Middleware, workflow solutions, real-time monitoring, predictive dashboarding and capacity utilization tools abound - and yet BPM tools still don't seem to have been consolidated into a single solution that will allow you to buy some BPM off the shelf.
At the same time though, it seems the moon and the stars are perfectly aligned for BPM - the tools and methodologies for modelling, 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, flexibility, and smoother compliance with shifting regulations. The growing adoption of SOA, combined with progress in systems integration, has 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 learnt? To get answers, we talked with enterprises in various stages of deploying BPM initiatives.
Chubb Group: tangible benefits
Few CIOs tell the BPM story as straight as Ian Cook, vice president and director of IT for Asia Pacific arm of the Chubb Group of Insurance Companies, especially when he is addressing his peers.
Speaking last month at an INSTO insurance technology conference in Sydney, Cook's version of the BPM experience is probably not what most vendors would prefer as a BPM poster child. He does more with less and that seems to include vendor margins.
Hitting the stage with a slide from a well-known analyst company rating the relative position of BPM vendors, Cook kicks off a BPM primer to his colleagues with a few home truths about the real state of affairs.
"Here's what the analysts are saying - and you can ignore it all. Business process enables us [IT managers] to separate business function from applications. Ask yourself how much of business process is still hardwired," Cook says, warning underestimating the complexity of integrating separate legacy systems is a very common stumbling block.
"One of the nasty pieces about breaking down a legacy application is the matrix of lines that join things together," he says of the much vaunted promises of service oriented architecture (SOA)-based application integration.
Part of a fundamental reality check Cook believes CIOs need to run over any BPM offering is whether they are headed down the BPM path by necessity or choice. Pointing towards an avalanche of recent compliance requirements which have compelled companies to rework the way they do business, Cook feels it is incumbent upon business-savvy technologists to make the best use of what would otherwise be a legal burden.
This includes re-examining the way your businesses operates, how it responds to threats and opportunities and never taking for granted why some processes work and so remained unchanged.
"It means being better at executing your business - reorganizing and recentralizing. Agility is the key word. Being able to turn on a dime," Cook says, adding that as new markets open, the protagonists entering them are not beholden to previous, siloed product and process models.
However, Cook is also realistic about the spin which accompanies IT driven by compliance regimes rather than innovation. Citing a much bandied estimate from "some consultant somewhere" that $US15.5 billion will be spent on risk management compliance over the coming year worldwide he points out that "a huge amount of money" is currently being spent and targeted.
Singling out a compliance survey from one of the big four accounting firms, Cook finds it hard to believe of 1300 CEOs, 43 percent regard "governance, risk management and compliance as value driver and a source of competitive advantage" for their businesses.
"It's bull, they might say that, but they don't believe it. Get over it."
Spin dispensed with, there are still BPM positives which can be extracted from doing more with less. Cook says IT-based business enablers such as integration of legacy applications, service oriented architecture, end-to-end information management - and even such established staples as EDI and B2B can all make a difference.
However, Cook is adamant that BPM should not be looked upon as a panacea but rather a set of tools and standards to allow businesses to transform themselves. Moreover he maintains that there are plenty of BPM vendors who simply "don't talk about SOA".
"Stand-alone BPM is dead in the water. How do I know? We did it. The killer app is BPM and SOA together. It's in the system component orchestration layer. You have to think about your [Web] standards if you want to execute," Cook says.
As for the core mechanics of practical versus vendor pushed BPM, Chubb's risk savvy IT director has few doubts.
"You have to know how you will orchestrate processes. You don't actually have to buy anything to do this, we have found that there are a whole lot of open standards already out there that will allow you to [develop BPM] on your own. It's not about the tools [from vendors]. They all pretty much offer the same thing."
As for what BPM can achieve, Cook maintains the benefits are tangible and can be measured.
"[We are looking at] BPM services plus system integration and integrated document management. There are potentially great business services here. With the right BPM systems you can build a [premium] quotation engine in a matter of weeks [rather than several months]," Cook says.
Pulte Mortgage: making success repeatable
Business has been good for Pulte Mortgage, which issued $US7 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 1000-strong 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 said.
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 says. Another realization 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 most of the loan process with BPM," Burckhardt says. "There's a lot of communication between various people, and we use BPM to send tasks to all those people when it's time to apportion tasks, whereas before, that coordination had to be manual."
Burckhardt says that the BPM system links directly to the company's main applications systems, such as the 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 modelling Loral Skynet's critical sales and fulfilment 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 modelling 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 said.
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. "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 modelling 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 says.
When you're a 210-year-old city, you don't get a chance to do too many greenfield projects. But that's exactly what the municipal government of the District of Columbia did recently, deploying a phalanx of new IT systems and a BPM system to boot.
In 2002, the city embarked on a $75 million project to replace legacy mainframe and paper-based systems for procurement, HR, budgeting and planning, performance management, payroll, and a host of other critical city functions, according to Sanford Lazar, director of ERP at the Office of the CTO of the District of Columbia.
As part of a best-of-breed approach incorporating packages from vendors such as Ariba, Hyperion, and PeopleSoft, the city acquired an integration and BPM solution from enterprise middleware vendor SeeBeyond "as the glue" to link all the pieces together, Lazar said. The SeeBeyond package provided code conversion and format translation from each application back to the legacy general ledger and other relevant systems.
Putting in BPM as part of a total applications refresh let the city start to rethink many of its core business processes. "It gave us the ability to look at how we did it before and take out things that don't add value," Lazar says. As its first BPM project, the city totally revamped its antiquated, paper-based procurement system, first monitoring and modelling workflows and then cutting out layers of unnecessary approvals in a system that serves 72 city agencies and handles more than $1 billion in transactions.
"We've gone in some cases from a 20- or 30-step process down to a four- or five-step process," says Lazar. "It used to take three weeks to months to get a transaction approved, and now we average seven days, with many being approved in one or two days." Most importantly, he notes, the city gets a total, time-stamped audit trail of every single transaction and every point where a person touches a transaction. If something is amiss, an exception is generated for reconciliation.
Getting the system up and running efficiently required some tinkering, Lazar said. Specifically, finalizing the integration architecture required a rewrite of the initial Java prototype code, which used intermediary staging tables to obtain and update data from the general ledger system.
Although this method worked and provided better transaction records, it turned out not to be less efficient and scalable as using direct, real-time calls right into the general ledger's database, Lazar says. "We built a lot of code in the prototype to see it working end to end and did a lot of testing," he recalls. "When we went live, it worked like a charm."
Lazar says the system's end-to-end process visibility has given better insight into causes of delays and bottlenecks. Although change is always difficult, Lazar has been pleasantly surprised by the city employees' reactions to BPM. Employees will gravitate towards anything that helps them do their job better."
Where will BPM go from here? As these examples illustrate, BPM means different things to different companies and is so tightly tied to business needs that it has spawned a host of variants.
Jim Sinur, vice president at Gartner, notes that today there are more than 130 pure-play BPM vendors, which fall into categories such as modelling-centric (analytics plus repository); human-to-human BPM (workflow engines); system-to-system BPM (integration engines); policy/rules-centric; and dashboard-driven (centring on business activity monitoring readouts). He sees this field consolidating and facing increasing competition from big app vendors such as Oracle and SAP.
Sinur also notes that soft issues, such as training, incentives, and methodologies, are increasingly what make or break BPM projects. "There are no public methodologies or best practices for BPM," he notes. "Change management processes need to be oiled in so organizations can become more process-centric."
Then there's the issue of who's driving the BPM train and how IT and the business units can best collaborate on these new systems. Mike Barnett, director of professional services at BPM vendor Gensym, sees BPM as "a near revolution of management against IT to get more control over the rules that control the enterprise".
"Management control of the business logic is distinctly different to what we'd seen before," Barnett says. "Previously it was, 'Let's capture the knowledge of our best people and put it into an automation solution.' Now there's a requirement that those rules and that knowledge be accessible by management."