Business process management (BPM) is steadily gaining ground at large companies, even though there are still some challenges to overcome. Those challenges include lack of technical resources and, sometimes, internal
Complexity is another frequently mentioned speed bump. But the rewards are well worth the pain, stressed Janelle Hill, a vice president in the business process management research practice at Stamford, Conn.-based Gartner Inc. "BPM offers the promise of giving business people control over the lifecycle of processes within a company," she said. And cost savings and freeing people to work on more important tasks are two frequent BPM benefits.
A business process is defined as a set of related activities that produce either a service or a product. The idea behind BPM is to line up these processes with the goals of a department or company. The central tenet is to fully use the strengths of IT to continually improve processes.
For many IT departments, the phrase BPM is synonymous with workflow modeling, and in fact many companies -- particularly smaller ones -- do use these tools solely for modeling new processes. This is common at manufacturing companies, said Nari Viswanathan, research director at Aberdeen Group Inc., a Boston-based IT consultancy. "In the supply chain world, process managers are more likely to download individual workflows and reuse them," he said.
This is a common thread for large companies implementing BPM: They're using the tools to increase the productivity of process workers and to provide the capability for real-time visibility into key processes.
Surveys of large businesses show that while a minority have BPM projects implemented or under way, many more plan to go in that direction, most using BPM tools. In 2007, Forrester Research Inc. in Cambridge, Mass., surveyed 164 IT managers in the U.S. and U.K., about a quarter of whom worked at companies with annual revenues of more than $1 billion, about their BPM usage. The data showed 29% had one or more BPM projects under way, 16% had one or more BPM projects implemented and planned to expand their BPM efforts, and 42% said their companies had active plans to implement BPM. According to Ken Vollmer, principal analyst and primary author of the study, many of these companies are using multiple BPM tools for their projects.
But companies that haven't adopted BPM tools should beware the vendor speak around the various offerings. BPM has evolved beyond the classic delineation that separates tools into "people-centric," "integration-centric" and "document-centric." "That's a very 1980s view of the market," Gartner's Hill said. "We don't accept that definition. You want to use all your resources -- people, infrastructure, paper -- to build more efficient processes. The underlying applications don't matter to business users."
The importance of getting business users and IT on the same page can't be overstated, said Gene Rawls, vice president of continuous improvement at Wells Fargo Financial Inc. in Des Moines, Iowa. A division of Wells Fargo, the company is focused on real estate lending. "Relationships, relationships, relationships -- that's the main lesson I've come away with," he said. "This only works if you create an integrated team of business and IT people."
Rawls, a 25-year IT veteran, heads a BPM SWAT team of 15 process modelers and developers. In 2006, the new head of Wells Fargo Financial "heard the message from the business side" that processes for the loan business needed to be improved. He mandated a focus on streamlining and simplifying processes, Rawls said.
The company chose Lombardi Software Inc.'s Teamworks BPM tool set, which lets business users and process modelers from the IT group sit down together and look at ways to change processes in line with the department's needs. In real time, the modeler and the department manager can make changes and then "replay" them to see the effects of the changes. Then when the process is improved to the business owner's satisfaction, it can be implemented without further input from IT. The business owner is then responsible for tracking that process and alerting Rawls' BPM group when further changes are needed.
However, employees on the business side were initially reluctant to involve IT because they were concerned their needs might be misconstrued or even delayed due to stretched IT resources. To overcome this resistance, Rawls had his team sit with select business owners to first redesign some small processes that would measurably improve operations within that business group. Still, the learning curve for BPM in general, and for hashing out every step in a process in particular, was pretty significant and one of the first lessons was the value of teaming business and IT, he said.
The payback has always been tangible. For example, a recent BPM project for the centralized loan disposition group resulted in savings of $250,000 pretty quickly. The group receives thousands of loan requests each month, and a compliance rule states that the company must respond to each request within 30 days. To meet that requirement, the group was looking at adding an additional 15 employees.
Instead, Rawls' team worked with business managers to create an automated workflow that presents a daily report on applications pending for seven, 14 and 21 days. Automatic email alerts to branch managers and loan request processors coupled with performance metrics have streamlined the process and obviated additional headcount.
A BPM testimonial for product development
BPM wasn't even on the radar at Nacco Materials Holding Group Inc. when the company began to consider buying a major product lifecycle management (PLM) platform to streamline its product development efforts. Nacco, a $2.8 billion global company based in Portland, Ore., designs and builds heavy construction equipment including forklifts. Its main competitor is Toyota Material Handling. But in the wake of a recently completed, trouble-plagued, multimillion-dollar SAP AG ERP implementation, the company was gun shy about launching another major IT project.
The company's CEO originally advocated for Agilent Technologies Inc.'s PLM suite because Nacco was already using an Agilent product for data management in some areas of the company. Bob Shallow, director of global product development, was a relative newcomer -- 20 months -- to Nacco, but he had successfully used Lombardi's Teamworks product at Ford Motor Co., his previous employer. He persuaded Nacco to go with Teamworks, spending about $350,000 on the BPM tool set instead of $3 million or so for a PLM platform.
The decision has paid off: Shallow has completed many projects successfully and quickly. The first one -- a process redesign to automate a small cost authorization system -- took just 15 days.
Despite this success and others, Shallow has had to face down reluctance and distrust of BPM tools from IT. "They viewed Teamworks as just a workflow modeler. The attitude was, 'We own the systems. If you want to model it, that's fine, but we'll build it and implement it.' They didn't realize how powerful it is," he said. That attitude changed fairly quickly when IT resources started to get a bit stretched, he added. "They started to say, 'You guys take it as far as you can and then call us when you need us,'" he said.
The relationship with IT has gotten much better, Shallow noted. "They see that the tool set is very strategic and very powerful. The IT director was originally not a fan," he said.
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This was first published in September 2008