Building flexible foundations for a collaborative future

Collaborative business strategies have a greater chance of boosting competitive advantage during the next decade if they are supported by Business Process Management Systems (BPMS), which link processes in the end-to-end activities of entire value chains, says Howard Smith, Chief Technology Officer for Computer Sciences Corporation`s (CSC) European operations.

Smith was recently in South Africa to brief CSC clients about the latest trends in Business Process Management (BPM), or the act of improving and transforming business processes, and the evolution of BPMS, a technology based on the systematic, engineering-based approach to using computers to assist business performance management.

Smith says that companies are increasingly focusing on improving their processes by exploring the capabilities of customer relationship and supply chain management.

He says some BPM pilot projects have already achieved impressive results. For example, a US-based property and casualty insurance company reduced claims processing costs by up to 20% and shaved about 60% off the time taken to perform the tasks.

BPM is strong in the insurance industry, but benefits are being reported in the banking, finance, credit card, healthcare, pharmaceutical, government and discrete manufacturing industry sectors as well. In one case, a ten-fold reduction in process design to production time and cost was achieved.

"The drivers behind BPM are not technological, they`re economic. Two dominant trends today are globalisation and commoditization," says Smith. "As trade barriers between nations and regions are dismantled and niche markets disappear, companies have sought alliances, joint ventures and collaboration as new avenues to achieve competitive vitality.

"The company is becoming a component in flexible, polymorphous, fuzzy-edged extended enterprises that work across corporate borders, trade with competitors, supply suppliers, buy from customers, and sleep with the enemy."

For cross-company collaboration to take place, process models must become the new sharable enterprise data models of the past. BPM implies better visibility, the ability to make changes, improved automation, measurement and analysis.

But, Smith stresses, the key factor is BPM`s ability to focus on the end-to-end business activities of an entire value chain and that requires a universally understood process model.

Currently, he says, companies are stuck with a data-centric view of information technology (IT) "in which there is an ever-growing disconnect between the business and the technology it deploys."

Much energy and money is expended on integrating applications to support new or changing business processes but this does not recognise that business processes have a lifecycle of their own, independent of the IT systems that drive their automation.

Business processes are not comprised of different pieces of applications, integrations, rules, Web services and workflows. Processes are whole entities and need to be represented as such.

Smith says it is critical for companies to realise that a true and effective BPM system is more than a "bundle of disjoint technologies" as it provides a digital representation of whole processes.

BPM is a radical breakthrough in that it makes all business processes directly and immediately executable, without the need to develop software. Smith states that BPM "doesn`t speed up applications development; it obliterates it." He bases this claim on the fact that BPM is based on new mathematics that underpin dynamic mobile processes, as opposed to static relational data.

The foundation of BPM is solid theoretical computer science, which radically simplifies how business people, not just technicians, can design, implement, adapt, align and optimise the business processes that will enable corporations to gain the double leverage they need to both cut costs and achieve growth.

This mathematical basis gives management a clear understanding of how entire business processes can, for the first time, be made self-automating and self-optimising.

Smith believes BPMS will have as dramatic an impact on the next 20 years of business computing as relational database management systems have had on the past 15 years.

Productivity gains could be three-fold. This business process revolution will be seated in the boardroom. Companies are creating roles such as the Chief Process Officer (CPO), sometimes called the Process Information Officer (PIO). Companies are also appointing executives responsible for specific, end-to-end, process improvement projects.

Such projects focus on high level business objectives such as `easy to do business with`, `single voice of the customer`, `low daily prices`, `fast and responsive service`, but they are realized using BPM. Each BPM project creates a focal point for new shared services built from composite processes. The projects are overseen by executives with titles such as the Vice President of Order To Cash, of Transact to Fulfill, of Build to Order, of Goal to Reward. Corporate process teams will focus on using new IT tools to capture, and then improve, the way business operates.

Smith, who is co-author of the book `BPM - The Third Wave`, is co-chair of the Business Process Management Initiative (BPMI.org), a non-profit corporation that publishes open, royalty free standards such as the Business Process Modelling Language.