BPM, Hype or reality?

The first vows sworn by two creatures of flesh and blood were made at the foot of a rock that was crumbling to dust; they called as witness to their constancy a heaven which never stays the same for one moment; everything within them and around them was changing…

Oeuvres Romanesques , Denis Diderot (1713-84)

Much management thinking and writing is about entities – things – that are unmoving, unchanging and separate. The reality is that most of what you see around you, whether you can touch it or not, is part of some process or other. It is on its way to being something else. As Diderot suggests, nothing in this world is unchanging.

The processes deployed in all organizations define the culture of that entity, they are what differentiate it from other, seemingly, similar entities – they define the corporate backbone and are, quite simply, the way things get done around here. Needless to say then, they are pretty important and need to be managed and exploited just like any other corporate asset.

One of the most effective way of exploiting these vital assets is to explore ways of managing them and this is where Business Process Management (BPM) comes into its own. But what exactly is BPM and is the technology hype or reality?

A good deal of the technology that underpins process management concepts has its roots in the late 1980s and early 1990s and stems from the early efforts of the workflow community. So BPM is not new. Business software has long supported major business processes. What has changed is the realization that business managers need to understand and improve those processes. Getting a handle on the myriad processes that exists in all organizations is the easiest way to be more competitive, adaptable, responsive and manage costs. Using process-based software is the key to achieving that.

This software does five main jobs, it:

• Puts existing and new application software under the direct control of business managers.
• Makes it easier to improve existing business processes and create new ones.
• Enables the automation of processes across the entire organization, and beyond it.
• Gives managers ‘real-time’ information on the performance of processes.
• Allows organizations to take full advantage of new computing services.

The result is an improved ability to respond to or anticipate changing business demands. Also, the organization saves money whenever it changes computerized working methods – usually an expensive and protracted rigmarole. As a bonus, the organization becomes better fitted to exploit future business and computing opportunities, including business process outsourcing (BPO) and web services.

The success of all this depends on how managers introduce and use this new kind of software. BPM is as much about organizational design, human communication, people’s viewpoints and mutual consideration as it is about technology. It is not just a matter of optimizing computer programs.

So we are not trying to solve any new problems – just to solve them differently. The old way was to create isolated ‘stove pipe’ solutions. These were rigid, difficult to maintain, costly to set up and, worst of all, obsolete by the time they arrived. We want to solve problems cheaply, quickly and effectively. How? By seeing those problems as a set of well-defined and integrated processes.

In May 2003, Nicholas Carr wrote a paper for the Harvard Business Review in which he argued that it is a mistake to assume that as IT’s potency and ubiquity have increased, so too has its strategic value. What makes a resource truly strategic – what gives it the capacity to be the basis for a sustained competitive advantage – is not ubiquity but scarcity. You only gain an edge over rivals by having or doing something that they can’t have or do. By now, the core functions of IT – data storage, data processing and data transport – have become available and affordable to all.

Carr’s article spawned a ‘may-bug’ industry of counter argument and rebuke – books were written, behemoths were angered – so this paper is not going to enter the fray except to say that what if Carr is right? Buying more IT simply keeps you in that game? What that means of course is that if an organization is only going to get to a ‘me to’ position by spending vast sums on IT infrastructure then they need to look at what it is that will give them the edge and apply technology to that aspect to gain the competitive advantage – the obvious candidate is process – the way you do things – the backbone of your organization.

Applying IT to process technology is going to give you that competitive advantage; it will show a return on the investment – it will keep you in front – and that is where the value will come from – and that is what I believe the Process revolution is all about.

BPM technology is becoming mainstream – one effect of this widespread adoption is that there will be less differentiation of large scale BPM engines. They will all be very scalable, support key standards, have good integration capabilities, and be infrastructure products.

So where do the benefits come from?

The key area will be simulation and statistics – or Enterprise Process Analytics. Organizations are beginning to realize that although they can implement BPM without analytics capabilities, they do not have a complete end-to end solution. Their BPM system does not help their strategic planning nor enable them to accurately develop contingency plans for opportunistic and threatening scenarios. They do not have real insight into their processes or the outcomes they produce let alone an automated way of addressing them.

Analytics give business managers and executives the ability to track and measure performance based on real-time feedback of their processes this gives them real insight into how the organization operating. Once good and accurate analytics are in place, end users can make informed decisions because they are presented with issues that need to be addressed, as well as with the context so they can take the right action. They have the ability to ‘drill down’ into an anomaly and to look at the information from different dimensions giving them greater understanding of the ‘information behind the information’. Forecasting is made possible through ongoing statistical data capture, and reporting functions ensure real-time and predictive information is available.

The powerful combination of real-time process analytics and Business Operations Management means that users can:

• Adjust processes to changing business dynamics.
• Move from managing business processes to managing business process lifecycles.
• Tie together business objectives, strategic planning, process modeling, workflow, application/content management and analytics so that they interact.
• Develop feedback loops for change management and incremental optimization of business processes.
• Eliminate gap between strategy and business objectives.
• Ensure workflow and processes support key business objectives
• Gain the control of operations to manage process lifecycles from end-to-end.

By implementing BPM, the business community will be able to build and execute processes that are designed with customers in mind, deliver better quality, faster and at lower costs, and retain competitive advantage by being able to execute processes that deliver the business strategy. The CEO doesn’t care about systems integration or the concepts of straight through processing, however valid that may be. But the CEO does care about monitoring how the business is performing, being able to react to changes in the market, handling exceptions quickly and effectively and having a complete view of the organization.

The role of the CIO

The CIO has the task of making sure the needs of the CEO are fully met quickly, effectively and with zero disruption to the business. Systems implemented in today’s rapidly changing technology world must show fast ROI and bring benefits to the bottom line, without having to discard what works.

Providing technology that enables users to define the business process in clear understandable notation is an important aspect of the technology, but it’s only part of the solution. Being able to execute that process, facilitate simple integration with legacy systems and commercially available packages and monitor/manage how those processes are executing, are also vital components. Furthermore, BPM as defined here enables the CIO to implement new applications quickly and tie the front office applications and the back office systems. This reduces maintenance costs, time to deploy and makes the IT function far more responsive to the business needs.

The future for BPM technology is bright – arguably it will give the biggest return on investment of any technology deployed to date.