • Decision support and visibility – Users receive the information they need to make informed decisions. Analytical tools available today can pull the relevant information together and present a complete picture of the situation for fast assessment and improved decision-making. Modern BPMS tools provide the technology to produce these composite informational views using data from multiple systems as needed for end-to-end process visibility.
  • Contextual collaboration – Business decisions and actions routinely require help from other internal and external parties. The BPM program should be set up to allow the sharing of information with other stakeholders, both internal and external, to collaborate on corrective action, agree on who is responsible for tasks, and then enable interested parties to check status and follow up on action items.
  • Action recommendations – Business users need to make decisions on a daily basis to manage unplanned events, apply corrective action to an issue, respond appropriately to a customer order change, etc. Where possible, management should identify tasks or processes for managing these situations. Otherwise, action is left up to individuals who might take appropriate or inappropriate action. Modern BPM programs can alert the business user to a threat or opportunity and then prescribe action per company guidelines. This is particularly useful as less experienced people move into roles previously occupied by more senior employees.
  • Process automation – Though likely not really part of a BPM program, automating repetitive tasks is a natural follow-on activity once business processes are identified and analyzed. Once company-standard process flows are determined, some manual process steps can be automated, and in some cases, robotic process automation (RPA) can be applied to improve process efficiency.

While business process management has been around for decades, it is time to revisit the practice. New technologies have brought new opportunities to better manage enterprises both small and large, simple and complex. Never before have organizations had the ability to not only determine which business tools to use, but also establish and monitor the end-to-end business processes designed for achieving corporate performance and success. And the business user community and their managers have an unprecedented ability to monitor their business processes in real time, be aware of unplanned situations, and easily collaborate with others to take corrective action and benefit from new business opportunities.

Learn more about automating business processes with workflow technology using the SAP Cloud Platform.


Chet Harter

About Chet Harter

Chet Harter is a member of SAP's Digital Innovation team. For over 15 years, he has helped many SAP automotive and manufacturing clients apply new technologies to address current business issues and opportunities. Prior to SAP, he spent 12 years in various positions in materials and production management for large tier 1 suppliers in the automotive industry. He can be reached at chet.harter@sap.com.