Business Process Management: A Key Component of e-Business Strategy

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Ken Vollmer is a Research Director of Integration Strategies for Giga. He is an analyst covering trends and issues related to all forms of business-to-business integration, including business process integration (BPI) and electronic data interchange (EDI). Ken has assisted hundreds of clients in North America and Europe with their B2B integration projects.

This article is a summary of his presentation at BrainStorm San Francisco as part of the Business Process Management Strategy Track. Kens talk covered some of the background and technical details of present BPM capabilities and solutions.

Ken said there is confusion over how to define Business Process Management. There is growing interest in BPM and how it can help organizations. Of the several definitions, Ken favors a fairly broad one: The automated integration of process information targeted to streamline operations, reduce costs and improve customer service.This loose definition could be used to define EDI if you were talking about data integration, but BPM goes significantly beyond EDI. BPM is used both internally and externally; between applications within an organization and between companies. Ken explained how the aerospace industry is saving 30% through internal integration and expects to save another 30% with external integration.

One good example is a large NY financial institution that employed a large number of applications to process wholesale financial transactions. There were significant delays and a lot of customer dissatisfaction. Using the kind of component software that makes up BPM technical solutions, they linked, integrated and automated both the internal and external business processes. This resulted in delivery time for new financial transactions going from 28 days to as little as four minutes. The four-minute example would be one where no extra human input is needed, but the solution also accommodates any human modification needed for transactions. Customers are the big winner here. Ken said that this benefit of BPM is often overlooked and that happy customers are repeat customers.

The software components of BPM systems include:

  • Process Modeling: models business processes that can be imported into workflow and process automation software (can be a simple flow chart or something that can capture and generate code)
  • Workflow: automates and manages human-to-computer (also human-to-human)
  • EAI (Enterprise Application Integration): automates the exchange of data between internal applications
  • Process Management: automates and manages the flow of integration processes (this is the engine that uses the information from process modeling)
  • Trading Partner Management: automates the linking of internal business processes with those of key trading partners
  • Business Activity Monitoring: provides monitoring and analysis of active business processes (an example: management dashboards to monitor important operations)

The current focus on BPM started about five years ago when we had low-level Process Modeling, Workflow, Process Automation, and EAI. This led directly to internally focused BPM solutions. Today BPM has grown significantly with more sophisticated packages that include Business Activity Monitoring, Trading Partner Management, B2B Connectivity, and Security Operations Management (which involves both the internal and external processes).

 

  • The expected benefits of BPM include:
  • Improved efficiency
  • Improved productivity
  • Improved management control
  • Improved customer loyalty and service
  • Improved accuracy
  • Lower operating costs
  • Shorter cycle times

All of these benefits create increased profitability. The main business drivers for BPM vary by industry. In banking, rivers include a single view of the customer, faster processing of loan requests (two hours or less), and Patriot Act compliance (all banks doing business in the US must comply). In energy, the drivers are automation of gas and electric nominations, synchronization of generation and marketing, and support for trading desk operations. For healthcare, the drivers are quick verification of customer benefits, more efficient claim processing, and supporting HIPPA compliance (US only).

As for the terminology, Enterprise Application Integration, Business Process Integration, and Business Process Management, are all provided by a single class of vendors that Giga refers to as Application Integration vendors. But different classes of vendors offer many different integration solutions, which can create confusion.

Ken showed a slide of the technology of the e-Business Integration Stack and followed it with slides of the Application Integration Stack, the Applications Platform Stack (where the servers are included in the solution), and the e-Business Application Stack. This presentation demonstrated where the different BPM software applications are used.

Security resides at the bottom of the stack, followed by Infrastructure Performance Management, Database Management, and then Application Servers. Software packages are used at different levels with the stacks. But above the application server level (except for the Application Platform which works at the application level) there are important integration decisions that are dependent on your business goals. These decisions will decide how complex and costly the project will be. Management must have a clear idea of this entire process and direct the approach accordingly.

Which approach is best? It all depends on what you want to accomplish, according to Ken. If you need a leading-edge technology solution, application integration is the best. When an integration project requires a lot of custom development, an application platform is best. When a single business application suite comprises the majority of an organizations application functionality, then a business application such as SAP, Microsoft, or IBM is best. Ken cautioned that this can get very complicated and shouldnt be attempted without expert advice.

Ken showed several slides of the Application Integration Framework Model with basic, advanced, and external integration components, along with the current players in the market.

When making your integration decisions, Ken recommends using a method that determines the total impact on your organization that includes cost, benefits, flexibility, and risk. This method has the added advantage of making it clear to management what the options are and where they can get the best ROI.

In all of the above areas, it is more advantageous to buy a solution than to build. Generally speaking, enterprise-wide integration solutions are just too complicated to build in-house. In the B2B world, trading partners dont want to hear that your solution is unique and requires extra effort to implement.

 

  • BPM best practices include:
  • Being inclusive
  • Planning carefully
  • Selecting the right type of software
  • Focusing initial efforts (start small)
  • Developing trust

Ken concluded by emphasizing the way to ensure a successful first integration effort is by getting executive buy-in and promoting it throughout the enterprise. Use a model for cost justification and pick the right solution for your organization. Make sure to get executives as well as the technical department on your side. In the Q & A period after his talk, Ken pointed out the growth in this area, noting that the $2B BPM integration market will probably double in the next five years.

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