Credit giant TransUnion’s nascent mortgage and personal loan business is growing fast, and Executive Vice President and CIO Len Lombardo will not let technology slow it down.
“We don’t want any software package putting restrictions or dictating how our business can act,” says Chicago-based Lombardo. “Our product guys are very creative, and there’s so much competition out there. We’ve got to be able to react.”
Lombardo’s need for speed and flexibility rings true in nearly any business. Ideally, companies should be able to quickly automate their business processes while also being nimble enough to optimize those processes over time. In practice, companies often find themselves bound to the business rules hard-wired into their enterprise applications because modifying the software is so difficult.
Business process management (BPM) software seeks to turn the tables. BPM tools are designed to let CIOs and end users take a process-centric approach to IT projects and to track the effectiveness of those corporate processes. With many companies doing the same amount of work with fewer employees, business process efficiency may well be the next stage of business-IT innovation.
Process Improvement by Design
Although workflow-oriented software has been around for years, a new generation of BPM software is spreading beyond the leading-edge user set. Founded in 1992, the Business Process Management Group?a U.K.-based user organization?boasts more than 2,500 members, 200 of which joined during the past few months.
Vendors of many stripes?integration middleware, workflow and enterprise applications?are converging on BPM as well. Because so many software products now include embedded workflow engines, a precise definition of BPM is tricky. But the most common feature set includes a business-process-modeling tool, a run-time engine to execute and monitor processes, and a development environment with connectors to enterprise applications.
Many experts argue that BPM is the killer application for Web services. Once Web services becomes more commonplace, end users and business analysts without extensive training should be able to design and build process workflows that tie together, or “orchestrate,” several prebuilt services. IT organizations, relieved a bit of the application backlog, will then have time to focus on IT infrastructure and system-to-system process automation?or at least that’s the hope.
But perhaps most compelling, BPM technology is versatile enough for all manner of applications. Just ask Shell Oil.
Shell U.S. Tax Organization in Houston wasn’t in the market for BPM software when it had a mandate to cut its monthly financial reporting time in half and provide a clear trail in case of audits. The core problem?common to large enterprises?was the heterogeneity of the systems involved, including geographically dispersed divisions running primarily SAP R/3 but also J.D. Edwards and Oracle Financials, says John Antaki, former technology adviser for the Tax Organization who is now a managing partner with Matrix5 Consulting in Houston.
Shell found that TeamWorks, the BPM software from Lombardi Software, could handle the enterprise application integration capabilities found in many middleware products but didn’t require extensive coding?the application was up and running within three months. And because the team could quickly prototype business processes with the tool, financial analysts and IT people focused more on evaluating how they worked, rather than the technical underpinnings of the software.
“The key is the business process,” says Antaki. “The effort is in deciding which area of the business process you want to automate and finding the bottlenecks that have the greatest challenges.”
Shell recouped its $1 million investment in fewer than six months and helped derive more value from its $1 billion SAP investment, Antaki says. Now the company is looking to roll out BPM software in other operations, including exploration, refineries and financial services, he says.
Beyond automation, examining business process in a BPM implementation is also a significant benefit, according to users. “The tool and method force you to look at processes and understand how they work,” says Philip Parker, CIO and vice president of Addison, Texas-based United Surgical Partners, a chain of surgical facilities. “As a result, you tend not to automate what exists; you tend to ask, What does the process need to do?”
United Surgical has implemented one BPM application using software from Fuego that normalizes data from multiple financial reports. Going forward, Parker expects his IT and business analysts will spend 80 percent of their time documenting and analyzing processes for new applications, with the remaining effort to be split between tuning existing processes and creating new components for the BPM system.
Old Wine, New Bottle?
Business process automation in software, of course, is nothing new. But the convergence of many vendors around BPM is creating a hotly competitive market.
A flurry of pureplay BPM startups have cropped up, such as Fuego, Intalio, Lombardi Software, Q-Link Technologies and Savvion. Workflow products from companies such as FileNET and Staffware, originally oriented toward document management and end user workflow, are now beefing up their wares with better connectors to enterprise applications.
Meanwhile, integration middleware vendors, such as Tibco Software and WebMethods plus Java application server vendors IBM and BEA Systems, are eyeing BPM as a growth area. Even enterprise application vendors, including SAP and Siebel Systems, are introducing workflow engines into their suites.
The crowded playing field makes vendor choice tricky for CIOs. A supplier’s pedigree?end-user-oriented workflow or back-office application-to-application integration?will help determine how appropriate a technology is for a given application, analysts say. Often, IT executives need to choose between a best-of-breed product that connects well to third-party software or go with a BPM product from an incumbent vendor that integrates tightly with a company’s existing architecture, says David McCoy, vice president and research area director at Gartner in Stamford, Conn.
“The problem is you have these vendors who think it’s their God-given right to have process management inside their products, but they’re not doing anything in a standardized way,” says McCoy, who predicts that many companies will have as many as eight different tools that support process management within two years.
To help the situation, numerous BPM and workflow standards have been proposed by various industry groups during the past year. In July, Microsoft, IBM and BEA threw their weight behind BPEL4WS, or Business Process Execution Language for Web Services, an XML-based language for modeling a business process. Other standards include the business process modeling language (BPML) and ebXML (electronic business using extensible markup language).
Analysts say that it will take some time for one dominant standard to emerge, and that in the near term it’s unlikely that a single specification will address all business process standards scenarios, such as internal automation versus business-to-business.
Even with standardization, analysts warn CIOs to pick suppliers carefully and expect industry consolidation. As a sign of things to come, IBM in September acquired longtime partner Holosofx with the goal of integrating Holosofx’s business process modeling and tracking tools with IBM’s MQSeries Workflow and WebSphere application server.
Getting on the Same Page
Considering that most business process modeling in enterprises is done with Microsoft’s Visio diagramming tool, one of the key benefits of BPM is the ability to create a live link between business models and production systems, say analysts and vendors. Having a single business process diagram that both business and IT workers use, either for process modeling or coding, helps drive alignment between business and IT. And once processes are effectively documented and reviewed, businesses gain a lot in process knowledge.
“You’re actually capturing best practices,” says Antaki of Shell Oil’s experience with BPM. “So if you have high turnover, new people are coached to perform to the same standard and level as the top person in the organization. You get a productivity improvement.”
In fact, BPM advocates say CIOs should measure return of BPM projects not only on reduced cost but on process improvement. “The next level of business enhancement or rate of return is in process. You’ve got to bring about change in the process level,” says John Koenigs, president and CEO at Savvion in Santa Clara, Calif. In effect, innovating at the process level makes the CIO a businessperson, says Koenigs.
But despite growing interest, BPM tools still haven’t caught on broadly with end users and business analysts, who ultimately know the most about business processes. Allmerica Financial, an insurance and financial services company in Worcester, Mass., decided to avoid the industrial-strength, back-end process automation offered by many workflow and middleware vendors. Instead, CIO Greg Tranter spent about $50,000 building its first application using a desktop-oriented BPM product from Nobilis Software. He expects subsequent applications will let business users automate and modify their own processes without IT’s involvement.
“What ends up happening is that business users like to change underwriting guidelines very frequently if they see things changing in the market. This lets them change things on the fly,” says Tranter.
Not all companies have technically savvy end users or strong process orientation. Still, companies such as United Surgical Partners are making the jump to BPM, in part to make the company’s existing staff more productive but also to understand more about their corporate processes. United Surgical Partners’ Parker is devising a centralized BPM application to gather key performance indicators from the underlying systems and provide alerts or reports to top management.
“We’re in a constant process improvement model,” says Parker. “If we stop improving, we’re in trouble.”