Business Process Management Implementation

Adopting and adpating to the new revolution of conducting organizational functions is a challenge. A tool being relied upon by many is business process management. BPM represents the future of business technology. But which business process management software yields the best on-going benefits, efficiency and dynamic organizational behavior? Adopting the best practice approach both in software applications and in BPM deployment improves the chances of successfully utilizing BPM and seizing the benefits of reengineering an organization for performance in the new world.

Best Practices

 

Tried and true methods for implementing processes, for example, represent the best processes to implement BPM. Other examples include best practices for CRM, human resource development or organizaitonal development.

Best practices are instantly adaptable solutions. They optimize processes to meet primary objectives, eliminating the need to "re-invent the wheel. They are important in change management, because best practices enable organizations to be rapidly responsive given the current economic climate and the related rate of change. BPM best practices enable organizations to meet multiple challenges in an organized fashion. Rather than resorting to management by crisis, companies can navigate through difficult issues and develop strategies. By leveraging best practices from  existing business process management deployments, organizations can more easily:

• Develop objectives for BPM applications
• Support implementation of BPM
  
• Respond effectively to BPM feedback
  
• Adopt an ongoing dynamic amethod to business performance
• Create a goal-oriented management focus throughout the organization
• Set responsibilities and expectations for planning and goal achievement
  
• Manage operational goals and communication in line with key underlying objectives
• Promote transparency and accountability
• Formalize assumptions on the environment and its drivers

BPM practices are not just tools for competitiveness; they are effective methods for achieving efficiency in all areas, even uncompetitive or non-revenue-generating ones. Using BPM best practices in payroll, for example, helps to process paychecks efficiently, without making a company more competitive in market terms. By keeping costs low through efficient system design, though, helps to boost the bottom line.

 

BPM Software Applications

 

The core processes of BPM, IT and best practices give organizations control over the lifecycle of processes to achieve business agility. For example, many IT software solutions use the best practice approach for process support. Employing a formal standard for best practices to optimize corporate goals empowers IT departments; they can instantly access adaptable solutions and service organizational needs to provide customer value. Best practices in IT provide organizations with a logical framework to:

• Automate and streamline tasks
• Align IT to business processes
• Employ a framework for establishing and following policies, steps and rules
• Act on findings

Best practice BPM software also enables organizations to:

• Manage IT departments at consistently maximal efficiency levels to meet key goals (e.g., cost efficiency and profit maximization)
• Create IT department accountability for business performance and results
• Measure business performance and effectiveness
• Isolate and underline areas to implement cost cuts, enhancing quality and growth
• Provide customers with helpful information
• Locate procedural loopholes and superfluities
• Organize IT needs optimally with maximal efficiency and control

Implementing BPM Using Best Practices

 

To maximize BPM's potential, companies must implement business process management throughout the enterprise. Best practice BPM implementation strategies are relevant to any solution or application, regardless of software type or industry. Essentially there are four inter-related components in the strategy to successful business process management implementation. These are:

1. Conduct a test-pilot run
2. Involve other key departments
3. Plan for organizational change
4. Establish core expert group

 

Best Practice #1: Conduct a Test-Pilot Run

 

The best practice approach involves identifying one departmental project in line with key corporate objectives for the pilot run. This project can vary from one organization to another, depending on where its critical focus lies. For example, the help desk in an insurance company might focus on improved customer service, or a mortgage company trying to gain a competitive edge by fast processing times might focus on processing new mortgages.

The pilot run establishes the benefits of BPM implementation. By quantifying the findings and extrapolating them enterprise wide, companies can establish the benefits that BPM could yield to the entire organization.

Best Practice #2: Involve Other Key Departments

The best practice approach simultaneously involves professionals from other key departments so that they can:

• Benefit from the same solution
• Access interdepartmental process efficiencies
• Cut implementation, support and training costs

Involving other departments in the pilot run ensures that the same effort is invested in BPM implementation across the entire company.

Best Practice #3: Plan for Organizational Change

BPM implementation affects many aspects of the organization. From finance to service integration, companies must:

• Analyze, find and assess the level of change
• Determine how the change will be implemented
• Determine how systems will be used forthwith

BPM Best Practice #4: Establish a Core Expert Group

Concentrating expertise from IT departments, systems integration staff and key business users within the organization into a core discussion and action group brings shared experiences and fosters best practice discussion. The core group is also responsible for BPM:

• Evaluation
• Research
• Implementation

Conclusion

 

BPM best practices have much to offer companies, giving them a leading edge in difficult market conditions. Companies using best practices in BPM while focusing on key processes can navigate any economical climate. Using BPM best practices, companies that work this way remain consistently agile. In essentially what is a top-down management approach, these organizations meet the ideal objective of best practices and BPM; namely, maintaining continual flexibility, innovation, accountability and competitiveness to meet key corporate objectives.

Innovation - An Essential Ingredient for the New Business Environment

The Apple iPod is perhaps the first great innovation of the 21st century – judging by the phenomenal global impact it has made.

It is no surprise, therefore, to see Apple at the top of the most influential rankings for innovation. In 2006, the company topped Business Week’s rankings of the 25 most innovative companies as well as Fortune’s Best in Innovation category in its annual survey of the world’s most admired companies.

Business Week said that to launch the iPod, “Apple used no fewer than seven types of innovation. They included networking; a novel agreement among music companies to sell their songs online; business model, songs sold for a dollar each online; and branding, how cool are those white ear buds and wires.”

And to lend support to the case that Apple is an eon ahead as an organization getting the innovation mix right, its latest gadget, the iPhone, is already a global hit – and it has not even been released yet.

A Goggle search of iPhone brings up a staggering 50 000 000 hits – and just the official announcement of its launch this year saw Apple shares soar. The BBC ran the headline on 10 January 2007: “Apple shares up on iPhone launch”, and detailed an 8% rise in the share price and that “shares in makers of smart phones fell on the news, with Research in Motion - the company behind Blackberry devices - tumbling nearly 8% on the Nasdaq.”

Globally it is dawning that innovation is now a key part of doing well in an increasingly challenging business environment.

IBM CEO Samuel Palmisano said to a group of 500 executives at a leadership forum held in Rome in 2006: “The way to thrive in this environment is by innovating – innovating in technologies, innovating in strategies, innovating in business models,” he said. Unlocking creativity is particularly pressing for old school businesses as it is widely acknowledged that innovation is a very key part of economic growth and job creation.

So how can companies respond appropriately?

Before any action can be taken business leaders need to take cognizance of how innovation is fostered. Leaders need to recognize that what lies at the heart of innovation is the mindset of the people within the business. Innovation begins with creative ideas, and creativity begins with people. For this chain reaction to occur, though, businesspeople need to adopt and foster a culture of strategic thinking and action.

According to research by Richard Florida, author of The Rise of the Creative Classes, a tolerant environment that values innovation and diversity is one of three enablers of creativity, which in turn, he shows, is a key driver of economic growth.

A “strategist” is often defined as those in leadership who make the big decisions for the business – nothing could be further from the truth. The reality is that people at all levels in organizations can develop themselves to be master strategists.

Achieving this has real benefits in a business environment – it enables people to see more viewpoints, alternatives, solutions, and opportunities for success, and therefore to make more informed decisions on what action will create value for the organization. It is through developing this mindset that creativity and innovation will be unleashed to the benefit of the business.

Research and experience from leading thinkers on developing innovative organizations highlight seven key questions which leaders can address in order lay the foundation for an innovation process:

1. Are blocks to innovation being removed and boundaries lifted which will allow people to experiment?
2. Are boundaries and limits being created too? Good creativity is based on discipline and has limits – whether its ethics or values, or time or money. It’s essential to have these in place.
3. Is the possibility of connections between people being enhanced, thereby allowing for increasing conversation and information flow? The fuel of creativity is rich connections between people and ideas.
4. Is anxiety being created in people? Not too much or it will be counter productive. But too little tension is counterproductive too. Some pressure, drive and urgency are important to keep people engaged and alert - enabling creativity is like making a tight rope, which must be tight to be useful. In organizations this means one needs both a force of experimentation, and a force of control and stability working in harmony.
5. Is there a willingness to let efficiency slip periodically to allow people to make the mistakes they must make to learn and understand? Creativity requires extra resources if it is to manifest as a great solution.
6. How is power being used? Creativity is a voluntary act – a leader can set the conditions for it to emerge but can’t dictate or order it to happen. Remember the sun and the wind who contested to get the coat off the back of the man walking up the road? The wind tried first and the harder it blew the tighter the man held on to his coat. The sun came out and shone warmly, and in no time the man took off the coat. Developing creative people is a bit like that – businesses have to create the right conditions for people’s creativity to emerge. Be too autocratic, criticize mistakes and try to be too directive and creativity will evaporate. Rather encourage, motivate and reward - and get out of the way. A leader may also need to bite his or her tongue sometimes and to smile if creativity is to advance.
7. Are new trends being addressed? Encourage people to be alert and alive to new trends and ideas early – put out information about innovations, and get in guest speakers about trends.

Many businesses aren't harnessing their assets properly. In order to harness innovation organizations must let go of the bureaucracy that cripples start-ups, and let go of some controls. Adopting network strategies and other methodologies is the begining. At the same time poor governance and corruption rip the heart out of innovation. Usually, these are symptoms of stakeholders maintaining, through circumvention, their control or relevance in a world where it no longer exists.

Florida in his book shows that there is a direct link between the attractiveness of a region for creative people and economic growth. A rich cultural life, high degrees of tolerance for different life styles, interesting environments – these are important

We need to loosen up a little as a nation and celebrate our creativity – it will pay off economically.

The Global City, Cultural Assimilation and Sassen

Travel to any major international city and you will see an increasing commonality. The world is truly becoming global. Cultures are assimilating and evidence of tremedous change is becoming more obvious each day. This is but an initial phase of a rapidly expanding process whereby our globe is becoming one world without borders and one culture without limits.

Saskia Sassen, the noted Ralph Lewis Professor of Sociology at the University of Chicago, and Centennial Visiting Professor of Political Economy in the Department of Sociology at the London School of Economics, has written extensively on globalization and international human migration ( http://en.wikipedia.org/wiki/Saskia_Sassen ). In her paper, Global City: The Strategic Site/New Frontier, Sassen makes a number of important observations that relate to Globalization. One of her most notable is the definition of “Global Cities”. It is in this writing that Sassen defines the cities of the business and global revolution and why place and centrality are still a necessity to its end. Sassen also reflects on the dichotomy that is represented by these global cities, centers for the elite who benefit from readily available global capital while relying on the necessary services and inexpensive undervalued labor resources constituted by an underclass that migrates reterritorializes and assimilates. While her precepts are undeniable and intriguing, Sassen in later research will likely address and embrace both the necessity of the conditions she describes and the idea that place and centrality represents organizations clinging to old methods that ultimately will secede from the practice of the adoption of the new paradigm. As with past historical shifts in economics and society, we do not reach the idyllic without a transformation that entails some pain and therefore while describing the present state of the world becoming global, we should keep in mind the opportunity this future represents.

Sassen opines that globalization requires centers or places, leading into her definition of global cities, “A focus on practices draws the categories of place and production process into the analysis of economic globalization. These are two categories easily overlooked in accounts centered on the hyper mobility of capital and the power of transnationals. Developing categories such as place and production process does not negate the centrality of hyper mobility and power. Rather, it foregrounds the fact that many of the resources necessary for global economic activities are not hyper mobile and are, indeed, deeply embedded in place, notably places such as global cities and export processing zones.”

Sassen defines global cities as, “new geographies of centrality at the global level that binds the major international financial and business centers: New York, London, Tokyo, Paris, Frankfurt, Zurich, Amsterdam, Los Angeles, Sydney, Hong Kong, among others. But this geography now also includes cities such as Bangkok, Taipei, Sao Paulo and Mexico City (Sassen 2000b)”.

Of great interest is Sassen’s reference to the commonality of numerous aspects of the new geographies cultures. She refers to reterritorialized; “The large western city of today concentrates diversity. Its spaces are inscribed with the dominant corporate culture but also with a multiplicity of other cultures and identities. The slippage is evident: the dominant culture can encompass only part of the city. While corporate power inscribes these cultures and identities with ‘otherness’ thereby devaluing them, they are present everywhere. For instance, through immigration a proliferation of originally highly localized cultures now have become presences in many large cities, cities whose elites think of themselves as cosmopolitan, that is transcending any locality. An immense array of cultures from around the world, each rooted in a particular country or village, now are reterritorialized in a few single places, places such as New York, Los Angeles, Paris, London, and most recently Tokyo.” Here Sassen expresses the essence of a new global world in the global city. The assimilation of cultures is occurring each day as the result of the business revolution. However, ultimately this assimilation and the forms that they are taking at present will not be limited by space. They will each every place and touch every facet of each community on the planet.

Sassen further addresses the issue of assimilation of cultures as a result of globalization when she writes, “Immigration and ethnicity are too often constituted as ‘otherness’. Understanding them as a set of processes whereby global elements are localized, international labor markets are constituted, and cultures from all over the world are deterritorialized, puts them right there at the centre of the stage along with the internationalization of capital as a fundamental aspect of globalization today.”

The shift in population and cultural assimilations, according to Sassen, will not likely be met with resistance that will end the process; “The linkage of people to territory as constituted in global cities is far less likely to be intermediated by the national state or ‘national culture’. We are seeing a loosening of identities from what have been traditional sources of identity, such as the nation or the village (Yaeger 1996). This unmooring in the process of identity formation engenders new notions of community of membership and of entitlement.”

Capital Formation - The Private Placement

Obtaining capital for a business is a complex process that requires knowledge and experience in a variety of disciplines including business planning and analysis, an understanding of the industry and the opportunity proposition, team and resource recruitment, finance and accounting, information systems, marketing, concept and product development, the preparation of contracts and an understanding of both federal and state securities laws. Performed properly, the process takes into consideration innumerable issues including those of shareholders, investors, lenders, managers and the requirements of the company itself. Each contributor to a business must be clear in what they intend to receive as a result of their relative commitments, be it capital or otherwise. Defining, managing and balancing the expectations of all stakeholders is the key to successfully obtaining and structuring necessary capital that fits all of the stakeholders needs.

I have advised many clients in the area of capital formation and concluded many financial transactions. During the past seventeen years I have successfully directed ten private debt or equity placements for companies with net capital raises of between $300K to $3 Million each. Sources of capital included venture capital firms, high net worth individuals, commercial lenders and others. In addition to securing over $40 Million in debt refinancing and financings, I was involved as a key player in a significant hostile acquisition, where our team secured $249 million in senior debt from a group led by Canadian Imperial Bank of Canada, a $149 million bridge loan from Merrill Lynch and the issuance of PIK notes on the public market.

The environement today is replete with available capital given the right proposition that includes the proper balance of management first, and specific market opportunity second.  My experiences have provided in-depth knowledge of the complex issues and challenges facing the successful close of these transactions. In speaking with potential clients, I am often asked many questions regarding the process of raising capital. Since many of the firms I have advised are not fully aware of the issues that must be managed in the process, I have prepared some basic information for potential clients to review in evaluating the acquisition of capital for their businesses.

Frequently Asked Questions

1. What is a private placement?

A private placement is a capital formation transaction, privately negotiated with individual or institutional sources, which provides funding to support a company's financing requirements or shareholders' liquidity needs. Typically, capital is being sought by a company and given the phase of the business, going public or obtaining capital via other means is impractical. Thus, private placements become a rational means of securing the required funding.

Strict legal rules govern private placements. These transactions are typically completed under registration exemptions from Section 5 of the Securities Act of 1933. Private placements fall within alternative Regulation D rules and requirements, depending upon the size of funding and the nature and number of investors. Transactions less than $1 million are frequently structured for and directed toward individual investors while larger transactions generally target private equity funds and institutions. However, this is not always the case, as many Small Business Investment Companies fund smaller amounts. While disclosure requirements differ, depending upon deal size and investor attributes, the general preparation and process for completing a successful private placement transcend specific transaction categories.

Private placements may take the form of senior debt, subordinated debt, convertible debt, preferred stock, common stock and hybrid or combined forms of these instruments. Key structural determinants include development phase, historical and projected operating performance, current capital structure, designated use of proceeds, future funding expectations, time horizon for return realization and desired exit strategy.

2. Why would a company consider a private placement?

The private placement market is accessed by a diverse group of companies for a wide variety of purposes. Some of the more common transaction contexts are described in the following:

Secured credit sources may not be available to support an internal expansion initiative, given the company's relatively leveraged capital structure, lack of collateral or early phase of development;

Shareholders may wish to execute a liquidity strategy (such as a recapitalization or management buyout) which does not involve the public capital markets or sale of the company to a strategic buyer;

The public capital market may not be a viable long-term source of funds given the company's size, development stage, management organization or industry dynamics;

A significant strategic opportunity, such as an acquisition, may unexpectedly present the company with a consequential financing issue. A private placement can be tailored to the project's specific capital requirements and completed relatively quickly;

While shareholders may ultimately desire to take their company public, the firm's current market capitalization may prevent it from securing a quality underwriter. Alternatively, the timing of the company's funding may not coincide with favorable public capital market conditions. A private placement can bridge this gap, providing interim funds in anticipation of a subsequent public offering, and

A private placement transaction can help secure outside investors for the business to assist with business strategy formation, future financial support and financial strategy execution.

3. Who invests in private placements?

The ultimate source of financing for a given private placement transaction primarily depends upon deal size, phase of company and investment structure. For new and early stage companies, individual investors and venture capital firms are more likely to provide equity financing. Private equity partnerships, Small Business Investment Companies and mezzanine funds serve as the principal sources for equity and hybrid transaction structures involving expansion phase to mature companies. For larger transactions, institutional credit sources (insurance companies, pension funds, banks and other credit institutions) usually consider direct purchases of relatively large debt instruments.

4. What are the key success factors in closing a private placement transaction?

Capital formation transactions pose important implications for any company. Additionally, while significant capital is available within the private placement market, creditors and investors remain very discriminating with respect to their choices. As a result, management should invest the necessary resources and thoroughly prepare in identifying appropriate long term funding solutions and attracting suitable financing sources. In differentiating their company as a high-quality credit or investment opportunity, management should:

Structure the financing to accomplish achievable organizational goals. Identify logical and specific uses for the requested funds;

Develop realistic expectations with respect to prospective operating performance, entry and exit valuations and ownership dilution;

Prepare a descriptive but concise financing memorandum to professionally present the industry, company, management team, business strategy and return prospects to investors;

Target the solicitation effort. Approach investors that clearly understand issues confronting companies within your development phase. In addition, select creditors or investors with favorable experiences and continuing, expressed interest in your industry;

Ensure that current shareholders' time horizon for creating and realizing value is consistent with the investor's desired time horizon;

Approach credit institutions or investors that are comfortable with the size of the proposed transaction and capable of providing follow-on financial support to the business, and

Present reasonable financial strategy scenarios to investors with respect to return generation.

Systematizing Your Company and Tapping Into the Revolution

Do you have a job or own a business? If your business depends on you, you don't own a business - you have a job. This is the first barrier to tapping into the new resources being made available to organizations across the globe. Without a systematic method of serving clients and conducting business, you cannot leverage your company using the tools of the business revolution.

While attending a recent conference in San Francisco, I noticed that a lot of company “owners” were involved in mobile telephone calls and urgently replying to emails in the middle of important presentations and during conversation that they had traveled to benefit from. It seemed like many of their businesses, were still, in various ways, largely depending on their personality and abilities in operating the day-today. The fear expressed by some when I would hear their complaints is that when not around, customers may contemplate obtaining products or services elsewhere. So what is wrong with this picture?

When your business depends on you, your customers are counting on your ability to fulfill their needs; not your businesses' ability. So of course, when you are absent, there is nobody left to take care of them as well as you could, and that is why they go somewhere else. The solution is a SYSTEM dependant company, not a PEOPLE dependant company. This concept is largely the reason many businesses are unable to tap into new solutions that the revolution in business is providing today. By failing to focus on systemization and not understanding the true customer processes at work in the manner of conducting business, owners and managers are cut off from alternatives that would provide tremendous opportunities for their future. Thus enabling them to be more productive and focus on essential parts of developing their companies.

Many leading businesses meet their customers' needs regardless of the personnel on duty. Have you visited a Starbucks during a busy morning rush? Does it matter if the founder of Starbucks is not there to serve you? Starbucks has developed a system that works; customers generally receive consistently good service, regardless of who is working. This system doesn't rely on highly skilled extraordinary people that are in short supply in the market place. Instead, it leverages productivity and good work out of people that are in more ample supply. It is a "turn-key solution." There are many other examples of enterprises such as this. You must build a system that works; which is your business. Then you need to give the key to others, enabling them to use the system, and to improve it based upon their own experiences.

Creating a real and viable company is about building a business that works not because of you but without you. It is only after you have built your systems that work without you, that you are freed from the Company. Ask this question; “How can I give my customer the services and products that they want SYSTEMATICALLY rather than PERSONALLY?” People are important. But, relying on people without process is like having a driver without a vehicle. If you want to go somewhere, you need both. Thinking in terms of systematization is the first step in tapping into the tools the revolution openly provides to everyone wishing to participate.