Business Process Management vs Workflow in Procurement

Recently we explored the inconsistent interpretations surrounding what constitutes a platform v. suite v. disparate collection of point solutions. Lately, we’ve heard a little bit of the same term-swapping between business process and workflow.

The general response when bringing up the issue to colleagues, clients and partners is, “Does it matter?” People just want to get their work done in the most efficient, effective manner possible, regardless of the terminology. Since workflow and business process are both integral to achieving that efficiency and effectiveness, it’s worth a quick examination of the lexicon.

Broadly defined:

Workflow – There are variations around this depending on industry, but in general: Workflow is described as a sequence of different steps in a prescribed process involving people, operations and/or functions, that are repeatable and systematic, through which work, or a piece of work, passes from initiation to completion (think AP automation).

Business Process Management — Definitions here become more complex, and variable:

According to Gartner

Business Process Management (BPM) is a discipline that uses various methods to discover, model, analyze, measure, improve, and optimize business processes. A business process coordinates the behavior of people, systems, information, and things to produce business outcomes in support of a business strategy. Processes can be structured and repeatable or unstructured and variable. Though not required, technologies are often used with BPM. BPM is key to align IT/OT investments to business strategy.

According to the BPMInsitute.org

Business Process Management is the definition, improvement and management of a firm’s end-to-end enterprise business processes in order to achieve three outcomes crucial to a performance-based, customer-driven firm:

1) Clarity on strategic direction
2) Alignment of the firm’s resources
3) Increased discipline in daily operations

There are as many variations of these definitions as there are organizations involved, but the gist is mostly the same: Align processes to strategy and make them work more efficiently.

Similar, but not identical.

Based on that summary, you can see why there is overlap in the usage of the terms workflow and BPM. The former is a part of the bigger picture, but they’re trying to achieve the same thing.

The way we delineate the terms at Corcentric is by size and scope:

• • Workflow refers to the task-oriented procedures that a department or function exists to fulfill and accomplish on a regular basis.
  • Business Process Management is what links and integrates all the workflows in an organization together, through master data, metadata, document management and other components.

To this end, consider a traditional process for a purchase request from a supplier catalog: A user goes to the company internal catalog or punchout catalog, puts the item in a shopping cart and creates a request or requisition.

If the request meets certain criteria, like requisition total amount, number of items or even category, then an approval may be needed to convert the requisition into one or multiple purchase orders. The next step is to approve the receipt of items — say at a shipping dock or in an office — as it relates to the item(s) ordered. This may require multiple approvals if the items being received are being matched to separate purchase orders.

Diagram 1 – Requisition to Receipt

But this is only part of the picture — the diagram simply shows the workflow that allows a user to purchase items and for the approvers involved to facilitate the process. What about payments? What about the contract these items are purchased against? What about the budget or cost accounts this get allocated to? All this detail may not matter to a user, but the ability to connect the dots to other workflows and business processes is what constitutes business process management.

Under the hood.

As applied to manufacturing — an auto assembly line for example, each step further completes the building of a car. In “source-to-contract” or “procure-to-pay” (as illustrated below), it involves thinking beyond just moving a requisition from PO to receipt to include all the processes that are interrelated within the organization.

Diagram 2 – Business Process Management in procurement

In this regard, Diagram 2 shows the connection of additional approval workflows required to enhance and complete the workflow described in Diagram 1. These often include contract management, supplier management, invoice management, financial and asset/inventory management. What enables all these workflows is the ability to connect users and processes through master data and metadata on a common platform for managing wider business processes within procurement.

In short, business process management integrates many workflows across the wider source-to-pay continuum to empower collaboration and achieve business success.

So, to answer the question, “Does it matter?” For the sake of clarity, yes. Especially for anyone who is in the market for a new procurement, contract management, sourcing, supplier management or other source-to-pay solution. You want to be sure that when comparing choices, you’re speaking the same language.

To dive deeper into this topic on the alignment of functions, register for our on-demand webinar with PayStream Advisors, Harmonizing Procurement and Payables: A Critical Confluence for Success.

If you’re interested in seeing workflow and business process management in action, schedule a demonstration.