Thursday Mar 29, 2012

BPM in Retail Industry

The following series of blog posts discuss common BPM use-cases in the Retail industry:

  • ARTS Reference Model for Retail
  • Retail 2.0 represents the transformation in the retail industry triggered by the accelerated shift towards online and mobile technologies and social shopping paradigms. Never before has the consumer been of more importance or should i say in greater control, especially so due to the shrinking information asymmetry between merchants and consumers that has tilted the balance of power in the latter’s favor.

For details, click Customer Experience Management for Retail 2.0 - part 1 / 2

  • Below is a concept architecture for streamlining front-end, mid-office and back-end interfaces through shared process to achieve consistency and efficiency in managing the customer experience from order capture to order provisioning.

    For details, click Customer Experience Management for Retail 2.0 - part 2 / 2

Friday Feb 24, 2012

BPM in Utilties Industry

The following series of blog posts discuss common BPM use-cases in the Utilities industry:

  • Meter-to-Cash is the primary revenue generating activity for down-stream utilities. Traditionally, there has been little impetus for utilities to strive for cost efficiencies across this activity due to the revenue ceiling imposed by regulated prices. Today, utilities are faced with capital intensive investments in upgrading to smart-grid/metering infrastructures and consumer-centric revenue models e.g. net-metering and time-of-use pricing that could potentially drive down revenues as consumption shifts to off-peak periods. Hence, utilities can no longer afford to neglect efficiencies in their meter-to-cash cycle.

For details, click Meter-to-Cash Optimization for Smarter Utilities

  • Today, utilities are committing to capital intensive investments in upgrading to smart-grid/metering infrastructure driven by government regulation and consumer awareness. However, iIn this process of becoming increasingly “smarter”, the digitization of the grid is blurring lines between operational, information and communication technologies. This inadvertently makes the grid highly vulnerable to cyber-attacks, physical sabotage and equipment malfunction in the “last-mile” i.e. Automated Metering Infrastructure (AMI).

For details, click Mitigating Cyber-Security Risks to Smart-Grid AMI

Sunday Jan 29, 2012

BPM in Communications Industry

The following series of blog posts discuss common BPM use-cases in the Communications industry. 

  • Communications Service Providers (CSPs) are faced with declining voice revenues; hyper-competition from increasing number of IP network based providers and customer demand for integrated telephony, mobile, TV and internet services.While “Triple play” or “Quadruple play” offerings have become the norm, CSPs are experiencing increasing customer churn and revenue-leakage arising from errors and delays in order management across order-capture and order-provisioning.

For details, click Gain the Customer-service Advantage with Agile Order-cycle Processes.
  • The distinction between network operator Communications Service Providers (CSPs) and virtual CSPs e.g. MVNOs is decreasing by the day driven by industry deregulation and proliferation of IP based networks that have lowered barriers to entry. This hyper-competition is creating continuous pressure on CSPs to shorten time-to-market cycles for PLM and FAB (fulfillment, assurance and billing) processes to differentiate.

    For details, click Driving Operational Efficiency with eTOM

    Thursday Jan 12, 2012

    Stuck in Cement: Turn to BPM for edge applications

    "Stuck in Cement: When Packaged Apps Create Barriers to Innovation", reads the title of a recent Forresterresearch paper. The author, Craig Le Clair, laments that packaged applications create inertia that makes it harder for organizations to embrace change from an execution perspective. As per the report, there is widespread frustration with regards to ability to packaged applications to allow businesses to break free from operational silos and embrace change. So does that mean packaged applications are the root of all organizational inertia and should be dispensed with? Certainly not!

    Vertical or horizontal applications packaged applications were intended to provide scale to business operations in terms of Capacity (i.e. volume), Performance (i.e. Straight Through Processing (STP)) and Compliance (with standards and /or  regulation) while mitigating time, effort and comprehensive skills set requirements, both technical and functional, of developing custom applications. The same rationale and value of packaged applications holds true, even more so today,  when time-to-value (lead-to-cash and trouble-to-resolve) and time-to-market (concept-to-market and time-to-compliance) pressures are greater than ever. While technology innovations such as Cloud accelerate initial set-up time and effort, to a large extent, cloud based applications apportion up-front and on-going costs of packaged applications over their life-time. It would be sacrilegious to claim that cloud based applications will solve the agility issues faced with on-premise applications. In fact the integration challenge would remain largely the same, if not get more complicated especially given the security, privacy and data synchronization concerns.

    The problem of responding to change from an packaged applications perspective has been incorrectly associated with the eradication of business silos. Organizational and IT systems stove-pipes have been berated as being the cause of dysfunction in responding to change. But are organizational silos really bad? If so, why do they develop in the first place? Organization and IT system silos are a consequence and concomitance of natural evolution as the organization grows in the depth and breadth of its offerings, geographic reach, vertical specialization and market (i.e. customer segments). To respond to business priorities, that is revenue growth, margins, profitability or market share, organization will continue to become more complicated.. Matrix organizational structures are giving way to mesh (i.e. network) like organizational structure where the boundaries between internal lines of business and the external stakeholders (including customers, partners and suppliers) is blurring. Shouldn't businesses then be making more investments in packaged applications that are purpose-fit for specific customer niches, geographies and industries? Clearly, the flexibility of changing existing packaged-applications to meet new business needs is overrated in today's business environment.

    The solution lies in providing a consistent experience across external interfaces while continuing to make investments in internal applications (packaged or custom). After all specialized, purpose-fit, applications will deliver a competitive advantage. This is where edge applications built on BPM shine in overcoming the change inertia plaguing businesses. For instance, let's consider a local retailer contemplating entry in an overseas market. What if the retailer's existing CRM system does not fit the requirements of rapid-entry into the target market? What choices does the retailer have?

    One choice, could be to customize the existing CRM system through customized development effort. Another choice, could be rip-and-replace the existing CRM system with a new on-premise or cloud based CRM system. The latter approach may appear tempting in vendor pitches but is not for the faint-hearted in practice. To quote Carl Von Clausewitz, "Everything in strategy is very simple, but that does not mean that everything is easy!" In reality neither of the above approaches scale in the long-term.

    Yet another alternative, one that businesses typically resort to, is to deploy a new CRM system that is purpose-fit for the requirements of the overseas market. In this case, the business is faced with the time and effort of re-coding business rules and compliance policies in the new CRM system. Though this approach makes sense it becomes harder to scale when future needs complicate integration effort and consistent enforcement of business rules and compliance policies across the stove-pipe CRM systems. However businesses can circumvent these issues if they build an intermediate layer that interfaces with the customer channels and orchestrates the orders across the different front-end CRM systems. In this manner, businesses get the performance and capability benefits of purpose-fit packaged-applications and while being able to apply business rules and compliance policies consistently across them thereby providing a uniform customer experience across the external channels.

    The future is here today and BPM addresses the long-standing challenge of strategy-execution gap by serving as a platform for building edge applications.

    Saturday Jan 07, 2012

    OVUM opines Oracle BPM Process Accelerators as ripe!

    A recent report from OVUM affirms the significance of Oracle's BPM Process Accelerators which were announced at OOW last October.

    Given that process templates or accelerators have been around in the BPM industry for a while, the OVUM report identifies two scenarios addressed by process accelerators:

    • Complex, IT led, process integration  -  The business value of such accelerators is reduction of implementation effort and complexity i.e. cost of professional services and thus faster time-to-value. 
    • Lightweight, business led, process integration - The business value of such accelerators is the empowerment of business users to automate common workflows that are largely human-centric and document-centric with minimial IT dependence.

    The OVUM report points out, and correctly so, that Oracle's BPM Process Accelerators address the latter scenario. However the report leaves the reader wondering whether Oracle offers any solution for the former scenario.To set things in perspective, Oracle AIA delivers process accelerators and pre-built integration packs for complex application and data integration needs outlined in the first scenario. As is what you would expect, the process reference models delivered through AIA are built-on on Oracle BPM suite.

    In addition to Oracle BPM Process Accelerators and AIA, Oracle partners too have developed and deliver process accelerators on top of Oracle BPM suite to jump-start process improvement initiatives with Oracle BPM. The highlight of the report is an independent validation of the industry momentum Oracle BPM is generating.

    Thursday Dec 22, 2011

    Payments Straight-Through-Processing Journey

    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. 

    You can find more details in the following posts:

    • Improving Visibility of Payments Value-chain - (1/2)

      [Summary]: 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. This post looks into the factors (demand, organizational and technology) creating impedance in realizing the vision of Straight-Through-Processing.

    • Improving Visibility of Payments Value-chain - (2/2)

      [Summary]: 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.

      This post outlines different approaches  to achieving STP including application consolidation, interface consolidation and hybrid (with end-to-end abstract processes).

    Sunday Dec 11, 2011

    Intelligent (event-driven) Business Process Management

    In a research report released last week, Gartner announced a new use case for BPMS, dubbed iBPMS (Intelligent BPM Systems). Gartner's findings re-affirm our vision and existing capability in delivering real-time-decision making and intelligent process automation capabilities offered by Oracle BPM and Oracle CEP technologies. 

    In fact, i have blogged over the past few weeks on the need for brain-like decision systems, key attributes of such systems, the enabling technology components and iBPMS use-cases in Financial Services, Healthcare and Public Sector where opportunity cost of split-second "sense-and-respond" is overwhelming. You can find more details at the following links:

    • Harnessing Business Events for Predictive Decision Making - (1/3)

      [Summary]: Faced with this data explosion, businesses are exploring means to develop human brain-like capabilities in their decision systems (including BI and Analytics) to make sense of the data storm, in other words business events, in real-time and respond pro-actively rather than re-actively. It is more like having a little bit of the right information just a little bit before hand than having all of the right information after the fact (premise of the book, "The Two Second Advantage"). To illustrate this thought, this post delves into the workings of the human brain.

    • Harnessing Business Events for Predictive Decision Making - (2/3)

      [Summary]: 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 possible solution lies in integrated systems that are engineered from the ground up and not merely assembled from multi-vendor components. This post provides a graphical representation of brain-like capabilities and the enabling technology components.

    • Harnessing Business Events for Predictive Decision Making - (3/3)

      [Summary]: This post looks at real-world scenarios where Oracle BPM and Oracle CEP technologies collectively deliver intelligent automation, as envisioned by Gartner's study on iBPMS, in Financial Services, Healthcare and Public Sector.

    Wednesday Nov 23, 2011

    Gauging Maturity of your BPM Strategy - part 2 / 2

    In my earlier post I had discussed the essence of maturity assessment and the business imperative for doing the same in the context of BPM. In this post I will discuss Oracle’s BPM Maturity assessment methodology.

    Oracle’s BPM Maturity model comprises of the following components:

    • Maturity – represents stages of evolution of your BPM capability with 0 being the lowest level and 5 being the highest level 
    • Domain – represents multiple perspectives both technical and business oriented against which your BPM capability can be assessed
    • Adoption – represents scale of BPM rollout starting at the project level to the enterprise level

    Note: Your BPM capability can be at different levels of maturity for the different domains.

    Oracle’s BPM assessment methodology measures the maturity of your BPM capability at the individual domain level as well as the aggregate level. The output of Oracle’s BPM assessment benefits you in two ways:

    • Gap Analysis by comparing the “As-Is” BPM capability with the desired “To-Be” BPM capability along the various domains  (see Figure 1)
    • Systematic Adoption by aligning evolution of BPM capability with its rollout in multiple phases (see Figure 2)

    Friday Nov 18, 2011

    Gauging Maturity of your BPM Strategy - part 1 / 2

    In this post I will discuss the essence of maturity assessment and the business imperative for doing the same in the context of BPM. Social psychology purports that an individual progresses from being a beginner to an expert in a given activity or task along four stages of self-awareness:

    1. Unconscious Incompetence where the individual does not understand or know how to do something and does not necessarily recognize the deficit and may even deny the usefulness of the skill.
    2. Conscious Incompetence where the individual recognizes the deficit, as well as the value of a new skill in addressing the deficit.
    3. Conscious Competence where the individual understands or knows how to do something but demonstrating the skill requires explicit concentration.
    4. Unconscious Competence where the individual has had so much practice with a skill that it has become "second nature" and serves as a basis of developing other complementary skills.
    We can extend the above thinking to an organization as a whole by measuring an organization’s level of competence in a specific area or capability, as an aggregate of the competence levels of individuals it is comprised of. After all organizations too like individuals, evolve through experience, develop “memory” and capabilities that are shaped through a constant cycle of learning, un-learning and re-learning. Hence the key to organizational success lies in developing these capabilities to enable execution of its strategy in-line with the external environment i.e. demand, competition, economy etc. However developing a capability merits establishing a base line in order to
    • Assess the magnitude of improvement from past investments
    • Identify gaps and short-comings
    • Prioritize future investments in the right areas

    A maturity assessment is essentially an organizational self-awareness check that is aimed at depicting the “as-is” snapshot of an existing capability in-order to guide future investments to develop that capability in-line with business goals. This effectively is the essence of a maturity assessment.

    Organizational capabilities stem through its architecture, routines, culture and intellectual resources that are implicitly and explicitly embedded in its business processes. Given that business processes underpin realization of organizational capabilities, is what has prompted business transformation and process management efforts. Thus, the BPM capability of an organization needs to be measured on an on-going basis to ensure delivery of its planned benefits.

    In my next post I will describe Oracle’s BPM Maturity assessment methodology.

    Thursday Nov 17, 2011

    Managing Operational Risk of Financial Services Processes – part 2/2

    In my earlier blog post, I had described the factors that lead to compliance complexity of financial services processes. In this post, I will outline the business implications of the increasing process compliance complexity and the specific role of BPM in addressing the operational risk reduction objectives of regulatory compliance.

    First, let’s look at the business implications of increasing complexity of process compliance for financial institutions:

    · Increased time and cost of compliance due to duplication of effort in conforming to regulatory requirements due to process changes driven by evolving regulatory mandates, shifting business priorities or internal/external audit requirements

    · Delays in audit reporting due to quality issues in reconciling non-standard process KPIs and integrity concerns arising from the need to rely on multiple data sources for a given process

    Next, let’s consider some approaches to managing the operational risk of business processes. Financial institutions considering reducing operational risk of their processes, generally speaking, have two choices:

    · Rip-and-replace existing applications with new off-the shelf applications.

    · Extend capabilities of existing applications by modeling their data and process interactions, with other applications or user-channels, outside of the application boundary using BPM.

    The benefit of the first approach is that compliance with new regulatory requirements would be embedded within the boundaries of these applications. However pre-built compliance of any packaged application or custom-built application should not be mistaken as a one-shot fix for future compliance needs. The reason is that business needs and regulatory requirements inevitably out grow end-to-end capabilities of even the most comprehensive packaged or custom-built business application.

    Thus, processes that originally resided within the application will eventually spill outside the application boundary. It is precisely at such hand-offs between applications or between overlaying processes where vulnerabilities arise to unknown and accidental faults that potentially result in errors and lead to partial or total failure.

    The gist of the above argument is that processes which reside outside application boundaries, in other words, span multiple applications constitute a latent operational risk that spans the end-to-end value chain. For instance, distortion of data flowing from an account-opening application to a credit-rating system if left un-checked renders compliance with “KYC” policies void even when the “KYC” checklist was enforced at the time of data capture by the account-opening application.

    Oracle Business Process Management is enabling financial institutions to lower operational risk of such process ”gaps” for Financial Services processes including “Customer On-boarding”, “Quote-to-Contract”, “Deposit/Loan Origination”, “Trade Exceptions”, “Interest Claim Tracking” etc.. If you are faced with a similar challenge and need any guidance on the same feel free to drop me a note.

    Tuesday Nov 15, 2011

    Managing Operational Risk of Financial Services Processes – part 1/ 2

    Financial institutions view compliance as a regulatory burden that incurs a high initial capital outlay and recurring costs. By its very nature regulation takes a prescriptive, common-for-all, approach to managing financial and non-financial risk. Needless to say, no longer does mere compliance with regulation will lead to sustainable differentiation.  Genuine competitive advantage will stem from being able to cope with innovation demands of the present economic environment while meeting compliance goals with regulatory mandates in a faster and cost-efficient manner.

    Let’s first take a look at the key factors that are limiting the pursuit of the above goal.

    Regulatory requirements are growing, driven in-part by revisions to existing mandates in line with cross-border, pan-geographic, nature of financial value chains today and more so by frequent systemic failures that have destabilized the financial markets and the global economy over the last decade.  In addition to the increase in regulation, financial institutions are faced with pressures of regulatory overlap and regulatory conflict.

    Regulatory overlap arises primarily from two things: firstly, due to the blurring of boundaries between lines-of-businesses with complex organizational structures and secondly, due to varying requirements of jurisdictional directives across geographic boundaries e.g. a securities firm with operations in US and EU would be subject different requirements of “Know-Your-Customer” (KYC) as per the PATRIOT ACT in US and MiFiD in EU.

    Another consequence and concomitance of regulatory change is regulatory conflict, which again, arises primarily from two things: firstly, due to diametrically opposite priorities of line-of-business and secondly, due to tension that regulatory requirements create between shareholders interests of tighter due-diligence and customer concerns of privacy. For instance, Customer Due Diligence (CDD) as per KYC requires eliciting detailed information from customers to prevent illegal activities such as money-laundering, terrorist financing or identity theft. While new customers are still more likely to comply with such stringent background checks at time of account opening, existing customers baulk at such practices as a breach of trust and privacy.

    As mentioned earlier regulatory compliance addresses both financial and non-financial risks. Operational risk is a non-financial risk that stems from business execution and spans people, processes, systems and information. Operational risk arising from financial processes in particular transcends other sources of such risk. Let’s look at the factors underpinning the operational risk of financial processes.

    The rapid pace of innovation and geographic expansion of financial institutions has resulted in proliferation and ad-hoc evolution of back-office, mid-office and front-office processes. This has had two serious implications on increasing the operational risk of financial processes:

    ·         Inconsistency of processes across lines-of-business, customer channels and product/service offerings. This makes it harder for the risk function to enforce a standardized risk methodology and in turn breaches harder to detect.

    ·         The proliferation of processes coupled with increasingly frequent change-cycles has resulted in accidental breaches and increased vulnerability to regulatory inadequacies.

    In summary, regulatory growth (including overlap and conflict) coupled with process proliferation and inconsistency is driving process compliance complexity

    In my next post I will address the implications of this process complexity on financial institutions and outline the role of BPM in lowering specific aspects of operational risk of financial processes.


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