Getting IT Right?

As can happen with new combinations of software and processes, some confusion about terminology accompanied BPM’s surge in popularity – for example, some people call it Corporate Performance Management, or CPM. Others confuse the acronym BPM with business process management. Nevertheless, BPM is taking hold as the common moniker. A majority of companies polled in 2004 and 2005 intend to launch a BPM initiative, or have already.

Often, most of the content and a part of the processes and software are already in place at a company. Still, supplying BPM software has recently been one of the few hot growth areas in the software industry. Our goal here is not to define the subject of BPM, but simply to zero in on some of the newest trends. This article won’t make you a deep BPM expert, but it will help you be up-to-date.

Trend #1. Entrenched software doesn’t always provide the best BPM solution

Buyers of BPM systems have, to a degree, turned on its head the usual marketing cycle for add-on software; that is, software which complements ERP applications. In the past, when a company wanted to expand a particular solution area, it would usually start by calling the vendor which had provided the solution currently in place. But in the world of BPM today, the ERP vendor usually does not get the new business by default.

Instead, the incumbent vendor is asked to join three or four rivals in a selection process – or is specifically excluded from the evaluation altogether. This seems to go against logic and common sense: if your people are already trained on the solution, there is probably a good pricing deal in place for purchasing incremental seats and functionality. Yet the entrenched vendors are not being invited to play. Why is this?

A typical BPM initiative involves a departmental system going corporate-wide, or the addition of BPM components. For example, your company may already have budgeting, and now you want to add a dashboard, or consolidation. We find that the users of existing systems do not stand up to advocate for the incumbent vendor when such expansion moves are being considered. In some cases, they even recommend against considering the accepted ERP vendor.

Their lack of vendor loyalty usually stems from a negative experience with the vendor or its products –perhaps the functionality was oversold, or the implementation was longer and more expensive than expected. While this can happen with any application, the highly aggressive sales and marketing that has characterized the BPM software market has come back to bite some who profited from it.

The smaller, alternative vendors are also pouring on the marketing hype. They know that if you had problems with the existing system, the new ones they are marketing to you seem great by comparison. Of course, this also makes it highly likely that a cycle of disappointment and fickleness will repeat the next time the system is expanded.

So what does this mean to the vendors, customers and the BPM industry? Where will it all end? For most vendors, it means opportunity. A major vendor with a strong foothold in a company cannot presume it will win the BPM deal when the system is expanded – but they might break in at companies whose ERP business had earlier been captured by another large vendor. There is also the opportunity to be the vendor that tells it like it really is and wins repeat business.

To the customers, it means they must perform more due diligence. A vendor, their implementation partner, or his best references, may honestly tell you their system is great, and they might be right – but it could still be dead wrong for your company.

For the industry it should be a wake-up call. If the vendors don't get back to more realistic solution selling and/or the customers don't do a better job of evaluating products, then there is the risk of BPM joining the ranks of great three-letter acronym solutions that failed to live up to expectations.

Trend #2. Continuation of the battle between IT and Finance

There is a surprisingly common theme in our talks with companies embarking on a BPM initiative: the business users who drive the project (usually in finance) are in a clash with IT. This is late 2005, and IT and finance are fighting; over what, you might ask?

As it turns out, there is a lengthy list of things to argue about: who’s in charge, what’s really needed and, most importantly, what solution to purchase. Nobody disputes that the job of IT is to meet the needs of the end user, yet the finance organizations in major companies are telling us that their IT group won’t let them get what they really want.

Why IT wants what it wants

The most common issue seems to be that IT wants to move into BPM by acquiring modules from their ERP provider. This is logical and, of course for IT, more comfortable. Their people are already trained on the underlying technology, the new modules will theoretically be well integrated, and work with a unified database.

However, the business users tend not to care sixpence about the underlying integration. They are focused on: ease of use, depth of BPM functionality, and reduced dependence on IT.

Business users typically put the best-of-breed BPM application vendors atop their list of favorites. What typically happens next is nothing; in many organizations it is a stalemate. These companies miss out on the benefits of BPM. In others, IT does what is best for IT, and the system is never fully embraced by the end users, so it ends up being underutilized. In other cases, independent third parties, like our company, are brought in to referee.

There is a process to avoid an IT-vs-finance fight, and it involves spending time to figure out, and then agree on, what the company wants from BPM. In other words, if you don’t hammer out a BPM strategy, an argument over how to achieve it – the choice of platforms – is almost inevitable.

Usually, senior management does not see how critical it is to put BPM strategy before BPM actions. They don’t want to lead the discussion, so the initiative falls on the shoulders of the functional heads and they have different perspectives. Finance wants ease of use, but IT wants integration. Things tend to polarise around these positions.

Trend #3. RFP madness

Everyone hates Request for Proposals (RFPs), including you, me and everyone you do business with. The end users that send out RFPs hate creating and reviewing them and the vendors hate having to respond to them.

Ironically, RFPs also don’t accomplish much. Vendors learned a long ago that they must find a way to answer ‘yes’ to every question the RFP poses. So the end result is an unpleasant, costly and time-consuming process, one that leaves everyone back where they started: trying to reduce a long list of vendors to a short list.

Although the RFP process has been rendered ineffective, it continues to spread, due to ‘this is the way we have to do things’. This could be one of the curses of Sarbanes-Oxley, at least in the United States – RFPs were formerly reserved for big projects, but now they are surging down the price ladder to much smaller-cost projects, where they are not cost-effective. If your decision to award a project or buy a system is later put under the microscope, you can prove the vendor answered ‘Yes’ to every requirement. “Look, here it is in writing. They swore they could do everything we asked.”

In the past, the RFP process was used for software vendors often, and very rarely for implementation partners. At least with software vendors it made some sense. Software products do have different feature sets and trying to figure out who does what and how they do it, had at least the virtue of being a well-intentioned endeavor. Now we see RFPs on a regular basis at my company, which is a consulting firm.

This doesn’t make much business sense. Everyone knows that all consultants do everything and they do it well. How can an RFP possibly differentiate them, other than by the price they charge? One of our prospective new clients has planned a US$10,000 project and sent an RFP to us and other third-party advisory firms. For a project of this size, they took about two months to prepare the RFP and have been reviewing the responses for about a month now. For a US$10,000 project! Are they crazy or am I, for responding to it? Of course, I must admit that if an engagement does occur, we will probably be helping them prepare the RFP for software vendors.

In closing:

A majority of US and UK companies are already engaged in performance management to some degree, and the future will see a higher percentage of companies with some type of a BPM project, while those already underway will extend their capabilities. This wouldn’t be true unless the benefits were compelling. BPM can deliver one version of the financial truth across your company, increased ability to tie strategy to execution, and reduction of the time it takes to collect information, thereby allowing more time for analysis and decisions to adjust performance. If you are in the minority of companies that have not yet embarked on a BPM initiative, it is well worth starting a process of education about the field of BPM, before you get left behind!