March 27, 2006 | Boston, MA: Anyone who suffers the pain of correcting process mistakes discovered after a major technology roll-out or is frustrated by the management of complex relationships between policies, procedures, systems and data, take heart: You are not alone. In a study of large- to medium-sized companies recently completed by the Delphi Group, 70 percent of those surveyed said capturing and documenting business requirements is a difficult process. More than 60 percent said their organization has trouble implementing process or policy changes.
On the surface, it appears that any organization worth its salt should be able to define and document the business requirements for a new technology initiation or the automation of an existing process. In reality, however, the task can be overwhelming because it involves understanding — and accurately documenting — the numerous and complex relationships surrounding the companies internal and external policies, the internal control and statutory required procedures and the manual activities needed to accomplish all this utilizing information from people, systems and data formats throughout the enterprise. And at every turn, there are gaps in standards, logic, documentation, systems, policies, knowledge and so much more.
Business Process Management (BPM) offers a solution. BPM helps companies visualize a business process, define the process workflow and integrate the process into an existing infrastructure. Adding intelligence into business process management with business rules and business rule management capabilities enhances the value of the technology dramatically by allowing business analysts to play a larger role in accurately defining the business requirements and managing the sophistication and complexity of real world business problems. A business-oriented rules and process modeling tool helps business analysts prevent business mistakes in business logic from being built into the process, improves efficiency and ensures that the final product truly meets the business need. It also makes it easier for IT to convert those requirements into executable computer code as well as to consolidate and integrate legacy systems throughout the improved business process.
Companies in a broad range of industries are reporting measurable payback from this technology. Ninety-eight percent of those who have implement workflow improvement tools say the solution meets or exceeds their expectations, according to Gartner Group reports. In industry assessments and other printed reports, improvements cited include:
- 30-45% reduction in process operating costs
- 50-75% reduction in end-to-end process completion time
- 60-90% reduction in time to change business requirements
- 75-90% reduction in manual operations errors
Still, with only two to five percent of businesses using business process management technology, adoption has been much slower than many analysts predicted. Why the gap? Most experts believe that CIOs and other senior managers recognize the benefits of BPM, but the perceived risks and known investment of time and resources required are holding them back. Think of it this way: everyone wants to live in a nice home, but very few people actually build the home themselves. BPM has evolved to the same point. People like the benefits, but they simply don’t have the time or expertise required to tackle such a huge undertaking.
As a result, the market is shifting to make it easier for companies to implement the technology. One approach by vendors is to offer canned templates which either recycle implementations from their other customers or are marketing versions without real execution value, but these templates tend to be difficult and cumbersome to customize. Another approach is model-driven BPM applications which are architected to be repeatable and scalable for very specific functional or vertical business processes. A model-driven application uses libraries of business rules combined with workflows as well as user interfaces to close the gap from conceptualizing a need to implementing a solution. It incorporates proven best practices for a particular process and allows each business to easily customize it to fit their needs, just as most people today start with a base house plan and work with the builder to add the unique features that make the home a perfect fit to fit their lifestyle.
This column is the first in a series that will explore the way business process management can benefit companies in a variety of industries. Each column will provide an in-depth look at the common challenges of a particular industry. We’ll explore trends and new developments and provide insight into what’s working…and what isn’t. Next month we’ll examine the dramatic shifts underway in the mortgage banking industry and how companies are using business process management to drive down costs, cope with inflexible systems and speed new products to market.
Before we dig down into specific industry details, however, it is worth taking a few moments to explain BPM at a higher level.
What is Business Process Management?
BPM is a software system that streamlines business processes by automating manual tasks and integrating them with existing systems. The BPM system provides visual process modeling tools to define the process workflow and integration tools to connect to the existing infrastructure. The BPM system executes the process, orchestrating task flowing through the system.
What is Business Logic?
Business logic is the bridge between policy and execution. It is the set of business policies and procedures that execute a corporation’s value proposition to their customers and provides real differentiation against competitors. It is comprised of both business rules and workflows and provides business accountability for strategy, from concept to execution. Business rules express business policy such as price, product, geography and channel. Workflow expresses the ordered tasks for passing of documents or data from one participant (system or person) to another.
The reason it is so difficult to innovate in operations is that it has been difficult for businesses to create and maintain the business logic that represents a company’s policies. This is where business process management, implemented correctly, can help. Model-driving applications allow business analysts to change, manage and re-deploy the business logic largely independent of the IT effort.
What is Rules-Driven BPM?
A rules-driven BPM system uses business rule engine technology to drive the business process. The system allows a business analyst to model the process and automate human tasks by defining the business rules to be applied, rather than wait for a developer to code the logic of the task. This bridges the gap between business and IT, enabling each group to do what they do best, which in turn reduces costs, improves productivity and accelerates time-to-value.
As the value of rules-driven process management becomes more well-known, the push to include it in all solutions is becoming stronger. According to reports from Gartner, Forrester and Delphi, customers are listing business rules capabilities as a “must-have” feature for any process management technology under consideration.
The Business Process Gap
Unlike decades past, the focus is no longer on the technology. It is all about the business. For the benefits of BPM to be realized in the mainstream, companies need to have access to proven solutions for specific recurring industry processes. Model-driven applications appear to do this most successfully. They incorporate as best practices the 80 percent of the business process that is standard within an industry and enables the customer’s business team to focus and drive the 20 percent of the process that is unique to that organization.
In addition to incorporating proven best practices, this approach eliminates the common problems in “do-it-yourself” business process management. It adds the business logic layer of expertise to the IT function and provides true transparency into the business problem. In addition, some solutions provide established project management functionality to keep the project on task and features that speed the requirements gathering phase which is so challenging for organizations. This approach also goes a long way in mitigating risk by ensuring that mistakes are not built into the automated process and making it easy for an organization to accurate manage change.
As you will see in the coming months, BPM has tremendous potential in a wide range of industries and a model-driven approach to this technology can provides businesses with real value, intellectual capital and competitive differentiation.
Caitlin Seele: email@example.com | (617) 530-1208