Heavily regulated industries might be leading the charge, but organizations of all types are feeling the pressure to achieve business process transformation -- and fast.
Macy's corporate, systems and merchandising groups, and various store brands currently run their own enterprise resource planning or business process management (BPM) systems, according to Jon Nam, director of technology at Macy's Merchandising Group Inc. in New York.
"Our business is constantly changing, with new brands coming up. Even the [point of sale] is changing: How do we appeal to Gen-X'ers and Millennials who don't want to wait in line?" Nam asked, thinking aloud about checkout options that are more like an E-ZPass automatic toll collection system, where customers might be able to pay with a phone and someone checks the bag. "A shopping fast lane. Or a customer could walk into a store and get bonus points," he said. "The question is, how do we leverage technology" to make the experience more efficient for the customer?
Change often comes on like a freight train, as happened when the economy collapsed, then was infused with cash and new regulations in the industries hardest hit: financial services, insurance and health care. In response, CIOs in those enterprises are using BPM disciplines to stay agile, and by streamlining and automating business processes realize business process transformation amid the changes that are coming, experts say.
BPM is a management practice that uses a technology stack for fueling enterprise agility and delivering better business value more efficiently, according to BPMInstitute.org. Along with the impetus from the economy, new developments in BPM tools and business-process-modeling notation, or BPMN, standards are adding steam to the practice of business process, which analysts at Forrester Research Inc. believe is fundamental to business transformation."The model we're seeing in insurance, financial services and health care is more about being able to respond to rapid change," said Clay Richardson, an analyst at Cambridge, Mass.-based Forrester. These industries will face the most change within the next five to 10 years, as they have to deal with large compliance burdens and changing customer bases. "With health care legislation coming down, we have seen an uptick in BPM demand," he said, describing how one health care insurer is "looking at going to horizontal business processes and cross-functional silos" for a patchwork view into the business.
In the past, IT used BPM tools to support the technical pieces tying legacy systems together, Richardson said. There may have been a process improvement team, but it probably didn't work with the BPM tool because of its narrow technical focus. Now, with more BPM suites offering collaborative capabilities that take advantage of Web 2.0 features, BPM has become a strategic tool leading the charge for business process transformation that's altering business roles.
With such products as IBM Blueworks Live (which was created from the combination of IBM's acquisition of Lombardi Software's Blueprint SaaS BPM offering and its own BPM service called BlueWorks) and Software AG's AlignSpace (now ARISalign), the trend is going from an IT-oriented and -supported BPM to a business-focused or end-to-end business-oriented BPM. "We're seeing some enterprises move some of their application development into the business units to help drive process transformation," Richardson said. Organizations also have to think about the compensation model: It's no longer just about motivating the line-of-business manager; now it's also about creating a compensation plan focused on end-to-end process and driving success, he said.
Changing fashions and pleasing customers with business process transformation
Macy's customer-centric viewpoint is particularly noteworthy as businesses use BPM across applications and business units, experts say. Financial services companies are asking, "What do customers need from us?" Health care organizations are asking, "How do we engage customers better?" But to cope with inevitable change, using BPM itself as a method or approach is not enough, according to Aleks Buterman, founding partner of IT and business management consulting firm SenseAgility LLC in Northbrook, Ill., and former chief architect at Lincoln Financial Group and The Allstate Corp.
BPM without a service-oriented architecture (SOA) is nothing but legacy management, Buterman said, taking note of an insurance company that went all out on a BPM path but didn't coordinate it with its master data management (MDM) strategy. In fact, only 8% of organizations link BPM with MDM, a "hair-raising" statistic, he said. "In 90% of organizations, there is major friction [caused by the impasse] of two major investments."
Companies realize an ROI with BPM, Buterman conceded, and it is used sometimes for cost control as well as business process transformation. One of the more interesting BPM projects he has seen involved putting business intelligence rules on top of the BPM system, with hooks that allowed the process to be event-driven and measured with each step, and let it change rules on the fly in real time.
Business process transformation first, tools second
Buterman recognizes that with vendors touting the latest features of their BPM suites, CIOs can get carried away with the promise of technology, he said. It's essential, however, that they understand requirements and business process flow before they even think about a BPM stack, he added.
Another mistake is focusing on just a small subset of what BPM can help with. "With horizontal engines like BPM or MDM, the real value is that they can be reused and reused and reused," Buterman said. By limiting the project scope to five or 10 applications out of 100, CIOs shoot themselves in the foot, he said.
"The real value is when you run BPM across multiple applications and business units. By itself, BPM is not enough. It has to be married with SOA and MDM," Buterman said. "The ones who don't will be left behind."
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