Business process management (BPM), and the information technology systems that support it, are defined in many different ways. Business process management software (BPMS) is the enabling technology to define, digitize, execute, monitor and optimize global business processes. It automates the end-to-end business process, encompassing people and system activities, across multiple organizations and supporting applications and, to quote Webster, "delivers a particular and consistent result."

From a technology perspective, that result is increased levels of straight-through processing and flawless escalation and exception management. From a business perspective, that result is lower operating costs, lower IT costs, improved customer satisfaction and increased revenue.

The Three Fundamental Concepts of Business Process Management
Since most organizations process orders, let's illustrate the fundamental concepts of BPM by using a sample process. Since most organizations process orders, we will use the order-to-cash process as an example (see Figure 1). While the individual tasks that make up this process will vary by organization, the common tasks usually include proposal generation; order management; credit operations; manufacturing and distribution; invoicing and accounts receivable operations; and electronic payment and collections.

Fundamental Concept #1: Organizations Have Very Few Core Processes
At the enterprise level, most organizations have a small number of core processes. Product design, manufacturing, customer acquisition, order-to-cash and customer support represent the core processes for some manufacturers. Each of these core processes decomposes into many sub-processes and scores or hundreds of tasks.

The fundamental point is that, with apologies to the application vendors, sales force automation, accounts payable, procurement, supply chain and warehouse management are not processes. Each is a set of activities such as a workflow or sub-process that while important, must be viewed within the context of the core process it supports. Using the order-to-cash process as an example, an organization can not realize much value with its perfect order management application when the distribution systems it uses inaccurately ships products to the customer. World-class organizations optimize the end-to-end or core process.

Fundamental Concept #2: Few Processes Are Completed Within Your "4 Walls"
Given today's virtual business models, process management is increasingly complex as it spans the extended enterprise. Few, if any, core processes are executed totally within a single company.

The combination of outsourcing, dynamic supply chain management, electronic commerce and ever-increasing government regulation dictates that the execution of end-to-end processes crosses multiple departments within your company and the full spectrum of suppliers, customers, regulatory agencies and outsourcing vendors.

These extended processes span not just organizations and people, but all the supporting IT systems and applications as well. The digital collaboration with trading partners and customers has an impact on business performance that is matched only by the challenge of managing processes that span so many organization and system silos.

From a process management perspective, the problem is not the execution of rules and workflows that are defined in an application that support the core process. Rather, the challenge is the handoff from one organization to another or from one application to another. In the order-to-cash process, a company can do a perfect job managing the customer buying experience; however, if it then turns the order fulfillment and distribution over to a third party that performs poorly, the end result is an upset customer who will dispute the bill, make calls to the support center and be less likely to make a repeat purchase. In short, a sub-process might be perfect, but the core process is far from optimal.

Fundamental Concept #3: There Is A Big Difference Between Process Automation and Process Orchestration
At this point, most application vendors are thinking that they do a great job of process automation.