VUCA and Business Process Management: an Introduction — Part I

About VUCA Challenges, Business Process Management (BPM), Governance and Internal Control Systems

Table of Contents

1. What is VUCA?
2. Introduction to “Business Process Management” (BPM)
   2.a. What are business processes?
   2.b. What is a process landscape?
   2.c. What is Business Process Management (BPM) and what are the 7 phases of the BPM life cycle?
   2.d. Why is BPM a possible response to VUCA challenges?
   2.e. What are the common reasons why BPM initiatives fail in organizations?
   2.f. What is the relationship between BPM and governance / internal control systems (ICS)?
3. Key takeaways and future trends

1. What is VUCA?

VUCA is the trendy acronym for:

• Volatility: highly dynamic situations.
• Uncertainty: the disappearance of previous certainties.
• Complexity: an abundance of possibilities that can no longer be reduced to simple principles and rules.
• Ambiguity: a large number of interpretations of a situation where it is unclear which one is accurate.

As demonstrated by the general pressure resulting from various globalization trends, the worldwide COVID-19 pandemic, ongoing conflicts like the war in Ukraine, or the emergence of disruptive technologies such as advanced generative AIs (ChatGPT, Bard, DALL-E, Bing Image Creator, etc.), VUCA environments have become the new normal for many organizations.

These VUCA challenges come with both risks and opportunities — including the risk of going bankrupt.

So, how can we respond to these challenges?
One option is to embrace digital transformation, focusing on managing our business processes and adopting more agile ways of working.
By doing so, we aim not simply to survive in this VUCA world but to thrive in it!

2. Introduction to Business Process Management (BPM)

With the VUCA challenges mentioned above in mind, let us dive into part I of our introduction to Business Process Management (BPM). Here we will explore the following topics:

• What are business processes?
• What is a process landscape?
• What is Business Process Management (BPM) and what are the 7 phases of the BPM life cycle (see part II of this introduction to BPM for more details)?
• Why is BPM a possible response to VUCA challenges?
• What are the common reasons why BPM initiatives fail in organizations?
• What is the relationship between BPM and governance / internal control systems (ICS)?
• Finally, there will be a summary of key points and a look at some of the future trends.

2.a. What are business processes?

We are all familiar with business processes in our everyday work life, like creating a quote or handling an entire order from start to finish. However, if we want to describe business processes in a more abstract way, here is how we can define them:

They are a collection of interconnected tasks that share three key characteristics:

• They have a clear beginning and end.
• They involve the systematic transformation of inputs (such as a customer inquiry via phone or email) into outputs (like the creation of a specific product or the provision of a particular service) within an organizational and/or technical environment.
• Their purpose is to achieve a specific business objective or deliver value to the customer.

2.b. What is a process landscape?

A process landscape is a high-level view of the three main types of processes in an organization:

• Management processes: They deal with strategic and operational management, such as setting goals and monitoring performance.
• Business processes (in a strict sense): These core processes deliver value to customers and include activities such as product development, sales and customer relationship management.
• Support processes: These processes provide essential support for the organization, such as HR, IT, procurement, finance and facilities management.

Here is a simple example of such a process landscape:

By understanding these three types of processes, organizations can see how they work together and identify areas for improvement.

2.c. What is Business Process Management (BPM) and what are the 7 phases of the BPM life cycle?

With reference to the preceding, we can define Business Process Management (BPM) as follows:

BPM includes business processes concepts, methods, and techniques such as:

• Eliciting and discovering.
• Documenting and modeling.
• Analyzing and improving.
• Configuring, administering and executing by means of people and or automation solutions.
• Measuring and optimizing.
• Monitoring and controlling.
• Evaluating.

This list can then serve as the basis for the so-called iterative and continuous BPM lifecycle, where each bullet point can be considered a phase that provides information for the next phase.

Why do organizations need such a lifecycle?

Organizations often find themselves constantly reviewing, adapting, and refining their processes to navigate the ever-changing environment around them. Whether it is the emergence of new business needs, shifts in market dynamics, advances in technology, or the introduction of new laws and regulations, there is always something that demands their attention.

Fortunately, the BPM lifecycle comes to the rescue, enabling organizations to achieve operational excellence, foster agility, and drive continuous improvement in their business processes.

2.d. Why is BPM a possible response to VUCA challenges?

When it comes to the relationship between organizations and their VUCA environments, we can turn to the law of Requisite Complexity proposed by Boisot and McKelvey, which is based on the law of Requisite Variety proposed by the British cybernetician William Ross Ashby.
According to this law, as the complexity of the environment increases, systems such as organizations must also increase their own complexity, or they will gradually lose their ability to adapt.

In short:
In order for any complex (biological, conscious, or social) system to adapt and thrive, the internal complexity of the system needs to match the external complexity of its environment.

In organizational terms, this means that as VUCA environments become more complex and dynamically unpredictable, organizations themselves must step up their game by continually increasing their adaptive capacities such as:

• More organizational agility and flexibility beyond the team level!
• Faster response times.
• Improved information processing capabilities.
• More innovation beyond specialized departments!
• More resilience.

This leads also to a different perspective on BPM, i.e. from primary efficiency enhancement to innovative enabler:

Traditionally, BPM has often been seen as a means to improve the organizational efficiency of structured business processes. While this view remains important, it is no longer sufficient in VUCA environments.

To keep up with VUCA challenges, it is crucial to see BPM as an innovative enabler that focuses also on:

• Creative and dynamic, yet loosely structured processes.
• A holistic perspective on process innovations that integrates strategy, governance, cultural and other organizational aspects with IT.
• A fundamental orientation towards value creation, which is sometimes overlooked in pure IT projects.

2.e. What are the common reasons why BPM initiatives fail in organizations?

BPM initiatives can be a tricky endeavor, and they often stumble upon various hurdles that can lead to failure. Let us take a look at some of the common factors that contribute to these setbacks:

• First and foremost, a lack of executive support can be a significant roadblock. Without strong leadership backing the BPM initiative, it may struggle to gain momentum. Executives need to show their belief in BPM, allocate necessary resources, and actively drive the initiative forward.
• Resistance to change is another challenge that frequently arises. People are creatures of habit, and when you introduce new processes, there is bound to be resistance. Therefore, it is crucial to involve employees early on, listen to their concerns, and provide adequate training and support to ease the transition.
• Insufficient resources and budget allocation can hinder the implementation of BPM initiatives. Adequate support, including skilled personnel, time, and budget, is vital to sustain the initiative and address evolving needs.
• Unclear objectives and scope can also hinder the success of a BPM initiative. Without well-defined goals and a clear scope, confusion sets in, and efforts become scattered. To stay on track, it is important to set specific objectives and communicate them effectively.
• BPM initiatives require clear / consistent communication and collaboration / involvement from various stakeholders. Neglecting to engage stakeholders and foster collaboration can lead to suboptimal solutions and a lack of buy-in. Therefore, it is often a good idea to
  - employ a dedicated change manager in medium and larger organizations here,
  - involve employees who are passionate about both the business processes and the associated technologies and then act as multipliers within the organization,
  - determine specific process owners and proxies.
• Insufficient training on new processes and technologies can also impede progress.
• Excessive trust in technology, believing it will solve many organizational problems automagically, is a misconception.
  It is more appropriate to view organizations as complex social systems, whose dynamics can only be controlled to a very limited extent.
  Scholars like Niklas Luhmann, Dirk Baecker, Stefan Kühl, etc. have emphasized this fact for almost five decades.
  Their works highlight that organizations operate within intricate webs of communication, whose autodynamics ultimately defy all attempts at intervention and control. The remaining attempts are then rather based on harmful control illusions.
• The crucial point here is: the success or failure of any BPM project heavily relies on an organization’s specific culture. And the unique organizational culture determines the ultimate outcome of these initiatives.
  Or to rephrase a famous saying by management guru Peter Drucker: Organizational culture eats automation and other BPM projects for breakfast!
• One variant of overreliance on technology should be explicitly mentioned here: the implementation of automation solutions in organizational silos.
  This leads to incompatibilities between departments, the loss of an overall view of processes, and an explosion of complexity and costs.

In short: Don’t do that!

In a nutshell, a lot can go wrong with (major) BPM initiatives.
Nonetheless, if organizations anticipate the challenges mentioned above and address them early on, they can massively increase their chances of BPM success!

Learning from past mistakes, adapting to change, and continuously refining their BPM initiative(s) is then an organization’s path to the BPM paradise of sustainable process improvements.

2.f. What is the relationship between BPM and governance / internal control systems (ICS)?

BPM, governance, and the internal control system (ICS) are distinct but interconnected concepts.

• As we have seen above, BPM is traditionally all about managing business processes to make them more efficient, effective, and aligned with organizational goals.
  In addition, it has to function more and more as an innovative enabler.
• Governance, on the other hand, sets the overall framework and guidelines for decision-making, accountability, and control. It involves the top-level executives and governing bodies who provide direction, ensure compliance, and make strategic decisions. So, while BPM experts focus on the day-to-day improvement of processes, governance sets the rules of the game and oversees the bigger picture.
• The internal control system (ICS) comes into play as part of governance. It consists of the policies, procedures, and mechanisms that ensure the reliability of financial reporting, compliance with regulations, and operational efficiency.
  You might think of the ICS as the control activities put in place to safeguard assets, prevent fraud, and provide reasonable assurance that objectives are met.

In brief:
BPM experts are in the organizational trenches managing and improving business processes, while governance and the ICS provide the necessary structure and oversight to ensure compliance and effectiveness.

3. Key takeaways and future trends

Here are the key takeaways from Part I of this introduction to BPM

• VUCA (Volatility, Uncertainty, Complexity, Ambiguity) environments have become the new normal for organizations due to various global trends and challenges. As a professional navigating these environments, it is important to understand their risks and opportunities.
• Embracing digital transformation based on Business Process Management (BPM) and adopting more agile ways of working can help organizations respond to VUCA challenges. In short, for people who drive BPM initiatives in organizations, focusing on managing business processes and fostering agility is crucial.
• Business processes represent a set of interrelated tasks characterized by a clear beginning / end, a transformation of inputs into outputs in an organizational and technical environment and clear business objectives (esp. the creation of value for customers).
• Business Process Management (BPM) is a discipline which consists of many concepts, methods, and techniques associated with the management and improvement of business processes.
• The BPM lifecycle, consisting of various phases, enables organizations to achieve operational excellence and continuous improvement.

VUCA challenges and BPM

• Recognizing the need to adapt by matching the internal level of complexity to the level of complexity of the environment is essential in VUCA contexts in general and for organizations in particular.
• BPM should in this context be seen as an innovative enabler, i.e., not just for improving efficiency but also for addressing creative, dynamic and less structured processes.
• Taking a holistic approach that integrates strategy, governance, culture, and IT is therefore more and more important for many BPM initiatives.
• Failure in BPM initiatives can be attributed to factors like lack of executive support, resistance to change, insufficient resources, unclear objectives, and inadequate training. Being aware of these factors and addressing them early on can massively increase the chances of success!
• Organizations are complex social systems, and their culture plays a pivotal role in the success of BPM initiatives. Recognizing the limitations of control and embracing the cultural aspects is essential for achieving sustainable process improvements.
• And, last but not least, the relationship between BPM, governance, and the internal control system (ICS) is interconnected: BPM focuses on process management, governance provides the framework and rules, and the ICS ensures control activities are in place.

Future trends

As Niels Bohr, the Nobel Prize-winning physicist and father of the atomic model, famously said, Prediction is very difficult, especially when you’re talking about the future!

That said, here are some future trends that are already happening and increasingly converging in a hyperautomation scenario that you should watch out for (see also part III of this multi-part series):

• Artificial Intelligence / machine learning will enable advanced automation capabilities, automating complex tasks using natural language processing, sentiment analysis, predictive analytics.
• Robotic Process Automation (RPA) where software robots automate repetitive and tedious tasks.
• Process Mining where real-time data analysis will help organizations discover, analyze, and optimize processes, providing insights for data-driven decision-making.
• Customer-Centric Process Design: BPM will focus on designing processes that prioritize customer experience, incorporating customer journey mapping and personalization techniques.
• Low-Code/No-Code Platforms: Business users and citizen developers will have greater involvement in process automation using low-code and no-code platforms, reducing reliance on traditional software development cycles.
• Agile and Adaptive BPM: Agile methodologies and adaptive BPM practices will enable faster iterations, flexibility, and continuous process improvement.
• Cloud-Based BPM: Cloud computing will provide scalable infrastructure for process automation and collaboration, enabling advanced capabilities and easy resource scaling.
• Integration with IoT and Edge Computing: IoT and edge computing will generate real-time data for proactive decision-making and automated actions within business processes.
• Blockchain for Process Transparency and Trust: Blockchain technology will enhance transparency, security, and trust in cross-organizational processes through smart contracts and distributed ledger technology.
• Ethical and Responsible BPM: BPM practices will prioritize responsible and ethical use of automation technologies, considering data privacy, security, and the impact on employees, customers, and society.

This illustrates:
Nothing is more certain than constant change when it comes to BPM!

In Part II of the introduction to BPM, we cover the seven phases of the BPM lifecycle in more detail.

Thanks for reading and, hopefully, see you in the next post!

Author for WAITS Software und Prozessberatungsgesellschaft mbH, Cologne, Germany: Peter Bormann — July 2023.

Disclaimer:
AI writing tool used to summarize efficiently: ChatGPT