BPM and workflow: A convergence driving business value

Globalisation has amplified the need for improved corporate performance and greater competitive advantage. However, since the spending spree of the 1990s, businesses are loath to throw good money after bad and are demanding IT find ways to maximise the already considerable investment in technology.

This, together with the constant need to streamline cost structures and enhance worker productivity, has made business process management (BPM) a popular subject at management meetings - despite an ingrained aversion to buzzwords and three-letter acronyms. The reason is simple: BPM has matured as a technology over the past decade or so.

Robert Handler, VP of enterprise planning and architecture strategies at Meta Group, believes what we now refer to as BPM has its roots in industrial engineering. In an article penned for Darwinmag.com, he suggests the formula "BPM = industrial engineering + workflow".

Qualifying this, Handler notes that new underlying technologies like pi calculus are being applied to traditional software solutions (read workflow) to provide more robust process automation. "Pi calculus, considered a subset of PROCESS algebra, allows computing over channels, or concurrent computing, more easily. This better mimics the way in which processes occur in the real world," he explains.

In their book "Business Process Management - The Third Wave", authors Howard Smith and Peter Fingar offer a different view: "BPM does much more than facilitate process design. It provides a direct path from vision to execution. BPM provides the ability to create the future by innovating with process, without the costs of re-engineering or adding more layers to the already complex technology stack."

The Aberdeen Group describes BPM as having "to model a process, broker that process, deliver it and then manage it, all within a single environment".

However, the "single environment" is a misnomer because standards are emerging for the definition of business processes. Mark Ehmke, MD of Staffware SA, believes XML-derived standards and Web services technology will enable BPM to "cross the chasm".

"[Business] processes are no longer confined to departments or individual companies. They are now spanning multiple organisations and, as a result, BPM is now beginning to converge with enterprise application integration (EAI) technology. A good example is the supply chain," he says.

Aberdeen supports this view, dubbing BPM "the exchange of enterprise information through the semantics of a business process view that involves employees, customers, partners, applications and databases". According to Ehmke, businesses will store their process definitions in XML and use Web services to deploy those processes - making them accessible to customers and suppliers. Impetus is given to his belief by the fact that organisations are now using Web services to facilitate EAI.

Another factor worth considering is that storing processes in this way and making them accessible via Web services opens the door to outsourcing.

Lofty Pretorius, energy consultant at arivia.kom, sees business process outsourcing, or BPO, becoming a major growth industry in the next few years.

Trevor van Rensburg, best practices BU manager at Software Futures, cites the audit trail as a primary advantage of current BPM technology. "[The audit trail] enables companies to see exactly how long processes take, where the bottlenecks are and how much each process costs the company from a productivity point of view," he says.

Another driver, according to Van Rensburg, is corporate governance and the need for compliance with regulatory acts or frameworks. "In banking, for example, the FICA Act requires banks to hold certain information about their customers, and there is similar regulation in the legal profession. BPM helps companies ensure they collect and store this information. It pulls it all together to provide controlled, documented processes that can be measured and optimised over time," he notes.

David Ives, solutions manager, enterprise product group at Microsoft SA, agrees. "Businesses [in SA] are legally obliged to keep documents for five years. By building such statutory requirements into business processes, companies can ensure they don`t fall foul of the law," he says.

Constant change is an irony in business. While most companies accept that competitive landscapes change continually and business processes must adapt to such changes, people (or, more accurately, employees) rarely feel the same way, tending to resist change.

BPM technology enables businesses to adapt processes without necessarily requiring people to change the way in which they work. In many cases, simply adapting an automated process allows the business to adapt without encountering resistance on the shop floor.

Sean O`Hare, technology architect at Sun Microsystems SA, believes this is the most critical aspect of BPM technology. "It`s a feedback loop. Constant feedback allows processes to be continually refined and adapted to changing business needs," he says.

Microsoft`s Ives concurs: "Business today needs an agile infrastructure that enables processes to be changed on the fly."

Winston Anderson, business technologist at Bytes Business Solutions, believes BPM is being applied to quality improvement, eliminating the lag between management intent and execution. "New BPM systems make it possible for organisations to make continuous, subtle course corrections to stay ahead of the competition - whether it be from a production, logistics, marketing or sales point of view," he says.

However, O`Hare says current definitions of BPM are too vague. "Although people are [using BPM] they may not be defining it as such. If you look at a typical work environment, there are systems and processes in place. Work moves through them but companies are not necessarily calling it BPM," he says.

It is of critical importance that, as far as possible, your business processes and IT are fully integrated.

Andre de la Harpe, COO, Kalahari.net

Andre de la Harpe, COO of kalahari.net, notes that business processes have always been around, and that they were simply managed manually before, but due to increased volumes this is no longer possible. "BPM cannot, and should not, be considered separate to the business - it is the business," he adds.

Although kalahari.net is a so-called "new economy" company, it provides a relatively simple illustration of BPM and what it means to any business. The processes initiated by placing an order on the company`s Web site are similar to those in operation in any business on any given day.

"Each day, orders received are [automatically] collated, sorted and an order generated for each supplier with pricing and other related information drawn from our database. Orders destined for local suppliers are then dispatched and those for international publishing houses are placed [manually] in a global ordering system connecting us to those suppliers," says De la Harpe.

Upon receipt, goods are scanned and matched with original customer orders, complete orders are packed, the package label is scanned, an invoice and waybill are automatically generated, payment is finalised with the authorising institution and the order is dispatched via one of the courier services kalahari.net uses.

"Within the process as a whole are sub-processes for handling incomplete orders, notifying customers of order status and even tracking the progress of the delivery. Customers can query any of this information on the Web site at any time," he says.

Contrasting the process flow at kalahari.net with those in traditional "old economy" business highlights the gains in efficiency that can be achieved using technology. "It is of critical importance that, as far as possible, your business processes and IT are fully integrated. IT must be seen as part of the business and should be involved in all its processes," says De la Harpe.

This is consistent with the experiences of First National Bank (FNB), which recently implemented a BPM-type workflow system in its credit card fraud unit. "Through this solution, it is now possible to monitor the quality and quantity of investigators` daily activities; and therefore also accurately determine their overall productivity," says Jan Kleynhans, CEO of FNB Card.

Customers benefit from the implementation because potentially fraudulent credit card transactions can be instantly communicated, via e-mail and/or SMS. This will probably have an impact on customer loyalty and so provide return on investment, in real, bottom line terms.

Another example of BPM in action can be seen at the Potchefstroom City Council, which elects to keep tabs on all its business processes via a Web-based document management, workflow and portal solution. While purists might point out that this is a workflow solution rather than pure-play BPM, Ben Robbertse, city secretary of Potchefstroom, disagrees.

"If the council is to deliver efficient service, it is vital all incoming and outgoing documents are distributed quickly to the correct people. The workflow solution allows management to immediately query the status of any project, process or document at any time," he says.

Robbertse agrees with Van Rensburg about the importance of the audit trail. "Through the document audit report we can easily pick up any problems, such as a staff member who continually returns a document or forwards an incomplete document. Recurring errors like these are a beacon to warn us that additional training is necessary, allowing us to plan corrective action targeted at real problems that employees experience in their day-to-day routines," he says.

The audit reports have enabled the Potchefstroom council to see "definite improvements in productivity, efficiency and accuracy" since installing the solution, according to Robbertse. "Our staff can now get more done in less time and they don`t have to wait for anyone to pass a piece of paper along or go searching for lost documents before being able to do their jobs," he explains.

Local companies are generally reluctant to quantify the benefits achieved by implementing BPM. However, Budget Rent-A-Car provides an international case study with an implementation originally intended to centralise financial systems for its debtors` book.

The resulting increased efficiencies allowed the company to realise dramatic business improvements, including:

* Increased invoice processing - from 10 000 to 65 000 per month;
* Reduced cycle time for invoicing processing - from five to two days;
* Head count reduction and redeployment of 35% to 40%;
* A four-fold improvement in the efficiency of the travel and expense-reporting process; and
* A "dramatically" reduced error rate.

Sun Microsystems` O`Hare highlights another advantage of current BPM technology. "BPM can now be extended beyond the boundaries of traditional IT infrastructure to mobile devices such as cellphones and PDAs. It is even possible to hook in the global positioning system on trucks - something certain courier companies are doing," he says.

Staffware`s Ehmke agrees, but highlights a problem: "If you assume XML is adopted [by everyone] for process definition and Web services are used for deployment, the result will be processes 'lying around` organisations and, probably, outside those same organisations. How will you manage them? Who will manage them?"

Perhaps arivia.kom`s Pretorius has a point. Outsourcing processes or sub-processes under strict service level agreements may well address the security issues. For now, however, businesses appear to be keeping a tight grip on their processes.

The ICT industry is often slated for "over-hyping" a new technology or concept - and usually before any deliverables are evident. BPM is no different. International researcher Gartner`s "2Q03 Pure-Play BPM Magic Quadrant" lists no fewer than 49 "players". While this is ironic, considering that BPM has been around since the 1980s, it is also an indication of an immature industry.

According the Janelle Hill, analyst with the Meta Group, a complete BPM suite consists of six interlocking components: strategies and methodologies; modelling and execution environment; connectivity; simulation and optimisation; monitoring and analysis. She describes BPM as "an evolving set of technology", pointing out that many of the standards are not complete, not mature and not fully adopted.

"Many of the products on the current market that we would consider BPM suites have in fact been assembled through acquisition, through 'OEMing` of someone else`s technology, and through marketing partnerships; even using capabilities together often can involve an import/export of a model. Technically it conforms to a suite since a vendor may be providing all these capabilities, but all the pieces do not necessarily work as a consistent whole yet," she says.

Far from discouraging interest in BPM, this analysis may well prompt businesses to investigate the technology more thoroughly. One thing stands out: BPM is about business, not technology.