The category of business management software, while evolving, is cluttered. The term ‘business management system’ has been a catch all term to cover a multitude of business technology solutions.
As business complexity has grown so has the category of business management software. The landscape is one of varied vendors typically offering products with specialised but singular focus, for instance, process mapping tools, workflow applications and operational intelligence platforms, with many now being offered in the cloud.
ERP and business management tools
Even ERP software is often described as business management systems. ERP, most notably SAP which started more than 40 years ago, came from the need to unify disjointed IT systems within an organisation – accounts, general ledger, inventory management, workforce management, sales and so on.
However, ERPs and business management systems are very different. While ERPs allow organisations to be more efficient as they provide integrated transactional data, they don’t provide descriptions of what people do, how processes are carried out and how to work is done in a low risk environment, as in a true business management system. Because of this ERP and business management systems can complement each other well.
The ERP market is mature and most large organisations understand the need to have an ERP to run their businesses. While the category of business management software is still emerging and it will continue to develop as organisations look for better ways to deal with complexity and be more agile, it is likely to follow a similar trajectory as ERP. Organisations will move from a multitude of single-purpose applications to an integrated view of business that will provide greater reliability through consistency of information that is maintained and enhanced, frequently accessed and remains current.
Mapping and modelling tools
Another area commonly labelled as business management software is the category of business process mapping tools. Business mapping helps to break down silos by considering the overall view of processes. It can help to eliminate bottlenecks and reduce lag time between process steps when work is passed between people.
However, business mapping has its limitations. For example, it cannot assist with business transformations and change as there is no means of analysing the process maps to simulate a future operating environment.
This brings us to business process modelling tools, also often badged as business management software. Unlike process mapping which treats each process discretely, modelling allows the relationships between components of processes to be understood. Through business modelling, a rich understanding of an organisation can be created, which is invaluable to its operations and change initiatives.
Some IT systems do already incorporate some form of process mapping or modelling. Given the heritage of these systems, they are usually very system-focused and do not include manual processes, responsibilities, control points and document management.
System orientated processes often use technical diagrams, such as Business Process Modeling Notation. This technique is very effective in configuring IT systems and workflow to conform a set of prescribed rules, however they are not understood by operational people who need to undertake the work. They only provide part of the picture, one that is disconnected from risk management, compliance and operating procedures.
What’s next for business management software?
What has become clear is organisations need to transition to a different way of thinking. The current world of disparate systems and a multitude of documents throughout organisations do not support the agile business of the future.
There needs to be a shift away from managing through documents to managing using models. Documents pertain to single dimensions of an organisation and don’t capture the inter-relationships that are inherent within any organisation. For instance, the operations department may have a set of standard operating procedures (SOPs) and the compliance department maintains regulatory obligations. With thousands of SOPs, it is virtually impossible to keep these aligned with changing compliance obligations.
Rather than specialised document management within organisational silos there needs to be a coordination of information, that connect risks, controls and processes, and integrate into one model of how things work or a ‘single source of truth’. In the above example, as the regulations change, the model guides the organisation to the impact on operations and an update to internal policies flows through to all affected areas with a single change.
The technology is there, but organisations need to transition to a different way of thinking, move away from silos and understand that every part of the business is interconnected.
A business management system should cover every aspect of an organisation, rather than singular areas, and also provide feedback on operational performance, turn organic knowledge into organisational knowledge, enable successful transformation projects, ensure compliance and help to deliver organisational strategy.
With the digitisation of businesses, more and more organisations are transitioning from traditional manual and paper-based methods to manage complexity, and soon sophisticated, powerful business management systems will be the norm.
Bruce Nixon, CEO of Holocentric