Written by Eran Rozenfield, Vice President Operations, Priority-Software US
Businesses are constantly evaluating ways to operate more efficiently. Monitoring management procedures to develop effective methods for reaching business goals, or business performance management has been around since the 1960’s. However, there is more than one system that can be used to identify new improved ways of doing business.
Both Business Process Management (BPM) systems and Enterprise Resource Planning (ERP) systems can be used to enable companies to process orders quicker and invoice customers faster. Since the boundaries between the two systems are blurring, it is becoming more and more difficult to know when to use one system or the other, and how to use them together.
Comparing BPM and ERP
BPM and ERP systems have a different approach. While BPM systems are looking to identify how processes can be re-engineered, eliminated or replaced, ERP systems are typically used to automate the flow of tasks within business processes to make them more efficient.
BPM systems analyze efficiency with a level of detail not typically offered by ERP systems, including providing information on how long it takes to complete each process and how many processes are opened or closed at a specific point in time. In addition, BPM systems present information in a format that is easier for business users to understand, often resulting in higher quality input which is important when designing new processes. BPM systems are also more comprehensive, analyzing processes beyond the typical scope of ERPs systems, including highly customized transactions and tasks that are being performed manually.
ERP systems typically manage processes that are made of several individual tasks that are tracked from one step to the next. For example when placing an order an ERP system will track the initial request from an employee for a product or service, the manager completing a requisition form, routing the form to upper management for approval and forwarding the approved request to a purchasing coordinator.
In contrast, a BPM system can be used to introduce new programs, for example if a factory wants to implement a predictive maintenance to prevent breakdowns and extent equipment life. All of the manual and automated processes required to perform preventive maintenance, including setting the thresholds for normal equipment temperature and vibrations, alerting technicians in the event of unusual conditions, and ordering replacement parts can be modeled using a BPM system, while the processes of requesting and approving an order for a new part could be handled in the ERP system’s purchase requisition module.
Paring together ERP and BPM
Although both systems naturally complement each other, both of them aren’t always necessary. When a company is small and the number of processes are limited and recurring, then the workflow management capabilities within an ERP system can be sufficient to achieve and maintain a high level of efficiency.
However if as the business grows resulting in new processes or adding additional steps to existing processes, than a BPM system can be used to redesign processes based on the new business realities. In this case, the BPM system can work as an overlying layer and be fully integrated so share data with ERP systems in order to automate the new processes.
Using a BPM system can also be helpful if companies wants to analyze the impact of changing their processes by implementing new innovations. This can include reading in third party data for improved decision making, for example, inputting credit ratings and past credit history to decide on contract terms for new customers, or inputting real time weather conditions on shipping routes to predict delivery dates. If companies don’t regularly rethink their processes they run the risk of missing out on important innovations and making their business processes work around their existing systems instead of innovating their business processes to stay competitive.
There is always better collaboration and increased efficiency when aiming to improve and streamline processes and tasks, whether it’s done using a BPM or ERP system. As companies evolve they can rely initially on ERP process analysis, and then move on to BPM systems as processes are re-engineered, and eventually integrate the BPM system with the ERP system. Even the processes of improving businesses processes needs to grow and evolve to keep pace with the rapid rate of business change.
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