MANAGEMENT & ACCOUNTING

Enterprise-Wide Business
Process Management
DRIVES PERFORMANCE
Patrick Ow
A well-designed BPM approach can deliver business process effectiveness and efficiencies
that will ultimately drive organisational performance.

O
rganisations are continually
faced with a need to improve
the way they operate.
This usually means “improv-
ing” an existing business process, while at
times developing a new process from
scratch. Unfortunately a lot of time is spent
discussing problems related to business
processes and often ending with treating
the symptoms rather than the real prob-
lems or the root causes.
Business Process Management (BPM)
is a field of knowledge at the intersection
between management and information
technology, encompassing methods, tech-
niques and tools to design, enact, control,
and analyse operational business pro-
cesses involving humans, organisations,
applications, documents and other sources
of information.
At the very minimum, a business pro-
cess will have the following components:
䡲 Entities — A person or a group of people
who per forms one or more tasks in-
volved in a process.
䡲 Transactions — Information exchanges
between entities.
䡲 Goal — End state to be achieved.
䡲 Objective — Statement describing what
the business process seeks to achieve or
what outcome should occur that eventu-
ally supports the goal. The statement
must be specific, measurable, attainable/
achievable, realistic and time-bound.
䡲 Business Rules — Set of statements that

28 ACCOUNTANTS TODAY • June 2007


define or constrain some aspect of the
business process. It is intended to assert
business structure or to control or influ-
ence the behaviour of the business.
䡲 Trigger — Event, action, or state that ini-
tiates the first course of action in a process.
䡲 Task Set — Set of tasks required to fully
define the business process.
䡲 Input(s) — Information received by the
business process from external sources.
Inputs are not generated within the pro-
cess.
䡲 Output(s) — Information transferred out
from a process and may have been the
resulting transformation of an input, or
it may have been information created
within the business process itself.
䡲 Outcome(s) — Resulting transaction of
a business process that indicates that the
objective has been met. Often, measures
or key performance indicators can be
associated with the outcome (e.g., how
much, how often, decrease in incidents,
etc.). Note that an outcome can be, but
is not necessarily, an output of the pro-
cess, which is difficult to measure, as
compared to output measures.
We need to develop a rational and cost
effective but yet comprehensive approach
to assist organisations to think through
the tasks that are performed to meet spe-
cific corporate objectives (analysing their
business processes through Business
Process Analysis), rethink the tasks to
increase effectiveness and efficiency (re-
design business processes through Busi-
ness Process Redesign), and describing
what information system or technology
must do to support those tasks (define
system requirements through the use of
technology).
The enterprise-wide approach is detailed
below:
1 Business Process Analysis (How do we
do our work now?)
䡲 Define and confirm goals and objectives
(alignment to corporate objectives is vital).
䡲 Determine core processes within the
organisation and model its context or fac-
tors of work, estimating their performance.
䡲 Identify associated business rules where
decisions are made.
䡲 Describe tasks and workflow for these
June 2007 • ACCOUNTANTS TODAY
Enterprise-Wide Business Process Management Drives Performance
core processes.
䡲 Identify associated common task sets.
䡲 Spot overlaps and inconsistency, concentrat-
ing on value-added task or value drivers.
䡲 Identify, analyse and evaluate risk (or
barriers) impacting the achieving of pro-
cess goals.
䡲 Identify possible revenue leakages.
䡲 Identify cost drivers, seeking to under-
stand the link between their cost struc-
ture and the wider business.
䡲 Determine operational impact and recov-
ery time objectives if there is a full or par-
tial process failure (business continuity).
䡲 Identify applicable regulations and con-
tractual obligations that impact upon and
govern the workflow.
2 Business Process Improvement/Re-
engineering (how should we do our
work?)
䡲 Analyse tasks and workflow with an un-
derstanding of linkages and dependen-
cies between all identified core pro-
cesses, taking a systems approach,
rather than individual processes.
䡲 Identify inefficiencies and eliminate non
value-added activities through simplifi-
cation and use of technology, where ap-
propriate.
䡲 Identify efficiencies with repeatable pro-
cesses.
䡲 Refine business processes and business
rules, eliminating revenue leakages and
excessive/ inappropriate cost struc-
tures, where possible.
䡲 Remodel context of work.
䡲 Identify risk treatment/ controls and
monitor their implementation.
䡲 Ensure regulatory and contractual com-
pliance, including adequacy of limits of
authority based on the 80/20 rule (80 per
cent transaction should be approved at
a lower level before it is passed on to a
higher authority).
䡲 Identify business continuity recovery strat-
egies in line with assigned recovery time
objectives based on available resources.
䡲 Restructure task and workflow accord-
ing to remodelled process.
䡲 Measure and track actual performance
through key performance indicators and
balanced scorecards covering financial
and non-financial areas like customer
satisfaction and human performance.
3 Requirements Definition (How can an
information system support our rede-
fined work/process?)
䡲 Define specific task to be performed for
optimised business processes, especially
through the use of technology and im-
proved workflows and business rules.
䡲 Eliminate manual or non value-adding
work steps.
䡲 Describe the implementation of im-
proved business rules.
䡲 Describe in words and graphics how an
information system must be structured.
A well-designed BPM approach can de-
liver business process effectiveness and
ef ficiencies that will ultimately drive
organisational per formance. Core pro-
cesses are integrated with each other and
aligned together as a coherent system to
maximise the performance as a group of
processes. Tweaking individual core pro-
cesses without considering the impact
upon other processes is counter-productive
and destructive.
From a risk management perspective, the
process analysis can identify a potential risk
that affects the achievement of the process
and corporate objective. Controls can be
enhanced or developed to mitigate or man-
age risks. A risk management plan will pro-
vide a list of controls that will provide rea-
sonable assurance that objectives will be
achieved. This ensures that risk control ac-
tion plans are aligned to objectives.
From a business rules perspective, by
understanding all business rules associ-
ated with the process, we are able to de-
termine where key decisions are made
along the process, the associated criteria
for making these decisions and the persons
making them. Business rules describe the
operations, definitions and constraints that
apply to an organisation in achieving its
goals. For example, a business rule might
state that no credit check is to be per-
formed on return customers.
Unfortunately business rules that are
usually encapsulated in policies and pro-
cedures are not frequently reviewed, re-
sulting in inconsistencies in operations.
From a revenue assurance perspective,
29
Enterprise-Wide Business Process Management Drives Performance
after determining the business rules affect-
ing the process, we are also able to ascer-
tain possible revenue leakages along the
process in question. For example, penalty
waivers cannot be given unless predefined
criteria are strictly adhered to. A RM5
waiver – covering 2,000 “affected” accounts
daily – can be substantial over the entire
financial year.
Generally, there are 10 key processes in
revenue assurance that must be consid-
ered:
1 Pricing strategy;
2 Sales and marketing;
3 Order management and provisioning;
4 Service activation;
5 Customer management;
6 Network engineering and operations;
7 Mediation and carrier operations;
8 Rating and billing;
91Accounting; and
10 Cash collections.
It is recognised that increased controls
and revenue leakage reduction can have
significant positive impact on downstream
processes, having positive impact on both
revenue recovery and cost avoidance/ re-
duction activities.
This closely links to cost management
whereby an understanding of the link or
driver between cost structures in a process
and the wider business will maximise
organisational effectiveness by reducing
cost, without compromising efficiencies
and under-funding on key operational ar-
eas.
From a business continuity perspective,
we need to understand the impact on core
processes in the event of a full or partial
failure or disaster like a fire to the office
building. The likelihood and impact of
these possible failures are quantified
through risk management methodologies.
Core processes like customer service or
production must be able to recover from
an untimely disaster through the determi-
nation of possible disaster scenarios affect-
ing the process.
For each disaster scenario identified, the
impact analysis will determine dependen-
cies like applicable computer support, ac-
cess to key documents to perform the work
and resources required immediately after
30
the disaster and during the recovery stage
as defined by the recovery time objective
and encapsulated within recovery strategies
and business continuity recovery plans.
If the recovery time objective is short, say
within 15 minutes of disaster, minimum op-
erations must be up, then reliance on a “hot-
backup” computer network is required to
access customer information from an alter-
native site. Processes must be analysed and
re-engineered to take into account potenti-
alities of a failure or disaster affecting the
process, ensuring that dependencies and
flexibility is incorporated in the process re-
design and not left to chance. This includes
business rules and revenue assurance,
whereby compromises through potential
revenue leakages immediately after a disas-
ter must also be considered.
From a regulatory and contractual com-
pliance perspective, the process analysis
will determine whether there are potential
leakages of confidential customer informa-
tion to unauthorised personnel, especially
if combined with business rules analysis.
Storage of a customer’s personal informa-
tion, either manually or electronically,
along the workflow can be analysed
through data-flow diagrams.
From a limit of authority perspective,
accountability and responsibility can be
analysed for clarity and consistent applica-
tion. Persons triggering a task are respon-
sible for their actions. The ultimate person
responsible for the entire process is the
person accountable for signing off on the
transaction.
For example, the preparer of a payment
voucher will be responsible for the accuracy
of the document being prepared. But the
approver will be accountable for the process
by which the payment voucher is prepared,
approving the financial drawdown from the
approved budget, in addition to making sure
that information is accurate, coding is cor-
rect, and policies/ procedures are applied
correctly and consistently.
And finally, from a process improvement
or re-engineering perspective, the holistic
analysis will attempt to remove non-valuing
steps along the process flow, thus eliminat-
ing possible duplication and inefficiencies.
Process improvement is a series of ac-
tions taken to identify, analyse and improve
existing processes within the organisation
to meet new goals and objectives, whereas
Business Process Reengineering is a man-
agement approach aimed at improvements
by means of elevating the efficiency and
effectiveness of the processes that exist
within and across different organisations.
A sequence of value-added tasks makes
up the value chain for a workflow. Ideally,
the goal for quality improvement is to
maximise the percentage of tasks that com-
prise the value chain. Conversely, tasks
that do not add value must be redesigned
or removed to improve the efficiency of the
workflow.
For example, the task flow diagram for
an accounts receivable business process
revealed that an activity in which a worker
checked the totals of a ledger was redun-
dant after paper ledgers were replaced with
electronic spreadsheets. The spreadsheets
contained the automatic calculation func-
tion that was necessary to check totals, but
the manual calculation task was never de-
leted from the workflow. Removing the
manual calculation task decreased the time
for the work to be completed and also freed
up a labour resource for other critical tasks.
Another benefit in performing task flow
analysis is the capability to define the spe-
cific tasks that need to be performed by
an information system or technology. Au-
tomation is absolutely required. For ex-
ample, leave form submission and approval
can be incorporated into a database and e-
mail authorisation workflow, eliminating
paper movements that are prone to “going
missing”, thus delaying the approval pro-
cess and wasting time to prepare a new
submission. This does not include paper
cost, printing cost and storage cost.
Through a holistic and comprehensive
look at core business processes across the
entire organisation simultaneously from
dif ferent perspectives, we are able to
maximise performance drivers throughout
the organisation. This ensures horizontal
alignment of core processes throughout
the organisation and vertical alignment of
core processes to the corporate strategy,
minimising any rework in the future within
a one-off exercise, instead of multiple en-
gagements. AT
The author can be contacted at patrickow
@gmail.com
ACCOUNTANTS TODAY • June 2007