Business process management vs. business decision management

Regardless of its market, maturity and size, in order to thrive, a business must manage its day-to-day operations through well-defined, executed, and controlled processes and decisions. The top performers automate both with two automation technologies: Business Process Management (BPM) and Business Decision Management (BDM). The aim of this article is to explain the two technologies, what they have in common, what makes them different, and how to use them both to better benefit from the automation of processes and decisions.

Introduction

Generally speaking, BPM is the set of technologies that fully or partially automate one or more processes of an organization, that is, to say the stages and milestones through which the organization goes 一 from data entry to data analytics to business reporting. On the other hand, BDM is the set of technologies that fully or partially automate the operational decisions of an organization, that is, the hundreds, thousands, and sometimes millions of decisions that the organization takes a day.

As is always the case in technology, there is no clear distinction between BPM and BDM. Suppliers of both technologies tend to operate in both markets, and companies tend to use both technologies to derive maximum benefit of each technology. A second purpose of this article is to draw a line between the two technologies through an example from subscription-based businesses such as Amazon Prime, Netflix, and WSJ and a second example from life, property, and causality insurances.

Subscription-based businesses such as those listed above take the form of a billing relationship with a starting subscription event, a continuous servicing or insuring process, and an eventually un-subscription event. Figure 1 below presents a high-level view of the processes and decisions that take place behind the websites of Amazon Prime, Netflix, and WSJ. Figure 2 does the same for the life, property, and causality insurances.

Figure 1: Simple lifecycle of subscription to a media

Processes vs. decisions

When you take a close look at the two diagrams, you may wonder what a process is and what is a decision. In fact, both are taking place within these two examples of subscriptions.

The key difference between the two is that processes are what make a company belonging to an industry, while decisions are what make the company unique in this industry. By definition, the processes are stable enough in the sense that they do not change, because they are independent of each situation and indeed of each data. Whether it is a media or an insurance, the company always starts by prospect acquisition, then customer activation, then customer management. On the other hand, the decisions change too often, depending on the situation captured through data.

Take the subscription to a streaming media (Figure1). Ending the contract can be a tricky decision. Should the media end the relationship the date of the subscriber’s call to stop the subscription or should it try to propose a discount to try to keep the subscriber? Should the media recall subscribers who have not paid their last bill, a week or two weeks after the due date? These are the typical decisions that separate the media from each other. Each media has its own specific way to investigate customers when the relationship has ended.

Now, take the subscription to a car insurance (Figure 2). The insurance, like any other insurance competing for the same policies, searches to augment its market share, sales, and profits, but at the same time it wants to reduce its loss risks. So decisions are more complex than in the case for a media. The subscriber may not be eligible for different reasons and to decide, third-party data may be needed. Also, he or she may present different risks depending on the age, the car, and his or her accident history. So the insurance has to take another series of decisions: First, compute a risk level, then a price that hedges the risk.

Figure 2: Simple lifecycle of subscription to an insurance

BPM, BDM, and standardization

Under the pressure of competition on the one hand and regulation on the other, many service companies have realized the importance of separating decisions from processes that, until recently, were nested. Leading this trend, the Object Management Group (OMG) has published two recommendations to help companies build modern business process management systems and decision management systems (BPMN for the former, DMN for the latter), thus accelerating the emergence of BPM and BDM as two different yet complementary technologies.

Conclusion

In practice, BPM technologies are appropriate when the problem is centered on a document that must be co-signed by different stakeholders. For example, a loan contract that passes from the sales department to the financial department, then to the legal department, then back to the sales department, and finally to the client. On the other hand, BDM technologies are more appropriate when the problem is centered on operationalizing decisions. For instance, a credit management application first evaluates the eligibility for a credit loan, then computes the loss risks, and finally prices the interest rate accordingly. The steps and outcome of the application heavily depend on data.

Takeaway

• Regardless of its market, maturity and size, in order to thrive, a business must manage its daily operations through well-defined, executed, and controlled processes and decisions
• Processes are what make a company belonging to an industry, decisions are what make the company unique in this industry
• BPM is the set of technologies that fully or partially automate one or more processes of an organization, that is, the stages and milestones through which the organization passes. BDM is the set of technologies that fully or partially automate the operational decisions of an organization
• In practice, BPM technologies are appropriate when the problem is centered on a document that must be co-signed by different stakeholders. BDM technologies are more appropriate when the problem is centered on operationalizing decisions

About the author

Data strategy consultant, now leading marketing for Sparkling Logic, a Bay Area company that helps businesses leverage data and models to automate enterprise-level decisions.

Disclaimer

Although based on research, consulting, and implementation work, the views, thoughts, and opinions expressed in this article belong solely to the author, and not to the author’s current or previous clients or employers. The article was not reviewed nor endorsed by any company or organization mentioned. You can send your comments to the author at hlaasri@sparklinglogic.com.

* A shorter version of this paper appears as a blog here: https://www.sparklinglogic.com/bdm-vs-bpm/