Three letters that spell efficiency

Around four months ago, HDFC Standard Life Insurance invested Rs 5 crore in three magic letters "� BPM, or business process management.

The software for this was provided by StaffWare, a UK BPM company that started operating in India recently. Says HDFC Standard Life's IT head Sunil Rawlani: "Thanks to BPM, we've standardised the process of issuing policies."

HDFC Standard Life is but one of 10 Indian entities that have or are adopting BPM, defined as anything that automates routine work flow in an organisation in order to speed it up and increase efficiency.

HDFC Bank, which is implementing BPM, believes that it helps. Says Anand Narayan, vice-president and head of IT at HDFC Bank: "The solution will help us augment our centralised processing, thereby lowering operational costs while maintaining high levels of service."

He says that the bank took about eight months to study several software solutions, ranging from document imaging, document management systems, to work flow management and BPM, and finally plumped for BPM.

Narayan adds that since the bank is still in the process of implementing BPM, it would take some time to evaluate the benefits, but industry experts reckon that BMP will cut costs by 40 to 50 per cent.

Adds Noshin Kagalwala, country manager at Staffware India: "As banks continue to experience intense competition and increased customer demand, they need a process-driven, end-to-end loans processing solution to expedite loans."

HDFC Standard Life thinks that BPM has helped it cut the average time taken to process and issue a policy from a week to three days now.

Rawlani says that work flow can be automated across various processes but the challenge is automating the work flow process at various stages of each process, since even now human intervention is required, especially when evaluating policies.

Once more data are available, each stage in the process will become automated. Rawlani explains that the insurance industry is a service industry and most of the basic products offered by insurance companies are very similar. So what marks one company from the next are service levels; these can be improved by making improvements in processes.

BPM also involves data imaging and has the features of enterprise application integration (where business processes, tasks and procedures in an organisation are defined, analysed and integrated).

It offers the advantage of data being easily accessible since it offers data storage and retrieval facilities. A thin dividing line exists between work flow and BPM.

Work flow is concerned with the automation of procedures to achieve an overall business goal and is limited to routing manual tasks from person to person. BPM, on the other hand, uses work flow but also integrates systems.

HDFC Standard Life, for example, can use the centralised work flow to store data on claims which can be later used for statistical purposes.

Every time a process is initiated, it is stored in a central processing hub. Over a number of years the data build up and can later be retrieved and used. Some insurance industry men say that BPM can increase claims processing efficiency by 80 per cent.

Awareness of BPM is on the upswing, both in India and overseas. No statistics are available on the size of the domestic market (which in any case is piffling right now) but the global BPM market is estimated to be valued at $128 billion (the Asia-Pacific region represents over 10 per cent of this) and the figure could leap to a huge $234 billion by 2005.

Still, implementing BPM takes time. Explains Manoj Kunkalienkar, head of ICICI Infotech, a Staffware partner in India involved in implementing solutions: "First we study the client's various processes. Then we map the dependencies, indentify the points of escalation and work out the matrices required for implementing the solution."

Secondly, Gartner, the US IT data tracking and consultancy organisation, points out: "Many vendors use the BPM term to refer to a broader context of process management tools. This looser definition opens up a door for enterprises to be exposed to at least 12 different process management pricing models." Improper pricing models can doom BPM projects, it notes.

Last but not least, Khasgiwala acknowledges that the effects of implementing BPM should ultimately be measurable in terms of return on investment. But much of what BPM offers is hard to measure, as Gartner points out.