Lately it seems the moon and the stars are perfectly aligned for BPM -- the tools and methodologies for modeling, developing, and maintaining enterprise business processes. Scores of vendors now offer BPM software, which provides the means to analyze, optimize, and automate business procedures, from procurement workflows to insurance underwriting.
BPM's growing popularity stems mainly from businesses' relentless desire to streamline processes and save money. But the graphical view of workflows offered by BPM also gives business managers a broader view into and more direct control over business process logic, thereby fostering innovation, flexibly, and smoother compliance with shifting regulations. The growing adoption of SOA combined with progress in systems integration have made it easier to create layers of software that sit atop multiple systems and help manage end-to-end processes.
With all the talk about BPM and its various permutations, many wonder how enterprises are using it. Has it lived up to its promise? What lessons have early BPM adopters learned? To get answers, we talked with four enterprises in various stages of deploying BPM initiatives.
Pulte Mortgage: Making success repeatable
Business has been good for Pulte Mortgage, which issued US$7 billion worth of mortgages in 2004 for its parent company, Pulte Homes. But a couple of years ago, according to Senior Vice President and CIO Chris Burckhardt, the company recognized it needed to streamline and consolidate its operations to handle growing business volumes.
The company had grouped its 1,000-person workforce into teams, each with its own best practices, relationship management approaches, and reporting systems, Burckhardt recalls. "We needed to identify best practices across all these groups and implement a BPM tool that would allow us to take performance to the next level and provide consistency across a broad workforce," he explains.
As for technology, Burckhardt recalls, the company had many different systems for loan origination, servicing, and reporting, written in a host of different languages, including Java, Cobol, and C#. "We wanted a layer across all that technology that would make it more consistent and drive the work across all those systems," Burckhardt says.
After getting buy-in from top management and going through a rigorous tool selection process, Pulte chose to deploy a system from Lombardi Software. According to Burckhardt, step one was to use the tool's scoreboarding capability to understand the current business, including how the various teams and individuals were performing against specific metrics.
"We identified some major 'ah-has' in terms of where time and energy were being spent," including opportunities to expedite time-consuming steps such as loan pricing and customer contact, Burckhardt recalls. Another realization, he says, was that "we can more effectively allocate work -- giving more complex products to more experienced underwriters, for example, rather than a round-robin-type allocation."
Step two was to use these insights to design new process flows and have the BPM system drive the business. "We have fundamentally automated the majority of the loan process with BPM," Burckhardt says. "There's a lot of communication between various folks, and we use BPM to task all those folks with when it's time to do their portion of a task, whereas before, that coordination had to be manual."
Burckhardt notes that the BPM system links directly to the company's major applications systems, such as the Fidelity National Information Solutions' Empower loan origination system. It also links to several external partner systems for ordering credit reports, flood certifications, and so on, whose functions can be called automatically based on an event-driven architecture. The system uses Microsoft BizTalk as its middleware layer.
Burckhardt says Pulte had to clear several implementation hurdles. The most dramatic problem arose during deployment, when the realization came that the Lombardi software would need two-way integration with the company's apps. When someone made a change in the loan origination system, for example, that change might also need to trigger a new BPM workflow process such as a review of loan terms, which would require writing agents to monitor each app and feed events back to the BPM system. "It's one of these things you don't really think through until you're in there," Burckhardt says.
What has Pulte learned from its BPM experience so far? "It requires much more of a partnership between business and IT. It raises the bar in terms of IT's participation," Burckhardt says. "This is really about changing the way the business works, talking about how we want the business to operate, so you have to be a player at that level."
Loral Skynet: Merging complex processes
When two divisions of Loral Space & Communications merged in 2002, Charles Bihler's life got a whole lot more complicated. At the time, Bihler, process manager at the Loral Skynet division, was already deploying a BPM system to automate the workflows associated with selling the company's satellite-based video and data transmission services.
But when Skynet absorbed Loral CyberStar, a networking services company, Bihler had to refocus the BPM effort midstream in order to optimize the much more complex set of processes required for delivering customized network services. In particular, his team turned its attention to modeling Loral Skynet's critical sales and fulfillment processes, base-lining the status quo and creating scenarios for improvement. "We focus on cycle time in service delivery, efficiency, reliability, and eliminating rework, such as poorly written contracts or equipment sent to the wrong site," Bihler says.
As part of a quality group within Loral Skynet's finance department, Bihler and a few others are the primary users of a stand-alone planning tool from Proforma, used for modeling potential process improvements and clarifying existing process flows in order to facilitate the company's Sarbanes-Oxley compliance efforts.
When fully deployed, the system will enable Loral to assign time, cost, and resource utilization properties to process objects and to run Monte Carlo or other discrete event simulations to determine cycle times within a statistical distribution. "It models the real-world variability you have in the process," Bihler explains.
Although Loral maintains some legacy process models in Microsoft Office, SPSS, and Visio, Bihler strongly advocates use of an object-oriented BPM package to enforce a rigorous sequential model with predefined rules, thereby avoiding any ambiguity about the details of workflows and transactions that can result from free-form drawing tools.
Bihler says enterprises will get the most out of BPM if they are also using a methodology framework such as Six Sigma, ISO 9001, or PQMI (Process Quality Management and Improvement), which prescribe steps such as base-lining processes, finding critical path activities, and looking for ways to break bottlenecks. "The key to doing any kind of business process improvement is you have to have a methodology," Bihler says. "The value of a BPM tool is using it to enforce a methodology."
And finally, Bihler stresses the importance of getting the right people involved in the modeling process up front. "I do it the old-fashioned way, I pull the people who need to make the decisions into the room, with multiple versions of the same process flow," he explains. "We don't force processes on people from the top down -- everybody needs to feel like they're a co-creator of the process."