The Hindu Business Line : Track the flow

HDFC Bank's expansion spree has the bank growing at the rate of two branches per week with 290 branches currently located across the country. Nothing earth-shattering, except that in an era of intense competition among retail banks to increase an already burgeoning customer base and hold on tight to existing ones, HDFC has opted to utilise business process management, or BPM as some would call it, for just this purpose. Hold on right there, you, the reader, might say. Just what is BPM, another dreaded acronym straight out of the book of jargons?

Well, industry experts would like us to believe that business process management is more than jargon compiled by enterprising technocrats and the media. Simply put, what it means is this: The units of a work system are directed through a multi-step process. The units are identified and tracked as they move through each step with either specified people or applications processing the information.

Business Process Management refers to various automation efforts, including workflow systems, XML business process languages and packaged ERP systems. So a comprehensive BPM system involves workflow automation, data imaging and features of enterprise application integration wherein the business processes, tasks and procedural steps of an organisation are defined, analysed and integrated, thus providing a framework for the organisation to deliver its (business) solutions.

Herein, a workflow solution comprises three basic steps involving mapping, modelling and managing. Mapping is the first stage in the adoption of a workflow solution and involves the crucial task of revealing and recording all of the manual and automatic internal business processes of an organisation. From there, the organisation will begin to develop a model that will help to streamline internal processes whether they involve person-to-person, person-to-application, or application-to-application interaction. Once the business process model or architecture has been developed, it is ready to be integrated, without breaks, across the enterprise. The implementation of a workflow solution will not only provide significant business benefits as mentioned above, but it will also enable managers to better forecast and manage their projects and personnel, resulting in a more efficient and effective organisation.

Now that we've got the definition in place, let's get back once again to HDFC and its strategy.

Change in strategy

In the past, HDFC had implemented quite a few workflow solutions but these were largely departmental and not enterprise-wide. The bank observed that in a typical process like loan approvals there were transactions that required some skill-levels. Here they faced some difficulty in terms of resource utilisation as these services had to be offered at various locations. If work could be moved from branches to central locations, the skill levels required at branches would be low.

For instance, something as simple as opening a savings bank account involves several steps including filling up the savings bank form by a customer, the bank employee verifying that all the details required by the bank are available, verification and so forth.

All this involves a great deal of paper work and documentation flowing between various people before the customer finally becoming a savings bank account holder of a particular bank. Business Process Management helps to cut down on the voluminous paper transactions and the time taken for a process to reach completion. It increases employee productivity by tracking the time taken for a certain process to be done and allocates the employee such that there is better utilisation of time.

Explains Anand Narayan, Vice-President-IT, HDFC Bank, "We needed to combat geographical distance and voluminous paper work and documentation movement across such distances. Besides this, we were looking at process uniformity across branches. We took about eight months to study a lot of solutions available, ranging from document imaging, document management systems, workflow management and BPM." The bank finally settled on implementing a business process management system across board after an initial pilot project.

The pilot project had HDFC cover the trade, finance and savings bank segments. "We outsourced the work but there is a five-member team at HDFC which is helping to implement this. The process has helped to reduce people dependency and expand branches independent of geography," says Narayan.

Other benefits include optimum utilisation of resources, proper distribution of work and transport documentation across geographies. While Narayan says it is too early to quantify the benefits, the success of the (BPM) solution is enough for the bank to contemplate expanding this to cover other areas such as credit card and internal credit approvals.

As banks start to realise the benefits of business process management, IT research firms expect the process to become a necessity for banks to thrive and survive in an extremely competitive market.

IT research firm Aberdeen expects worldwide spending on BPM to increase to $6.32 million by 2005 from $2.26 billion during 2001 with the Asia-Pacific region accounting for 10 per cent of the global market. Total BPM spending is estimated to grow at a compounded annual growth rate (CAGR) of 29.3 per cent during 2001-05 with the financial services segment being a key spender, according to the Aberdeen report.

Picture by P. Goutham

preetim@thehindu.co.in

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