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Q2 How Do Organizations Use Business Process Management (BPM)? 461
Q2 How Do Organizations Use Business Process

Management (BPM)?

For the purposes of this chapter, we will extend the definition of business processes that we used
in Chapter 3. Here we will define a business process as a network of activities, repositories, roles,
resources, and flows that interact to accomplish a business function. As stated in Chapter 3,
activities are collections of related tasks that receive inputs and produce outputs. A repository is
a collection of something; an inventory is a physical repository and a database is a data reposi-
tory. The new terms in this definition are roles, which are collections of activities, and resources,
which are people or computer applications that are assigned to roles. Finally, a flow is either a
control flow that directs the order of activities or a data flow that shows the movement of data
among activities and repositories.
To clarify these terms, think of roles as job titles. Example roles are salesperson, credit man-
ager, inventory supervisor, and the like. Thus, an organization might assign three people (re-
sources) to the salesperson role, or it might create an information system (resource) to perform
the credit manager role.

Why Do Processes Need Management?
Business processes are not fixed in stone; they evolve for several reasons. To understand why,
suppose you are a salesperson working at the company having the ordering process shown
in Figure 12-1. When you joined the firm, they taught you to follow this process, and you’ve
been using for it 2 years. It works fine as far as you know, so why does it need to be managed?
Fundamentally, there are three reasons: to improve process quality, to adapt to changes in tech-
nology, and to adapt to changes in business fundamentals. Consider each.

Improve Process Quality
As you learned in Chapter 7, process quality has two dimensions: efficiency (use of resources)
and effectiveness (accomplish strategy). The most obvious reason for changing a process is that
it has efficiency or effectiveness problems. Consider a sales process. If the organization’s goal is
to provide high-quality service, then if the process takes too long or if it rejects credit inappro-
priately, it is ineffective and needs to be changed.
With regard to efficiency, the process may use its resources poorly. For example, accord-
ing to Figure 12-1, salespeople verify product availability before checking customer credit. If
checking availability means nothing more than querying an information system for inventory
levels, that sequence makes sense. But suppose that checking availability means that someone
in operations needs not only to verify inventory levels, but also to verify that the goods can be
shipped to arrive on time. If the order delivery is complex, say the order is for a large number of
products that have to be shipped from three different warehouses, an hour or two of labor may
be required to verify shipping schedules.
After verifying shipping, the next step is to verify credit. If it turns out the customer has in-
sufficient credit and the order is refused, the shipping-verification labor will have been wasted.
So, it might make sense to check credit before checking availability.
Similarly, if the customer’s request for special terms is disapproved, the cost of checking
availability and credit is wasted. If the customer has requested special terms that are not nor-
mally approved, it might make sense to obtain approval of special terms before checking avail-
ability or credit. However, your boss might not appreciate being asked to consider special terms
for orders in which the items are not available or for customers with bad credit.
As you can see, it’s not easy to determine what process structure is best. The need to moni-
tor process quality and adjust process design, as appropriate, is one reason that processes need
to be managed.