Business process optimisation can increase BPM's effectiveness, but only if you address the technology and the culture of the business you want to improve
Business process optimisation (BPO) is an emerging element of IT services that focuses on processes as opposed to applications. The bigger picture within which BPO sits is familiar: firms are implementing tools and disciplines to make them more process-centric.
The idea is that systems are triggered by customer requests and deliver directly in response to those requests. The net result is that organisations serves customers from their point of view, not merely from the businesses'.
Mike Thompson, principal research analyst at Butler Group, thinks that with BPO users have an opportunity to make the technology work for the business. Before automation, businesses ran a process flow through the company to achieve a business objective. But Thompson believes that enterprise resource planning segregated this workflow by tackling automation of certain business tasks and not others. "BPO is about bringing everything back together," he said.
Optimisation occurs when a process that may have previously involved several linear steps can be done in parallel. Although software tools suppliers such as Compuware and Mercury Interactive have products supporting BPO, Thompson is convinced that users need to take a more radical approach than that of the main suppliers.
"We need a new approach to put the business process ahead of the technology," he said. The underlying technology is less important than achieving the objectives of the business process, but, according to Thompson, only a few companies take this approach, whereas established suppliers lead by technology.
Nevertheless, end-users will require an IT infrastructure to support BPO and Thompson said this approach is based on a service-oriented architecture.
In this model of IT, applications are treated as services with defined interfaces and service levels. Some of these are computer-based and some are manual; others require a call to ex- ternal services (manual and computer-based). IT components are tied together using web services.
Although this approach will allow end-users to separate business processes from underlying technology, any business process management (BPM) project can rapidly become immensely complex, with legacy infrastructures, heterogeneous systems and departmental silos all stirred up in a maelstrom of process confusion. The organisation has to develop an ongoing process management capability because process change is continuous.
Sharyn Leaver, senior analyst at Forrester Research, said BPO answers two questions raised by BPM. First, does BPM have visibility of end-to-end-business processes or are they fragmented and buried within applications, structures and end-user working practices? Second, does BPM promote continuous process improvement through simulation and deployment support?
"Although all of the [BPM] offerings can provide benefits, pure-plays are still the best option for firms looking to begin a BPM implementation by automating processes that incorporate a mix of people, systems and other content," Leaver said.
So how does BPO function? BPM brings processes to the surface and abstracts them in what is sometimes referred to as an independent process layer. BPO adds another dimension where a firm can quickly improve the degree to which processes are automated by filling in the gaps between systems that have previously been difficult to automate and manage.
"It enables a more disciplined approach to process management," said Chris Phillips, EMEA marketing director at Tibco. This means that processes can be easily changed and those changes made operational far more quickly and cheaply.
"Process optimisation provides a very clear return on investment as faster, lower-cost business processes can be implemented without having to replace expensive packaged applications," said Phillips.
BPO goes beyond traditional BPM by introducing an IT governance layer that controls, measures, manages and ensures a firm's processes meet business needs and perform at maximum efficiency. The key is to have an holistic view of applications across the enterprise, including customer websites, ERP and customer relationship management systems, and STP engines.
"Bear in mind that whenever a business process changes, it is almost certainly reflected in the underlying technology," said Roger Gilheany, IT governance market development director at software firm Mercury Interactive.
"One cannot remodel anything - from the way you pay employees to the manner in which a customer checks the status on a website - without an IT change. It is essential you can check the performance, quality and availability of your business systems before, during and after each business process change," Gilheany said.
BPO is susceptible to the problems faced by any change, notably the resistance of employees. It is not just that some results of BPO, such as streamlining processes, can be perceived as a move to cut jobs, but BPO often demands greater efficiency, which can be perceived as invasive.
"Maximum benefit can only be gained from BPO if you address the hard elements of business change such as tools, techniques and IT, and the soft elements such as culture, teamwork and behaviour," said Shaun Gough, EMEA business development director of outsourcing at Unisys.
A poor BPO implementation could hinder process flexibility. "By over-analysing processes, firms create too many processes and the simplicity - which BPO is meant to promote - is lost," said Gill Corfield, technology support manager at Compuware.
"To avoid this, firms should focus on processes with repetitive tasks, as optimisation will result in greater benefits and efficiencies. They should avoid tasks which are ad hoc or very dynamic processes where changes cannot be predicted or accounted for."
BPO in brief
What is BPO?
Business process optimisation is a tool that fine-tunes process-focused IT change in near real time.
Who is offering it?
Any BPM supplier will claim to optimise processes. However, pure-play BPM and IT governance suppliers are adding specific BPO capabilities.
What can BPO do?
BPO adds new levels of process agility and efficiency by gaining enterprise-wide visibility of business processes.
BPO case studies: AXA and Adidas
Filenet is being used at AXA Ireland to streamline insurance claims using business process optimisation. AXA typically has about 20,000 active insurance claims in process at any one time, involving communication with tens of thousands of customers.
Legacy paper-based claims processing was automated to meet a target to cut response times by 50%, as well as integrating customer information to improve service levels.
BPO was a key ingredient in the overall BPM mix that led to an increase in productivity of 200% in the first year.
Another example comes from Adidas, a company that has recently attempted to become a customer-focused, service-based IT operation. Its BPM product from Mercury enabled the company to standardise globally by digitising and automating business processes from demand through production.
"We now have what all large businesses must want - ERP for IT," said Stein Tumert, senior executive of global IT for Adidas.