In order to thrive, a business must manage its daily operations through well-defined, executed, and controlled processes and decisions. The top performers automate both with business process management (BPM) and business decision management (BDM).
Introduction to business decision management
Generally speaking, BPM is the set of technologies that automate processes of an organization, that is to say the stages through which the organization passes. Often, the stages include data entry, transformation, and enrichment. Then data activation, exploitation, and reporting. On the other hand, BDM is the set of technologies that automate the multitude of operational decisions of an organization. The number often varies from hundreds to thousands, and sometimes millions of times a day.
As is always the case in technology, there is no clear distinction between BPM and BDM. Suppliers of both technologies operate in both markets, and companies combine them to maximize the benefit of each technology. The purpose of this article is to draw a line between the two technologies through an example from subscription-based businesses such as Amazon Prime, Netflix, and WSJ, and a second example from life, property, and causality insurance.
Processes and decisions
Subscription-based businesses such as those listed above take the form of a billing relationship with a starting subscription event, a continuous servicing or insuring process, and an eventually un-subscription event.
Figure 1: Simplified lifecycle of subscription to a media
Figure 1 presents a high-level view of the processes and decisions that take place behind the websites of Amazon Prime, Netflix, and WSJ. Figure 2 does the same for the life, property, and causality insurance provider. When you take a close look to the diagrams, you may wonder what a process is and what is a decision. In fact, both are taking place within these two examples.
Figure 2: Simplified lifecycle of subscription to an insurance provider
The key difference with business decision management
The processes are stable enough in the sense that they do not change, because they are independent of each situation and indeed of each data. Whether it is a media or an insurance provider, the company always starts by prospect acquisition, then customer activation, and then customer management.
On the other hand, the decisions change too often, depending on the situation captured through data. Take the subscription to a streaming media (Figure 1). Ending the contract can be a tricky decision. Should the media end the contract the date of the subscriber’s call to cancel? Or should it try to propose a discount to keep the subscriber? Should the media recall subscribers who have not paid their last bill? A week or two weeks after the due date? These are the typical decisions that separate the media from each other. Each media has its own specific way to investigate customers when the relationship has ended.
Now, take the subscription to a car insurance (Figure 2). The insurer, like any other insurer competing for the same policies, seeks more business. But at the same time, it wants to reduce its risks. So decisions are more complex than in the case for a media. The insurer may need third-party data to determine whether a subscriber is eligible. Also, the subscriber may present different risks depending on the age, car, and accident history. So the insurer has to take another series of decisions: Compute a risk level, then a price that hedges the risk.
In short, the processes are what make a company belonging to an industry, the decisions are what make the company unique in this industry.
BPM, BDM, and standardization
Under the pressure of competition on the one hand and regulation on the other, many service companies have realized the importance of separating decisions from processes. Until recently, they were nested. Leading this trend, the Object Management Group (OMG) has published two recommendations (BPMN for the former, DMN for the latter), thus accelerating the emergence of BPM and BDM as two different yet complementary technologies.
Conclusion
In practice, BPM technologies are appropriate when the problem is centered on a document that must be co-signed by different stakeholders. For example, a loan contract that passes from the Sales to Finance, then to the Legal department, then back to the Sales, and finally to the client. On the other hand, BDM technologies are more appropriate when the problem is centered on operationalizing decisions. For instance, evaluating the eligibility for a loan, accepting or rejecting the application, and so on. However, whether you’re a BPM or BDM subscriber is less important than understanding your use case. Let your business requirements drive what technology you adopt and not the other way around.
Takeaway
- Regardless of its market, in order to thrive, a business must manage its daily operations through well-defined, executed, and controlled processes and decisions
- Processes are what make a company belonging to an industry, decisions are what make it unique in this industry
- BPM is the set of technologies that automate processes, that is to say the stages through which the organization passes. BDM is the set of technologies that automate the daily decisions
- In practice, BPM technologies are appropriate when the problem is centered on a document that must be co-signed by different stakeholders. BDM technologies are more appropriate when the problem is centered on operationalizing decisions.
Disclaimer
The statements in this article belong solely to the author. The article was not reviewed nor endorsed by any company or organization mentioned. You can send your comments to the author at hlaasri@sparklinglogic.com.
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