BPM Powers Profitability

Businesses have always been driven to reduce costs, streamline operations, improve customer responsiveness, react to change, and mitigate risk as a way to maximize profitability and gain an edge on competitors. However, only recently have business leaders identified effective business process performance as a primary means of achieving this goal.

In a recent study published by the Economist Intelligence Unit, 70% of the executives surveyed said the performance of internal business processes directly impacts their firms' profitability. By contrast, only 10% of business leaders felt they possessed sufficient visibility of business processes across the enterprise to make necessary and timely adjustments to these procedures. This discrepancy has created a huge demand for new BPM (business process management) technologies.

This demand is confirmed by a 2003 AIIM study in which 333 users of ECM (electronic content management) solutions were asked to rank their purchase intentions for this year from a list of 22 technologies. Forty-two percent of those surveyed identified BPM as their number one purchase intention for 2004. The AIIM study also showed that 34.2% of those interested in BPM solutions planned to spend more than $500,000 this year on ECM purchases, compared to only 17.4% of those uninterested in BPM.

Clearly, business leaders recognize the impact process improvement can have on their organizations, and VARs can profit by delivering the BPM solutions these customers desire. However, to make your mark on the BPM landscape, you need to know what a BPM solution consists of and how to tie the pieces together in a way that optimizes user effectiveness and maximizes your margins.

Unify Process, Content, And Connectivity
The common misconception is that BPM is the same as workflow. It's not. Workflow focuses on automating the flow of information between humans. This is only part of the BPM equation. BPM also incorporates EAI (enterprise application integration) concepts that automate system-to-system communication and facilitate human-to-system interaction. This allows data to be processed directly between systems, while exceptions are automatically sent to humans for processing.

To help customers best optimize their processes, some vendors claim that BPM must also unify process, content, and connectivity capabilities. "Many BPM solutions only focus on the process side of the equation and don't address content," says Chris Preston, director of product marketing, for FileNet (Costa Mesa, CA). "These solutions are incomplete because content can have a direct impact on processes. For example, a change to a contract may change the processes a business needs to execute. Or moving a loan origination to closing may initiate a whole different set of processes. To give businesses the flexibility to effectively optimize their environments, process and content must be unified. Connectivity components should also be inherent to allow BPM technologies to interact with existing applications throughout the enterprise."

Simulation, Analytics Provide Visibility For Continuous Process Improvement
A key point illustrated by the Economist Intelligence Unit study is that most businesses don't have sufficient visibility of their business processes to quickly identify problems and implement changes. Prior to BPM, and even in early versions of the technology, process problems were difficult to recognize unless they physically manifested themselves in some way. Furthermore, process logic was baked into hard-coded applications, so making a process change involved breaking an application apart and recoding and testing the process before putting it back into production. The time involved to make these changes usually meant they were one-time events. Also, once the process change was made, there was no way to accurately foresee that the change would actually solve the problem. In reality, one section of the process may be optimized by the change, but other processes may be negatively affected.

Many of today's BPM solutions incorporate simulation and analytic technologies that provide users with graphical representations of business processes. These BPM diagrams require no coding and allow companies to change a process simply by adding or deleting steps and redrawing information flows. "Through simulation and analytics technology a company can see how all of its processes are running throughout the enterprise in real time," says Preston. "A business can identify issues before they become problems and make the proper changes to quickly react to those issues. Simulation tools also allow users to prove out proposed changes prior to implementation."

Finally, simulation technologies also serve as a forecasting tool, allowing a business to anticipate and automate potential process changes for the future. For example, a business can preconfigure a process change that automatically redistributes work to other regional locations if one falls victim to a natural disaster. This functionality provides an environment that fosters continuous process optimization.

BPM Should Encourage And Facilitate Collaboration
Businesses seek the efficiency and visibility gains that BPM delivers, but they also desire a platform that allows users to collaborate more effectively. "Some BPM technologies focus too much on automation and don't address the area of human collaboration," says Lubor Ptacek, director of product marketing for EMC Software (Hopkinton, MA). "Most businesses require the ability to interact beyond predefined workflows and want this capability included in their BPM solution. In response, select vendors have added collaboration technologies to their BPM offerings. These features are among the most popular with customers."

Collaboration tools provide businesses with an interactive portal where users can gather to make joint decisions. For example, if a user does not have sufficient knowledge to determine how to handle a specific exception, he can gain input from others in the company by launching an online team environment as part of the BPM system. This collaboration tool allows the questionable content to be automatically distributed to the entire team, provides voting rights for all team members, and allows any new content created as part of the decision-making process to be automatically injected back into the process. This functionality allows a business to document how a decision was reached, which can be particularly useful for regulatory compliance.

BPM Moves From IT To The Business Analyst
BPM solutions are designed to meet the needs of three main business groups: IT or systems administrators, business analysts, and end users or knowledge workers. In the past, BPM vendors placed the majority of their focus on satisfying the needs of IT departments and knowledge workers by designing solutions that were easily interoperable with existing systems and well equipped with user-friendly features. While advancements continue to be made in these areas, many vendors have shifted their focus to the business analyst.

"A knowledge worker, line of business manager, or IT administrator is not going to change a process itself, nor would a business want that," says Preston. "Most organizations want rigid controls in place to ensure only those with the proper modeling and process engineering skill sets, the business analysts, interact with and make changes to the system. In response, many vendors have geared their product development more toward a business analyst focus."

With this in mind, VARs would be wise to target business analysts when pitching a BPM solution to a potential customer. To win over this audience, a VAR must have knowledge of BPM technologies as well as how to integrate these products with existing customer applications. However, it is equally or more important for VARs to focus on specific vertical markets when selling BPM. A vertical focus will give a VAR valuable insight into the specific processes common to a particular market. For example, a VAR that focuses on the mortgage industry will be familiar with loan origination and approval processes. Being able to speak intelligently about this process and knowing how to apply BPM technologies to automate that activity will give the vertically focused VAR a huge advantage over general systems integrators.