BPM, E2.0 @Oracle

I’ll start fairly easy with an introduction of BPM. I won’t be going into products, standards etc., well not yet anyway. So, let me start by defining BPM:

BPM is a strategy for managing and improving the performance of the business through the continuous optimization of business processes in a closed-loop cycle of modeling, execution and measurement.

You’ll note that there’s no reference to technology, vendor, tools, methodology or any such things. In other words, to quote Paul Strassman (albeit in a different context), “it’s economics [..] technology has to be taken for granted”. You could arguably do BPM without any technology but if you do make a successful use of BPM technology, then the return on your investment is potentially much higher.

Let’s look at the context for the use of BPM technology in the enterprise. A business process is a complete, coordinated sequence of serial and parallel activities needed to deliver value to a customer. Some of the characteristics of business processes are:
• Enormous and complex data and business flows
• Dynamism due to rapidly changing market conditions
• Partial automation
• Dependence on human involvement and judgment
• Display of life cycle characteristics

As processes are the basis of planning, marketing, customer transactions, billing and reporting, they become the unit of improvement, competition, intellectual property and differentiation.

However, the enterprise is not organized around processes. Instead, they are organized around individual business units such as finance, legal, HR, manufacturing, sales and such. In large enterprises, this can be even replicated geographically. Each unit is generally enabled by best-of-breed applications such as CRM, billing sytems, databases and custom applications etc. This is not necessarily a bad thing. It is in fact a natural evolution of the specialization of jobs in the enterprise.

Bruce Silver remarked that processes that run within these single business units or on single systems (I’ll collectively call them silos) are already automated and arguably efficient enough. But the price of that automation has been the creation of new silos or “white spaces” between business units or systems. End-to-end business processes will span those silos, thus causing a loss of both context and potentially accurate and up-to-date data between these silos. This loss can have a direct influence on both worker productivity and the decisions they take.

Typically, what knowledge workers tend to do is use several productivity tools e.g. IM, email, documents or they just swivel around or pick up the telephone to talk to a co-worker. This shows that they can survive those the problems created by the white spaces. While they survive, they don’t necessarily thrive. This is where BPM technology shines. As Bruce Silver further remarked, BPM started as a management discipline 20 years ago as a way to think about the business in terms of key cross-functional processes i.e. how to plan it, understand it and measure it. Dr. Geary Rummler, one of the early pioneers, emphasized “managing the white space in the organization”, i.e. the handoffs between the silos where information tends to get lost.

As the market has only recently gained considerable momentum (in 2006 there were approximately 150 vendors!), it is only natural that there are many opinions about what exactly can be considered BPM. While some believe it that it should remain a management discipline and only provide the ability to analyze the business processes, the real returns comes from the ability to model, simulate, execute and optimize the business processes using a Business Process Management Suite. A BPMS does not simply analyze the processes of an organization but it also actively manages the processes that span it.

Process Management Challenges in the enterprise
The rise of siloed enterprise applications has created several challenges:
• Inefficiency: process exceptions are handled manually with the result that on average, processes take too long to complete
• Rigidity: it is hard to integrate enterprise applications and much more harder to change
• Lack of compliance and control: the same processes are executed differently in different business units
• Poor visibility: management cannot measure the performance of business processes
• Inertia: requirements and rules keep changing while IT resources are already stretched to or above their maximum

The stakeholders don’t care about the silos. For example, our customers or business partners do not think of our silos; they think about the high quality products and services they can get from us. In other words, they want a good customer experience.

Benefits of BPM to the enterprise

A BPMS does not replace your enterprise applications; rather it coordinates the actions of people and systems to make the processes more efficient, more flexible and more compliant.

A BPMS makes processes more efficient because it can automate manual tasks, handle the white spaces and manage the exceptions as well. It makes processes more agile because the processes are not controlled by a complex application whose code is difficult to modify. Rather, processes are defined graphically and these can be easily and quickly changed when desired. This lowers the cost of developing and maintaining business solutions. One of our BPM customers once reported that on average, they had to deploy a new application every 9 days. Development, testing, change and maintenance became a serious issue. They reported substantial improvement by using Oracle BPM. It makes processes more compliant because the logic is based on well-defined and well-understood rules which reflect the policies and the best practices of the organization. Users have no choice but to execute the processes and follow the rules as they have been defined. These can also be used to show to compliance auditors that the rules have been followed.

Finally, a BPMS makes processes visible by ensuring that process performance along with key performance indicators can be provided to management.

These can rapidly translate into tangible returns on the investment in BPM. In my next post, I’ll talk about what constitutes a BPM Suite.

Cheers,
Ali