BPM Can Add Two Percentage Points to the Operating Margin

Professor Ayelt Komus

Ayelt Komus is Professor of Business Requirements Analysis and Business Informatics at the University of Applied Sciences in Koblenz, Germany, and is a renowned BPM expert. In 2007, he managed a survey in which 500 companies were polled about BPM – which revealed some interesting results, particularly for accountants: Companies that make a concerted effort to deploy BPM have an operating margin of between six and eight percent, an average of two percentage points more than their non-BPM competitors.

Professor Komus, to what extent is business process management part of everyday life in the business world?

When it comes to implementing BPM, most companies have taken small steps. It is the exception rather than the rule for new departments to be set up or companies to undergo radical process-oriented redefinition.

In general, BPM is interpreted and put into practice in very different ways, and this can be largely attributed to the industry and the size of the company.

Large enterprises and the midmarket generally have the same motives for targeted process management – standardizing workflows, increasing quality, and improving process efficiency. With large enterprises, creating standardized methods as the basis for authentic process management plays an important role. In contrast, the midmarket is constantly looking for a compromise between continuity, methodology, and immediate results. The direct benefit is what’s most important to small businesses and midsize companies.

I am currently working on an online BPM check, which takes the different target systems into account and offers advice about which measures are relevant for different constellations.

Are there any regional differences in terms of BPM?

I think that all companies with professional global strategies have come to understand the necessity and potential of BPM. In English-speaking economies, BPM has been pursued consistently and with great commitment for a long time now.

In German-speaking countries, many companies value procedures that comply with methods. Another factor is that SAP solutions are very common in this part of the world. Their great connectivity naturally encourages organizations to systematically explore integrated business processes.

How can software support business process management?

The idea of an all-encompassing optimized value chain is not new – and was already realized by ERP software such as SAP R/2 and SAP R/3. With their high integration capabilities, these solutions heralded the end of the era in which IT systems were functionally separate. But back then, users often had to decide whether they should run the processes as envisaged by the system or whether they should develop their own modifications. And with the second option, you could negate the advantages of using standard solutions.

The concept of service-oriented architecture (SOA) and new BPM systems now give users much greater scope for making decisions – but they are also spoilt for choice. SOA can potentially make companies more competitive through individual process design, provided that the business processes are managed competently and actively.

It is possible to measure BPM?

What companies are ultimately interested in, of course, is the answer to the questions: What improvements do BPM measures bring about? How good is the output with limited input – in terms of cost, time, and quality?

If input and output are difficult to gauge, as is the case with creativity or customer focus, maturity models are used. For example: How precisely can a company predict the delivery date?

But we must be careful. If you take a hacksaw to your processes and aim for maturity across the board, you’re bound to fail. Companies must analyze precisely what the requirements are for each of the processes, based on size, industry, and strategy.

Thanks to ERP software and BPM systems, many companies now have access to relevant data from transactional processes. This can be used for controlling and monitoring.

You are the author of the book “Wikimanagement.” What can BPM learn from social software and wiki management?

In our book, we investigate the factors that make social software systems like Wikipedia, Xing, and YouTube so powerful. Innovative technology plays only a minor role. The decisive success factor is the common vision – for instance, Wikipedia’s desire to make knowledge available to everyone.

Interestingly, the control and quality management mechanisms are so strong that the people involved aren’t hampered in their commitment and creativity.

But integrating a wiki management philosophy into existing BPM structures presupposes that employees get actively involved, in other words, the company has a bottom-up approach to BPM. And, of course, this must harmonize with the corporate goals.

I think it could be feasible if done in small steps, so that certain restricted areas could systematically try out the approach using trial and error, in much the same way as an article on Wikipedia is constantly under development.

And what Wikipedia has done is most encouraging: Instead of the much predicted chaos, the quality of most of the information is comparable with the content of classic encyclopedias.

Let’s have a look into that crystal ball: What does the future hold for BPM?

The fundamental conflict between functional – or resource – efficiency and process efficiency might level off in a few places, partly as a result of modern IT systems. But the conflict will still be there.

Due to the degree of freedom enabled by SOA and modern BPM solutions, companies will be able to organize their business processes even more flexibly. Above all, the direct linking of design, modeling, the transactional system, and controlling will be important.

When we look at putting successful mechanisms from social software in place in BPM, we are still at an early stage. Currently, there are a few tentative moves to integrate technologies such as wikis, networks, blogs, and so on. But that’s just a small part of the identifiable potential. Marked improvements will be seen where the social software philosophy becomes an integral part of process management, in other words, where it touches the employees who get the work done.

Professor Ayelt Komus

Ayelt Komus is Professor of Business Requirements Analysis and Business Informatics at the University of Applied Sciences in Koblenz, Germany. His academic research, which combines theory and practice, investigates how companies can improve their process design using modern information technology and process-oriented networking, and thus become more competitive. He is also involved with the BPM network for German-speaking countries and is the author of the book “Wikimanagement.”

Read more about BPM in the November/December 2008 issue of SAP Spectrum.