The book is divided into four sections and covers his views on:

• The Information Society;
• Business Opportunities;
• The Changing World Economy; and
• The Next Society.

Drucker sees the Next Society different to the New Economy. (More on that in a later post) To him the Next Society is a knowledge society. “Knowledge will be its key resource, and knowledge workers will be the dominant group in its workforce”. The main characteristics of this Next Society will be :

• Borderlessness, because knowledge travels even more effortlessly than money. (I think the information freedom that the Internet brought accelerated this trend);
• Upward mobility, available to everyone through easily acquired formal education (I think that informal education through the Internet may have surpassed the formal mediums); and
• The potential for failure as well as success. The fact that you can acquire the knowledge doesn’t automatically leads to successful outcomes, according to Drucker.

He also states that IT is an enabler that helps information spread near instantly and makes it accessible to anyone. This now results in organisations that need to be globally competitive while still operating in local markets. Just think of the local bookstore that needs to compete with the prices on Amazon.

So how does this Next Society impact our organisation’s competitive advantage? What has it got to do with my business processes and how they work in my organisation? According to Drucker the success and survival of every business will depend on the performance of its knowledge workforce. He makes an observation that it is impossible, according to the law of statistics, for any but the “smallest” organisation to have “better people” and the only way an organisation can excel in this knowledge economy is to manage its knowledge workers for greater productivity. So how is that different to the “old economy”?

Well, what made the traditional workforce productive was the system. The factory style, assembly-line “system” was popularised by Taylor and followed by Henry Ford and Demming. The system embodied the knowledge, or the knowledge was “built into the system”. It is the reason why McDonalds can run a fast-food restaurant with a bunch of fifteen year olds. Drucker’s view is that the system is productive because it enables individual workers to perform without much knowledge and skill. According to him, greater skill on the side of an individual worker is a threat to co-workers and the entire system. It is also the way that we design and implement business processes today. We automate “the system” and leave little or no room for workers to deviate from this. It enforces repeatable, consistent and measureable output. But we leave no room for individual contribution.

In knowledge-based organisations it is the individual worker’s productivity that makes the system productive. In a traditional workforce the worker serves the system and in a knowledge workforce the system must serve the worker, according to Drucker. This means that we have to change the productivity tools that we use for the Next Society. It means that the way we designed, implemented, automated and measured organisational processes must change. Processes can’t be as prescriptive and restrictive as what we’ve done in the past. It needs to support the productivity objectives of a knowledge worker and it needs to be dynamic and flexible while providing the necessary organisational control.

Drucker remarks that it would be difficult to overstate the importance of focussing on knowledge workers’ productivity. “For the critical feature of a knowledge workforce is that knowledge workers are not ‘labour,’ they are capital”. There is a shift from labour as a cost to a view of ROI on “labour capital”. Drucker calls it the Productivity of Capital.

The move to the Next Society is here. We have seen the borderlessness of information, the upward mobility of knowledge workers and the way process work changed. Knowledge workers need Next Society tools to support their productiveness. They are not bound to the constraints of an assembly line, either physically or in their contribution to the processes. They require IT enabled productivity support tools that allow them to work anytime, anyplace. The key to Competitive Advantage lies in enabling the Next Society to work in a way that will give a positive ROI on our knowledge capital.

Well I’d like to rephrase it for myself to “Why do I think BPM cloud take off like ERP and CRM”. It also pre-supposes that CRM has taken off (which is a different debate).

I believe BPM will take off but not in the form or shape that we understand or think off today. I wrote a blog post on my BPMJournal blog titled “On Evolution, Darwin and BPPM” and no, BPPM is not a spelling mistake, it stands for Business Process and Performance Management. In the post I discuss the Richard Koch’s theory on “Evolution by Natural Selection” and how it applies to business process management and the “Progress from Order to Chaos”.

In summary (and I suggest that you read the post if you want to understand the context) it states that there is variation (we breed new adapted species), then selection (only a few make it in the new conditions), then more variation based on those that survive, the selection and so on. Being successful or “surviving” is based on fitting the “conditions of life”.

ERP systems in particular didn’t just arrive overnight. It evolved into the technology based systems that we see today through the same natural selection process. It is interesting if you trace the history of the double entry accounting system that a transactional ERP system is fundamentally based on.

In 1494 Frater Luca Bartolomes Pacioli, friend of Leonardo da Vinci, published his fifth book, Summa de Arithmetica, Geometria, Proportioni et Proportionalita (Everything About Arithmetic, Geometry and Proportion). It was written as a digest and guide to existing mathematical knowledge, and bookkeeping was only one of five topics covered. The Summa’s 36 short chapters on bookkeeping, entitled De Computis et Scripturis (Of Reckonings and Writings) were added “in order that the subjects of the most gracious Duke of Urbino may have complete instructions in the conduct of business,” and to “give the trader without delay information as to his assets and liabilities.” He acknowledged in his book that thirty-six years before him Benedetto Cotrugli wrote Delia Mercatura et del Mercante Perfetto (Of Trading and the Perfect Trader), which included a brief chapter which described many of the features of double entry.

The point I am making is that ERPs evolved over an extended period of time and will continue to change in future. ERPs didn’t start selling that well in 1500 or 1700 or 1900. I remember large Kalamazoo hand written “accounting systems” in my dad’s offices in the late ’60s, early ’70s. Today we wouldn’t contemplate starting his type of business without at least the standard modules of a manufacturing ERP. We just won’t be competitive and survive. I think the shortcomings of ERP have spawned the “next generation” and growing emergence of BPMS systems. But is all part of the evolutionary process.

BPM systems are evolving in a similar way to address ad-hoc, dynamic process requirements. The emergence of systems like Facebook disrupts the behaviour of people that use ERP, CRM and BPM systems and will change the face (no pun intended) of business systems forever. I’ve always held the view that future ERP systems will be based on a type of “BPMish” tool and I think that SOA, BPM, ERP, BI etc. are all converging to new ways of using technology to get better at getting work done. This is in the end the main objective. It will not look the same as what we know right now. It will be better adapted.

I think it is too early to say that BPM won’t take off like ERP and CRM systems. That is, if you see BPM as the technology component and not the management science. I think it can and will take off, maybe just not in the form that we see it in now. It is all based on how well it is suited to the “conditions of life”

Double entry system source: http://www.canhamrogers.com/HDEB.htm

One of his comments was “Deliver what is needed just in time and account for change – but manage change, design to account for it, deliver “good enough” to account for the evolution”

We often see analysis paralysis where customers want to define all combinations, permutations, exceptions and business rules upfront that they are so fatigued after that exercise that the processes stay in document form and never gets digitised in process automation tools like XMPro. It is a pity because the real benefit is in making processes executable.

Processes should never be static. They should be designed for change as new process requirements “emerges”. Process management is continous discovery journey that requires an adaptive process approach. Start off with basic processes that add value quickly and improve them as the real requirements emerges. The benefits of “getting it started” far outweigh the perceived benefits of “getting it perfect”. Real process performance improvement can only be leveraged by management action.

One of his other comments was that if you can’t create a solution in 90 days or less for a specific process problem, you are doing it wrong. I have to agree but more on that in a next post.

I’m typing this from my iPhone and I am getting close to my bus stop. Let me quickly press this (read more on mobiles for process management on the eXomin website) before I miss my stop.

What are your biggest frustration with business process management?

Imagine how my business output increases if I can approve leave, expense claims, credit notes etc while I’m on my way to work. I don’t have to wait to fire up Outlook on my notebook to get my process to do list. All because my processes are in the cloud and I am mobile.

Anyway, this is my stop and I must get off here. Submit to post

One of the comments on the interview states that “… to start a journey, a path must be chosen. All you need is a map, maybe even a compass will do”. It continues that the point is that the end path is not always known ahead of time. This is certainly true for a large component of the work that we (knowledge workers) do on a day to day basis. Our work has changed from the factory style, sequential and pre-determined workflow, to dynamic event based process “reactions” based on the contextual knowledge that we have for the activity that we need to address. This is quite a long explanation. Let me simplify with an example.

Suppose we receive an email from a client that want to change a purchase order from a 1 000 widgets to 10 000 widgets. Their initial order was wrong as someone left the last digit off. They still want it on the same delivery date. Suddenly there are a number of things that need to happen in your process. Our hard-coded predefined process requires that the sales person completes an “order variation” request that will be loaded in the ERP system. It may now move the delivery date out due the large variation because the MRP planning module and it may also moved to pending status as the customer credit limit is exceeded and needs to the adjusted. This is where the sales person generally revert back to email and collaboration as the structured dependency of the process limits his or her ability to “manage the process effectively”. The credit change process is manually escalated early on while the Operations Manager is called/emailed and briefed on the possible change and impact on inventory and production planning. Existing process controls are bypassed and process actions are dynamically routed and escalated based on the information that we gather at each step. We may find that credit approval requires additional information and possible collateral from the customer and we “know that we are about to receive a number of additional orders from the client as our account manager informed us that the customer landed a big contract”. Do you see the complexity in the process? It is not in the actual execution of each task, it is in deciding on a course of action based on information that we gather in the context of the process or as it emerges. It is not the activities but the combination and permutations of when and how we need to execute them. The above example is a simple one but one that most organisations would address collaboratively if they had to do it right now.

We generally model the suggested or “happy path” but this is not to say that it is the only effective way of doing work. Sometimes (most of the time) we need controlled process activities that we can sequence as the process requirements “emerges”. That is an Adaptive Process. It adapts itself in each specific transactional instance. We still do the same work, but we done necessarily do it in the same way every time. We still have specific process activities that are compulsory in every process, like credit approval, but we sequence it based the dynamics of the business. This is true “process management”.

The above example demonstrates the challenges that we face with models that are based on sequential workflow style routing and I’ll be posting on follow up posts on some ideas and suggestions around dynamic models.

One of the discussions is to try and define BPM in 160 characters or less. I added my few cents and came up with 2 attempts along these lines:

• The purpose of BPM is to actively manage process events, variables and stakeholders to deliver critical, measurable process outcomes; and
• It is “applied common sense” to make sure that you do the right things the right way over and over to stay in business and that you get better at it.

Roger Tregear’s definition, however, is the best BPM for Executive Dummies that I’ve seen in a long time.

• Organisations exist to deliver value to customers and stakeholders. That’s strategy.
  
• They do this via a series of coordinated activities across a number of functional elements of the organisation. That’s a process.
  
• It makes sense to optimise these processes so that they satisfy the requirements of customers and other stakeholders. That’s process improvement.
  
• Taking a coordinated view of the performance of the processes by which an organisation delivers value, optimises performance. That’s process management.
  
• Process management allows organisations to focus on processes that create the market differentiation described by the strategy. That’s execution.
  

It is more than a 160 characters but it describes the essence of what BPM wants to achieve, or for that matter, the essence of what any organisation wants to achieve.

It is actually part of an article that Roger did (see the “achieving process based management” in the box.net section of his LinkedIn profile) and I recommend reading it. He lists some of the reasons for BPM in the same document, which I will comment on in a later post.

Back to the “profound sequence from strategy to execution”. Not all organisations look at their processes strategically. They should, and Roger gives the definitive reason in the five bullet points. We seldom find prospects or customers that want to start the discussion with strategy. Most are looking at bullet 2, the series of coordinated activities across a number of functions in the organisation. Most have a problem with coordinating events across functional areas of their business and want a quick fix. And that’s generally where many organisations stay. They may automate them but they don’t get the benefits associated with managing them.

It also illustrates the difference between process automation/workflow and business process management. You may require process management software tools to achieve effective BPM, but it remains a way of thinking and how you approach processes that will have the long term strategic benefit. There is a process in getting to real BPM. The good news is that it is fairly simple and not hard to do. Just take the five points and apply them to your organisation and go from strategy to execution through your processes.

I often get asked what the difference is between BPM and Workflow. I guess I’ll answer it like any consultant. “What do you want it to be?”. It is really based on your point of view. If you come from a technical or tools perspective then the difference is quite so obvious. When you look at it from a business perspective some clear points of difference are visible.

For me BPM is about managing a business problem where workflow is a technology. BPM use workflow as one of its dimensions to manage business processes. The thought of dimensions led me to think of some of the other dimensions of BPM. It also reminded me of the cube as the icon for BPM with its six sides. The six sides of the BPM cube.

• BPM has a human workflow (WF) dimension;
• BPM has a rules engine (RE) dimension;
• BPM has an enterprise application integration (EAI) dimension;
• BPM has a service oriented architecture (SOA) dimension
• BPM has a content management (CM) dimension; and
• BPM has a business intelligence (BI) dimension.

So if BPM has all these dimensions one can argue that a BPM Suite (BPMS) should allow for the configuration of all of the dimensions from one interface or product suite. A BPMS provides the ability to create Composite Process Solutions (CPS) with all of these elements from a single toolset. A typical CPS may be a complex Order Management Cycle (OMC) solution with complex business rules, human intervention, various documents and data integrated to the CRM and ERP solutions in the business. The OMC solution needs to provide operational feedback and notifications to line managers as well as the ability to analyze completed processes and identify and opportunities to improve the processes by reducing bottlenecks and redundancy.

A simplified model of the cube would be to integrate RE with WF as well as EAI and CM with SOA. This leaves three dimensions for BPM:

• Rules-based human-centric workflow and process automation [Automate]  A
• SOA based EAI and CM [Integrate]  I
• BI based Performance Management [Manage] M

Are you AIMing your processes in you organization? This should be more important than debating workflow vs. BPM

Organisations are all looking to improve their competitive advantage by following one of the 3 Porter strategies:

• Low cost provider;
• Differentiation; and
• Focus.

Business Processes are the primary vehicle for the implementation of anyone of these strategies and that is the main reason why business process improvement projects are on the top of the list of many organisations. Gartner and numerous other research organisations have listed business process improvement on the top of the list for both CEO and CIOs. The cost of labor in developed countries such as the USA, UK and Europe also require continuous review and optimisation of business processes to reduce the labour cost to a level where it can compete with emerging countries like India and China where labour is cheap.

Business Process Improvement Initiatives (BPI²) differs from automation and workflow projects in objective and scope. The scope of BPI² is to management process improvement across the enterprise and its objective is to support the strategic objectives of the organisation. These strategic objectives typically revolve around both growth and cost reduction plans to support the 3 strategic approached that Porter described.

Automation and workflow focus on automating repetitive tasks in specific business areas and the objectives are generally operational by their nature. They are in many instances the result of a pain point or an operational issue that can be easily automated with a hard-coded workflow. Some of these workflows may even have rigid integration into a back office system to reduce time, errors and increase productivity of the process. (Technologies such as WF may be ideally suited to develop these workflows.) It has a transactional perspective and is aimed at solving an operational problem by letting a programmer write a custom application.

Workflows are useful if it can be utilised as part of a bigger business process management solution to support BPI². The objective of BPI² is to support the strategic objectives of the organisation as noted earlier and it is part of a continuous improvement process throughout the lifecycle of the business. The processes that support the business strategies need to change as the business move through its lifecycle. This requires an agile approach as business strategies may change quickly in response to market events and requirements. Changes to business processes are identified by business users and they are best suited to define the requirements for the changes to the processes. Business Process Management Suites, such as XMPro, is designed to support business users in the discovery of their business process requirements and allowing them to compose and deploy new processes without coding and programmer involvement. This is also the promise of BPM2.0.

It doesn’t mean to say that programmers and developers will disappear, but their roles will change in the agile process driven world of the Real Time Enterprise (RTE). BPM requires a set of new skills both in business and IT. This article will address these new roles later.

Business Process Management or BPM differs from workflow not just from a technology point of view but also from a strategic perspective. The same technology tools can be used to solve a workflow or a BPM issue. BPM is a management approach that is aimed at managing business processes. The management action is a continuous effort to define process outcomes (KPIs), deploy, monitor, analyse and adjust the process in a proactive manner. BPM utilises a broad range of support technologies to accomplish this and a BPMS like XMPro put all these technologies together in s single suite to support the proactive management approach to improve processes or competitive advantage.

Enterprises that embark on a formal BPI² goes about it in a structured and methodical way that is based on a sound BPM methodology. Developing a point solution workflow doesn’t require that same approach and are in many instances a simple specification of an operational flow diagram and it is left to the developer’s interpretation of the process to determine what the outcome will be. A BPM methodology is based on aligning the strategic outcomes of the value chains in an Organisation with the operational processes that support them. A compliance strategy may require a less than optimum technical solution, but it will better support the strategic objectives.

The BPMS support the business user throughout the process lifecycle and is a critical success factor for an effective BPI². It empowers a business user to compose strategically aligned processes, optimize, deploy, analyse and monitor them and provides the flexibility and agility to change them quickly to respond to changing business requirements.

Many Organisations are still low on BPM maturity and use the BPMS technology primarily for workflow and integration purposes. These organisations will increase the benefits of using the BPMS ten or hundred fold as they move up the BPM curve towards BPI and increase their competitive advantage.

It is clear that organisations can code workflows in a multitude of developer tools that include a BPMS but the requirements of the Real Time Enterprise need a BPMS to deliver on the competitive advantage of agility in strategy and operational execution.

Business Process Management is not only limited to large organisations with formal business process improvement (BPI) initiatives, but it is just as relevant (if not more so) in mid market businesses that operate in the same competitive landscape as those large enterprises. They may not have the same resources available but they still have the same types of business applications in place to support the same processes as those larger Organisations. There CRM and ERP solutions may not scale to 50 000 or 100 000 users but the core functionality remains the same. There value chain looks very similar, if not identical, to that of the larger organisations. Their order to cash, procure to pay, and quality management processes have the same inefficiencies as that of larger organisations. Their business applications are also disconnected and rely on people to understand and drive their processes. Their workflows are also rigid hard-wired integration solutions and their business users require the same ability to adjust processes and business rules as the competitive environment changes.

They have limited IT resources and IT is in many cases outsourced. Business users in the mid market have an even bigger need to be in charge of their own destiny. Their initiatives may not be strategically defined as BPI but are typically more tactically oriented. Take the following Customer Onboarding business scenario:

A sales representative manages his/her prospects in the CRM solution of the organisation. They only maintain the bare minimum information that is required by the system. At some point in time the prospect may want to be become a customer and a new account needs to be created in the financial application. E-mails typically start flying around and the financial person ends up trying to get the information required to create the account. There are no controls to ensure that the credit status of the prospect is verified and that all supporting documentation accompanies the request.

The process can be managed from start to end with a Business Process Management Suite (BPMS) such as XMPro to connect the CRM to an approval process through to create the new account in the ERP using drag and drop integration adapters (XMConnect) . The process can be initiated from Microsoft Outlook, SharePoint or a web interface and all the supporting documentation is available with the process audit trail.

This scenario is typical of the operational process requirements that mid-market Organisations face. Managing 50 sales representatives may not have the same operational savings as managing the 12 000 found in some large enterprises, but the improved customer relationship management and quicker account approval process will have significant impact on the sales bottom line.

The process in the example above can be deployed in a matter of days and fine tuned to the exact requirements of the business in weeks. The process can be expanded to include other scenarios and grow as the business grows.

The objective is not to create workflows for requirements that the ERP or CRM can’t cater for but to manage the business processes at a tactical level with performance feedback information, dashboards and the flexibility to change as the competitive landscape changes.

Extending business applications with BPMS applications such as XMPro in mid market organisations allow them to compete with large business in the age of Real Time Enterprises.

Tom Davenport , a process management thought leader at Harvard, wrote in his “The Next Big Thing” blog about “The Rise of the Chief Performance Officer” appointment. The interesting is thing not his view on President Obama’s appointment but rather his view on the convergence of process management, knowledge management and performance management. Tom refers to a debate on merging various thought leader discussion groups and I quote his blog
“They noted, for example, that if you want to align knowledge and learning with work, you need to know something about business processes and how to improve them. And if you’re going to align processes with the content needed to perform them effectively, you need to know something about the technology that would deliver the content in accordance with job tasks. What this begins to suggest is that the era of siloed business improvement activities will give way to applying a variety of interventions to improve work. In other words, an organization run by a Chief Performance Officer might be called for. “

This has been the point of Performance Focused Process-Centric organizations and this blog all along. Knowledge Management in today’s organizations are tied to the hip with processes. Every process has contextual knowledge, transactional knowledge and procedural knowledge that makes the process work. Performance management endeavours to make processes effective, efficient, consistent and even predictable. Performance, process and knowledge management are inseparable in support of the business drivers mentioned in a previous post on this blog. Processes need to designed for performance and embed critical knowledge.

Most of today’s process, performance and knowledge management methodologies are supported by IT based tools. There are content, performance and process management solutions that can manage the transactional side of all these components, but the role of the Chief Performance Officer (CPO) will be to ensure a synergistic approach to methodology and tools. There is no one single solution that will work for all organisations that cover all 3 areas (there are not even tools in the 3 areas that cater for everything in that area) and the CPO will need to ensure that process are designed for performance and that it takes knowledge management into consideration. Knowledge Management should support performance and process management while performance management solutions should be based on quality information from knowledge based business processes. Definitely some food for thought.

Well done President Obama on recognizing the need for a Chief Performance Officer. Let’s see how well they perform

PvS Comment: These are always the most difficult. In all honesty, we don’t sell them BPM if they don’t know what it is. We rather engage with them and identify some “pain points” in their business. We then solve the problem by addressing the process and we show them what it means to “manage” their processes. This approach takes less time with a higher conversion rate than trying to educate them at the start.

Message from John: I enjoyed reading your reply to this post.  It seems that many of our posts get into the technology agnostic debate and I was curious how you managed this?  You seem to have a very simplistic and elegant approach.  Does it remain that way for long when you integrate a tool?  Thank you and I hope I am not asking a dumb question.

PvS reply to John:

Our objective is to sell our software in the end but we’ve learnt that we have to solve the “business problems” if we want to have a long time relationship with our client. Taking a business improvement approach mostly leads to the question on how to implement the process change to make it consistent, repeatable and sustainable. That inevitably leads to employing a tool like XMPro. We never started XMPro with a view to become a BPMS. We come from a background of developing bespoke solutions for ERP solutions. That generally requires solving the business problem. The focus is not on the tool but the objectives and performance indicators of the process. We then decided to build a tool for composite process applications with complex integration requirements and it turned out that Gartner coined it BPMS. So our focus is on solving a business problem and you will have a customer for life.

Once they see that they have multiple process (pain point solutions) in one process portal, they start to see the value of “managing processes” proactively. Then we introduce them to fully fledged BPM.

I hope this answered your question and thanks for commenting.

So the best way to pitch BPM to a company that know that it needs it, is not to pitch it at all. Show how process performance improvement can solve business problems. It is not about the methodology, technology or the tool. It is about solving a business problem.