Executive Summary

Business Process Management (BPM) has been making huge strides across industries in the last few years. This article explores the relevance of BPM across multiple domains and unique strategic advantages that are gained by the application of BPM principles.

Although domains such as Healthcare, Retail, and Banking vary in the nature of their business as well as operational structure, the method of optimizing the business process in each of these domains remains similar. This article will elaborate the application of IBM BPM 8.0 with specific examples.

Principles of BPM

Wikipedia defines BPM as a "holistic management" approach to aligning an organization's business processes with the wants and needs of clients. The key goal of BPM is to create a framework for identifying, analyzing, optimizing, re-evaluating and re-optimizing the critical business process. The chart below depicts the key features of IBM BPM 8.0:

BPM Need

We are living in an increasingly hyper connected world. Smartphones and tablets have made access to information a seamless process. Consumers are more informed than ever. The market dynamics are changing by the hour and the first player to respond to the changing market dynamics will eventually lead the market. Such an ecosystem demands a hyper connected visibility to the business processes of an organization for its stakeholders to help them make informed decisions. IBM BPM 8.0 provides a complete visibility to the business processes.

Innovation and BPM

Edmund S. Phelps, a Nobel laureate in economics and director of the Center on Capitalism and Society at Columbia University and author of the forthcoming book “Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge and Change. “Notes the following about Innovation and BPM -

“My view is that innovation has declined in the everyday processes that businesses tinker with incrementally as they try to become more productive over time. This decline of innovation across many fields — with notable exceptions like Silicon Valley, biotechnology and clean energy — has set back much of the earlier gains in productivity in American history.”

Flavors of BPM

IBM BPM 8.0 can be applied in different flavors such as –

Complete Automated Process with Minimal human interaction
Mostly Manual Process with Minimal automation
Part Automated and Part Manual Process

BPM Strengths

IBM BPM 8.0 has robust integration capabilities with enterprise architecture

· The IBM BPM 8.0 suite has the capability to integrate with web services with minimal impact to the existing architecture. This greatly reduces the cost of implementing BPM solutions but at the same time provides improved process management.

BPM has been and will continue to change the nature of work force

· It eliminates the non-value adding work such as data entry and leaves value addition work such as decision making and evaluation with the workforce. This advantage results in huge productivity gains to the enterprise and reduces manual error in routine tasks to a great extent. The result – more robust business processes with less rework due to manual error.

BPM empowers the business and classifies IT as a supplementary function

· Tools such as BlueworksLive enable business process owners and participants with no programming language to draw up critical processes for analysis and improvement

· By placing the process flows in the hands of the business users, BPM helps the business users to look at their business critical processes end to end and think holistically

· Most of the critical business processes involve business rules. Ever changing regulations and market conditions require updating business rules on a day to day basis. Rules Engine integrated with BPM systems such as in BPM 8.0 provides user friendly interface for the business users to implement and govern ever changing business rules in processes without bringing down the applications or involving the IT team

· Business process improvement is a continuous process and can be driven by the business after gathering process metrics over a period of time

· By continuously monitoring the process metrics after deploying a process, the business users can track the savings in effort and time with the new process and suggest improvements to the process accordingly

BPM Aligns the business processes with the strategy of the organization

· A detailed analysis of business processes and well defined process roles and purpose help to evaluate and re-align the processes with the strategy of the organization

Let us see how these steps are implemented in various industries:

Retail

Need for BPM in Retail Industry

“Show rooming” is the latest market disrupting trend faced by the retailers. Smartphone enabled consumers are evaluating the features of products in stores, comparing the prices of those products at other retail stores or online and leaving the store to buy it elsewhere. Online retailers like Amazon and eBay have made it easier for the consumers to shop remotely at a click of a button. Retailers have to carefully strategize their Unique Selling Preposition (USP) within a short period of time and present the best product (in terms of price, quality, ROI) to the consumers at the right time in the right place. This means better inventory control and flexibility to cater to changing consumer preferences. Retailers are creating market places for other retailers to sell on the retailer’s store/website. The approval processes for adding new vendors to the market place, approving the product catalog, inventory decisions, supplier onboarding, transportation routing all have to be optimized and should have a quick turnaround time.

Innovation in Retail

Retailers have to think of creative ways to reduce cost while at the same time retaining existing customers and attracting new customers. Some of them are:

· Innovative transportation routing for the trucks that move the inventory across the warehouses and stores

· Sourcing products from suppliers that are close to where the demand is to reduce transportation costs

· Offering value added services along with the core products

· Delivering products to the customer’s doorstep the same day

· Creating brand awareness through Social Media marketing

· Sourcing products across multiple channels – Store, online, market place

· Using mobile apps to drive location based product offerings

· Rewarding tailored products to loyal customers

· Controlling the supply chain to adapt to changing market needs

IBM BPM 8.0 can help retailers innovate in each of the above ways by providing the following features:

Provide end to end visibility for truck route assignment processes
Integrate inventory systems with truck routing systems and provide a convenient approval process
Ability to define/modify business rules around truck routing and inventory management
Integrate store inventory order management systems with supplier systems, build business rules to dynamically map suppliers with stores based on proximity and create a governance process to manage the mapping
Integrate and provide visibility and control across channels– Store, online, market place
Build business rules capability for offering location based products
Provide intelligent systems to analyze customer behavior and formulate business rules around tailored product offerings

Sample Order Fulfillment Flow –

Flavors of BPM in Retail

A supplier/vendor onboarding process will primarily have manual tasks and less automation/system integration
Transportation management and inventory control process will have manual tasks and automation in equal measure
The Cross channel Inventory integration process will be mostly automated with minimal manual interaction

Unique advantages with IBM BPM 8.0 in Retail

Integration:

BPM software such as IBM BPM 8.0 provides robust integration capabilities with web services. This coupled with IBM Sterling Commerce software, which provides B2B integration, secure file transfer and multi-channel selling and fulfillment, provides control and visibility across the length and breadth of a retail product lifecycle
IBM BPM 8.0 software integrates easily with existing software infrastructure of retailers that are based on SOA
IBM BPM 8.0 also provides easy integration with enterprise Active Directory to provide role based authorization and authentication
The Rules component of IBM BPM 8.0 suite can implement the role based governance by integrating with the existing enterprise directory

Changing nature of workforce:

Most of the non-value work such as downloading the inventory data or transportation routes and presenting them as reports can be eliminated with IBM BPM 8.0 software. The IBM Business Activity Monitor (BAM) component of BPM suite provides comprehensive and customized reporting capabilities
The manual work involved in B2B approval process such as retrieving data from multiple system sources, combining and sorting data is eliminated. By automating the data integration across system sources and sorting and presenting the data in a user friendly format, BPM leaves only value addition work such as reviewing supplier information and approval in the hands of the employees.
Productivity gains are achieved by the enterprise since employees spend less time collecting data and instead work on evaluating the data and making best judgment
Process owners spend less time collecting process metrics such as the number of suppliers waiting to be approved, the number of trucks scheduled on transportation routes, the product mix on the market place waiting for approval, number of pending orders in the order pipeline waiting to be fulfilled, the status of product delivery, etc. Out of the box process reports and customized reports from IBM Business Activity Management provide great visibility to the senior management to make informed decisions in a short span of time
Built in escalation in the process ensure human tasks are completed within the SLA
Visibility into the order pipeline process helps senior management make the decision to invest in those parts of the process that add most value to the customer. E.g.: An order fulfillment process that depends on an email approval or loading the order in a data warehouse for reporting purpose before an order can be routed to a vendor for fulfillment is unnecessarily causing delays in the delivery of product to the customer. Eliminating the email approval and making the load to data warehouse as a parallel process will expedite the delivery of product to the customer

Empowered Business Users:

Business rules related to truck routing and supplier allocation can be updated by the rules owners without IT team involvement
Business rules around product catalog can be updated by the rules owners without IT team involvement
Regulatory changes around order fulfillment, payment processing etc. can be implemented with minimal impact to the business process

Healthcare

Need for BPM in Healthcare Industry

The healthcare reform, a.k.a. Affordable care act, as presented a pressing need for the healthcare insurers to be more competitive and reduce their costs. The law makes it easier for the individuals and small groups to compare and purchase the health insurance plans that best fits their needs. At the same time the health insurance costs have continued to rise. In 2011, the health insurance premiums for businesses rose by 9 percent. Increasing competition and rising administrative costs are forcing insurers to control costs by making their critical business processes more efficient. A major “not for profit” state healthcare insurer Prolifics was consulting at was facing the same challenge. This insurer processes over 50 million claims per year for its members. In 2011, it’s SG&A (selling, general and administrative) expenses was around $1.5 billion. A major component of the administrative costs is the cost for claim processing. Efficient claim processing enabled by IBM BPM 8.0 will result in effort, time and cost savings for the insurer. Federal and state regulations impose a greater emphasis on the way insurers process the claims, charge and spend the premium amount, especially if the insurers happen to process claims for federal and state benefit plans. Claim quality auditing is a preferred method the insurers follow to ensure compliance with the regulations. An integrated BPM solution that eliminates bottlenecks and reduces non-value work like collection of auditing data will improve the claim processing and auditing process.

Innovation in Healthcare

Regulations and heightened competition has forced insurers to innovate in the following ways:

Quick turnaround in creation of group insurance accounts for small, medium and large businesses
Inculcate flexibility into benefit structuring and product offering
Reduce the lead time to process claims by automating the classification of claims, gather data (evidence) around the claims, validate and pay the claims
Eliminate over or under payment in claims there by save money and prevent regulatory action
Build artificial intelligence into claims payment and auditing by identifying a pattern over a period of time and formulating business rules around those patterns
Consolidate the enterprise business rules, update business rules easily and quickly react to the ever changing regulatory conditions

IBM BPM 8.0 can help insurers innovate in each of the above ways by providing the following features:

Orchestrating the account set up for small, medium and large businesses by integrating with Group & Membership systems, contract & ID generation systems and other third party systems
Providing visibility and control to the account set up process
Integrating account set up process with Benefit and product catalog systems, applying the business rules and associate the benefits and products with the accounts
Analyzing the claim processing and auditing process, eliminating tasks taking high amount of time
Automating the gathering of data(evidence) for claim processing and auditing and presenting it in an user friendly format
Automating assignment of claims to claim processors and auditor
Consolidating enterprise business rules using Rules Engine and providing easy interface to maintain the rules
Enabling convenient introduction of new business rules into the process

A Sample BPM Enabled Account Set up process:

A Sample BPM Enabled Claim Audit Process:

Flavors of BPM in Healthcare

An account set up/maintenance process can be a mostly automated process with orchestration and integration as the primary function of the process and with minimal human interaction
A Claim audit process can have part automation and part human interaction
Claim processing can be completely automated by building intelligent rules into the rules engine to evaluate the claim against benefits & eligibility and integrating with the claims payment system