Why aren't SMEs adopting BPM for better operational efficiency, increased profitability, lower operating costs & improved market competitiveness? What challenges do they face & how can they overcome it? This pioneering study reveals the SMEs' experience from AUS wine industry. Read here or visit us at http://www.verityconsult.com

1. Business Process
Management for small
businesses
A study of the
Australian wine
industry
By Sandy Chong
Business Process Management large organisations, it is also
(BPM) has been identified as very important within the
the number one business context of small and medium-
priority. However, building sized enterprises (SMEs).
one’s business process
capabilities will remain a In this article, we focus on
major challenge for senior SMEs within the wine industry,
executives in the coming mainly because of its
years. BPM is a structured significance in Australia. Wine
method of understanding, businesses in this region are
documenting, modeling, just starting to apply BPM
analyzing, simulating, principles in response to the
executing and constant change global grape glut, which forced
of business processes and them to increase operational
resources that add value to the efficiency. A pioneering study
business. Though BPM research was done to review BPM
has always focused on practices in these SMEs.
Consulting Creativity | Passion | Growth

2. Creativity | Passion | Growth
BPM in SMEs 3
The Australian wine
industry 3
Constraints on BPM
implementation 4
“Collaborate to compete” 5
BPM: Australian wine industry 2

3. Creativity | Passion | Growth
BPM in SMEs The Australian wine industry
The benefits of successful BPM experienced by The recent trend of industry consolidation has
large organizations are well endorsed and threatened the competitiveness of smaller wine
documented; they include, better operational operators; these larger companies bypass
efficiency, increased profitability, better traditional distribution channels, eroding the
customer relations, shorter process-cycle margins of smaller players. Furthermore, the
times, lower operating costs, increased worldwide grape glut (oversupply) has generally
accountability, and improved market depressed the market value of wine-related
competitiveness. However because the products. This points to the need for industry-
spotlight has always been on large wide strategies that preserve the health of the
organizations, there is a false impression that industry.
process-driven optimization frameworks are not
applicable and useful for SMEs. Many operators have started to incorporate
wine tourism in their business models in a bid
It seems to be that most SMEs are not aware of to diversify operations. It is important to note,
BPM practices that can help their businesses. In however, that this is unlikely to offset the
many cases, they remain attached to older influence of supply-side inefficiencies and
(functional) ways of thinking and managing, changing market dynamics. Thus, the fate of
much to the detriment of their long-term SMEs will largely be determined by their
survival. This situation has raised concerns willingness and ability to optimize business
amongst policy makers worldwide, as SMEs are processes.
important drivers of the economy, accounting
for 40 to 60 percent of businesses in most For this research article, interviews were
developed nations. Regardless of industry, conducted with representatives from 10 SMEs in
there is an increasing need for SMEs to keep in Western Australia's (WA) wine industry. The
pace with developments in the field of business main objective was to examine factors that
strategy, so as to compete in an increasingly impede or constrain the implementation of
global environment. BPM.
BPM: Australian wine industry 3

4. Creativity | Passion | Growth
Constraints on BPM implementation
The research consisted of semi-structured interviews with representatives from SMEs
in WA that derive a significant proportion of their revenue from activities related to
wine production or sales. Although BPM has been adopted by many of the firms in
this SME-driven industry, implementation is still at a stage of infancy.
I. Lack of financial resources and III. Lack of IT expertise
time This finding is understandable on two grounds.
Firstly, the wine sector is still an “emerging
These appeared to be the two most important
industry” to the extent that much of it is still
factors that hampered BPM implementation in
comprised of small family-owned operations,
the wine industry.
most of whom do not have the resources to
SMEs are usually unable to accommodate a employ specialist CIOs or knowledge
large outlay on IT-driven BPM tools. Their management supporting officers. Secondly,
human capital base also too small to allocate firms are mostly unable to afford hiring BPM
BPM-specific tasks without compromising on technology specialists or consultants.
regular operations. As one interviewee posited,
the wine industry is very “capital intensive”. IV. Poor knowledge &
Hence the long run cost savings expected from misconceptions of BPM
BPM practices must be carefully balanced
against the need for adequate working capital This finding is not only consistent with general
in the short run. The smaller the firm, the studies on BPM adoption in SMEs, it also applies
more difficult it is to strike this balance, it to the wider corporate community. A sound
seems. knowledge of process-oriented optimization
frameworks is essential to the success of BPM,
II. Lack of senior management regardless of size and industry. In our context
support though, there is a false impression that since
smaller wine companies are not operationally
Four of the ten interviewees found that this diversified enough, investing in process
factor inhibits BPM significantly. This is optimization is not worthwhile.
consistent with other BPM studies, that support
That is not true, however. All companies,
from senior executives or leaders is key to BPM
whether they realize it or not, are engaged in
success.
value-adding activities - which are in fact
Unfortunately in the wine industry, there is “business processes”. It would be a mistake to
much resistance because businesses are assume that the streamlining of these "business
relatively “family-oriented” and "traditional" in processes" is irrelevant to them.
their mindsets and organizational structure. On
In our interviews with wine companies, BPM
the other hand, firms that experience great
activities were usually adopted in an ad hoc
managerial support have more vertically
and piecemeal fashion, without proper
integrated business units, supply chain
implementation plans or strategic frameworks.
intermediaries, export markets, growth
Addressing the knowledge gap with education
potential, and ambitions for accreditation.
and publicly sponsored initiatives would
therefore be essential.
BPM: Australian wine industry 4

5. Creativity | Passion | Growth
“Collaborate to
compete”
SMEs in the wine industry seem to be caught in About Us
the same dilemma: it is true that process
Verity Consulting is a boutique international marketing &
optimization frameworks like BPM should be
communication consultancy specializing in corporate training, senior
adopted enjoy long-run cost reductions, yet,
executive coaching and business advisory services.
firms still have to manage short term capital
needs, causing BPM initiatives to be curtailed,
For more information about Verity’s global services and innovative
delayed, and even abandoned. Experts
business solutions, contact us at:
recommend that “competing” SMEs should
+61 4 02211373 (Australia) +65 8337 7178 (Singapore)
instead collaborate, especially in industries like info@verityconsult.com
the wine sector, which is seeing more and
larger competitors enter the market. About the Author
If a “collaborate to compete” model is adopted Dr. Sandy Chong
in the WA wine industry, various inter- Principal consultant, Verity Consulting Pty Ltd
organizational networks can be exploited. And, dr.sandychong@verityconsult.com
issues with a lack of resources may be linkedin.com/in/sandychong
dissipated. Certainly, one of the biggest
questions is whether the WA wine industry is Curtin Business School
mature and ready enough to adopt the Curtin University of Technology
“collaborate to compete” approach. Indeed, Western Australia, Australia
our research reveals that stalwarts of the wine
industry tend to be averse to such This article is an abridged version of a research paper published in
arrangements. In light of new competitive 2007 in the Journal of Information Systems for Small Businesses, 1(1-
pressures, it might therefore be worthwhile for 2), pp. 41-58 – Business Process Management for Small- and Medium-
companies to rethink their otherwise sized Enterprise: An exploratory study of implementation factors for
"traditional" business approaches. the Australian wine industry.
BPM: Australian wine industry 5

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