The financial benefits of BPM integration with Six Sigma

The financial benefits were equally significant. Revenue collection improved by $4.2 million, resulting in a net annual hard savings of $226,800 (at a cost of capital of 5.2 percent). Additionally the company improved its operating cash margins significantly, which subsequently improved its debt rating.
Case Study

Within a Fortune 100 financial services firm is a segment of advisers offering financial planning and services to individual customers, businesses and institutions. The group of advisers is committed to recruiting and retaining the most qualified employees to best serve customer needs. In order to do so, the group needed a better way to recruit, train and retain new and experienced financial advisers. The current hiring and retention processes in practice were labor intensive and greatly duplicated
efforts. Each process was independently owned with objectives that did not necessarily align with enterprise objectives.

TRAXION Enterprise For a crucial company success factor such as the process of identifying new hires, executing post hire procedures, and evaluating new hire success, too many gaps existed in the process to be efficient for both the advisers group and the employee.

The group follows Six Sigma principles and required a Business Process Management (BPM) solution that would align with the methodology when designing, modeling, executing and optimizing the life-cycle of the employee hire and retention process. In addition to this requirement, the company wanted a tool that would provide a common understanding and end-to-end view of business processes spanning departments, regions and work-groups. The processes must be transparent, seamless and remove redundancies. Another requirement was the ability to generate and test scenarios to identify work-group utilization and bottlenecks. Next, the power to identify areas to increase productivity and decrease cycle time was key, as was determining optimal process flow and workload to reduce costs. Last, the BPM solution the advisers group would select must needed to have a feedback mechanism to measure the effectiveness of the implemented solution.

To help the company identify the most effective new hire process, CommerceQuest’s TRAXION Enterprise Business Process Management Suite (TRAXION Enterprise BPMS) was selected because of the breadth and depth the solution offered. Specifically, TRAXION Enterprise BPMS is able to more rapidly identify higher quality recruits, implement more applicable training methods for each new hire, and continuously improve processes by monitoring results and applying the best options to increase processes efficiency.

CommerceQuest worked closely with the financial services advisers to review their current processes and to develop a customized approach for them to model and document processes. The processes were then added into TRAXION BPMS’ Process Modeler and the group was able to run simulations that identified bottlenecks, excessive costs, and inefficiencies prior to deployment. Several iterations of improving and simulation processes identified a 20-30 percent savings in time and labor costs prior to deployment.

TRAXION Enterprise BPMS encompasses business focused and IT focused tooling that compliment the entire process of recruiting, training and identifying new employees and it will become an organizational standard that will be deployed across the enterprise beyond the new hire process. For example, the benefits obtained using modeling and simulation capabilities prompted the company to implement additional TRAXION Enterprise BPMS solutions, this time in the execution and integration of system resources, that identified at least another 20-30 percent efficiency improvements by automating these processes across the financial services group.

Integrate BPM with Six Sigma at all five DMAIC stages

If an organization has implemented Six Sigma, BPM is a catalyst for further improvement in all of the phases of the methodology. Below is an overview of how one Fortune 1000 services company applied BPM to the Six Sigma DMAIC methodology in use across its organization to significantly improve operating performance in the cash flow and receivables process.


Performance data in the cash flow and receivables process was looked at by a Six Sigma Black Belt in terms of key outputs, capabilities and need for improvement to meet business needs. It was identified through this step that the invoice preparation process was a semi manual process, which required inputs from service reports generated in several departments. Further data analysis revealed that 79 percent of the invoices were exceeding their targeted completion time of 10 days and 48 percent were

  • Accounts Receivable
  • Remote office
  • Remote office
  • Remote office
  • Invoice issued to customer
  • Service record
  • Reconciliation
  • Record
  • revisions

exceeding the upper limit of 15 days to issue the invoice to the customer. This created an undesirable outlay of cash, in the form of receivable averaging over 62 days, estimated at $5 million. The Black Belt determined the quickest impact was to create an improvement project to reduce the invoice preparation cycle time.


In this phase, BPM process maps expedited the task of characterizing processes. Through a highly intuitive set of tools, the Black Belt was able to lay out all of the activities, participants, business rules, technologies, and resources that comprised the invoicing process and illustrated the invoicing activities performed by all participants (people, systems, and resources) across multiple functional areas of the extended enterprise.


The primary activity is to narrow down the number of potential contributors to a problem and to find the root causes. A detailed model of the process was used to discover and simulate how the existing process functioned and to determine where potential bottlenecks and other problems were occurring. Six causes were confirmed as major contributing problems, these were:

  • Services recording (17 percent had incorrect/missing information)
  • Invoice reconciliation (slow)
  • Manager review (failure to review in a timely manner)
  • Internal mail routing (inconsistent delivery location and time)
  • Queue method (first in first out). For example, a claim could sit in Accounts Receivables between one and 12 days before being worked on. Of the 36 activities identified in the process map, 21 were designated as non value added. The non-value added steps alone accounted for approximately seven days of the current cycle time.


Once the process was identified, mapped, modeled and the most likely root causes were identified, additional ‘what if’ scenarios were used to create the improvement solution. Based on the knowledge gained, it was decided that the process could be partially automated. Using BPM technology along with the process analytics led to four areas where improvement could be taken. The areas were:

  • Fourteen of the 21 non value-adding steps were recommended to be removed. This reduced the invoice process cycle time by three days.
  • Eighty-five percent of the customer services data was recommended for digital entry by the performing department as the service was provided. This reduced the service reporting errors to less than one percent from the previous 17 percent. Thus another two days was removed from the cycle time.
  • Using BPM it was no longer necessary to send hard copies of the services input forms through the office mail. The Accounts Receivable department was provided electronic access via EAI (Enterprise Application Integration). Cycle time was further reduced by one day. When human interaction was required to complete a process action, the BPM system automatically ordered the transactions into a first-in-first-out approach. This eliminated an additional two days of cycle time.


The objective is to provide sustainability for the improvement solution. To assure that process performance would be consistent and manageable, a BPM web-based monitoring and tracking system was built to provide managers with real-time visibility up and down the process to maintain control of the invoicing. They could take specific actions when process activity was not meeting predetermined requirements. For example:

  • If the invoice reconciliation process exceeded one day, the affected invoices were aggregated together with an action email to the department manager for immediate intervention.
  • Services recording error rates were monitored within the system using statistical process control tools, again alerting management if the process lost control.
  • The total invoice volumes, invoice processing times, error rates and work in process volumes at key process steps were built into a dashboard system. These parameters were then monitored using SPC rules and reviewed by the team on a weekly basis.
  • A monthly process management summary report was automatically generated by the BPM system and reviewed at the company’s monthly operations review meeting to assure conformance and consistency. The Executive teams reviewed this data as it was considered a critical success factor for the company.

The performance of the process significantly improved by using the Six Sigma problem solving methodology in combination with the application of BPM. The business benefits included a total of seven days of average cycle time removed from the invoice preparation process, service recording errors reduced from 17 percent to less than one percent, and the number of invoices completed over the upper limit of 15 days decreased from 47.8 percent to 7.9 percent.

BPM Benefits to Six Sigma Practitioners

Indeed, BPM and Six Sigma are synergistic. In fact, the combination of the two creates the most complete and robust approach to business performance improvement at the enterprise level – the likes of which businesses today have not yet seen.

Benefits to Six Sigma Practitioners

Although it is projected by Redinius that over 80 percent of companies will be using Six Sigma integrated with BPM and other performance systems such as Lean and Balanced Score Card by 2010, for now activity in combining Six Sigma with BPM is fairly limited. While more companies in non manufacturing and service sectors are starting to deploy both Six Sigma and BPM initiatives independent of one another, a combination of the two is not yet a mainstream approach. Early adopters, however, in the financial services and retail industries are starting to see results. Among the benefits to practitioners in combining Six Sigma with BPM include the following:

  • BPM helps expand the effectiveness of Six Sigma across an enterprise.
  • BPM provides assistance with tools to aid in the design and simulation of business processes.
  • BPM helps Six Sigma better capture data.
  • BPM takes Six Sigma to unprecedented levels of control and predictability.
  • BPM helps Six Sigma to link to corporate strategy or integrate with other processes.

How a Services Company Integrated BPM with Six Sigma

The Convergence of Six Sigma and BPM

While the company today has one of the largest field forces in the country, they wanted to further improve investment results by leveraging their financial advisers to secure longer-term relationships and achieve better client retention. It came down to instituting a better way to recruit, train and retain advisers across the enterprise. The hiring process was distributed across multiple owners – both internal and external to the organization. As a result, tracking and status reporting were inconsistent thus creating a duplication of efforts that was labor intensive and inefficient.

The financial services company required BPM to align with the Six Sigma methodology in use and to provide an end-to-end view of the hiring across departments, regions and work-groups. Indeed, the combination of Six Sigma problem solving methodologies with BPM tools worked well to model processes, identify bottlenecks and test scenarios. In addition, by leveraging the rigor of the Six Sigma methodology with the automation improvement capabilities of BPM, the company was able to quickly design an optimal process flow for recruitment across the company. As a result, this new and more efficient process saved 20-30 percent in time and labor cost and created at least another 20-30 percent efficiency improvement by deploying and automating the hiring process across the financial services group.

The Convergence of Six Sigma and BPM Since the late 1990s when Six Sigma started to move beyond the manufacturing industry and into the service sector, the adoption of Six Sigma among U.S. companies with revenues greater than $200 million has been around 28 percent, according to trend analyses by Don Redinius of Agillist Group, Inc, a business performance improvement solutions company.

While growth of Six Sigma has been significant, it has not been as effective as it could be. Collecting and tracking huge amounts of data across multiple departments/business units has been difficult for Six Sigma due to a lack of standardized process monitoring technology. As a result, improvement projects tend to be department or function specific with poor integration between processes across the enterprise. Finally, although the Six Sigma methodology for solving problems is one of the best because of its discipline and rigor, it falls a bit short in the ‘control’ phase. Six Sigma’s control phase tends to use manual methods for managing and sustaining improvements over time. Six Sigma is just now starting to realize the benefits of automating the process and controls using BPM methods. BPM brings a paradigm shift of process control efficiency and effectiveness.

BPM, and associated integration, workflow and modeling technologies, has the potential to augment Six Sigma to create a more robust approach to process improvement, management and control. The strengths of BPM compliment the weaknesses of Six Sigma and vice versa. For example, BPM readily characterizes process inputs, outputs and their performance but lacks the analytical tools to solve difficult and complex problems. By using BPM tools to model, simulate and connect processes together to visualize how they link to critical success factors, gaps in performance are identified. Then the problems creating the performance gaps can be solved using Six Sigma improvement tools. Finally, BPM technologies can electronically execute change and continuously manage and improve a process. BPM tools are especially good when a variety of processes and associated resources need to be connected across an enterprise.

Combining Six Sigma with Business Process Management

A Marriage Made in Heaven: Combining Six Sigma with Process Management to Reach Unprecedented Levels of Business Performance

By Michael Forster, Chairman/Chief Executive Officer CommerceQuest Inc.

Abstract: Given the competitive nature of corporate business, companies are constantly seeking the most effective ways to improve productivity and maximize monetary gain. Consequently, companies are demanding more control over their business processes. Serving as a bridge that joins technology with business, Business Process Management technologies aid streamlined workforce efforts, reduced task times, less process variation, and more predictable results. This, in turn, makes the business more robust and profitable.

Companies are discovering the benefit of combining Business Process Management (BPM) technologies with Six Sigma methods and tools to advance the performance level of business processes. With BPM and Six Sigma, companies can better characterize, understand and manage entire value chains. People and systems, as process participants, can now perform to unprecedented levels of control and predictability. Sustainable enterprise improvements that were previously unavailable are possible through the integration of BPM and Six Sigma. This article illustrates how organizations in various industries combine BPM technologies and Six Sigma to enable their most important initiatives. Projects as diverse as assimilating new employees, streamlining management processes, and improving a corporation’s ability to visualize and optimize necessary operations can be heightened as a result of this implementation. The results of aligning BPM and Six Sigma are a significant indicator of what businesses could accomplish to contend as a legitimate competitor in their industry.

A couple of years ago, a leading Fortune 100 financial firm committed to improving their business by instituting Six Sigma process efforts in specific departments across the company. They expanded Six Sigma training and used the methodology to reduce errors in existing processes. They even applied Six Sigma to product development to build in quality from the start. As a result, the company increased efficiency, reduced costs and created revenue-producing opportunities.

Now, in a strategic effort to further optimize business processes by aligning them with enterprise objectives and integrating them with other processes across the company, the financial services firm needed more than just Six Sigma. The company needed a tool that would augment the principles of Six Sigma to provide an enterprise view of processes and more direct control and manipulation over improvements to those processes. They turned to Business Process Management (BPM).

BPM is the practice of dynamically aligning processes across an enterprise while using technologies to provide visibility and management at any point in the process lifecycle. BPM and associated technologies model the flow of data, people, systems and physical resources and build or modify ideal processes in alignment with business objectives and market needs. All improvements are in real time, with no additional systems, rebuilding or development needed.

To test the alignment of Six Sigma with BPM, the financial services firm applied it to one of its most critical business functions – the recruitment and retention for new and experienced financial advisors. Within the firm, there is a segment of advisors offering financial planning and services to individual customers, businesses and institutions. A key strategy in 2003/2004 was to continue to grow its advisor force while many of its competitors cut back on their recruiting efforts.

What is Workflow?

Workflow is an essential element of Business Process Management (BPM).

Workflow is a term used to describe how work is defined and how work is allocated and scheduled.

Workflow defines the sequence and conditions based upon which work flows.

Workflow handles the routing of work between resources. The resources can be people, systems or machines.

Workflow manages the order in which these steps are handled.

Workflow enables employees to monitor and,  reconfigure the flow of a business process as needed.

The following example illustrates a BPM workflow

In a Content Management business process, an editor edits the content and the manager approves the content. If you define editing of the content as a unit of work and approving the job as another unit of work, then the editing job needs to happen first for the approval job to start. Further, if the editing job fails, the approval job can’t start.

Business Process Management (BPM) Advantages

BPM makes it easy for companies to program their current processes, automate their execution, monitor their current performance and make on-the-fly changes to improve the current processes. The process managed enterprise is the company of the future.

A BPM software enables you to automate those tasks that are currently being performed manually. Many of these tasks require some type of application process, approval or rejection process, notifications and status reports. A BPM solution can make these processes automatic.

Handling exceptions is an area where BPM really shines. Organizations have few problems when its process run smoothly ninety nine percent of the time. However, it’s the one percent that are exceptions that dominate the majority of the company’s time and resources.

BPM is excellent for processes that extend beyond the boundaries of an enterprise and communicate with processes of the partners, customers, suppliers and vendors.

BPM Gives businesses the agility to stay competitive

BPM reduces the time elapsed in a business process

BPM Increases the productivity per person

Business process consists of many steps. A typical BPM initiative reduces the number of steps by 50%.

A Business Process needs many people and resources. A good BPM should reduce the number of resources needed for the same process.

BPM helps improve coordination across departments and geographic locations of a company

Business Activity Monitoring (BAM) – What Is BAM

What is Business Activity Monitoring or BAM?

Business Activity Monitoring or BAM, is the the automated monitoring of business process activity affecting an enterprise. BAM is generally implemented as a module of ERP, BI, EAI or BPM products. BAM requires a business to identify its Key Performance Indicators (KPIs) and create a system that allows monitoring and responding to changes, preferably real time.

Virtually for everyone in a organization can benefit from BAM.  Business Activity Monitoring enables a company to respond faster to new opportunities and threats.  BAM is not just about technology, but about recognizing a business’ KPIs and implementing the right technology in place to monitor them.

BAM provides Real-Time, Graphical Key Performance Indicators & Analysis

BAM enables control and manage ongoing business operations using closed-loop visibility.

BAM will enable you to respond quickly to change based on business events as they occur.

BAM enables zoom in on cross-process metrics with real-time analysis to determine which processes are creating bottlenecks or which customer is most profitable.

The Right Metrics

Creating an effective BAM environment is not only about having the right technology and processes. Enterprises should define the right set of metrics, which will prevent information overload and overreaction to business exception reports.

Business Process Management (BPM) Components

A Business Process Management (BPM) Solution has Six Components

BPM IDE. Business Process Management (BPM) IDE is an integrated design environment used to design processes, rules, events and exceptions. Creating a structured definition of each process is very important to any business and the IDE enables a business user to design all processes with no help from IT.

Process Engine. The process engine of a Business Process Management solution keeps track of the states and variables for all of the active processes. Within a complex system, there could be thousands of processes with interlocking records and data.

User Directory. Administrators define people in the system by name, department, role and even potential authority level. This directory will enable tasks to be sent automatically to the defined resources.

Workflow. This is the communication infrastructure that forwards tasks to the appropriate individual.

Reporting/Process monitoring. Enables users to track the performance of their current processes and the performance of personnel who are executing these processes.

Integration. Enterprise Application Integration (EAI) and/or Web services  is critical to BPM as business processes will require data from disparate systems throughout the organization.

Business Process Management (BPM) Tutorial

What is Business Process Management?

Business Process Management or BPM, is the practice of improving the efficiency and effectiveness of any organization by automating the organization’s business processes. BPM used to be also know as Business Process Reengineering (BPR).

Many companies have business processes that are unique to its business model. Since these processes tend to evolve over time as the business reacts to market conditions, the BPM solution you choose must be easily adaptable to the new conditions and requirements and continue to be a perfect fit for the company.

In order to use BPM effectively, organizations must stop focusing exclusively on data and data management, and adopt a process-oriented approach that makes no distinction between work done by a human and a computer.

  • The idea of BPM is to bring processes, people and information together.
  • Dynamic infrastructure requires separation of flows, business rules and services.
  • Identifying the business processes is relatively easy. Breaking down the barriers between business areas, and finding owners for the processes is difficult.
  • BPM not only involves managing business processes within the enterprise but also involves real-time integration of the processes of a company with those of its suppliers, business partners, and customers.
  • BPM involves looking at automation horizontally instead of vertically.
  • Business Activity Monitoring (BAM) is essential for measurement of BPM impact.

Examples of BPM tasks that your organization performs that should be automated include:

  • Expense Reports Travel Requests
  • Purchase Orders Human Resource Management
  • New Accounts and Credit Authorizations Sales Orders
  • Project Management Software Change Management

The following example illustrates the power of BPM:

When a B2B partner needs some inventory, he can log into the web site and order required inventory. An email will be generated and sent to the supervisor responsible for the partner’s inventory. The supervisor can click on the link in the email, login to the site and approve the inventory. The partner will be notified of the allocation and the inventory will be shipped.

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