Magazine Article | July 25, 2006

BPM Becomes A Business Reality

Source: Field Technologies Magazine

Application templates and development frameworks have evolved to make BPM (business process management) a possibility for more companies.

Integrated Solutions, August 2006

BPM has long been a hot topic of discussion in the enterprise space. Integrated Solutions has chronicled the technology from dismantling the hype around it (June 2004) to moving beyond the hype and discussing the business efficiencies it provides (December 2005). Now, BPM is on its way toward becoming a standard component of a successful business. “BPM is in the limelight,” says Suresh Ramaswamy, VP of BPM Strategy for Autonomy Cardiff. “It is getting a lot of visibility now and has become very mainstream during recent years.” More companies are realizing the benefits of BPM and providing some enticing business cases. The increased adoption has driven BPM vendors to increase ease of integration and lower costs, which makes BPM a proposition all businesses should consider.

The concept of BPM enables businesses to develop highly responsive and adaptive business processes (e.g. workflow-oriented tasks and automatic sharing of information with enterprise applications). BPM solutions aggregate the right information and deliver it to the right people or systems at the time a decision must be made. This is achieved through the blend of processes, content (information), and application connectivity.

“Many companies are drawn to BPM because they hear of the tremendous return adopters are seeing,” says Chris Preston, VP of product marketing for BPM at FileNet Corp. “Savings of $20 million to $50 million are not unheard of, and in fact, are becoming quite commonplace. There is a level of heightened awareness and confidence that BPM has matured.” According to a recent study from Gartner, 95% of companies surveyed experienced more than a 90% success rate with their BPM projects. The survey also concluded that 80% of enterprises deploying BPM will experience an internal rate of return of more than 15%. The early adopters of BPM were largely global 2000 companies with annual revenues of $500 million or more. These companies were able to adopt earlier because they have more complex operating procedures and business processes. Therefore, they realized a return on the investment from the improved efficiency more quickly than smaller companies.

Those large, early adopters are driving future adoption, which is extending down to smaller companies. “More companies are using BPM today than a few years ago,” says Todd Price, VP of product management and marketing for Stellent, Inc. “Also, while large organizations typically lead the way with BPM, we’re now beginning to see the technology used by smaller companies. These companies are looking to realize similar process automation benefits and improve efficiencies to remain competitive against larger organizations within the same industry.” Price cites the example of an insurance company that, according to him, “knew it wouldn’t ever be the largest provider, so it focused its efforts on becoming the most customer-service-oriented.” The insurance company realized it needed to streamline its systems and deployed a BPM system. After comparing customer service approval metrics, the company found it was rated much better in service than its larger competition, which it directly attributed to having better business processes.

Another reason large enterprises were the first adopters of BPM was that the software platform costs were very expensive — only large companies could afford the investment. Additionally, the systems were complex and required significant IT resources to customize and integrate the platforms with existing legacy systems. Now, systems are easier to implement and require less IT involvement. “The move to limit IT involvement with BPM projects has been going on for awhile,” says Price. “Ease of use has matured to the point where more organizations can transfer the day-to-day responsibility of managing a BPM platform to individual business units.” The development of application templates and BPM application development frameworks has largely contributed to the improved ease of use. Vendors have created environments that are highly configurable, allowing organizations to develop and deploy BPM applications more easily and quickly. And, deployments that are simpler and faster cost less.

Lower costs and easier deployments make BPM a viable choice for smaller companies. Additionally, vendors are more flexible with their BPM solutions, offering smaller point BPM solutions for specific needs. For example, an organization might not need an enterprise-wide solution, but want to deploy a specialized BPM solution for accounts payable. These solutions cost less and can get a company started with BPM. Perhaps, after realizing savings from the point solution, the company can purchase software for other departments and eventually achieve enterprise-wide BPM.

Another factor driving BPM adoption is that more companies must adhere to government regulations such as Sarbanes-Oxley (SOX) and HIPAA (Healthcare Insurance Portability and Accountability Act). With BPM, companies can install processes and have better documentation, making audits go more smoothly and compliance come more easily. “A SOX auditor could view a log from a BPM system’s reports to verify that processes have been properly documented in detail, and even view the specific actions performed on documents at each point in the process,” says Price. The same documentation and review features would apply to HIPAA compliance as well.

While the most common use of BPM is to improve process efficiency and productivity, there are other uses as well. BPM tools can automatically load-balance work queues, either on a hardware (e.g. document scanner) or personnel basis. For example, if there are three accounts payable processors manually extracting data from invoices, and one is working three times faster than the others, the BPM engine can automatically route three times as many invoices to that person so the work queues are completed more quickly.

A newly hyped technology in the content management space is SOA (service-oriented architecture), a conceptual framework for designing and building IT networks and Web services that allows data to be freely exchanged among heterogeneous systems. “The advent of SOA and Web services has given IT a new frame of reference for business processes,” says Preston. “Because of this, BPM is now being viewed as a set of services that can be quickly and easily deployed as a part of a strategy to develop flexible, composite applications.” Preston cites a FileNet customer, an international financial organization, as an example. The company is using BPM as a service as part of its strategy to centrally develop, deploy, and manage all of its consumer lending applications in Europe, the Middle East, and Africa (15 countries with more than 2,000 users). “This company operates very much like a services organization: rapidly building and deploying applications, while providing business units central management and control with the added flexibility for business unit autonomy,” says Preston.

Companies that were waiting for BPM to “come around” can wait no longer — it has arrived. The benefits and business cases are there, along with easier implementations and lower costs. But, a note of caution. When you do implement the technology, be sure to look at the entire picture of how BPM will affect your organization. “BPM is more than a technology,” says Preston. “It’s about improving business performance, which usually includes a change to the culture and the traditional ways of doing business.”