Managing all forms of business risk to ensure organisations thrive and shareholders prosper is one of the core tasks facing business leaders today. Some risks are predictable events everyone expects in the day-to-day running of business and can therefore be planned for, but other risks are dependent on external factors and are therefore beyond the control of executives.
Controlled risk comprises the standard processes and policies at work in an organisation and all the people responsible for making and effecting decisions. This includes management`s abilities and actions that can have a positive or negative effect on the operations of the business. As such, the potential for the unexpected to happen in this area is limited, and apart from catastrophes almost every event can be dealt with in the normal flow of business.
Inherent risk, on the other hand, cannot be controlled as easily. Changes in business and market conditions, new regulations and unexpected competitor activity, for example, can increase inherent risk seemingly overnight. Corporate leaders need to have the tools and resources on hand to consider these unknowns as they run their businesses at maximum efficiency.
Instead of managing controlled risks and hoping to get by irrespective of the inherent risk factors that may occur, business process management (BPM) solutions offer organisations comprehensive support for strategy, planning, monitoring and analysis. In so doing, BPM allows decision-makers to proactively manage and manipulate the inner working of their businesses to meet both controlled and inherent risks.
Due to the all-encompassing nature of BPM solutions, any implementation must be undertaken in phases.
Sybille McCloghrie, group business development director, COSA.
BPM systems can accomplish this because they complement current ERP and transactional systems, delivering a single view of the business by integrating data from multiple existing sources. An effectively planned and implemented BPM solution therefore helps executives align their companies to the organisation`s vision.
In the event of an unexpected risk, this single picture of the business reflects the current market situation, allowing management to identify areas where processes need to be improved or renewed altogether, before any major disruptions occur. In other words, the constant integration of new corporate data into the BPM process allows insight into the real-time corporation - an organisation that operates in the present, not on last week`s or last month`s data.
Marketing campaign
Suppose a company launches a new marketing campaign, putting all the resources the marketing department considers necessary at the disposal of campaign managers. By monitoring the real-time progress of the campaign, management can more easily determine that it is failing and pull the plug before losing too much money and harming other, potentially lucrative areas of the business. On the other hand, should the campaign be progressing well, it can easily determine if the resources assigned to it are insufficient and allocate more money, people and equipment to ensure the campaign is as successful as possible.
Fully functional BPM allows executive management to ascertain the status of the company`s operations, determine if all systems are pulling in the same direction and redirect them if necessary -without disrupting the functioning of the organisation. More than helping management achieve goals irrespective of unexpected events, BPM also enables executives to proactively identify opportunities for future growth and profitability while optimising the allocation of resources.
In addition, a comprehensive BPM solution must be data-independent. No matter which vendor or vendors the user has elected to use as its business applications and data stores, the system must offer the ability to integrate data from multiple sources into a central resource if it is to present an accurate single view of the organisation.
Due to the all-encompassing nature of BPM solutions, any implementation must be undertaken in phases. One segment of the business should be installed at a time, must be integrated into existing BPM and business processes and be working 100% before the next is started. If companies take the plunge and try a to do an all-in-one installation, they may end up experiencing ERP syndrome, one of lengthy implementation times with little value perceived.
It`s all about control. Shareholders are not renowned for understanding that the market is depressed or that some other factor is eating their profits. Management needs the ability to monitor their organisation, the factors influencing operations and to make the right decisions to adjust or create new processes and steer their firms in the direction of optimal returns - irrespective of controlled or inherent risks.
* Sybille McCloghrie is group business development director at COSA.