Depending on whom you ask, business process management (BPM) software helps monitor human and automated processes, automate previously human processes, process something still managed by humans or manage something previously processed by humans.
Confused? You should be. Gartner estimates that there are currently over 100 BPM vendors out there, and it seems that no two agree on what it is they’re selling. So which definition is right? “They all are,” says Eric Austvold, a research director at AMR research. “There are varying degrees of rightness.” Behind the hype, BPM is a marketing buzzword for various software applications that are useful if you have a business process that needs improvement. But for a BPM product to be useful to you, rather than a waste of time and money, it’s important to choose the right project and the appropriate software.
Here are a few things that different BPM products can do: You can buy a BPM application that monitors your business processes, automates workflow or serves as an enterprise application integration (EAI) tool. These products can help you identify areas of your business that need to be automated, enforce business rules and even help you integrate your existing IT infrastructure. CIOs who have successfully deployed BPM report that it has made their companies more efficient. For the most part the software is relatively inexpensive, often as low as $US100,000, which means that most companies can afford some version of BPM if they want. Happy customers report a high ROI, often between 200 and 300 percent.
Getting that ROI, though, depends on being realistic about what you’re going to accomplish. Most BPM projects don’t make a big splash, and they require a lot of work up front. Maneesh Gupta, information systems chief for Prince William County, Virginia, says that installing the software may only take a month, but determining beforehand which processes to apply it to can take six months. (Gupta used it to improve the way the human resources department keeps track of employee performance and status.) And in many cases the initial investment in BPM is so small that even a return of 200 percent won’t change a company’s margins. “You will have to do a hundred of these projects before the CEO will ever see the results,” says Austvold.
But small wins are still wins, and that makes it worthwhile to sort through the hype about BPM and figure out how it can help you. “Most processes [in business] today are sophisticated and complex,” says Gupta. “They are not linear. That is where [BPM] comes into play.”
What Is BPM?
A decade ago, Michael Hammer pushed the idea that process re-engineering was the next business revolution. He promised companies that if they overhauled their business processes the businesses would become more efficient. Most businesses that bought into the argument laid a lot of people off, but the expected efficiency eluded them. In part, this was because it was hard to get everybody who was left to agree to change their work processes. And in part because even if they did, companies had no mechanism to enforce the changes. But today, the concept is back in the guise of BPM software, which provides a way to monitor and enforce efficient business practices. BPM software does this by extracting data from a company’s business applications and doing one of two things with it: tracking how the information is used to perform a task so that you can map an existing business process, or escorting the data through a set of tasks to ensure that a business process is being followed. There are three basic varieties of BPM software: monitoring tools, workflow software and tools that support EAI. Here is a look at each type.
EFFICIENCY MONITORS BPM monitoring products are essentially computerized versions of the 1950s efficiency consultant who would stand next to the assembly line staring at a stopwatch through “Coke-bottle” glasses. A monitoring product uses built-in application programming interfaces to connect with each of the systems a company uses for a particular process (for instance, tracking an order from the time it’s placed to when it ships), and then monitors the process for inefficiencies. A company may discover that there is a consistent 12-hour lag between the time a product is placed in the shipping queue and when it actually ships. Then it’s up to the company to figure out a solution. (Maybe it hires an extra loading dock worker or invests in load-scheduling software.) Monitoring software can also be used to keep tabs on a process and send out alerts when the correct process isn’t being followed.
Canadian mutual fund company AIC used BPM monitoring software from Sajus to speed up its process for updating clients’ accounts whenever there is a transaction. AIC is Canada’s largest privately held mutual fund company with approximately $US12 billion in assets under management.
Traditionally, customer transactions would sit in a queue on the mainframe, waiting for a nightly update to AIC’s shareholder management system. That meant AIC financial advisers were not able to see the most recent transactions when they logged on to AIC’s Web-based customer portfolio management system.
CIO Joe Sferrazza thought the advisers should have this information, so he built a Web service that updates the client’s account in real time on the customer portfolio management system that the advisers use. The mainframe is still updated nightly, and the client’s account information in the portfolio management system is rectified against the master database on the mainframe.
Sferrazza uses the Sajus software to make sure that all of this goes off without a hitch. The BPM software monitors the process and when it spots a problem it sends an alert to the appropriate person to fix it, rather than waiting for a person to detect the glitch the next time they look at the customer’s portfolio. Without the built-in monitoring, Sferrazza would have no guarantee that the automated processes are being properly executed.
WORKFLOW SOFTWARE Another variation on the BPM theme is the workflow-based product. These systems automate some parts of a business process and direct some tasks in the business process to people, assuring that the process is followed. For example, a workflow BPM system won’t let a sales rep open a new account before the system confirms that the client doesn’t already have an existing one. The trick to using BPM software to automate and enforce a business process workflow is that the people who will use the system have to come up with a detailed map of the processes that they want the system to follow and enforce. Therefore, the new system is only going to be as good as the processes that it automates. American National Insurance Company (ANICO) used BPM workflow software to improve service in its call centres. In the mid- to late-1990s, ANICO’s call centres experienced high drop rates and high customer frustration levels in part because the information that agents needed was hard to access. For example, in the health insuranc e division, a customer’s personal information, HMO information and policy administration details were stored in multiple legacy systems. “Our [agents] were navigating multiple systems while trying to keep someone on the phone,” explains Gary Kirkham, the company’s vice president and director of the planning and support division.
In 1998, Kirkham began installing a workflow/BPM system that would guide call centre employees through these systems and give them a logical process to follow. The system automatically extracts information from each of the legacy systems and delivers it to agents through a common user interface.
Before Kirkham could automate anything, though, the call centre employees had to come up with a completely new business process model. While Kirkham met extensively with the call centre workers to explain the project (how it would change the way they served customers and why it was important to capture best practices), it wasn’t his job to come up with and document these processes. That role fell to Zeb Miller, the company’s assistant vice president for health administration. Kirkham jokes that it didn’t hurt that Miller is 200cm and 113kg.
Now when a customer calls with a question about his or her health insurance, the BPM software prompts the service rep to confirm the caller’s social security number and address before getting access to the insurance information. Since this BPM application can enforce workflow rules, the call centre employees know what types of services they are allowed to provide based on who the caller is.
Call centre workers are now able to solve customers’ problems faster, which in turn allows them to serve more customers. Since putting the system in place, ANICO has experienced a 71 percent reduction in caller abandonment and a 61 percent improvement in the average time it takes to answer the phone. Furthermore, this type of project is easily repeatable. While Kirkham started small – just putting the system in the health-care call centre – it is now being used to support other ANICO insurance products as well.
ENTERPRISE APPLICATION INTEGRATION TOOLS Large enterprise application vendors and system integrators have used the fact that BPM has application program interfaces (APIs) that extract information from a company’s existing systems to push it as an enterprise application integration tool. In other words: If you are going to integrate your systems, why not take it a step further and use BPM as the user interface that connects to your middleware, regardless of what that middleware might be? IBM, Tibco and other integration vendors have bought existing BPM software companies and adapted their applications.
The BPM technology used with EAI isn’t substantially different from the monitoring or workflow varieties. For example, Tibco acquired Staffware, a workflow vendor. And the way companies use BPM for integration isn’t all that different either. In this case, BPM supports larger projects. Forrester principal analyst Ken Vollmer warns that combination EAI/BPM suites are capable of supporting larger projects and are generally more expensive than either stand-alone EAI or BPM products would be. “Using an EAI/BPM suite in a situation that could be handled by a stand-alone BPM product could add another $US300,000 to the cost of the project,” Vollmer says.
The Star Alliance, a partnership of 15 major airlines, including United and Lufthansa, is using BPM to help integrate its members’ legacy systems. While the partnership is committed to unifying the processes that its members use, it is equally committed to doing so in a way that respects each company’s previous investments.
That’s no small challenge, says Brian Cook, Star Alliance director of IT and acting CIO, with dozens of legacy systems to integrate. For example, a new service for frequent fliers on member airlines required the IT team to consolidate 90 separate business processes across nine airlines and 27 legacy systems.
This kind of integration effort could quickly spiral out of control, says Cook, but the BPM software helped provide a blueprint for how to share data among the various systems. The Star Alliance IT and airline project teams used the BPM software to record how each airline checked in customers and processed their frequent flier information. Then, airline managers took that information and developed a new business process that they mapped in the BPM application. This map was used to identify the points of integration for each legacy system.
How to Tell if BPM Is Right for You
The vendors will tell you that everyone can benefit from BPM, and, like all hype, there’s a grain of truth behind it. Almost everyone has a business process that needs improvement. The questions you need to ask yourself are: What’s the problem you are trying to solve? What’s the size of the investment you are willing to make? And how committed are your business units to making their processes more efficient?
Forrester’s Vollmer says that an EAI/BPM suite is a way to get more from your existing systems, since this type of solution can enable the building of integrated applications without necessarily requiring you to make any other technology investments. This gives companies a tremendous amount of flexibility when determining what type of project to pursue and which BPM vendor to work with. But Vollmer also says that common sense plays a large role in making that choice. For example, if you are considering an enterprise application integration project, he says, it is also wise to consider whether you are a good candidate for BPM in the near future. Since most EAI vendors provide both, CIOs should make sure that combined EAI/BPM solutions are evaluated as well as stand-alone products in each category.
On the other hand, most BPM users prefer to start small. One reason, warns ANICO’s Kirkham, is because process change – particularly, the type of radical process change his company’s call centre employees experienced – is hard. Trying to change too much at once could be counterproductive. People need time to learn the new process and how to use the BPM software. Just as business process re-engineering failed, BPM will fail if there isn’t institutional support for change. Kirkham says that even when ANICO’s employees got training, the company didn’t really gain efficiency until they hired a large number of new workers who never knew the old process.
AIC’s Sferrazza also says that his company isn’t ready to undertake a project on a grand scale, although he does plan to use the Sajus monitoring tools for other self-contained business processes. “We can effectively monitor our systems,” he says. And for now, AIC’s focus is on squeezing the last bit of efficiency out of that monitoring. His other concern is that the company will come to rely too heavily on monitoring software, raising his IT costs. “I can see a day where I will become so dependent [on BPM] that I need several people just to make sure that the processes are being monitored,” he says. In other words, if monitoring is the key to automation, then someone needs to monitor the monitoring software.
What to Know Before You Buy
AMR’s Austvold says that the decision about which type of BPM software to buy comes down to knowing what your goals are. Everyone agrees that it is a buyer’s market right now and that CIOs looking for a bargain on BPM software can find one. But CIOs and analysts all caution that no one should make a buying decision based on the deal they get. With the exception of large integration projects, the money involved in BPM isn’t that great and it’s not hard to get an ROI from the right project.
Furthermore, as with other evolving technologies, the marketplace is bound to consolidate. Most companies that sell BPM products are small and those products address one type of BPM function. There is always a chance that your vendor could go out of business, leaving you to support a product yourself. Austvold says the products from small companies are often better, however.
“You have a couple of choices,” says Richard Soley, CEO of the standards organization the Object Management Group. “Go with a large vendor who you don’t think is going away or you go with a [smaller vendor that uses a] standard. Obviously [this sounds] self-serving, but I don’t see what else you can do, besides ignore it” and hope your competitor doesn’t gamble more successfully.
There are several standards for BPM, such as the emerging Business Process Execution Language (BPEL), and more mature Web standards, such as Web Services Description Language and Java Message Service. Soley says every vendor uses some type of standard, and you need to choose one that is compatible with your existing applications. Finding out if a vendor uses standards should be part of your due diligence process before you buy.
Success with BPM
Success comes down to a few simple steps. First, make sure that you have a specific process in mind that you would like to improve with a BPM product. Next, monitor the process to learn how it works now. (You can use BPM monitoring software to do this.) Then, you and the process owner need to figure out how you want to change the process and redesign it accordingly. If it’s appropriate, you can use a BPM workflow application to manage the new process.
Cook of the Star Alliance says that a successful BPM project leaves a company with a documented set of business rules that could prove to be its important intellectual property, as well as provide a road map for future development of IT projects. “It’s hard to extract and document years of experience,” he says. “You end up with tons of information. But it ends up making [future projects] much easier for IT.”