Thursday Dec 29, 2011

Getting Social with BPM in 2012

Over the last few months i have come across numerous perspectives in blogs (from leading research firms such as Forrester, Gartner etc.) and marketing collateral from vendors (including mega-vendors and pure-play BPM vendors) on the promise of Social BPM. Analysts and BPM vendors are undivided in heralding Social BPM as a key trend for BPM in 2012. Just about every BPM vendor is making claims of delivering Social capability in their BPM offering. After all why wouldn't they, Social is the new buzzword and by some measure every technology (software or hardware) that has any human interaction seems like a suitable candidate for being labeled as Social.

Most vendors define Social BPM as the use of Web2.0 technologies to drive BPM efforts in terms of discovering, developing and fine-tuning business processes with their BPM tools. However, this view is rather narrow given the amplification, or should i say buzz, the term Social BPM is conjured to generate. I believe there is more to Social BPM that just integrating Web 2.0 technologies such as portals, IM etc. to aid the usage of the BPM tools sets with improved collaboration. Suspend disbelief in my claim for just a little bit longer and allow me to build my case on the business value of BPM.

Business priorities are centered largely on three things - Revenue, Cost and Customer Satisfaction. The fundamental value of BPM lies in empowering businesses to achieve efficiency, agility (in terms of responsiveness to change) and visibility (in terms of business operations insight) through process standardization and streamlining. BPM enables revenue up-lift from better lead-to-cash processes, cost rationalization through streamlined back-office and operational processes and improved customer satisfaction through conformance to customer/partner SLAs. However the promise of Social BPM as envisioned today to process discovery, design and development by incorporating multiple voices through Web2.0 technologies, does little to drive business value in terms of the above. 

Beyond leveraging Social capabilities in BPM tools through Web 2.0 technologies, a more business centric use-case for Social BPM could be leveraging external and internal Social networks to augment existing business process. For instance, HR processes for talent acquisition could be integrated with professional Social networks such as LinkedIn to source candidates and perform background checks. Similarly, Sales processes such as Lead generation could be integrated with personal Social networks such as Facebook to drive advertising leads into the sales funnel. Yet another example could be of linking customer feedback and review from recommendation networks such as Yelp into product planning processes to provide a constant stream of customer intelligence, in terms of needs and satisfaction levels.

Clearly there is more to Social BPM and i believe we are still scratching the surface.

Look forward to hearing your thoughts on how you are envisioning Social BPM in your business.

Monday Dec 19, 2011

Improving Visibility of Payments Value-Chain part 2 / 2

In my earlier post I discussed the business imperative for improving visibility in payments processes and the factors (demand, organizational and technology) creating impedance in realizing the vision of Straight-Through-Processing. In this post, I will outline some approaches of improving Straight-Through-Processing in payments processes to improve visibility in them.

Visibility in payments processing is fundamentally about knowing the status of payments as they flow from front-office initiation channels, across mid-office fraud, risk and compliance systems , through the payments application i.e. AR,AP and finally through external interfaces with clearing providers and financial network providers e.g. SWIFT, ACH etc. From a technology standpoint, payments straight-through-processing requires streamlining the integration across all these inbound channels, outbound interfaces and ancillary systems.

One approach is to consolidate all of the existing payments applications with a payments hub. Payments hubs are packaged applications that consolidate interfaces, both inbound and external, and offer full-fledged payments processing capabilities including AR, AP, treasury, exception management i.e. payments repair and reporting. In principle, centralization of payments processing with payments hubs provides real-time cash flow visibility by eliminating manual / semi-automated reconciling across multiple payment application stove-pipes, enables single-source-of-truth audit reporting and streamlined governance. It is important to note though that such application consolidation with a payments hub does require serious investments in time and effort, potentially being a multi-year effort and may be cost prohibitive depending on the comprehensiveness of the payments hub in terms of payment processing capability.

An alternative to application consolidation is interface consolidation with a payments gateway. Payments gateways streamline the number of integration points for payments applications by serving as a common pipe through which all in-bound and out-bound payment traffic flows. Unlike payments hubs, payments gateways do not replace core payments processing that’s undertaken by the payments applications. They offer connectivity to internal applications and external interfaces through pre-built adapters. This approach improves visibility in terms of being able to offer an aggregated view of the payments traffic in terms of volume and type of payments. Sophisticated gateways offer the ability to introspect the payments traffic, which could comprise of different message formats, there by offering a real-time snapshot of payments inflow, payments outflow and exceptions.

A hybrid approach is to use BPM in conjunction with the above technologies. Here, a lightweight abstract process is created to represent the end-to-end journey from the time a payment enters the organizational boundary to time it leaves the organizational boundary. This enables a chronological view of the payments workloads thereby giving insight for improving business operations by eliminating the bottlenecks for a specific line of business or initiation channel or payments application. Such abstract processes could be modeled as events driven processes that are triggered / invoked by different systems as payments flow through them. This BPM layer could also serve as the single-source for tracking payments. Below is a graphical depiction of how a BPM layer can be used to gain end-to-end visibility of payments.

Wednesday Dec 14, 2011

Improving Visibility of Payments Value-Chain part 1 / 2

Payments processing is a central activity for financial institutions, especially retail banks, and intermediaries that provided clearing and settlement services. Visibility of payments processing is essentially about the ability to track payments and handle payments exceptions as payments flow from initiation to settlement. The business imperative for financial institutions, especially retail banks, for improving visibility of their payments processes stems largely from the following:

  • Lowering time and cost of fraud detection, risk management and compliance by applying these efforts in a centralized manner across lines of businesses, payment types and payment channels
  • Gaining real-time visibility of their cash-flows to optimize working capital by improving effeciency in borrowing and lending and negotiating appropriate SLAs with intermediaries such as clearing houses and payment channel providers such as credit card providers

While automation has improved capacity of existing payments systems to cope with ever-increasing volume of payments traffic, there remain several hurdles to improving visibility of payments processes. Payments processing is a complex businesses for largely the following reasons:

  1. Large and growing number of channels for payments initiation. This includes non-electronic channels such as in-person and post, and electronic channels such as ATM, KiosKs, Point-of-Sale (PoS), Online, Mobile etc.
  2. Multiple payment types including cash, check/draft, card (credit / debit), Electronic Funds Transfer (EFT), Wire transfer etc.
  3. Payments initiated as a particular type could be cleared and settled as another type. For instance, a customer may pay a merchant using a check and the merchant's bank may scan the check and send it as an electronic payment type through a clearing counter-party.
  4. Varying governance requirements across payment type, clearing intermediaries, governments and industry standards
  5. Loss of control due to separation of payment processing function across different entities e.g. initiation of card payments is handled by a retail function in a bank whereas clearing of card payments could be handled a card provider such as VISA

In addition to the above there are the following operational hurdles faced by a retail bank:

  1. Out-dated payment systems that rely on batch-processing thereby making it incredibly difficult to report status of individual payments.
  2. Multiple payment systems, each with their own fraud, compliance and risk systems, that are not integrated thereby increasing time, cost and complexity of fraud detection, compliance and risk management
  3. Multiple external interfaces to clearing intermediaries e.g. SWIFT, ACH, FedWire, Card providers, each with their unique security and message exchange requirements
  4. Structural silos, internal to a bank, aligned to payment types and systems thereby hampering enterprise-wide view of payment activities

In the next post, I will explore some approaches to achieving STP and improving visibility in payments processes that span front-office initiation channels, ancilliary back-office systems and external interfaces.

Saturday Dec 10, 2011

Harnessing Business Events for Predictive Decision Making - part 3 / 3

The previous posts on this topic discussed the need for brain-like decision systems, key attributes of such systems and the enabling technology components. This post drills down into some of the common use-cases where opportunity cost of split-second "sense-and-respond" is overwhelming and intelligent BPM systems, or iBPMS (a term coined by Gartner in a recent research report) are gathering momentum. 

  • Financial Services - Payments processing is the bloodstream of financial services institutions. Banks and network providers (e.g. card issuers, clearing houses etc.) are experiencing phenomenal growth in volume of payments driven by emergence of newer payment channels (e.g. NFC contact-less mobile), greater payment types and aggressive drive to reach out to the un-banked population. Hence there is ever greater regulatory and commercial pressure to prevent fraudulent activities such as identity theft, terrorist financing and money laundering. It is no longer sufficient to rely on existing risk and governance systems to do retrospective analysis to detect and identify source of breaches. After all millions of dollars can be siphoned off in a split second and the perpetrators impossible to trace if the crime was committed with a mobile phone. What's needed is the ability to look at all of the payments transactions as they flow across payments processes, identify a rogue transaction (based on business rules or as an exception) and trigger an alert process to intervene a likely act of fraudulence. Clearly there will be a few false triggers but over time, just like our brains, such systems will be able to predict with greater confidence.

  • Healthcare - Patient Monitoring Systems (PMS), especially life-support systems that are meant to keep patients alive in medical situations where one or more critical organs have failed or are likely ot fail. Clearly, speed of emergency response is highly mission critical, if not life critical, in these systems. The premise of such systems is to monitor vital life statistics continuously and trigger alerts when critical thresholds are reached. However in some instances it is too late for any remedial action even when doctors respond without delay to an alert. In such instances precious lives could be saved if the PMS was able to predict likely organ failure or a threshold breach just a little bit beforehand and not after the fact. Intelligent dashboards that integrate such real-time data feeds from multiple PMSs would allow centralized monitoring and pro-active response thereby increasing critical-care success rates. 
  • Public Sector - Governments are expressing increased concern around cyber-security to safe-guard national interests. As more and more, government workloads and data shift to the internet and inter-linked systems, the vulnerability to and cost of breaches increases manifold. "Terabytes of data are flying out the door, and billions of dollars are lost in remediation costs and reputational harm, government and private security experts said in interviews", (Source: Reuters, June 16, 2011). The cyber-security problem has been tackled largely in a reactive manner till date, where security vendors rush to offer fixes after breaches have occurred or vulnerabilities are disclosed by software vendors. For governments such an approach is simply unacceptable. For instance, by the time a security fix is offered the damage could already be done if US nuclear documents fell in the wrong hands. Next generation cyber-security systems monitor both external i.e. web and internal i.e. business processes in real-time and correlate seemingly isolated data points to detect suspicious activity.

In addition to the above industries, we are seeing application of such iBPM systems, in telecommunications, retail and transportation. My colleague, Dan Tortorici, has written an interesting whitepaper on how Oracle BPM and Oracle Complex Event Processing (CEP) technologies are collectively enabling intelligent process automation, continuous process improvement and business transformation.

Friday Dec 02, 2011

Harnessing Business Events for Predictive Decision Making - part 2 / 3

In my earlier post i discussed the workings of the human brain to illustrate capabilities desired of the next generation decision systems in order to harness business events for real-time predictive decision making.

Below is a graphical depiction of the attributes of a "brain-like" decision system, its benefits and the underlying technology enablers.

Achieving near real-time predictive intelligence creates special demands of the technology components, hardware in particular, in terms of scalability, fault-tolerance and capacity (both compute and storage). After all performance is of the essence in building decision systems that operate at brain-like speeds. A remarkable capability of the human brain is that data and instructions are physically part of the same component, called neurons. This is what allows the brain to store exabytes (1 exabyte = 1 Million terabytes) of data and process equally vast number of real-time events in a flash. In fact more than 99% of the data storage, retrieval and processing in the brain happens without even conscious thought. In contrast, memory and processing is handled by separate components in computers. This is why it takes supercomputers that consume Megawatts of energy (for comparison sake, the human brain consumes around 12 Watts of energy at its peak performance) to simulate human brain activity. Now building a supercomputer for predictive decision making is certainly an over-ambitious, if not audacious endeavor, for most businesses.

Given enough time, skills and financial resources it is certainly possible to build such hardware systems. However, this is neither a forte nor a desirable capability which businesses should strive for. After all, businesses have more pressing concerns around realizing returns on IT investments in ever shrinking time-scales than experimenting with their technology infrastructures. A possible solution lies in integrated systems that are engineered from the ground up and not merely assembled from multi-vendor components. The rationale here is that optimizing individual parts is unlikely to optimize the whole. Hence simply assembling a hardware system by self-integrating server, storage, inter-connects and operating systems from multiple vendors is likely to create bottlenecks at the the slowest links in the chain thereby negating any benefits arising from performance claims of individual component vendors.

Oracle has a unique capability in delivering engineered systems comprising of middleware components and hardware substrata to allow you to get up and running with such decision systems while rationalizing costs and mitigating execution risk. If you are contemplating such event-driven decision systems feel free to drop me a note.


A business centric perspective on Private Cloud, Data-center Modernization and EAI.

Sanjeev Sharma
Twitter: @sanjeevio


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