BAM is to monitor the progress of business in a real-time manner or software to do such monitoring. Business Activity Monitoring.
Companies act towards the goals defined in advance and evaluate the progress towards the goals by using various indicators. BAM, in such company activities, aims to monitor whether the business is appropriately being executed to accomplish the goals or not. If the executive team or managers can monitor the status of business and immediately respond to anomalous cases, potential problems are proactively prevented, which will increase the likelihood of successful accomplishment.
Significance of BAM
|CSR stands for Corporate Social Responsibility and means social responsibilities of companies. It requires companies to continuously produce added values without doing any illegal activities and to contribute to the society by sharing their profits.|
BAM helps us reinforce internal control and identify problems by means of business "visualization." By introducing BAM, the executive team or managers can grasp not only the execution results but also the progress of business. Thereby, they can reinforce internal control and prevent illegal business processes. Also, BAM enables them to know the status on the way as well as the results of the business, so bottlenecks can be identified easily, which results in efficient company activities. In this sense, we can say that BAM helps companies carry out CSR.
Target of BAM
In many cases, BAM is introduced in customer relationship field, including production, logistics, and sales, and inventory management field. The concrete examples of indicators to be monitored are as follows.
- Lead Time
- Proportion of Defective Items
- Processing Time of Tasks
- On-time Delivery Ratio
- Sales Quantity
- Out-of-Stock Rate
- Number of Complaints
In this section, we will see what groups of functionalities consist of the BAM feature. BAM is supported by a workflow engine that supports the execution of business and a middleware system which monitors the health status of applications running on it. BAM acquires information from the workflow engine and applications, processes such information according to KPIs and rules, and displays the results on a dashboard for process administrators, such as the executive team and managers. In addition, it lets a participant in charge know by means of alarms etc. when a risk of anomalous situation is high.
Some examples of BAM products are shown below.
- IBM: WebSphere Business Monitor
- Oracle: Business Activity Monitoring（Oracle BPM）
- Microsoft: BizTalk Server
Differences from BI
The distinctive feature of BAM is that it grasp the status of business in real-time manner, which can be clarified through the comparison with BI. BI accumulates and analyzes information about business status in the past for the sake of decision making. On the contrary, BAM captures information about "how the business is currently going" and uses it to consider actions to be taken. Let us see an example to clarify this point.
Here, think about a manufacturer that also sells their products.
The manufacturer received a number of complaints saying "The out-of-stock rate of outlet stores is high." from customers. A problem happened. So far, additional order to the factory was placed when the amount of stock got lower than 30% of the sales quantity of the previous month. Through the analysis on the number of complaints stored in the DB and the time to deliver products to the outlet stores, the threshold has been changed to 50%.
In this way, BI makes the most of accumulated information to make a decision.
The manufacturer can define the following process. BAM software, which raises an alarm when the amount of stock gets lower than 60% of the sales quantity of the previous month, is introduced to all outlet stores. The participant in charge always monitors the sales quantity of each day, and he/she places an additional order when the inventory quantity reaches 50% of the sales quantity of the previous month.
BAM works in this way.
Introduction of BAM to BPM
It is desirable to implement BAM in BPM. Monitoring is indispensable because BPM is a continuous improving activity, and introducing BAM, which monitors the progress of business process, is very effective when BPM is executed. BI, which utilizes the accumulated information, is effective when we re-design business process and define KPI. On the other hand, BAM focuses on the appropriate execution of business process designed by using BI. BAM helps us detect indications of problems to prevent them proactively and respond to the problems quickly when they actually happen.
In PDCA Cycle, BI is important in Plan phase in terms of designing while BAM is crucial in Check phase in terms of monitoring as well as in Act phase in terms of problem solving without re-designing. We can achieve effective BPM by using BI and BAM.