Companies today looking for the next wave of IT to squeeze more productivity out of their operations are increasingly turning to BPM software to streamline operations by knitting together business procedures.
Their goal is to create a platform that weaves together processes running in different silos of technology, including ERP (enterprise resource planning), customer relationship management and other enterprise software. To the extent that an IT department can do that without having to rewrite major pieces of code, they make processes more efficient, improve profit margins and improve the timeliness of bringing products to market.
"The holy grail that everyone has been looking for the past 15 years is to model the business process using some tool and have the underlying implementation product automatically configure to align with that. If we could ever get there, that would be a major, major breakthrough," said Thomas Gulledge, professor of enterprise engineering at George Mason University and president of Enterprise Integration Inc., both in Fairfax, Va.
IT managers and line-of-business professionals alike have come to understand that implementing business process management software requires a process modeling step and a process optimization and management step. The former consists of breaking down the tasks of a particular business operation—both conceptually and graphically—and creating a model that details where processes touch systems, applications and, increasingly, people.
BPM is the technical execution of that model. IT organizations have found that you cant have one without the other. While theres been a lot of process modeling going on for years, process management tools that can execute those models have come to light only over the past 18 to 24 months.
These new tools are fundamentally different from previous software offerings in that they combine modeling capabilities with real-time management capabilities. This extends the concept of BPM across, and even outside, an enterprise.
The latest wrinkle in BPM technology links the execution layer to a process control layer, which gives companies the ability to monitor and measure processes on the fly.
"You have to believe the future is flows, rules and [Web] services," said Jim Sinur, an analyst with Gartner Inc., in Stamford, Conn. "So modeling languages are generating flows, managing the rules and generating portions of where customer [interaction] points are for Web services."
According to Gartner, 55 percent of clients polled said using a BPM engine helped them to automate administrative tasks and reduce costs of transactions or a business event. In the same study, 70 percent said BPM improved coordination across departments or geographies, 70 percent said fewer people were needed to perform business tasks, and 85 percent said they reduced the steps in certain processes. Some 85 percent said they experienced quality improvement, fewer errors, higher productivity per person and a reduction in time to market.
In setting up a BPM strategy, organizations can choose software from three constituencies—pure-play BPM vendors, EAI (enterprise application integration) vendors and ERP developers.
Although their software runs at the core of many businesses, enterprise software vendors such as Siebel Systems Inc., SAP AG and Oracle Corp. are the last ones to address BPM. Siebel and SAP have each announced integration infrastructures for defining, implementing, managing and monitoring business processes—and initiating Web services.
Siebel, of San Mateo, Calif., last fall announced its Universal Application Network initiative, which promises to provide prepackaged, industry-specific business processes. SAP, of Waldorf, Germany, is adding a BPM component to its recently unveiled Enterprise Services Architecture for Web services. Later this year, SAP will ship a product that combines an integration broker for XML-based message exchange and its BPM engine that enables the design, execution and monitoring of business processes.
Oracle, of Redwood Shores, Calif., is also looking to provide prepackaged business processes with its Conference Room Pilots, a set of 97 prepackaged processes, grouped into 19 functional areas, that work across Oracles E-Business Suite.
But pure-play BPM software makers continue to push into new realms. HandySoft Corp., for example, is developing a library of business process applications to augment its BizFlow BPM engine. The packaged applications will contain business rules, process models, reporting, solutions interfaces, adapters and services for quick implementation, said company officials in Vienna, Va.
Others are partnering to extend their capabilities. Intalio Inc., which earlier this month introduced the second version of its n/3 Business Process Management System, has penned agreements with modeling software developers Popkin Software and IDS Scheer AG to provide execution capabilities to companies that have invested in modeling software, according to Intalio officials, in San Mateo.
In addition, IDS Scheer, of Saarbrücken, Germany, is in talks with Microsoft Corp., IBM and PeopleSoft Inc. to embed its models into each companys offerings, according to Mathias Kirchmer, CEO and president of IDS Scheer.
IBM in the past year acquired two companies, CrossWorlds Software Inc. and Holosofx Inc., to round out its BPM strategy. IBM, of Armonk, N.Y., this quarter will ship software that integrates Holosofxs modeling, management and workflow capabilities with the rest of its WebSphere integration portfolio.
"The BPM players that are really good do system-to-system, human-to-human [mapping and execution]," said Gartners Sinur. "EAI vendors are focused on system to system and a little on human to human, and thats it.
"Packaged vendors—theyre too late in the game; its already gotten away from them," said Sinur. "If you believe in world package domination, then there is an impact from them. But who believes that? My customers dont."
Sanford Lazar, director of key systems for the District of Columbia, is in the midst of a total business transformation of all the major administrative and back-office systems within his purview. The project includes re-engineering the districts business processes for procurement, payroll, time and attendance, human resources, budgeting, benefits administration, pension administration, and property management.
The project is a five-year program that will cost an estimated $71.5 million to complete. Lazar figured that the result will be $150 million in savings over the same five years.
"The reason were so confident is were going through an extensive business process engineering as the main thrust," said Lazar. "Were not trying to say, These are the 13 steps we are doing now, and how do we refine that? Were totally revamping [our processes]."
However, Lazar is not looking to his ERP vendor to manage his business processes. Rather, hes looking to SeeBeyond Technology Corp., an EAI software developer.
"[SeeBeyond has] strong tools that allow us to build how processes flow from system to system," said Lazar.
Spending thousands of man-hours to map out current business processes is not providing the payback people thought it would 10 or 15 years ago, Lazar said.
"We are putting in new software, but its not a technology project. You need a lot of technology—dont get me wrong—but when we say its truly a business transformation project, to be successful you have to approach everything from the business side and use technology to support that," Lazar said.
Meanwhile, Gulledge, of George Mason and Enterprise Integration, is using IDS Scheers Aris business process modeling tools to change the way the U.S. Army, U.S. Navy and U.S. Department of Defense handle their business processes.
"We used IDS to architect three ERP and two other solutions for the Navy, and it took approximately one year," said Gulledge. "As an outgrowth of that, we were asked by the Office of the Secretary of Defense to develop its Future Logistics Enterprise—the vision and plan for how logistics will be implemented in the U.S. Department of Defense from 2006 to 2015."
Gartners Sinur suggests companies considering BPM initiatives look first to where they have the most pain. "For instance, if you think youre losing revenue, you may look at those processes that have revenue leakage—you may look at receivables," he said.
There is still a way to go before companies even begin to see the promise of end-to-end BPM.
"Business process management is in its infancy now. Theres probably less than 5 percent penetration for this technology," said Eric Austvold, an analyst at AMR Inc., in Boston. "But there is tremendous potential. What has happened with [Siebel, PeopleSoft and SAP] getting into this game is the exposure of business processes that are embedded in applications and exposing them to outside applications."