Business process management wins the "triple crown" of saving money, saving time and adding value. It also spans the business and technological gap to create synergy, with proven results.
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Business process management (BPM)-focused vendors are entering the race to help businesses at multiple levels, and BPM is delivering both short-term return on investment (ROI) and long-term value. We are seeing BPM embedded in nearly every package solution and many horizontal technology offerings today. Many BPM pilot projects have evolved into more-impressive solutions, with positive case studies abounding. An example is the reduction of cost of claims processing by 20 percent in a property and casualty insurance company, with the claims processing requiring just one-third the time. Although the example is in the insurance industry, where BPM is strong, we are seeing uptake in use and benefits in the banking, finance, credit card, healthcare, pharmaceutical, government and discrete manufacturing industry sectors as well.
Enterprises are encouraged to look at the long-term value (see related research in "Changing the View of ROI to VOI — Value on Investment" and "Where Is the Value on Investments in IT?" ) as well as the short-term benefits of BPM — see "Compound Metrics Required to Reflect Full Value of BPM." Early results are encouraging, and we suspect that more projects will move from the planning mode to the savings mode in less than 180 days. In fact, there are vendors that certify benefit potentials early and guarantee benefits after a paid competitive analysis. In addition, we are seeing the benefits of BPM being extended in quality programs like Six Sigma (a public method made famous by General Electric).
Besides the normal ROI and value on investment (VOI) that drive BPM, there is another major factor: compliance. A case in point is the Sarbanes-Oxley legislation that requires that the business processes be certified to produce financial reports as well as certifying the reports themselves. This affects the processes that deal with money that eventually end up in accounting reports, and is dealt with in "Process Management Technology Makes Compliance Easier."
However compelling the benefits are, we "put the cart before the horse" in talking about the benefits before we tackle the definition. At the business level, BPM is the management of explicit processes from beginning to end. These processes generally contain a long-running set of business activities such as those required to underwrite a policy or deliver an order under varying numbers of business scenarios. The technology definition is another story. Because BPM has multiple uses, from simple personal flow to deep system-to-system flow under performance constraints, it is hard to find a common definition, much less one technology market ready to handle all the needs. The kinds of business uses and the complexity of market choices for typical business use are elaborated in "A BPM Taxonomy: Creating Clarity in a Confusing Market." Although most enterprises will have multiple installations of BPM in various forms, the key is to try to categorize and guide the acquisition of yet another instantiation of BPM when it is justified.
Where Is BPM Going in the Business?
Because BPM delivers solid ROI and both short-term and long-term VOI, we expect the business to gravitate to its use, and we expect process optimization to become a habit in many enterprises, driven by compliance acts and quality initiatives such as Six Sigma projects. In addition, we anticipate that many enterprises will use streamlined processes as a competitive weapon in the marketplace. All of these efforts require an alignment among business professionals such as we have not seen since the inception of computing in corporations in the mid-to-late 1960s.
Everyone is being encouraged to get processes right, multipathed, efficient and agile. Agility is being implemented by BPM technologies today, as well as other technologies, but businesses will take advantage of this agility using business activity monitoring and business rule engines in a reactive mode at first, and then evolve to proactive practices.
Eventually, we expect an evolution to a planning mode that plans out contingencies and scenarios using business process analysis tools that can simulate various alternative flows needed to respond to likely conditions. Scenario building may, in turn, allow businesses to have rule packets ready to be installed at the first sign of a scenario. This is a form of real-time enterprise that is proactive in nature. Success will require the spanning of multiple systems and organizations to fuse together processes and supporting technologies. In "BPM: A Key Ingredient in Business Process Fusion," we explore how applications can be spanned and BPM's role in this process; in "Content-Process Fusion Drives Business Value," we examine the importance of content in creating overarching processes.
Although the expectations for BPM are high, there are ways to fail, and we expect some projects to do just that. The ingredients for failure include, but are not limited to, the following:
Technology-driven thinking only
Staying at too high a level and never dipping into the technology levels
Not having a business-driven methodology (for example, Six Sigma)
Internal political problems
Not enough education and training
Cultural aversion to process
Lack of commitment
What Is BPM Evolving to Technically?
BPM is a composite market, as identified in "A BPM Taxonomy: Creating Clarity in a Confusing Market," and most sectors, to date, have considered BPM characteristics as a feature. A case in point is integration-focused business process management (integrated BPM), which is rated as one of many attributes in the Integration Broker Suite Magic Quadrant. In this Spotlight, we rate the application-independent business process management (business pure-play BPM), which is purely about BPM features, in "Magic Quadrant for Pure-Play BPM, 2Q03." An explanation of the difference between pure-play BPM vendors and the BPM in integration suites is documented in "The Gap Between IBSs and Pure-Play BPM Is Narrowing."
There will be a major consolidation in the number of pure-play BPM vendors over time, and, eventually, most of the integration players will grow in their competence with BPM. This will cause more "head to head" competition across the BPM sectors identified in the BPM taxonomy. For architects and business professionals to sort out the kind of capabilities they would need in a BPM facility, we would suggest using the requirements that Gartner uses. The requirements documented in "Creating a BPM and Workflow Automation Vendor Checklist" can be used as a "jump start" set of requirements, weighted according to the needs of each enterprise within the two buying centers for BPM: business professionals and architects. To date, we have found more business-led decisions, at a rate of 2-to-1. As a result, we expect more BPM vendors to concentrate on vertical-industry templates and horizontal templates, such as those for Six Sigma and Sarbanes-Oxley legislation compliance, to create differentiation in the marketplace for the business professional. BPM will become crucial for businesses to compete in an increasingly dynamic business climate, so an intimate knowledge of BPM capabilities is a must for the business professional.
"Compound Metrics Required to Reflect Full Value of BPM" — Conduct return on investment and value on investment analyses over an extended period to reveal the total costs and benefits of business process management. By Waldir Arevolo De Azevedo Filho, Jim Sinur and Cory Mann
"Process Management Technology Makes Compliance Easier" — Employ general-purpose business process management tools to build flexible compliance solutions that can be used to build processes to comply with any legislation. By Debra Logan and Jim Sinur
"A BPM Taxonomy: Creating Clarity in a Confusing Market" — Understand BPM and flow automation definitions to help guide the planning, development, purchasing and implementation processes. By Jim Sinur and Toby Bell
"BPM: A Key Ingredient in Business Process Fusion" — To make business process fusion possible, examine the BPM capabilities within your applications and complement these with more-specialized tools where they fall short. By Simon Hayward
"Content-Process Fusion Drives Business Value" — Make business process management a strategic aspect of content management deployment, from simple content review and approval workflows to complex content-centric transactions. By Mark R. Gilbert
"Magic Quadrant for Pure-Play BPM, 2Q03" — Use a vendor's position in the Magic Quadrant for pure-play business process management vendors as part of a more detailed assessment in the context of the particular business requirements of the enterprise. By Jim Sinur and Jess Thompson
"The Gap Between IBSs and Pure-Play BPM Is Narrowing" — Although business-driven decisions usually go the direction of pure-play business process management, consider integration broker suites where architects desire integration-centric solutions. By Jim Sinur
"Creating a BPM and Workflow Automation Vendor Checklist" — Draft business process management requests for information using criteria from the 10 functional categories described in this research. By Jim Sinur, David W. McCoy and Toby Bell