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).
What is Business Process Management (BPM)?
Business process management (BPM) is the set of methods and technologies used to automate and/or optimize business processes. These processes can be fully-automated or not, structured or unstructured, repeatable or variable. BPM includes tools and techniques for business process discovery, modeling, testing, and analysis. Data management considers data an important asset that must be managed. Similarly, BPM considers processes as important assets that must be managed. For example, data management usually involves data entry, data storage, data transformation, data enrichment, and data reporting. While data management focuses on achieving data quality and security, BPM can be applied to data management to optimize the process steps to achieving data quality and security. In other words, BPM focuses on “the how” of business operations.
What is Business Decision Management (BDM)?
Business decision management (BDM), on the other hand, is the set of methods and technologies used to automate and optimize operational decisions or a business or organization. While organizations can apply BPM to different kinds of processes, organizations typically apply BDM to structured, repeatable decisions that are or can be partially or fully automated. Therefore, organizations do not typically apply BDM to strategic or tactical decision-making that tend to be infrequent and/or ad hoc. Rather, organizations apply BDM to the operational decisions that occur hundreds to millions of times a day. For example, insurers process thousands of insurance applications a day, deciding whether or not to approve an application. Within an approval decision are various sub-decisions, including the following:
- Do we trust that the applicant is who they say they are?
- Do we trust that the information the applicant provided is accurate?
- How risky is the applicant in terms of fraud or crime?
- How risky is the applicant in terms of creditworthiness?
- Given a certain risk profile, what should we offer?
Organizations can apply BDM to any or all of these decisions to optimize the performance of their policies. On the other hand, organizations can apply data management to optimize the accuracy, availability, and security of the data needed for making those decisions. And finally, organizations can apply BPM to optimize the processes involved in interacting with applicants, collecting information from them, processing the applications, and communicating with them after the fact.
BPM Use Case: Managing Subscriptions
Subscription-based businesses such as Netflix or WSJ rely on subscriptions to generate revenue (they may also have other revenue sources like advertising for WSJ). These organizations can apply BPM to optimize how they manage their subscriptions. Below is a simplified process flow or lifecycle of a subscription. Organizations can use BPM tools and techniques to automate this entire process and/or to optimize a particular step within the overall process such as invoicing.
Simplified Process Flow for Subscriptions
BDM Use Case: Auto Insurance Approval
Managing auto insurance policies could follow a similar process as managing subscriptions, however, the “sale” step of the process is usually more complicated. As mentioned earlier, an insurance approval decisions involves many sub-decisions. So while an insurer can apply BPM to optimize how they manage policies, they can apply BDM to optimize their insurance approval decisions. Below is a simplified decision flow for auto insurance approval. Organizations can use BDM tools and techniques to automate this entire decision flow and/or to optimize a particular step within the overall flow such as identity verification or risk assessment.
Simplified Decision Flow for Auto Insurance Approval
Learn more about business decision management with Sparkling Logic’s SMARTS™ Data-Powered Decision Manager