It is uncertain exactly when or where the term Business Process Management (BPM) originated but the industry consensus is that it’s an evolution from and convergence of business process reengineering and process improvement best practices and technologies such as process automation, workflow, ERP and business intelligence. But while BPM makes perfect sense as a management strategy, BPM technology is getting most of the current limelight. BPM technology, however, does NOT make perfect sense. It is neither for the faint of heart nor the frugal: It’s risky and expensive, and is fraught with peril for executives and companies alike.
A recent survey by BPM Magazine advises that vendors and consultants fall short in delivering on the promise of BPM systems: Only 41% of the companies surveyed reported their implementation went according to plan. It’s taking users longer than expected to finish BPM projects, and once their systems are operating they are still wrestling with ease-of-use and integration issues.
BPM technology is big business, and there’s a lot of pressure to get started and not “lose out” on the opportunity to be more competitive using “state of the art” technology. Dataquest estimated the worldwide BPM technology market in 2002 to be $452.5 million, which grew as much as 20 percent in 2003 to nearly $543 million, and the rapid growth is projected to escalate. Gartner predicts the total BPM technology market (including consulting services) will hit $6 billion by 2006.
Before companies invest hundreds of thousands or millions of dollars in BPM technology, there are some dangerous landmines that executives should be aware of and at least one major blunder to avoid: Ignoring that substantial operational performance gains are possible as a precursor to, or in lieu of, implementing BPM technology.
Landmine # 1: Believing that BPM is a Technology Breakthrough
First, BPM is not a technology, and not a breakthrough. But the driving message that BPM is technology-centric seems to be a common view of the pro-BPM collective. According to Howard Smith and Peter Fingar in their recent book “Business Process Management – The Third Wave”, BPM is presented as a strategic focus on processes driven by interconnected technologies. Their subtitle, “Don’t bridge the business-IT divide: Obliterate it”, sounds loud and clear their definition of BPM as technology enabled management.
One reviewer advises “This book provides the first authoritative analysis of how Business Process Management (BPM) changes everything in business and what it portends. In this book, Smith and internationally acclaimed co-author, Peter Fingar, herald a breakthrough in process thinking and technologies that utterly transforms today’s information systems and reduces the lag between management intent and execution.”
However, caution is the appropriate word here. Similar “technology will save the world” messages have been heard before. Technology and business process alignment is not a breakthrough in thinking. There have been sound alignment strategies and heavily promoted technology products for business process improvement for the past two decades. If “white papers” were resurrected on CASE (computer-aided software engineering), workflow technologies, artificial intelligence, 4 th generation languages, end-user computing, BPR, or other “leading-edge technologies” of the past twenty years, BPM technology could be substituted as the buzzword, and the resulting message would look very similar to the current marketing hypel.
As Jim Campbell, consultant at Partners for Change, advises in Looking beyond the BPM Hype, “BPM isn’t new, but is a culmination and evolution of existing best practices and technology that have now been repackaged.” 4 BPM is not revolutionary. However, BPM is far more than technology, and executives should view it as a business management strategy, not as a technology-enabled breakthrough and panacea.
Landmine # 2: Forgetting that IT Projects are Historically Risky
Executives should keep the organizations past IT projects and failures in mind when considering BPM technology investments. Businesses have been down the technology promised land path before, sometimes with very disappointing results. Large- scale IT projects are hard, complex and risky. The majority of IT projects are consistently late and the business benefits questionable. The Standish Group (www.standishgroup.com) has conducted surveys on IT projects since 1994, and emphasize the dangers of large technology projects.
In a landmark 2001 study, the Standish Group reported that 31% of projects were canceled before completion, and that 52% of projects cost 189% of their original estimates. Only 17% of projects were completed on time and on budget, and even those projects only delivered 42% of the originally proposed functionality in large companies, and only 74% of the original specifications delivered in small company projects.
There’s no reason to believe that BPM technology projects will be different. Dr. Raj Ramesh advises “Research has shown that even amongst IT projects only 20% of them finish on time. On BPM projects, the failure rate is even higher due to the immaturity of the technology and scope of the implementation.
If you are implementing a BPM project with the current tools and using the current standards that are still in flux, you are on the bleeding edge of technology. So your failure rate is even higher.”
Also, the human factor increases the risk of failure and, as Computerweekly writer Antony Savvas notes, “is often the biggest barrier to companies adopting successful business process management strategies.” 6 He also notes that Forrester Group says too many organizations believe they can implement business process management (BPM) with “nothing more than a comprehensive set of tools and a good return on investment story”, and warns that failure to also effectively address cultural resistance and “organizational desire” can lead to even the best-intentioned BPM projects failing.
Organizations that have struggled with CRM, ERP or other enterprise-wide implementations will find BPM a similarly daunting challenge. If past projects have gone over budget with late delivery or delivered less than stellar results, executives would do well to challenge IT to prove why and how a BPM technology project will be on time, within budget, and deliver business value. Early adopters, beware.
Landmine # 3: Being an Unwitting Early Adopter
Choosing a BPM technology solution is a broad-reaching decision that will permanently impact the business, and making a poor or premature technology selection could be disastrous. Complete BPM suites are still in their early releases, and it’s a crowded field of over 200 vendors with new and re-branded products. Some vendors are claiming 15+ years of BPM successes, but some analysts advise that BPM products have been around for only three to five years. And a Meta Group analyst advised that BPM is nothing new, simply an evolution of workflow. So it is clear that the BPM analysts and vendors are still composing their versions of the BPM story, and that these products are largely unproven and in early stages of integration.
For example, Meta Group (purchased recently by Gartner) advised in 2004 that “Global 2000 (G2000) organizations are increasingly wrestling with the question of whether business process management (BPM) technology is an end-user tool owned by the business to facilitate process automation or whether it is an orchestration engine/platform deployed by the IT organization (ITO) to enhance transformation to Web services and service-oriented architecture (SOA).”
After filtering through the technology jargon, it becomes (somewhat) clear that there is still confusion over what BPM technology is and isn’t.
Similar technology language-laden descriptions are provided by other industry analysts, each one with its own, and different, opinion. The descriptions and scope of BPM technologies and capabilities vary even more widely from the technology vendors themselves. If there is no agreement on the basic definition of BPM technology, there is little reason to believe that maturity of these solutions is within sight.
This immaturity challenge is further compounded by the very nature of packaged technology solutions. As Bob Jandro, CEO and President of Nsite advises, “The problem with BPM software in today’s world, however, is the problem with packaged software in general: high upfront license fees; protracted, expensive implementations; ROI promises that can take years to fulfill; and difficulty responding to change on an ongoing basis.”
Landmine # 4: Thinking that Industry Analysts Are Objective
Executives must be mindful that ABS (Analyst Bias Syndrome) is rampant in the technology space. It’s difficult to discern fact from promotion, vested interests abound and objective analysis is scarce. Gartner Group positions BPM vendors based on breadth of function and ability to deliver, and ranks them in their Magic Quadrant to assist their clients in making technology decisions. However, the technology vendors themselves are Gartner clients, so there are obvious biases on to promote the use of advanced technology solutions. Forrester Research ranks the BPM Top 10 on design, automation, and human workflow and also sells reports and research services similar to Gartner’s, to both business clients and technology vendors.
Executives should consider carefully that the technology analysts are clients of and paid by the technology vendors, and thereby heavily influence and recommend the expanding use of specific types of technology, including BPM. In spite of claims of objectivity, these analysts are driven by revenue and profits and are thus motivated to promote technology adoption.
The large business consulting firms have sizeable technology integration divisions and certainly encourage and welcome the trend of monolithic, multi-year, multi-million-dollar technology projects that drive their consulting revenues to higher levels. Executives should guard against the hype and be careful of abdicating BPM technology decisions to analysts and consultants. Instead, companies should rely on their CIO to help them sort through the hype for technology solutions that are pragmatic with achievable business goals.
Landmine # 5: Watch Your Wallet
Given the price tag, BPM could be termed as “Big Piles of Money”. Executives should check and re-check the business case and insist on direct conversations with executives from other companies where the proposed solution has been implemented. At the same time, it is necessary to keep in mind that the technology vendor will not be able to provide a long list of references for the technology that is being proposed. The reference clients, if operational today with the solution, implemented a previous release of software and often a completely different BPM technology suite and the business requirements are never a match from company to company – every company is unique.
The BPM market is driven by more fiction than fact and as noted before, there are huge profits to be made. In hopes of capitalizing on the multi-billion dollar opportunity, the BPM vendors are spending millions on advertising, “white papers” and events. The event organizers are promoting executive BPM
Conferences and seminars. There are dozens of BPM organizations vying for membership and recognition of standards. The consulting organizations have dusted off their BPR presentations, merged them with workflow terms, upgraded the technology terminology, and are offering executive “briefings”, seminars and training courses on how to be successful with BPM implementations.
This is lot of spending pressure to protect against, and a plethora of products and approaches to select from. Executive caution is the order of the day: These projects are very expensive, and the ROI anything but guaranteed. There will be budget expansion – these projects are very unlikely to come in on budget.
Warning from a BPM Technology Vendor
Even the BPM vendors caution against the unmet promises and potential dangers of BPM technology projects. A recognized leader in the BPM solutions market highlights the BPM risk: “Companies <like yours> have invested millions of dollars in applications over the years, all in attempts to improve functions such as enterprise resource planning (ERP), customer relationship management (CRM) and supply chain management (SCM.) If you’re among them, you know all about the promises of transformed operations and incredible benefits. Unfortunately, you probably also know how quickly that vision can fade when implementations take more time and money than expected, and as you realize that the new systems can’t adapt to requirements that change during implementation, let alone after deployment.”
“So what about another more recent player on the scene: business process management (BPM)? BPM promises to help you orchestrate all of your people and systems across departments and platforms so you can more quickly, consistently and efficiently conduct processes and transactions. Whether you’re talking about processing and fulfilling an order, responding to a customer inquiry or provisioning a service, the promise of BPM is that it will improve the way you get things done. That’s a tall order—can BPM deliver?”
The question is a valid one. Does BPM technology make business sense for an organization, and will BPM provide a business return that justifies the risk, distraction, cost and effort?
Before an organization considers going beyond the sales pitch to a BPM technology purchase, there are some important questions to consider. The answers will determine whether the BPM technology path is valid, requires adjustment or whether there is an alternate non-technology path to business process and performance improvement that makes more sense.
Avoiding a Major BPM Technology Blunder – Confirming Organizational Readiness
As stated earlier, Business Process Management is a business management strategy and should be profit focused, not technology driven. Otherwise, there is a risk of the business being slave to technology, rather than the technology being an “enabler” for increased business value.
BPM (not the technology) requires a clear view of the business goals for improvement, followed by an understanding of processes as a critical “next step” for Business Process Management. It is impossible to manage what is not understood, and many organizations have not even identified their processes, much less developed a common understanding of them. If there’s not a shared and agreed-upon understanding of the existing processes, BPM technology is certainly not going to be successful in helping executives and companies manage their processes effectively and profitably.
BPM Technology Readiness Questions
To avoid a BPM technology “blunder”, companies should first consider whether or not they are ready for
BPM technology. Executives should first confirm that BPM makes sense as a management strategy, is understood and that the basic foundation is in place. Key questions:
- Is there a common understanding of BPM and its role in the business?
- Is there a Business Process Management strategy in place?
- Have “process owners” been assigned for the major transactions of the organization?
- Is there a clear organizational understanding of business processes?
- Have processes been mapped out at a high level, and are these models current?
If the answer to any of the above is “no”, choosing a BPM technology should probably be put on a lower priority until it is confirmed that Business Process Management is clearly understood and the existing processes mapped and documented.
If there is an existing BPM strategy with performance goals and identified process owners, executives should then ask:
- Have process improvement techniques been used in the problem areas of the business through quality teams, “lean” initiatives or other methods?
- Are process improvement teams currently in place?
- Are there internal resources with competencies in process mapping, analysis and process redesign?
- If so, have all of the possible “no cost” solutions been implemented to gain immediate operational benefits?
- Is there a prioritized list of remaining improvement projects?
If any of these are “no’s”, selecting BPM technology is likely premature, and there are thousands, even millions, of dollars on the table in the form of short-term untapped savings and business improvement opportunities.
Even if the BPM strategy is sound and the organization has streamlined processes and optimized, there are still the IT project risks to consider. Two key questions:
- Have previous enterprise technology solutions been delivered on time within budget and delivered the promised business benefits?
- Is the potential return and opportunity sufficient to risk hundreds of thousands of dollars and several person-years of effort on implementation of an unproven technology solution?
Unless the answers are resoundingly “yes”, an organization may not be ready for BPM technology – they may want to consider an alternative investment of time and money…
Alternative to BPM Technology: Business Process Breakthroughs
BPM technology will NOT result in process improvement by default, regardless of what the vendors and analysts might say. The result could well be automation of poor and inefficient processes, with expensive “paving of the cow paths” that simply technology-enable the existing problems, leaving bottlenecks and inefficient work processes, business rules, and information flows intact.
Regardless of the state of BPM technology readiness, executives would be well served to consider that dramatic business process improvements are usually possible when executive management recognizes the power of BPM as a management strategy. The majority of organizations can get breakthrough results through rapid process improvement projects. Business Process Breakthroughs are possible by modeling, analyzing and simulating process flows and using currently available resources to solve critical problems without large capital investments in technology projects.
The concepts that Michael Hammer highlighted in his 1990 Harvard Business Review article “Don’t Automate: Obliterate”, still ring true. 10 This article served as a catalyst for business process re- engineering (BPR) and radical improvement through the 90’s with a defined message: Dramatic performance gains are possible through the simplification of value chains, and eliminating non-value-adding activities, resources and bureaucracy. Organizations can uncover and implement dozens, if not hundreds, of ideas on how to improve the business processes, and many of them require no capital investment and no technology. These concepts of BPR are as valid today as they were fifteen years ago.
Roger Burlton of Process Renewal Group is a thought leader on BPM, and his outstanding book, “Business Process Management: Profiting from Process”, is a primer on process-centric improvement, and a must-read for anyone who wants to understand BPM from a business opportunity, rather than a technology-centric, perspective. BPM is presented as an approach to value enhancement to the bottom-line, with technology as an optional tool for the business. Burlton has created an excellent step-by-step guide for understanding and “renewing” processes while adhering to proven project management, analysis and human change management principles.
In “Breakthrough Business Results with MVT”, Charles Holland suggests three simple criteria for evaluating process improvement ideas:
- Practicality – the proposed process must be possible with no more effort than is currently expended
- Speed of Implementation – the solution must be possible to test and implement within days or weeks
- Cost Free – implementation must be possible without raising costs – no capital expenditures or increased operating expenses
BPM technology projects fail all three of these tests, and do NOT by default produce process improvements.
Executives: Stop and Consider the Possibilities
Business Process Management should be a profit-enhancer and result in operational performance gains, first and foremost. Since an organization should consider BPM as a way to manage the business and its processes to meet business objectives, BPM technology shouldn’t be selected until a Business Process Management program is defined, including a process management strategy, a supporting organization and a framework of the information and product flows.
If organizations don’t have a BPM strategy, and haven’t improved their processes to a reasonably high level of efficiency through process improvement, BPM technology solutions will not deliver rapid value or an optimal ROI.
Prudent executives recognize that by starting with pragmatic, rapid and inexpensive improvements they can achieve breakthrough results and enhance business performance through vastly reduced cycle times, improved product quality, and dramatically lower costs in only a few weeks, using their current resources. This makes perfect sense, regardless of their BPM technology status.
Fact: Organizations can save millions through identifying and implementing operational improvements to the maximum before investing in BPM systems. The money they save can then be invested in BPM technology – if it’s still necessary.