production and transport/movement). Where idealized one-piece flow is not possible, inventory buffers are judiciously introduced (no excess inventory). This is Toyota’s secret, which enables its engineers to make a car in one year, when its competitors take two.

 

Case #2: Ford

Another good example of the benefits of BPM is the classic Ford case, from Hammer and Champy’s seminal work [ 10]:

When Ford’s purchasing department wrote a purchase order, it sent a copy to accounts payable. Later, when material control received the goods, it sent a copy of the receiving document to accounts payable. Meanwhile, the vendor sent an invoice to accounts payable. It was up to accounts payable, then, to match the purchase order against the receiving document and the invoice. If they matched, the department issued payment. The department spent most of its time on mismatches, instances where the purchase order, receiving document, and invoice disagreed.

One way to improve things might have been to help the accounts payable clerk investigate more efficiently, but a better choice was to prevent the mismatch in the first place. To this end, Ford instituted ‘invoice-less processing’. Now when the purchasing department initiates an order, it enters the information into an on-line database. It doesn’t send a copy of the purchase order to anyone. When the goods arrive at the receiving dock, the receiving clerk checks the database to see if they correspond to an outstanding purchase order. If so, he or she accepts them and enters the transaction into the computer system. (If receiving can’t find a database entry for the received goods, it simply returns the order.)

 

According to Hammer and Champy, by choosing this solution, Ford opted for radical business process change, and it achieved dramatic improvement. To illustrate this, it was mentioned that initially there were 500 people working in the accounts payable department and that a 75% reduction in this figure was achieved after the solution had been implemented.

Clarifying BPM Terminologies

Having understood the rationale of BPM and the fundamental reason for its discipline, I will now clarify BPM terminologies. BPM is mainly a cross-discipline “theory in practice” subject involving knowledge from organization management theory, computer sci-

The BPM Life Cycle

Figure 2: Van der Aalst et al.’s BPM life cycle [ 13].

4

3

2 ence, mathematics, linguistics, semiotics, and philosophy. Because of its multi-disciplinary nature, it is often easy to find business process research materials across many subjects’ databases. To understand the terminologies and features of BPM, one must always start from an appreciation of the BPM life cycle.

There are many views of the generic BPM life cycle [33, 8, 36, 11], but I will adopt that of van der Aalst et al. (see Figure 2) because of its succinctness and relevance. According to them, the BPM life cycle consists of [33]:

1. Process Design—In this stage, fax- or paper- based as-is business processes are electronically modelled into BPM systems (BPMS).

. System Configuration—This stage configures the BPMS and the underlying system infrastructure (e.g., synchronization of roles and organization charts).

. Process Enactment—Electronically modelled business processes are deployed in BPMS.

. Diagnosis—Given appropriate analysis and monitoring tools, the BPM analyst can identify and improve on bottlenecks and potential fraudulent loopholes in the business processes.

t

BPM vs. BPR

Before the 1990s, almost all practitioners and researchers were using the term workflow management (WfM) for what we call BPM today. However, in today’s context, many information system practitioners and researchers erroneously use these two terms interchangeably without consideration of their definitions and scope [ 8].

The influence of IT in managing of business processes can be raced back to Hammer and Champy’s BPR paradigm [ 9, 12] and Davenport’s book [ 5] on how process innovation can facilitate BPR. However, BPM and BPR are not the same. Whereas BPR calls for a radical obliteration of existing business processes, BPM is more practical, iterative, and incremental in fine-tuning business processes.

BPM vs. WfM

Two other terminologies often used loosely are WfM and BPM. There are mainly two differing viewpoints. One viewpoint by Gartner Research views BPM as a management discipline with workflow management supporting it as a technology [ 15]. According to Gartner [ 15]: “Business process management (BPM) is a process-ori-ented management discipline. It is not a technology. Workflow is a flow management technology found in business process management suites (BPMS’s) and other product categories. “

Perspectives on Workflow and WfM

In an attempt to distinguish the differences between the two terms, M. Havey defines workflow as “a flow of work, encompassing the exchange and enrichment of information” [ 12]. In the past, workflow meant passing paper from person to person. Workflow technology improved things not only by managing the flow of work, but also by digitizing the information, thereby making the process as automated and paperless as possible [38].

The Workflow Management Coalition (WfMC) defines workflow management as: “The automation of a business process, in part or in whole, during which documents, information or tasks are passed from