Business Process Management's Time Has Come

Information Management Special Reports, September 2007

Barbara Angius Saxby

Many senior IT decision-makers have cast a wary eye on talk about business process management (BPM), seeing it as yet another attempt by software vendors to sell the latest "new thing." Managing business processes to drive business applications is important, but for people whose professional standing rests on their judgment as to where to invest their firm's technology budget, understanding all of the different approaches and technology options can be a complex proposition. For those looking for confirmation that BPM is a critical requirement and that it actually provides real business value, a recent report from Aberdeen Research entitled, "Aligning IT to Business Processes: How BPM is Complementing ERP and Custom Applications,"¹ provides lots of solid reasons why the time for BPM is now.

One area where BPM shows great promise is among organizations that use advanced ERP systems or best-in-class technologies to manage complex supply chain and distribution channels involving multiple partners and systems. With BPM - along with service-oriented architecture (SOA) and Web services - companies finally have the ability to align business requirements with IT capabilities to compose applications, easily, quickly and at a reasonable cost. The reality with many early versions of BPM offerings, however, was that the payoff was less than promised as they represent a collection of discrete tools using static modeling techniques. But the problem was that early efforts at combining BPM and SOA failed to bring together in a single integrated environment that features business process modeling capability, the service-oriented platform needed to deliver on this promise and, perhaps most important of all, the functional business services themselves to assemble applications.

This incompleteness defines an important gap between the promise of new technology and the reality of what most vendors can actually deliver today. Ideally, a business process platform and a library of prebuilt and highly scalable business services that model processes should be delivered as part of the same offering. To do otherwise is to short-circuit the advantages that come from combining process and platform - thus adding unnecessarily to the complexity of real-world development and deployment. First-generation BPM offerings typically didn't effectively align IT with business processes, and subsequently fell short. The need in the marketplace, however, remained strong.

Why? Despite the investment of millions in ERP systems and supply chain automation software over the years, there is widespread agreement that enterprise software isn't delivering as much value as it should. Consider that

• More than half of companies surveyed in the Aberdeen study still rely on manual business processes;
• Only 15 percent believe their applications afford them the flexibility they desire, and
• 21 percent say their applications force them to limit service offerings.²

Organizations are understandably frustrated with inflexible software systems that can't keep pace with business changes. And the lack of automation is painful - it drives up costs, delays decisions and negatively impacts productivity and customer service.

The question becomes, can BPM really address these long-standing problems, or should IT decision-makers begin looking elsewhere for more agile business processes and better coordination between the supply and demand sides of the business? According to Aberdeen, the answer is: stop looking, BPM solutions can really deliver. Or maybe more accurately: IT decision-makers have decided that implementing BPM technologies is the wisest course of action because the alternatives on their own can't meet the ultimate objective of aligning IT with business processes to build better, more agile business applications. Consider some of the findings contained in the report:

• More than 50 percent of those surveyed (large, midsize and small companies) are turning to BPM in 2007.
• Close to three-quarters of large companies (annual revenue of more than $1 billion) are investing in BPM tools.
• There is an overwhelming preference for BPM technologies to create and monitor business workflows, followed by the chief tools that assist with IT integration: ESB, SOA middleware and enterprise application integration (see Figure 1).

Figure 1: Infrastructure Middleware Tools Drawing Investment Flexibility for Agility

No doubt many companies have been struggling over whether or not to pull the trigger on BPM-based applications, but it appears that a consensus has formed that now is the time to begin taking steps toward the new technology. In fact, implementations in rigorous, enterprise-scale settings are beginning to show quite clearly that BPM technologies can enable organizations to extend and bolster the capabilities and performance of ERP and supply chain infrastructure.

Moreover, such implementations are directly addressing the concerns that Aberdeen's study pinpointed. In their discussion of the main roadblocks to business process improvement, the authors state first and foremost that ERP systems "don't provide ... needed flexibility," with 75 percent of companies that are the biggest users of ERP systems citing lack of flexibility as their primary roadblock to business process visibility and integration. Additional findings include:

• Key application parameters and rules are locked inside program source code.
• Conventional ERP approaches suffer from a lack of centralized workflows associated with management lifecycles.
• A lack of IT agility forces interim paper workarounds to change business processes, with a resulting increase in labor and loss of management visibility.

BPM in Action

European food giant Hero AG, was planning to launch a new juice drink into the marketplace. Company IT architects faced a difficult value chain challenge. First of all, the product contains no preservatives and, therefore, requires a continuous refrigeration chain as the beverages are distributed to stores. Its shelf life is only 47 days, and of this period, 26 days must be allocated to the retail trade. With this relatively short window of opportunity, Hero needed to organize the value chain between production and delivery to the trade with pinpoint precision. In fact, all processes relating to the production, warehousing and delivery would need to be checked on a routine basis and would have to run within a planned cycle. Taken together, these concerns presented not just a distribution challenge, but a systems problem as well.

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