Changing business models = changing business processes

I read this post by Alex Osterwalder on the external forces that impact an organization’s business model — technological change, competitive forces, customer demand, social environment, and legal environment — which in turn has me thinking about how these business model changes impact business processes.

This is precisely why I look at issues of enterprise architecture and BPM together, even when a client has specifically engaged me for a BPM initiative. In a perfect world, the following occurs:

  1. A business model changes based on internal or external factors
  2. One or more business processes have to change to respond to the changing business model
  3. The business processes are implemented using a BPMS
  4. EA provides the linkages between the business model and the information systems (including the BPMS) so that the right changes can be made to the process in order to respond to the changing business model

Unfortunately, there’s a lot of roadblocks to establishing what I feel is a fairly obvious requirement for remaining competitive in the face of changing business models:

  • Impact analysis: many organizations don’t document their business models (by this, I mean their high-level company business models, not their departmental business processes and procedures), or don’t make adequate links from their “strategic planning” sessions to all the layers below that have to implement those models and plans. Because of this, there is no clear link between the change to a business model, the change to an underlying business process, and the change to the supporting information systems.
  • Automation: many organizations are still using manual processes and decision-making for well-understood business processes. For example, some insurance companies process all of their claims manually; others have greatly improved productivity by using automated adjudication systems that pass only the more complex claims to a human claims adjudicator. Although the former may understand that a BPMS can help their business, they see it primarily as a way of paving the cowpaths so as to provide faster movement of information between the same old human decision-making processes, rather than a tool for automating some of the steps and — with the addition of business rules — removing some of the human decision-making.
  • Agility: some organizations that implement a BPMS end up with automated business processes that are frozen in time due to an excessive amount of customization around the implementation. Although they’ve achieved automation (albeit, optimized for a point in time usually about a year prior to implementation), they’ve completely lost agility due to the complexity of changing the BPMS by creating a legacy business process.

These issues, which I often uncover during a client assignment, require more than just a few tweaks to their BPMS: they require that both EA and business rules be brought into consideration in order to provide the business agility that the client is expecting.

To begin with, EA can help to create the necessary models and the linkages between the layers to allow the impact of a business model change to be reflected in the business processes and the supporting information systems. If you can’t do impact analysis, then you don’t have any type of reliable business agility since you won’t understand all of the impacts that a change to any part of the organization might have on other parts.

BRMS are an essential facilitator to business agility. First, because they put the business rules in the hands of the business (or at least in a form that’s understood by the business), so that there’s much less latency in the process of changing business rules. Secondly, if a shared repository of business rules is implemented across the organization, then a change to a business rule can be immediately be reflected in every process and system that accesses it, from the next call handled by a call centre operator accessing a CRM, to work in progress in a BPMS.

Of course, I see BPMS as a given for business agility: it lets you automate business processes while still involving human intelligence at the points required in the process; integrate business rules for decision-making; and more easily make changes to the business process with less user retraining. There are good and bad ways to implement a BPMS (as with any system), and care must be taken to integrate other tools (such as BRMS or BI) where appropriate, rather than go down the path of excessive customization which can hinder agility.

The bottom line is that although a BPMS can be a huge contributor to business agility, it can’t do it alone: you need some amount of EA in order to understand what you’re supposed to be doing with that BPMS (that’s the business-IT alignment that everyone talks about), and you need some other tools like BRMS to keep things agile through a minimum of customization.

One thought on “Changing business models = changing business processes

  1. Hi, indeed a very true observation that business model change has an impact on business processes. But today companies are still very weak in mananaging this link. I like your idea of looking at business models and business processes as different layers. In my work I have also advocated for this view. I believe the ability of organizations to be able to connect the models of the two layers help them to gain a competitive edge when it comes to change. And the ability to change through flexibility and good management is the foundation in an economy characterized by uncertainty.

    Cheers, Alex

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