BPM in Action

On July 23, for my investment research work, I analyzed the Metastorm’s S-1. I said I thought the company was incorrectly betting that enterprise architecture management (EAM), business process analysis (BPA) and business process management (BPM) would coalesce into a market. I didn’t spend a lot of time defending my opinion because I also said it didn’t matter what I thought because:

“Metastorm is trying to redefine the already redefined category BPM… Such a redefinition is a tough challenge for a small player in a market and the challenge is compounded by the fact that all the major software-market players offer products in all these categories; even if Metastorm were successful in broadening the definition, its competitors are the same; there is no marketing advantage…”

Later I saw an article in a new technical trends journal that crystallized my thinking about why I disagreed with the Metastorm premise.

Metastorm is depending on the combination of process-related functionality into a product that would be used by developers, architects, business analysts, and even end users such as budget analysts and production planners, an unlikely combination in my opinion. Combining functions that all types of end users need is a more likely scenario.

The article that caught my eye is in the newly re-launched PwC Technology Forecast. It predicts that a suite of software will emerge that combines business intelligence (BI), rules engines and BPM. That is the likely combination that will emerge in my opinion and it reminded me that in 2004 at IDC, Dan Vesset and I called it “intelligent process automation” (he being the BI guy and I being the business rules/BPM guy). The term apparently never caught on. I found about 1800 hits on Google, small potatoes when it comes to buzzwords but the concept is emerging pretty much as we predicted as the next wave in BPM.

In 2004, we said it wasn’t all there yet because on the BI side there was a lack of event-based analytics and dynamic rules management, a lack of “self-learning” by the software because it did not track decisions and outcomes, and a lack of a process context. On the BPM side we saw the mirror image: a lack of data context (that is, data driving the process flow because BPM systems are traditionally and technically human-centric and exception based) and a lack of tight, hardened multi-enterprise process flows. BPM systems were not then taking advantage of all available underlying middleware technologies and were primarily only utilizing almost-10-year-old web server software capabilities, not much more powerful in many dimensions than the well-known Apache HTTP server.

This meant little to no tight connection to the canonical business flows, which are precursors of the application composites that are buried in every 'ERP system' or equivalent (what Michael Dortch has been calling the “Big Mashup”). Four years later, according to PwC:

“… with heroic effort, these applications can be stitched together to guide management and facilitate process enhancement.”

To understand the implications of some of these issues both in terms of the shortcomings of BPM and BI individually and what a full IPA solution might have, consider giving Dan a call at IDC.

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In March, when Appian announced its business process management (BPM) software contract with Enterprise Rent-a-Car, I noted that a lot of Appian’s technology such as Appian’s Form and Rules Designers and other real-user-facing components all work via a straight Web interface (no need for Flash, plug-ins, etc.). That helps support the company’s ability to deliver its Software as a Service (SaaS) offering called Appian Anywhere via almost any client. Given my day job with IT Investment Research (see link to right) I should have added that another big ingredient for any company going the SaaS route is money. For a bootstrap startup such as Appian that is not a trivial issue so it is not surprising that Appian’s founders announced venture funding on July 21.

Samir Gulati, Appian’s Vice President of Marketing and Matthew Calkins, its President and CEO, explained how they will use the $10 million investment by Novak Biddle to build up the SaaS infrastructure, market it and classic Appian Enterprise through a growing global and industry-specific partner ecosystem, and possibly add technology partners in the areas of business process analysis and business intelligence (BI). Started 10 years ago by guys from BI supplier Microstrategy, Appian has built on a Java base following the Unified Modeling Language (UML) and the XML Process Definition Language (xPDL). Appian comes with Red Hat JBoss out of the box but of course works with WebSphere and WebLogic as well.

But the good news is that users don’t have to worry about all that technology stuff. More important are the ease of use of Appian BPM implementation templates. Examples are available for procurement in federal government, for wealth management with rules for credit scoring, a program with Instill to build a quality management solution for the food/service industry, and a possible IT Help Desk template deriving from the Enterprise Rent a Car contract. One of the big uses of the investment will be to broaden and deepen such industry-specific and functionality-specific capabilities through partners. North America oriented today, Appian wants to expand outward in Europe from a beachhead in the U.K. and also add partners in Asia/Pacific.

How much of that growth is SaaS in the long term is an open question both for Appian and for the BPM market in general. I think the software market is going (back) to delvery as a service but that is more true for applications such as CRM than it is for BPM. The latter is true especially for those users that think of BPM as middleware. Calkins says he is prepared for both models of delivery but thinks there is an opportunity for a daily double where the two groups intersect: users that get their applications SaaS will have less of an issue using middleware delivered in that manner. Gulati says he expects to see examples of that both among small and medium size business as well as individual departments in larger companies and organizations.

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In case you needed some one other than your boss to tell you so, your budget is being cut. So says a recently released IT Spending research report from Computer Economics. There is a summary available on their web site and a longer version is available for sale. More interesting, according to the IT managers surveyed:

“Furthermore, the 4.0% planned increase in IT budgets in 2008 (Author’s note: vs. over 5% in 2007 depending on which research firm’s data is used) may prove to be optimistic. According to our survey, 25% of IT executives do not expect to spend all of the money allocated to them in their IT budgets…….”

Worse yet, capital budgets for information technology are flat. As expected the rates vary by industry, with manufacturers seeing almost no growth and energy/utility companies growing their budgets up to 8-9% (for the same reason thiefs rob banks). This is a U.S./Canada survey with an n of 200, fairly small for the industry splits to be too projectable.

So what business processes will be automated with these smaller spending levels? The company says that

“The hottest priorities for IT organizations… are… to improve service levels (#1) and better manage risks by improving disaster recovery capabilities (#2) and increasing IT security (#3), while at the same time reducing the cost of ongoing IT maintenance and support (#4). Around half of respondents across all sectors indicated that these priorities are increasing in importance this year.”

That makes it sound like a good year for the other half of CRM, the customer service and retention end of the CRM process set that rarely gets mentioned because all the emphasis is on salesforce automation and marketing.

CRM is a particularly important solution area for business process management (BPM) because it is one of the functions least integrated into ERP suites. That means BPM software can be used to tie the two together whether or not the CRM is another software package like ERP or a home-grown Web 2.0 capability. Both Jan Baan and >many users like yourselves talked about the importance of the CRM solutions area in our recent articles available here on ebizQ.

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When I started researching the ERP market in 1993 for Datapro, I quickly found there were over 100 ERP software providers even though most analysts only counted Oracle, J.D. Edwards, SAP and a dozen or so guys that are now part of Infor. (Some analysts even counted Hyperion’s accounting software as ERP, a credit to one of the best PR people I ever met, Judith Rothrock. She was able to convince some pretty savvy people that little Hyperion deserved to be mentioned in the same breath with the big boys. A few years later she pulled off the same play while quarterbacking Lawson’s PR.)

The difference between their list and mine was that I counted software supporting all industries rather than simply that which supported manufacturing. After all, what was HBO & Company’s (now McKesson) healthcare delivery software but ERP for healthcare? What was Hogan’s software but ERP for banks?

The logical extension of that process: what was the original SAP R/2 but a pharmaceuticals-specific ERP package? A business process management (BPM) trend I’ve started to watch here at ebizQ is the growth of industry-specific BPM suites. If what I found in the ERP market years ago holds true for BPM, it will turn out that dozens of these products already exist but are simply called something else.

For example:
• Over at it-director.com, Bloor’s Simon Holloway points out that Apriso’s FlexNet manufacturing execution system is really manufacturing-specific BPM software.
• Fort Washington PA-based Feith recently announced that it follows the U. S Department of Defense (DoD) 5015.2 standard. I have no idea what that means but based on the press release it looks like Feith’s lead product is a government-specific BPM product (even DoD-specific?)
• FTS, an Israel-based provider of Billing, CRM and Business Control solutions specializes in communication and content service providers; FTS’ BPM engine is actually the Oracle/BEA AquaLogic product
• Kaulkin Information Systems of Rockville MD creates workflow, document, and business process management technologies for its financial-services clients

Where are the equivalent BPM products for healthcare, retail, education and so forth? I suspect the list goes on and on just as it did for ERP and ebizQ would like to hear from you if you have such an industry-specific BPM solution. Particularly if you support the financial-services industry, see the information about our upcoming article here and participate in our survey.

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A recent article on CRM Today about BPM in banking reminds me that I have to get going on the next in a series of BPM-related research articles for ebizQ. The article talks about a Tower Group report that says:

"Financial services institutions will soon be forced to redefine the “classic” role of the bank teller, thanks to the decreasing number of teller transactions per year, advances in bank teller automation technology, and the rapid expansion of online and contact center channels."

That finding gets me asking the question, what better way to do such things in all areas of financial services than BPM software. If the day of the integrated application suite is truly done, then a lot of BPM software marketing organizations must be thinking the same way.

This month we are looking for BPM software and projects specific to financial services. I think of it as middleware but you might think of it as an application project. Let me know what you think either way and let me know why it fits one category or another. The survey instrument can be downloaded here.
Download file

The article is tentatively scheduled for release in August 2008. It will be similar to recent ebizQ articles on BPM as the new ERP software and similar product/category overviews. Your company’s product(s) may be mentioned based on my secondary research but if you would like to formally participate, download and return the attached 1-page survey form by Monday July 21, 2008 to dennis@ebizq.net.

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Like the week in December leading up to the Gregorian New Year (or do I have the wrong pope; is it Julian?), the week of July 4th is a slow news week. Although it is just an American holiday, IT companies believe that because the U.S. accounts for about 40% of all IT spending, it makes no sense to churn the worldwide waters with information while half the market is at the beach.

So this week provides me an opportunity for trolling the web with a google on "BPM" (I am always at the beach here on Cape Cod). I found an interesting blog and business process management (BPM)-related blog postings by a Microsoft "Enterprise Architect," Avinash Nicklas Chan Kumar Malik. His bio is here. The particular post that caught my eye is here (but there are a lot of other interesting BPM postings in his archives).

A Microsoft Enterprise Architect is a high-level professional developer and the point of his article, I think, is that BPM is not going to put programmers out of business. Despite the analysis of many, including me, that the goal of enterprises is to have BPM software working so well that non-IT folks can string together their own processes without getting the IT department involved, we aren't there yet. Avinash doesn't think we ever will be.

He may be right in terms of his criticism of BPM notation languages such as BPEL and BPMN (in fact, I never heard anyone promise that they would be used by non-IT). But if so, another trend (what you newbies call SaaS, or appliances, or some confluence of IT and the utility industry) will eventually reduce the role of the software developer as we know it. The demise of the IT developer in the enterprise is a matter of philosophy, economics and demographics. In reverse order, there are fewer and fewer well trained developers, they cost too much and we have to stop re-inventing the wheel.

By the way, Avinash, that is not to say that the need for developers won't grow and grow at Microsoft (and Oracle, SAP, IBM, Verizon, Google, ConEd, Disney/ABC, and so forth).

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If you blog on business process management (BPM) and open source software (OSS) as I do, every once in a while you get a two-fer such as the recent announcement at the Red Hat Summit that Collossa has joined the Red Hat Exchange (RHX). I wrote about Colossa here and the RHX here.

This is good news for both trends. RHX has been plauged by not enough true applications (do not be confused that I often argue that software such as Colosa's is middleware). The BPM movement has been hampered by not enough open source.

Of course as I researched in this article on open source BPM (ebizQ Gold Club membership required but there is no fee), Red Hat's own jBPM qualifies but the whole idea of the exchange is to up the count of non-Red-Hat choices. Colosa's listing brings the total to 20 such packages; next goal is 200.

More to come in business intelligence, ERP (including SCM, PLM and CRM), and all kinds of standalone collaborative and transactional applications. Why not all that IBM BPM software that runs on Linux? After all, RHX doesn't require that the exchange software be open source does it?

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