According to ancient wisdom, if you can't measure it, you can't manage it. This is particularly true for business processes. Measuring different aspects of a business process, such as activity duration, resource utilization, total execution time, average execution time, and so on, is crucial to understanding how the processes perform in the real world. We can only understand the process if we have numbers, and we can get numbers from measuring the process execution.
One of the key elements of process control is BAM. The key objective of BAM is to provide a complete overview of business process execution within the company. The management and other people who are responsible for development and operations of the company use this data. The most important component of BAM is time. Time is crucial because BAM shows actual, near real-time information on process execution. This allows the company to react quickly and efficiently to the changes reflected through process execution.
Whatis.com defines BAM as follows:
"BAM, also called business activity management, is the use of technology to proactively define and analyze critical opportunities and risks in an enterprise to maximize profitability and optimize efficiency. The BAM paradigm can be used to evaluate external as well as internal factors.
Three main steps compose effective implementation of BAM. First, relevant data is gathered in an efficient and timely manner and in sufficient quantities to provide meaningful results. Second, the data is processed to identify and categorize factors relevant to specific concerns. Finally, the data is analyzed and the results displayed in a clear, user-friendly interface so personnel can take appropriate actions."
To provide information for decision making, BAM first has to gather data. This data is gathered from business processes and is related to process activities, resources utilized in these activities, such as employees, and so on. The more the data gathered, the better and the more statistically relevant the derived information. The BAM tools have to gather the data and calculate interesting information that can help in decision making. BAM can process the gathered data in different ways:
Data can be processed immediately. In this way, the related KPIs will be calculated immediately and shown to the supervisors or sent to a decision-support application. Such KPIs can then be recalculated in near real time.
Data can be used to notify supervisors and other people involved in the process that something important has happened. For example, if a KPI value is too high or too low, certain actions can be triggered. A supervisor can be alerted (by e-mail, SMS, or voice call), or an automatic action can be executed.
BAM can also be used to identify patterns in the incoming data and notify or even react to them. Because BAM gathers data from different, independent business processes, BAM can identify certain patterns between the processes and can react to such patterns. This gives an additional level of control and flexibility to the information system.
BAM is not only a system that displays interesting information about processes; it consolidates data gathered from different, often independent, sources too. Connecting this data with past data enables BAM to identify critical situations in process execution or even automatically or semi-automatically solve some frequent critical solutions.
Monitoring the processes closely is essential, and we use KPIs to specify what we wish to monitor. KPIs are financial and nonfinancial metrics used to help an organization define and measure process efficiency. Monitoring KPIs in real time is nothing but BAM. KPIs should be related to the strategy of a company.
Examples of a KPI are the average revenue per customer, average time for response to a customer call, average order amount, and so on. KPIs differ from company to company. Therefore, the first step in using KPIs is to identify them.
We identify KPIs for a selected business process, which has to be specified well. We must also have clear goals and performance requirements for that process. When we define KPIs, we should follow these SMART rules:
Specific
Measurable
Achievable
Result-oriented or Relevant
Time-bound
When identifying KPIs, we should apply considerable thought to them because, in practice, KPIs have a very long lifespan. After we have defined them, it is difficult to change them because, if we change them, we lose the comparisons to performance in the previous years or periods.
KPIs should also be defined in a way that will enable comparison with other similar companies. Therefore, KPIs should not be unduly confined to a company's internal specifics.
In the real world, measuring KPIs efficiently and accurately is a major challenge. SOA, together with BPM, offers huge advantages over previous IT architectures because most SOA platforms provide KPI measurements as a built-in function of process monitoring and control.