An enhanced business process management system architecture is available through an Integrated Enterprise Excellence (IEE) implementation of BPM.
Enhanced Business Process Management System Architecture
A business process management system needs an organizational value chain from which analyses and improvements are made in an organization.
BPM System and the use of Porter’s Value Chain
The concept of Value Chain was developed around 1985 by Michael Porter and subsequently popularized by his book “Competitive Advantage”. One visual representation of Porter’s Value Chain from Wikipedia is:
Porter’s value chain approach is consistent with the desires of a business process management system deployment. Porter’s value chain entails viewing organizational units as systems composed of interrelated subsystems or processes that involve consumption and transformation of resources such as money, work force, materials, infrastructure and management. Porter’s Value Chain in essence defines ways in which an organization unit could uniquely manage its business processes to gain competitive advantage.
How an organization manages its core business activities as defined by the Porter’s Value Chain will ultimately determine the overall cost of doing business and the revenue generated. Organizations benefit when a value chain is structurally integrated in an overall business process management system (BPM system).
Business Process Management (BPM) is an activity based management technique that enables organizations to create and sustain competitive advantage. For businesses to develop superior performance, they need to restructure their business strategies to be in line with the organization’s core operations such as innovation and development and distribution of products or services. A business process management system can provide the integration of value chain concepts with other key aspects of BPM.
Using BPM and Porter’s Value Chain to Gain Competitive Advantage
Organizations should first identify all their business processes defined by the Porter’s value chain before fully implementing BPM to gain competitive advantage. Porter’s Value Chain concept helps organizations to develop a big picture of all the activities that are involved in the creation of finished products and how these processes are interrelated.
By using business process models and Porter’s Value Chain in a Business Process Management System, organizations can effectively measure the cost and value of resources. Once a product value chain has been developed, it’s easier to determine the cost of an individual Value Chain process and implement a cost reduction strategy or reorganize the entire Value Chain processes.
There is no doubt that all business organizations are always striving to gain competitive advantage in their respective industries, as illustrated in the figure.
However, this is only possible when a company’s Value Chain activities are properly managed using Business Process Management (BPM) tools. Competitive Advantage in essence is the situation in which one organization attains and sustains superior performance over its competitors for a prolonged period of time.
Leading companies have managed to stay on top because they understand the Value Chain processes and apply BPM principles to their core activities to enable them create, produce, sell and deliver the product or service to their clients at the lowest costs.
Organizations must apply BPM principles to their core processes according to Porter’s Value Chain Framework to ensure optimum operation of an individual process and a seamless integration of all the processes in the Value Chain. Organizations will be able to achieve Competitive Advantage by identifying the Value Chain processes and by implementing the BPM principles.
However, before applying BPM tools, organizations should first link all their business activities together into one Value Chain. BPM enables organizations to achieve better process integration as well as improved flexibility and agility, the key factors for a achieving and maintaining a competitive advantage.
Enhancement to Porter’s Value Chain
An Integrated Enterprise Excellence (IEE) system provides a structured integration of Business Process Management with Enterprise Process Management (EPM). Provided in this implementation of BPM is an enhancement to Porter’s Value Chain, which is called an IEE Value Chain. An IEE value chain can have different functions. An example IEE value chain is:
Among other things, the IEE Value Chain provides a structured linkage to performance metrics that can provide predictive assessments. Among other things, a Business Process Management System that utilizes the IEE value chain can help organizations improve their operations with the automation of processes so that there are whole-enterprise benefits.
Contact Us to set up a time to discuss with Forrest Breyfogle how your organization could gain much from an Integrated Enterprise Excellence (IEE) Business Process Management System implementation.