How BPM differs from an ERP

Here in this blog I would like to explain about BPM, Business Process Management and how it differs from an ERP. ERP is focused on integration of information across business functions (like HR, Procurement & Sales) by sharing a common database. Whereas BPM is a business practice focused on enterprise level workflows and aimed at optimizing, improving and automating business processes. We can describe BPM as a process-intelligent layer that may or may not integrate with ERP.

 

To explain about ERP, consider an example business activity – Sale of ‘n’ Qty of product ‘X’ to the customer ‘Y’.

A basic ERP is made up of 3 things:

1. a set of data capturing / representing facts about the company (stores data of sale – Qty n, Product X and Customer Y)

2. a set of rules governing what to do when the facts happen (inventory updates when sales like stock Qty reduces when sales)

3. a mechanism & medium to communicate with business users (such as an ipad to display an invoice)

 

Now to explain BPM, consider an example business process – Set of activities

A Purchase Order from customer receives by a Sales Dept; Preparing Delivery note from Store Dept; Sales invoice from Accounts Dept.

BPM is made up of 3 things:

1. a set of rules to govern activity in a business process (a flow sequence or specific rules, see the above example)

2. a place to store "state" -　that is　for every item in the process, where is currently is according to the rule described in point 1 (as per above example to know whether you are waiting for delivery note or finished it or on the invoice)

3. a mechanism to communicate state to the business user and provide instruction on what to do next. Also a place to intercept system activity and trigger a human response.　

 

So you can think of 2 options for your business:

1. Implement an ERP having BPR capabilities and customize to suite your business processes; develop embedded workflow to manage your business process – in this case, change management is costly and lack of BPM other functionalities & features

2. Implement ERP and BPM – here change management faster. Also BPM can integrate with ERP and having capabilities of DMS fully integrated with OCR and Barcode modules.

 

All reputed ERPs having embedded workflow and　the system has the facility to manage the business process to a certain extend. However, if you’re looking for the flexibility that comes with changing processes, this is very expensive and is faster in BPM, that is why SAP providing BPM adaptors to meet the customer expectations. BPM also covers processes that fall completely outside of ERP systems such as Correspondence Management, Project Management, and Action Tracking.　

 

In brief, BPM plays an important role in making an ERP system agile and adaptable to the dynamic needs of the business. Even though BPM is getting more popularity; still it is in the 'nice-to-have' zone.

What's MEA enterprises looking for innovation, BPM or ERP or Both?

I have gone through lot of articles and blogs and do some study what would be the Middle East market looking. What I discovered is that the MEA Region is about 3 years behind the global market in its access to and evaluation of BPM and ERP solutions.


And many people have asked me about the differences between ERP and BPM.
Questions include:

• How does BPM compare with ERP?
• Does BPM compete with ERP, does it replace ERP, or can it co-exist with ERP?
• What is the value of BPM to me?
• Which should I do first?

I would like input on this matter.  But I submit the following:


ERP:  In simplified terms, I see ERP as a way to integrate the data layer of different processes (e.g. AP/AR, Payroll, Order Entry) within larger processes (e.g., Financials, HR, SCM). Although workflow is an embedded part of any ERP system, it is not intended to support enterprise processes. The workflow itself is functionally-driven (e.g., materials management) vs process-driven, where the process can potentially span many different functions (e.g., requisitioning, recruiting). The value ERP provides is an integrated system and single view into customer data. The data is updated on demand. Customers expect ERP to support their processes, but often they have to change their process to match ERP best practices. As a result, ERP software and implementation costs are significant.


BPM : In contrast, BPM enables users to create business applications incorporating different people, data and documents, which in turn span multiple divisions, systems and/or data sources. Process function is almost irrelevant. In a structured BPM scenario, workflow activities derive from specific rules (i.e., roles, responsibilities, policies, procedures, deadlines, escalations). In a dynamic BPM scenario, users completely control routing in run-time. The value BPM provides is a platform to create multiple applications that improve productivity (effectiveness, efficiency), greater business agility (traceability, innovation, optimization), and ensured compliance (auditability). Furthermore, process definition components are reusable and changeable.


BPM might compete with and/or replace ERP on smaller scale projects. BPM absolutely compliments ERP by creating a "single view" into processes spanning multiple groups/systems (e.g., customer on-boarding, purchase requests). BPM also covers processes that fall completely outside of ERP systems such as Correspondence Management, Project Management, and Action Tracking.




In summary:

• ERP provides very good embedded workflow, but poor enterprise workflow. BPM supports both functional and enterprise workflow scenarios.
• BPM is far more agile than ERP systems, where BPM requires on average 3 months to implement versus 20 months for ERP. Change management is also faster with BPM.
• ERP often needs BPM to help realize its full value.
• If BPM isn't for use with ERP, why do so many vendors provide adapters?

So again you think, BPM or ERP or both? I will come to you with more details…