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BPM - Process for the Alert Enterprise

In the first article in this series, “SOA – The Backbone of the Alert Enterprise,” I made the case that service-oriented architecture (SOA) is part of the arsenal that IT needs to create an Alert Enterprise. An Alert Enterprise has a well-developed capacity to respond to change, react to opportunity and pre-empt risks, and ultimately, helps to drive alignment between IT and lines of business.

It is the orchestration, or business process management (BPM), layer on the SOA software stack where the rubber meets the road: where the business side meets IT. It’s important to note that BPM is not just about piecing together components to create a business process – although that is clearly important – but also about process improvement. The true value of BPM, in fact, is in defining a process-oriented architecture (POA) that links business strategy to execution.

Why is this true? The following statement by Charles H. Fine, professor of operations strategy and supply chain management at MIT’s Sloan School of Management, sums it up well: “Value chain design is the ultimate core competency . . . all competitive advantages are temporary” (Clockspeed – Winning Control in the Age of Temporary Advantage). While competitors can usually get a good idea about other businesses’ products and services, processes are much less visible to competitors and therefore less subject to being easily copied. However, with all the emphasis on “best practices” and benchmarking, even process design can be shared or co-opted in relatively short order. The key then is to be extremely nimble in adapting and improving the way business is conducted. As such, a POA must do for the business what SOA does for IT: create a framework for intelligent reuse of business processes and practices and rapid development of adaptations to those processes. BPM is the tool that plays a major role in providing this capability.

The term POA is not new. However, it has usually been used as a substitute for SOA or as a way to describe technology platforms that support business processes. To be truly process oriented, more attention has to be given to what the non-techies – the line of business folk – need to understand about a process, such as order-to-cash or procurement. As such, a POA is defined by its ability to:
- establish process standards
- monitor process performance
- discern baseline vs. exceptional process behavior

Process Standards: The Building Blocks of Process-Oriented Architecture

There are a number of key elements in establishing a process standard. The first is in describing the basic inputs, outputs and process steps needed to transform the inputs into the desired output. The SCOR (Supply-Chain Operations Reference) model is a good example of this for the supply chain. As a process reference model for supply chain management, it serves as a management tool that enhances communication between parties. It describes supply chains, regardless of their complexity, as process building blocks using a common set of definitions.

Additionally, major business application software such as ERP (Enterprise resource planning) or CRM (customer relationship management) systems have set what amount to de facto standards for various business activities such as order taking, inventory management, shipping and invoicing. There is a push toward common standards as a common way of doing things. With common standards, it becomes easier for everyone to compare processes. The downside of this is that processes can become commoditized. An advantage to the commoditization of processes is that they can be more easily outsourced. In terms of business processes, the main issue with outsourcing is not in striking the initial deal, but in creating a solid foundation that will ensure successful execution of the process, day in and day out. BPM provides this essential framework, and allows organizations to tie together the building blocks of an end-to-end business process.