Business process management activities can be grouped into five categories: design, modeling, execution, monitoring, and optimization.
Business Process Management Life-Cycle.svg

Process Design encompasses both the identification of existing processes and the design of "to-be" processes. Areas of focus include representation of the process flow, the actors within it, alerts & notifications, escalations, Standard Operating Procedures, Service Level Agreements, and task hand-over mechanisms.


Modeling

Modeling takes the theoretical design and introduces combinations of variables (e.g., changes in rent or materials costs, which determine how the process might operate under different circumstances).

Execution

One of the ways to automate processes is to develop or purchase an application that executes the required steps of the process; however, in practice, these applications rarely execute all the steps of the process accurately or completely. Another approach is to use a combination of software and human intervention; however this approach is more complex, making the documentation process difficult.
Monitoring

Monitoring encompasses the tracking of individual processes, so that information on their state can be easily seen, and statistics on the performance of one or more processes can be provided. An example of the tracking is being able to determine the state of a customer order (e.g. ordered arrived, awaiting delivery, invoice paid) so that problems in its operation can be identified and corrected.

In addition, this information can be used to work with customers and suppliers to improve their connected processes. Examples of the statistics are the generation of measures on how quickly a customer order is processed or how many orders were processed in the last month. These measures tend to fit into three categories: cycle time, defect rate and productivity.

The degree of monitoring depends on what information the business wants to evaluate and analyze and how business wants it to be monitored, in real-time, near real-time or ad-hoc. Here, business activity monitoring (BAM) extends and expands the monitoring tools in generally provided by BPMS.

Optimization

Process optimization includes retrieving process performance information from modeling or monitoring phase; identifying the potential or actual bottlenecks and the potential opportunities for cost savings or other improvements; and then, applying those enhancements in the design of the process. Overall, this creates greater business value.

Design

Process Design encompasses both the identification of existing processes and the design of "to-be" processes. Areas of focus include representation of the process flow, the actors within it, alerts & notifications, escalations, Standard Operating Procedures, Service Level Agreements, and task hand-over mechanisms.

Modeling

Modeling takes the theoretical design and introduces combinations of variables (e.g., changes in rent or materials costs, which determine how the process might operate under different circumstances).

Execution

One of the ways to automate processes is to develop or purchase an application that executes the required steps of the process; however, in practice, these applications rarely execute all the steps of the process accurately or completely. Another approach is to use a combination of software and human intervention; however this approach is more complex, making the documentation process difficult.
Business rules have been used by systems to provide definitions for governing behaviour, and a business rule engine can be used to drive process execution and resolution.

Monitoring

Monitoring encompasses the tracking of individual processes, so that information on their state can be easily seen, and statistics on the performance of one or more processes can be provided. An example of the tracking is being able to determine the state of a customer order (e.g. ordered arrived, awaiting delivery, invoice paid) so that problems in its operation can be identified and corrected.


Process mining is a collection of methods and tools related to process monitoring. The aim of process mining is to analyze event logs extracted through process monitoring and to compare them with an a priori process model. Process mining allows process analysts to detect discrepancies between the actual process execution and the a priori model as well as to analyze bottlenecks.

Optimization

Process optimization includes retrieving process performance information from modeling or monitoring phase; identifying the potential or actual bottlenecks and the potential opportunities for cost savings or other improvements; and then, applying those enhancements in the design of the process. Overall, this creates greater business value.

A complete Business Process Management (BPM) System supports business users along all the phases of the "Process Lifecycle": Process Definition, Process Execution & Control, and Process Monitoring & Improvement.
Process Definition is the phase when process analysts analyze & define business process in terms of activity flow, information flow, business policies & constraints (rules), performers and performance measures (or Key Performance Indicators such as activity turn-around time, activity cost). Process Execution & Control phase involves business users carrying out the process as defined and supervisors and managers controlling the process by taking corrective actions as and when required. Corrective actions are required when delays occur, exceptions arise, resources are unavailable, & so on.

It's instructive to look at what differentiates a BPM project from the software initiatives you have probably experienced in the last several years. With enterprise resource management (ERP) and customer relationship management (CRM), for example, the basic goals are well understood: you want to accurately record every transaction, customer, SKU (stock keeping unit) and shift of money. Because BPM is so young, there is no universal agreement on best practices, and simply deciding on the ideal functionality will trigger lengthy discussion. After assessing which business processes to engage with BPM, you'll then determine the number of existing systems in your company the BPM software will draw data from and what kinds of analysis will be most valuable.

You'll need to choose which department (s) to address and, in each of those areas, which business processes could have the highest performance improvement. It's typical to begin with the finance department, and finance is often the principal driver of BPM within a company. Often, the CFO's first priority is to focus on a thorny process such as budgeting. As was the case with ERP, it's important to pause and determine if the process itself is okay or needs reengineering. At most companies, of course, budgeting is regarded as broken at best, if not a perennial curse. Budgeting is also a logical starting point because it serves as the foundation for later analysis of performance against plan.

Business processes go through a series of distinct and definable stages. To fully optimize all process opportunities, it is important to not only be aware of these stages, but be able to hit each mark along the way.

Stage 1: Definition of Roles and Relationships
The first stage in the business process life cycle is to define the roles and relationships of the participants in the process. This is an activity that is done by default in most companies, even before the use of any process. Roles are created for each employee as he or she joins the company, and employees’s relationships with others are defined. In some small companies, the definitions of roles and relationships may be informal, but they do exist. Large companies usually have formal definitions in their organization charts and the roles of their employees. Roles and relationships are generally not tied to a particular business process and once a role has been defined, it can be associated with multiple processes. In any case, the availability of people, their roles and their relationships to each other are necessary prerequisites for business processes, even if they are not automated. For EAI processes the roles are played by computer applications.

Stage 2: Defining Business Processes
The second stage in a process life cycle is the definition of a business process. The definition generally evolves from the need to automate an existing manual process or the need to implement a new process based upon a change in the strategy of the company. Business processes are defined by business process owners who perceive the value for process innovation or improvement. This is a paper design stage in which the business process and its requirements are defined on paper in a design document.

Stage 3: Modeling and Optimizing Business Processes
After a need has been identified and the requirements of the process have been identified, a business analyst converts these into a series of tasks that have to be performed in order to satisfy the need. This is a detailed design of the process from a business perspective. The business analyst can also model the process in order to ensure that the design will achieve the results and benefits that are being sought. This entails making a series of assumptions about the volume of tasks, cost of each step, the availability of resources and the time it takes to complete each step. The purpose here is to create a complete process definition from a business perspective to ensure that it meets the requirements and expectations of the process owner.

Stage 4: Developing Business Processes
In this stage the business process definition created in the previous stage is converted into a practical solution that can be deployed. This activity is best performed by skilled IT professionals who understand the BPM tools and the technologies that work in conjunction with them. These technologies may include databases, messaging, electronic document management systems, desktop applications, enterprise applications and user interfaces (among others). Testing is an integral part of the development stage. Because a BPM solution is a distributed application involving a large number of users, it is not practical to test it after it is deployed. This will inconvenience all the users and is also very difficult logistically. The use of simulation, much like aircraft designers use simulation for their new designs, can help accomplish much of the needed testing and reduce the burden on the users of the BPM system. A BPM tool with integrated simulation capabilities enables designers and quality assurance engineers to role-play and test the functionality and usability of the solution.

Stage 5: Integration with Other Applications
Once a process has been developed, it is necessary to integrate it with a variety of other desktop or back office computer applications. This activity is typically performed by software developers who use tools such as software development kits (SDKs), scripts, XML and Web Services to integrate the BPM solution with other computer applications. In many cases, BPM solutions provide application agents to integrate with specific applications, or use EAI connectors to enable the BPM system to communicate with other applications.

Stage 6: Deployment and Administration
After a business process has been developed, tested and integrated, it is ready for deployment. This stage requires some form of version control, migration from one platform to another, and the ability to configure and manage the BPM system and its various components.

Stage 7: Active Processes
This stage begins when the business process has been deployed and is live. Workflow participants can start using and benefiting from the BPM system. Users participate in a business process through user interfaces to the system that enable them to perform a variety of functions and manage their tasks.

Stage 8: Reports
BPM systems can capture valuable feedback on the efficiency and productivity of overall business processes and the performance of the individual participants. During this stage BPM systems use their reporting capabilities to capture process metrics that can be analyzed to optimize business processes or reallocate resources to improve performance.

Stage 9: Optimization
At the end of each cycle, business metrics generated through the reporting tool are used as feedback to the business process definition stage. The business process is refined to meet the realities discovered by reports generated by the BPM system. The refined business process is re-developed and re-deployed as a new version, thus starting a new cycle of improvement and optimization. As just explained, a BPM solution goes through iterative cycles of definition, development, deployment, use, measurement and optimization.