Business Processes

This chapter looks at one way information systems can bring competitive advantage through their effect on business processes. As you read, think about the previous chapter on competitive advantage. How are the two concepts related?

Business Process Management

Organizations that are serious about improving their business processes will also create structures to manage those processes. Business process management (BPM) can be thought of as an intentional effort to plan, document, implement, and distribute an organization's business processes with the support of information technology.

BPM is more than just automating some simple steps. While automation can make a business more efficient, it cannot be used to provide a competitive advantage. BPM, on the other hand, can be an integral part of creating that advantage.

Not all of an organization's processes should be managed this way. An organization should look for processes that are essential to the functioning of the business and those that may be used to bring a competitive advantage. The best processes to look at are those that include employees from multiple departments, those that require decision-making that cannot be easily automated, and processes that change based on circumstances. Here is an example.

Suppose a large clothing retailer is looking to gain a competitive advantage through superior customer service. A task force is created to develop a state-of-the-art returns policy that allows customers to return any article of clothing, no questions asked. The organization also decides that, in order to protect the competitive advantage that this returns policy will bring, they will develop their own customization to their ERP system to implement this returns policy. In preparation for the rollout of the system, all customer service employees are trained, showing how to use the new system and specifically how to process returns. Once the updated returns process is implemented, the organization will be able to measure several key indicators about returns that will allow them to adjust the policy as needed. For example, if it is determined that many women are returning their high-end dresses after wearing them once, they could implement a change to the process that limits the return period to 14 days from the original purchase date. As changes to the returns policy are made, the changes are rolled out via internal communications and updates to the returns processing on the system are made.

If done properly, business process management will provide several key benefits to an organization, which can be used to contribute to competitive advantage. These benefits include:

  • Empowering employees. When a business process is designed correctly and supported with information technology, employees will be able to implement it on their own authority. In the returns policy example, an employee would be able to accept returns made before fourteen days or use the system to make determinations on what returns would be allowed after fourteen days.
  • Built-in reporting. By building measurement into the programming, the organization can stay current on key metrics regarding their processes. In this example, these can be used to improve the returns process and also, ideally, to reduce returns.
  • Enforcing best practices. As an organization implements processes supported by information systems, it can work to implement the best practices for that class of business process. In this example, the organization may want to require that all customers returning a product without a receipt show a legal ID. This requirement can be built into the system so that the return will not be processed unless a valid ID number is entered.
  • Enforcing consistency. By creating a process and enforcing it with information technology, it is possible to create consistency across the entire organization. In this example, all stores in the retail chain can enforce the same returns policy. If the returns policy changes, the change can be instantly enforced across the entire chain.