Accenture-Enabling-Innovation-Through-BPM

Enabling Innovation Through
Business Process Management

Innovation:
more and more
process-centric
1

All companies, regardless of size or
industry, need innovation to grow and
thrive. Yet, as executives know, innovating
on a long-term, sustained basis can be very
difficult, and generally spells the difference
between market leaders and “one-hit
wonders.” Business process management
(BPM) can help to make innovation a
lasting capability in an organization.
Innovation is defined as the act of
introducing something new to the
market—and making money with it.
Within this broad definition, there
are two distinct forms of innovation:
business model innovation and technology
innovation. Both are closely related
to the notion of business processes,
and can therefore be managed using
a BPM discipline and approach.
Business model innovation includes
new or modified value propositions,
new business processes (especially in
the supply chain), as well as new target
customers and markets (see figure 1). 1 For
instance, Dell’s value proposition for its
PC offerings has centered on convenient,
customized product configuration and
ordering. 2 The company’s supply chain
processes have eliminated dealer networks
and enabled individual configuration by
the client, while its target customers have
remained more or less the same as those
of its competitors. In other words, while
Dell did not invent the PC, it did invent
new business processes to bring PCs to
market, eliminating unnecessary steps
while offering customers more flexibility
and control. Similarly, Amazon.com did
not invent the book, but it introduced
the process of buying books online. And
while eBay did not invent auctions, the
company’s online, easy-to-use processes
have increased their popularity. Business
model innovation also is important within
more traditional industries: Machinery
manufacturers are offering more
convenient and reliable service processes,
while airlines have simplified the ticketing
process to reduce cost and improve service
levels. In all those cases the relevant
business processes play a key role, and
business model innovation has been
enabled through new and better processes.
As depicted in Figure 1, technology
innovation has the following levers:
offerings to end customers, process
technologies, and enabling technologies. 3
New product technologies are some of the
most obvious forms of innovation, while
process technologies support efficient
and effective business processes. Enabling
technologies support the effects of
product or process technology innovation.
Digital cameras, for example, originated
as product innovations. In contrast,
enterprise resource planning (ERP) systems
have made specific processes more
efficient and effective, and represent a
process technology innovation. The third
lever, enabling technologies, improves
either product or process technologies.
For example, the development of efficient
relational databases supported the creation
of integrated application software,
such as the ERP systems mentioned
above. Furthermore, all three technology
innovation levers also generally result in
new or adjusted business processes. A new
product technology, for example, often
requires adjustments to manufacturing,
supply chain, and sales processes.
Figure 1: Forms and levers of innovation
Business Model
Technology
Value Proposition
Indirectly Process Related
Offerings
(Products and Services)
Processes
(Supply Chain)
Directly Process Related
Process Technologies
Indirectly Process Related
Target Customers
Enabling Technologies
2

Why does innovation
need BPM?
3

Figure 2: Impact of BPM on Innovation
Innovation
Process
Business
Model
Innovation
Technology
Innovation
Process
Innovation
Others
Business Process Management (BPM)
Business Process Management
helps organizations overcome that
challenge, providing support in two
key areas: the “innovation process”
and “process innovation.” 4
On one hand, BPM can improve the
performance of the innovation process
by supporting it with an effective
management approach. BPM can add
value across the full innovation lifecycle,
from finding ideas, to evaluating them, to
launching new products and all subsequent
activities. A company can define and
manage an inter-enterprise process to
integrate external research institutions
such as universities into its innovation
process, thus augmenting its capabilities.
Additionally, it can integrate people within
the organization along the innovation
processes, defining exactly how each can
make the most valuable contribution.
Furthermore, the management of
innovation triggers can help companies
to act with greater agility. Management
rigor provided by BPM helps to improve
the efficiency of the innovation process,
empowering organizations to translate
ideas into products and launch them
much faster. Indeed, examples from the
telecommunication industry show that
BPM can accelerate product launches
by over 70 percent. In addition, BPM
helps companies improve the quality of
the innovation process by systematically
including appropriate checks, policies
and guidelines in the innovation process.
BPM also boosts the transparency of the
innovation process, thereby enabling high
performance and competitive advantage.
The key values of BPM—transparency
and the enablement of quality and
efficiency, agility and compliance, internal
integration and external networks—are
important for any process, but specifically
for innovation. 5 On the other hand, BPM
enables process innovation, helping
companies invent new processes that
move them forward, or that become part
of product or service offerings. It allows
companies, for example, to define and
model innovative processes in a structured
way that allows a thorough evaluation.
The use of process models introduces a
common language for process innovation.
BPM automation engines can be used to
implement the innovative process as a
realistic prototype. Once practice tests
are completed, the same automation
engine can be leveraged to roll the
product out, re-using the developed
business rules and workflow definitions.
In effect, BPM becomes part of the new
process and enables process innovation,
as illustrated in Figure 2. This diagram
shows how BPM is used on one hand
to move the innovation process to the
next level, and, on the other hand,
how it can become part of innovation
itself, enabling process innovation.
While BPM has the power to drive
innovation, many traditional organizations
have used the approach only on a project
basis to manage process transformations
and incremental improvement efforts.
However, leading companies increasingly
are developing lasting BPM capabilities
that can help them deliver business
value on an ongoing basis. To be sure,
with innovation being so central to an
organization’s long-term health and
viability, the use of BPM to improve returns
on innovation investments can provide
a major boost to a company’s pursuit of
growth and high performance. This is
especially true for services companies such
as banks, insurers, telecommunications
providers and retailers, for which every new
product developed consists of a process
innovation, and, thus, can be accelerated
and enhanced through BPM.
4

BPM and
the process
of innovation
5

Consumer goods or retail
companies can use BPM to
understand their customers better
and come up with customer-centric
innovation approaches.
Innovation is not without its challenges,
including the need to establish and
maintain a superior process of innovation.
Ideally, such an innovation process enables
a company to identify and evaluate
promising new ideas, select the ones with
the greatest potential business benefits,
bring those ideas to market, and measure
their success. In this regard, BPM
generates value by employing the “process
of process management” to manage the
innovation process. 6 BPM as a management
discipline enables a reliable and stable
innovation process that delivers the desired
results. The transparency generated by BPM
helps companies increase the quality of
their innovation processes, for example by
supporting idea generation and discovery
through creative software tools and social
media, and boosting efficiency by using
workflow for idea management.
BPM also can increase agility by allowing
companies to simulate alternative
scenarios, while enhancing compliance
with regulatory and other standards by
making procedures accessible in a process
repository. Furthermore, BPM can improve
the internal and external integration of the
innovation process by enabling companies
to use workflow engines to route ideas and
facilitate approvals, as well as integrate
external research institutions through
appropriate portals. A communications
company, for example, uses BPM to
organize its collaboration with a university
to acquire new ideas on a continual basis.
In fact, the process of process management
can support innovation through its entire
lifecycle. It empowers organizations to
define innovation as an end-to-end process,
from the discovery of ideas, through go-tomarket
strategies and success measurement.
Using the process of process management,
companies can leverage model-based
design, evaluate innovation process cycle
times and costs, discover bottlenecks and
identify company-specific metrics.
The process of process management
can help companies implement the
innovation process and make any identified
improvements. It allows companies to
leverage BPM methods and tools such as
workflow engines and process monitoring
systems, establish process governance
and roles and responsibilities, monitor
key performance indicators, and gain
transparency into how ideas “flow through
the process.” And, once the process of
innovation is established, the process
of process management can enhance
organizations’ control over it, allowing
them to use the results of ongoing
performance monitoring to fix short-term
issues and overcome structural issues—for
example, by launching new design efforts.
A high tech machinery company, for
instance, used BPM to achieve higher
performance in its engineering processes
and boost product innovation. At the
core of this pursuit was the repositorybased
design of all engineering processes,
including the simulation of processes
to identify bottlenecks and cycle time
improvements. The company was able to
parallelize engineering activities through
a model-based process design, re-use
information in a targeted way through
document management systems and
classification approaches, integrate with
relevant departments in production for
prototype development using workflow
systems, and collaborate with its suppliers
in the development process.
Consumer goods or retail companies can
use BPM to understand their customers
better and come up with customercentric
innovation approaches. A home
improvement company could, for example,
describe the “bathroom remodeling” process
from a consumer point of view: From the
initial idea, through the decision to move
forward and the completion of the remodel.
The resulting process models help
to identify which products and services
to offer and bundle to provide a holistic
solution. The solution can be tested using a
process model describing the new process,
again from the customer point of view.
6

BPM and
the innovation
of processes
7

The process of process
management also fosters
collaboration within and across the
organization. It allows companies to
establish robust governance, which
is critical to successful process
innovation.
In addition to fostering a strong process
of innovation, BPM can help organizations
enhance the ways in which they add
innovation to their key processes or their
service offerings. For example, companies
can use BPM to define processes or service
“products” in the form of process models.
This allows the use of a structured design
process, also known as service engineering,
that ensures important aspects of the
service are not forgotten, common
language supports strong communication
within the organization, companies have
the transparency required to make faster
decisions (such as approvals), and ideas
can be readily changed. By making process
innovation tangible, BPM allows companies
to handle it the same way it handles
traditional technology innovation.
BPM also can help organizations select
the high-impact processes for which an
increase in innovation activities makes
the most sense. Conducting a capability
assessment of the processes with a large
impact on an organization’s goals helps
them identify where innovation is needed
most, and focus resources on innovation
activities that really pay off. It is even
possible to develop a process innovation
roadmap based on such a prioritization,
generating a steady input into the
innovation process. 7
In addition, BPM and the process of
process management provide companies
with modeling and repository environments
that allow them to simulate process
ideas. By conducting such simulations,
companies can determine what works and
what doesn’t, evaluate the consequences
of a new process, predict its chances
for success, and estimate the costs to
implement it, as well as the effort required
to change it. Furthermore, BPM engines
help to implement a new, innovative
process in a real-world pilot while
accelerating roll-out through re-use of the
same infrastructure.
The process of process management also
fosters collaboration within and across
the organization. It allows companies
to establish robust governance, which is
critical to successful process innovation. It
helps make a new process successful in the
long term, enabling sustainable innovation.
The result: process innovations that deliver
the expected value.
BPM not only supports process innovation
within the organization. In addition,
the transparency it delivers allows
organizations to define new offerings
across enterprises, making it easier to
add new components to a process. For
instance, in the case of Dell, the company
can define how various suppliers and
logistic companies work together to
create offerings for customers, and where
improvements and innovations are possible.
Together, these benefits can have
a dramatic impact on a company’s
competitive strength. For example, while
investment banks sometimes require
eight months to approve a new product,
they can shrink that time significantly by
employing BPM to define products (using
process models) in a more transparent way
and develop a more efficient innovation
process. Likewise, telecom companies can
use BPM to establish the profitability of
new products and services upfront—thereby
avoiding the launch of unprofitable offers—
and to accelerate time-to-market for their
best innovations. The automation of the
launch and management process for such
new telecommunication offerings can cut
cycle time by half, or even more.
8

BPM:
the innovation
engine
9

In today’s business environment, companies
face a stark choice: sink or swim. Only by
continually innovating can they stay ahead
of competitive threats, keep up to speed
with dynamic consumer demands, and
adapt to rapidly changing conditions. Yet
such ongoing innovation can be difficult,
especially when navigating a challenging
business environment consumes significant
attention and effort.
BPM is a powerful ally in this pursuit,
whether companies are seeking to improve
the process of innovation or add innovation
to key processes—or both. By boosting
transparency, BPM empowers organizations
to enhance the strength of their innovation
processes, enriching ideation and enabling
new offers to be thoroughly vetted before
and after launch. And with a robust
BPM capability, the innovation process
is more agile and efficient, which means
high-value offers can reach their intended
markets more quickly and with greater
returns. BPM also can help companies
see with greater clarity how process
changes will impact their performance and
competitive strength.
In short, whether innovation is focused on
new technologies or on new key business
processes, it will be a cornerstone of
success and market differentiation for
years to come. By allowing companies
to imbue their innovation capabilities
with greater transparency, agility,
compliance, quality, efficiency, and
external and internal integration, BPM
therefore plays a central role in the
ongoing pursuit of high performance.
About the Author
Dr. Mathias Kirchmer
Dr. Mathias Kirchmer is Executive Director
for Business Process Management
(BPM) at Accenture. He leads the
global BPM-Lifecycle Practice, as well
as the program for the development of
Accenture’s Business Process Reference
Model Repository across industries and
functional areas. His special field of
expertise is to set up BPM capabilities
that deliver both immediate benefits as
well as durable competitive advantage.
Before joining Accenture, Dr. Kirchmer
had been for 18 years with IDS Scheer,
a leading provider of business process
excellence solutions, known for its BPM
software, the ARIS Platform. He was a
member of the Extended Executive Board,
including roles as CEO Americas, Japan,
and Chief Innovation and Marketing
Officer. During his career, Dr. Kirchmer has
developed deep knowledge in approaches,
methods, tools and software for the design,
implementation, execution and controlling
of business processes. He has applied
this know-how in companies of various
sizes and industries around the world. Dr.
Kirchmer is an affiliated faculty member of
the Program for Organizational Dynamics
of the University of Pennsylvania as well as
a faculty member of the Business School
of Widener University, Philadelphia. In
2004 he won a research fellowship from
the Japan Society for the Promotion of
Science. He is the author of numerous
publications, including five books. The
last one is entitled “High Performance
through Process Excellence: From Strategy
to Execution with Business Process
Management (2nd edition)” and was
published in September 2011. Dr. Kirchmer
holds a PhD in Information Systems from
Saarbruecken University (Germany), a
Masters in Business Administration and
Computer Science (“Wirtschaftsingenieur”)
from Karlsruhe Technical University
(Germany) and a Masters in Economics
from Paris-IX-Dauphine University (France).
References
1
cf. Davila, T., Epstein, M. J., Shelton, R.:
Making Innovation Work. Upper Saddle
River 2006.
2
Kirchmer, M: High Performance Through
Process Excellence: From Strategy to
Operations. Springer-Verlag Berlin
Heidelberg 2009.
3
cf. Davila, T., Epstein, M. J., Shelton, R.:
Making Innovation Work. Upper Saddle
River 2006.
4
Kirchmer, M: High Performance Through
Process Excellence: From Strategy to
Operations. Springer-Verlag Berlin
Heidelberg 2009.
5
Kirchmer, M: Competitive Advantage in
an Era of Change: 11 Typical Business
Situations where Business Process
Management Delivers Value. Accenture
2011.
6
Kirchmer, M.: The Process of Process
Management: Delivering the Value of
Business Process Management. Accenture
2011.
7
Kirchmer, M.: The Process of Process
Management: Delivering the Value of
Business Process Management. Accenture
2011.
10

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2011 Accenture
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