Market Analysis: Understanding Business Process Management

Effective business process management integrates people, processes and apps to ensure a cohesive team and boost the bottom line. Join us as we explore the BPM market.

July 1, 2005

12 Min Read
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Most BPM suites are process-oriented, sharing information among modeling tools, fat clients, portals and the process engine through Web services. The advantages to this model are reuse, interoperability and faster time to deploy.

Process-oriented thinking is at least as old as the Industrial Revolution. It was made an art form by entrepreneurs like Henry Ford, who recognized the advantages of disassembling the manufacturing process into discrete work steps, then measuring and maximizing the efficiency of each step and applying just enough resources--in those days, mainly human--to avoid bottlenecks. As with BPM, the idea was to keep things moving smoothly and efficiently.

In more recent history, process gained its enterprise credentials in the re-engineering boom of the early 1990s. Within many conglomerates of the day, departments had ossified into fiefdoms with pockets of data management detached from underlying processes. Business process re-engineering tried to fix this state of affairs by applying process-oriented principles to white-collar realms like purchasing, accounting and production planning. Unfortunately, BPR often led to overly ambitious cost-cutting. New processes were handed down from on high with little effort to gain buy-in, oversee implementation or tune the results. Deep cuts in staffing led to internal power struggles, gaps in product and service quality and, in the end, short-lived efficiencies.

ERP (enterprise resource planning), CRM (customer relationship management), SCM (supply chain management) and standalone workflow implementations followed in the mid-to-late '90s. IT-based automation was taking hold, but in a functional rather than process approach. Inevitably, these silos of automation created bottlenecks, errors and disconnects. What's more, the automation hard coded in big applications and workflow systems couldn't be tweaked or adapted without costly and time-consuming integration and customized coding. Now what?Getting To BPM

The automation silos of the '90s created fertile ground for what has blossomed into today's BPM market, which is growing at a 20 percent clip each year as a scattered field of more than 100 vendors begins to consolidate. The market's $1 billion in sales in 2004 should reach $3 billion by 2009, according to researcher IDC.

In the recessionary years of 2001 and 2002, demand was driven by cost cutting and productivity initiatives. BPM helped speed process cycle times with integration and automation that closed the gaps left by applications such as ERP. BPM systems also provided a faster, more flexible, less expensive and more business-friendly environment in which to model and change processes.

"The downturn proved that BPM saves money," says Gartner analyst Jim Sinur, pointing to a 2004 study by the firm in which 95 percent of 50 BPM implementors surveyed said their projects had been a success. Respondents reported an average 15 percent rate of return, and 55 percent had returns in the $100,000-to-$500,000 range on each project.

At the heart of any BPM implementation is the process engine, an application that interprets business rules and determines where to route tasks, whether they're destined for an employee or another machine. BPM engines also monitor processes, watching for exceptions that may require human intervention and alerting the appropriate personnel should problems occur or tasks sit too long. The same engine also monitors operational and business metrics, tucking away such mundane information as the duration of a task or activity and associating a value to each task by calculating the cost of resources and revenue generated as a process flows through the organization.If that sounds like an extremely broad mission, it is. A BPM implementation requires integration with your application infrastructure as well as cooperative human participants, within both IT and the business. We tested nine BPM suites in our NWC Inc. business applications lab to see how well they perform (see "BPM Rules). We found that both portals and fat clients can provide the interface through which participants interact with the process, and integration with your application infrastructure is supported by a wide variety of technologies, including Web services, JDBC, ODBC, application-specific adapters and, of course, custom code developed by IT staffers. People integrate with the system by interacting with tasks assigned to them through portals or, less commonly, fat clients.

The Next Era

While the first waves of BPM adoption were about automation and integration--capabilities that were mature in all the products we tested--the focus today is increasingly on regulatory compliance, business and application agility, and optimization. Driven by mandates such as the Sarbanes-Oxley Act and Basel II, companies are turning to BPM to enforce policies and procedures in financial reporting and other core processes that are material to company results. This is a natural for BPM because the systems are designed to document and model processes, apply explicit policies and procedures (as enforced by rules), execute in a consistent hands-off fashion, and track results and human exception handling.

In the drive for business agility, BPM has much in common with SOA (service-oriented architecture). Both aim for faster response to changing business requirements, starting with compliance but also including mergers and acquisitions and product and service introductions. In fact, 53 percent of Web services integration applications are applied to business processes, according to a study by Evans Data. So SOA has become a crucial foundation for BPM, supporting rapid assembly and orchestration of process services into larger, end-to-end processes.

Another goal is tying process management to the other BPM--business performance management--so that process improvements serve strategic performance goals. If, for example, improving product quality is at the top of your agenda, process management initiatives should focus more on qualitative measures, less on cost reduction and faster cycle times.To connect processes with performance goals, you'll need BAM (business activity monitoring) features, including metrics, key performance indicators, executive dashboards and advanced reporting capabilities. All the products we tested offer basic operational metrics, but many fall short on the promise of easy access to higher-level data and real-time information--they provide access to the data but not good reporting. And few products "close the loop" on processes by applying operational results to continuous process improvement. Although we could integrate KPIs (key performance indicators) back into the process, it's not a task that can be accomplished easily by those who know and understand the KPIs--namely, business process owners. IT staff will be required to plug the right data into the actual process.

Similarly, business process owners might be able to build KPIs, but they aren't going to generate dashboards that light up automagically when KPIs fall below specified thresholds. This capability is technologically feasible, but for the time being it's going to require a commitment from IT and some collaboration with business analysts.

Simulation was a crucial differentiator in our tests. Every product has a "play" button that let us run through the basic process, but only a few offer deeper simulation in which we could project human and systems resource requirements, and fewer still let us start, say, instances of a process and do serious diagnostics and cost planning. More important, it's still nearly impossible in all but a few products to simulate more than one process simultaneously. This is a problem--it's unlikely that people are dedicated to a single process, so it's important to simulate not just one but all processes involving the same people. This limitation makes BAM and historical analysis even more important for capacity planning and process optimization.

Vendors are aware of this deficiency, and on the BPM horizon are deeper simulation, scenario planning and predictive analysis features, according to Gartner's Sinur. "There will be dashboards at the operational and strategic level, and there will be a whole market around decision optimization," he says. "If you get two yellow caution lights and a red light for a third process, how will you respond? Scenario planning will help develop rules in advance for just that situation. There are chemical plants applying these principles today because bad decisions could put lives at risk."

Just as enterprises pay people to watch video cameras to ensure security, employees increasingly will be tasked with monitoring these dashboards. In addition, alerts and notifications for exceptions or exceeding thresholds are used extensively.Among the 100-plus vendors in the BPM market, most have their roots in workflow or were founded as pure-play providers. Joining the party in recent years have been EAI (enterprise application integration), application infrastructure and, most recently, ERP vendors.

There are two types of BPM pure-plays: those that transformed themselves and those that were BPM from the get-go. The former group includes workflow vendors such as FileNet, Metastorm and Staffware (acquired by Tibco last year to bolster its process-oriented technology and expertise) that have moved away from proprietary, hard-coded approaches to embrace loose-knit Web services integration and standards-compliant orchestration based on BPEL (Business Process Execution Language), the most significant BPM standard. The latter camp includes Fuego, Lombardi and Savvion, vendors that had no legacy in rigid approaches to process automation but that also lack the document- and content-management capabilities of most workflow-derived BPM systems.

The conventional wisdom is that pure-play products (including those with roots in workflow) are best suited to handling processes that combine human-to-human and system-to-system interactions. If those processes are content-intensive, such as lending, claims or other forms-driven activities, seek out systems like those from Ultimus or Tibco that can easily handle content review and approval steps.

Like BPM pure plays, EAI vendors such as Tibco, Vitria Technology and WebMethods have helped close the gaps between major application infrastructure and application platforms by including a broad selection of tools with their BPM suites, including those that have been offered only by platform vendors. Their challenge in moving to BPM, however, is in serving a mix of business and IT users and focusing on process management--their history is in serving IT with integration alone. It's important that they create design, modeling and rules environments that won't make your business analysts' heads explode. To this end, Tibco has taken the SOA model and applied it squarely to its own set of technology. Although the models and workflow can be implemented using BusinessWorks, Tibco's integration product, it's not required--Staffware's use of services provides an open environment in which any service can be inserted into a process.

If your enterprise depends on multiple, heterogeneous applications and you're already awash in integration servers, it makes sense to extend that investment into BPM. Yet, in our tests we seldom found integration to be a stumbling block. In fact, all products provided painless integration. Our experience confirms that rumors of integration technology's commoditization have not been exaggerated and explains the eagerness of EAI vendors to provide additional value by offering BPM capabilities that take advantage of their integration technology.All Eyes On Infrastructure

According to analysts we spoke with, big application infrastructure players--Microsoft, IBM, Oracle and, to a lesser extent, BEA--split the market evenly with the pure-play BPMs. But from the results of our latest BPM e-poll, you'd think the big boys pioneered the technology: 580 respondents ranked IBM, Microsoft, Oracle and BEA (in that order) as the "leader in BPM solutions." About the same number cited the same players, though in a slightly different order, as the top vendors being considered for BPM deployments.

Truth is, these application infrastructure bigwigs are not BPM pioneers, but they won't discourage the perception. Like integration players whose technology is rapidly becoming commoditized, application platform vendors have heard the violins and recognize the commoditization of the application server. IBM, BEA and Oracle are moving rapidly to provide reasons to invest in their application platforms, and BPM is a natural complement. Their efforts and acquisitions have not, however, changed their focus: All continue to primarily target the developer. Oracle, for example, acquired its BPEL engine from Collaxa only last year; it relies entirely on third-party modeling tools; and it concedes implementation is developer-oriented. Modeling and simulation are left to partners.

This strategy is not exclusive to application infrastructure players. Several pure-plays have told us they think standards-based modeling will result in a set of niche vendors, including Popkin Software (recently acquired by Telelogic) and IDS Scheer, that will focus on modeling and allow them to concentrate on enhancing service implementation and rules engines and eventually phase out their own proprietary modeling tools.

Our readers aren't the only ones who put application infrastructure players on their shortlists. Forrester Research estimates these vendors will claim 30 percent, the largest share, of the BPM market within three years. Next up will be the application platform vendors, with 25 percent of the market. Those customers that have built their businesses on SAP, Siebel, Oracle and PeopleSoft should know that these vendors are offering another route to BPM. For example, SAP claims its NetWeaver brings process-management capabilities to the application server, though the half-step of composite applications is also being promoted. The addition of third-party modeling and performance management tools from the likes of IDS Scheer might help achieve true BPM, but implementations are still in the early stages.With infrastructure and enterprise application vendors expected to take half the market by 2008, that will leave the BPM pure plays and application integration vendors each with a 20 percent share, with the remaining 5 percent going to other types of vendors. It should be an interesting shakeup that will leave enterprise IT with plenty of choices.

If you've ever done that logic-building exercise where you must explain to a visitor from another solar system how to pop popcorn or make a peanut butter sandwich, you've built a process. In the real world, efficient and continually updated business processes are the building blocks of successful companies. BPM software helps streamline integration between your application infrastructure and human resources, both IT and business types. But choose your partner wisely--there are about 100 vendors trying to sell you on their BPM visions. In "How To Win at BPM," we analyze what BPM can do for your company and offer a guide to the vendor landscape.


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