Let the process rule

Say there's a loading dock where workers input shipment data and get information from an ERP system. It's asking a lot if six or seven different screens in the system need to be accessed to process a simple transaction, and it gets even more complex if they must input a half-dozen details from shipping manifests.

In the past, changing the ERP system to make the job easier might have involved custom programming. Today, a software technology known as business process management (BPM) is emerging to streamline business processes within and between systems. BPM is a mix between workflow, enterprise application integration (EAI), and application development that makes it easier for companies to codify current processes, automate their execution, monitor performance, and make on-the-fly adjustments to improve the processes.

One manufacturer using BPM is MasterBrands Cabinets, a Jasper, Ind.-based supplier to the home improvement and new construction market. "We were admittedly skeptical of BPM at first because our experience with middleware ... was that [it was] difficult to run," says Dave Mewes, MasterBrands' CIO and VP of IT.

The CleanOrder BPM package from Vitria that MasterBrands installed handles integration, but also is able to take a step back from the technical interfaces between MasterBrands' multiple enterprise systems to orchestrate key business processes. With BPM, says Mewes, "the information undergoes...abstraction...so you're left with the information and not where it came from. It does sit on top of other applications and allows a 'translation.' You integrate, construct, and then build horizontally."

While BPM software is sometimes used to speed up clunky processes within existing systems, it shines at streamlining the hand-off between systems. "BPM is like fixing a leaky pipe," says Eric Austvold, a research director with Boston-based analyst firm AMR Research. "It chases down leaks and gets the process straight."

Steve Rotter, VP and cofounder of BPM vendor Q-Link Technologies, agrees that BPM excels at coordinating the flow of information. "The way we look at it, the typical Fortune 500 company is deployed with [more than] 40 enterprise systems, from ERP and CRM to supply chain," he says. "[Within those] there are hundreds of processes not being managed by CRM, ERP, or workflow...like all the paper forms. Ultimately they're in place to manage business processes. The challenge is the disconnects between those systems and managing the gaps in between them."

It's no small irony that a class of software that excels at straightening out business processes is itself hard to pin down. As Austvold and other experts point out, part of the challenge in evaluating BPM is that it involves multiple capabilities like integration, workflow, and process modeling tools.

MasterBrands has grown through acquisition, and rather than trying to get all divisions onto a single ERP system, the BPM solution permits customer service reps to accept orders for multiple divisions via a single user interface, and support integrated order management functions including real-time order status.

Says Mewes, "BPM linked all of our brands and 20 locations together, and extends to the factory floors. We're still developing the metrics, but the time and cost-savings have been very significant. We've realigned our whole strategy based on BPM."

While Vitria has a history in the EAI space, its product suite has long-supported the type of business process modeling and other capabilities found in BPM, says Tom Lowry, director of manufacturing solutions with Vitria. Not only that, he adds, with solutions like Vitria's CleanOrder, the vendor is evolving "into more highly packaged solutions that meet specific business needs."

Business process modeling tools chart out the desired information flows that support key business processes. The models, once created, should be dynamic, meaning that they are relatively easy to change without programming.

AMR's Austvold recommends process modeling as a good first step with BPM, especially when the models are used to remove variability from specific processes. However, he warns, the best results come from deploying other BPM components that execute, manage, and analyze business processes.

BPM uses workflow-like tools to execute, but they're not the same type found in traditional ERP systems or workflow tools, says Wayne Snell, director of marketing with BPM vendor Fuego. Simple workflow, he says, focuses on the routing of approvals and documents. A BPM tool, he contends, builds and executes workflows using the same "meta" model generated by process modeling.

In Fuego's case, Snell adds, process execution is paired with an analysis tool that performs what's known as business activity monitoring. Says Snell, "A BPM solution treats people as well as systems as 'services' in support of a business process, and orchestrates how all those services work together in support of the process."

Chris Preston, a director at BPM software vendor FileNet, echoes this holistic view when he says, "BPM was once only known as workflow. Now it's about content, process, and connectivity. It must be a blend of system and human elements leading to clear visibility of the business process."

Mark Smith, CEO of Ventana Research, a Belmont, Calif.-based firm that tracks BPM solutions, agrees vendors tend to differ in their approaches to capabilities such as workflow and application integration. "EAI and ERP vendors tend to concentrate on the connections between systems—on how transactions are passed from one system to another," he says. "Most don't have tools that map out the business-level definition of an integration to the extent that BPM does."

Best-of-breed BPM vendors, however, hardly have a corner on the market, especially with multibillion-dollar ERP vendors busily adding middleware solutions. Smith notes that SAP's NetWeaver integration platform gained new BPM capabilities late last year when SAP partnered with IDS Scheer to integrate its ARIS BPM solution with NetWeaver.

Other ERP vendors also are building or acquiring BPM capability. Geac, which offers ERP and financial software, acquired BPM vendor Comshare last year. This acquisition along with that of Extensity, formed the basis for a product called Geac Performance Management that counts IMC Holdings, a Grayslake, Ill.-based manufacturer and distributor of material handling products and equipment, as one of its users.

IMC Holdings uses the BPM solution to consolidate and analyze financial information from multiple sources, including an AS/400-based system that holds customer information, and another system that holds sales data. Paul McKibben, a senior business systems analyst with IMC Holdings, says the Geac solution consolidates pertinent information via the Web, allowing IMC decision-makers to see, on one Web page, a tab with sales analysis, a tab for sales data for today or historically, and another tab for financials, worldwide or by separate companies.

"BPM allowed us to track the progress of the company and take corrective action quicker," says McKibben. "We're now using BPM for strategic management, and sales and financial analyses."

In some cases, ERP vendors focused on the small and midsize market also have BPM software. For example, Exact Software, known in North America for its ERP packages, has built BPM functionality into Macola ES, and also offers a BPM package called e-Synergy.

According to Mike House, a general manager with Exact, BPM supports processes that span multiple systems, and can be used by more than the 10 percent to 15 percent of workers that typically use ERP. "There's never been a set of processes to handle critical product, cost of goods sold, sales and marketing, and customer support," he says. "Not EAI nor ERP; they've never reached the entire enterprise."

The cast of BPM players basically falls into three groups: pure plays like Fuego, ERP vendors offering BPM, and vendors with an EAI background offering BPM, such as IBM, SeeBeyond, and webmethods. With the ERP giants being the gorillas of the enterprise software market, one might expect that BPM will be subsumed by them, but don't count out the other players, say some experts.

"[The ERP players] aren't going to dominate BPM," says Robert Handler, a VP with Stamford, Conn.-based analyst firm META Group. "Say a company is using multiple ERP systems, but has nothing from SAP. Is that company going to pick NetWeaver for BPM? It would have little reason to unless it had SAP."

One analyst firm—London-based Butler Group—has cautioned that BPM is being over-hyped, and that users might not achieve the huge gains in process efficiencies promised by vendors. Yet Butler concurs with other analysts who figure that BPM can deliver value, and should aid long-term compliance with Sarbanes-Oxley.

Meta Group sees Sarbanes-Oxley as a BPM driver, predicting that such compliance, along with more traditional uses, will fuel 15-percent to 20-percent BPM market growth in 2004. Meta Group believes the BPM market grew at a 10-percent to 15-percent clip last year, to approximately $1.1 billion.

Handler says BPM's ability to manage the flow of information across systems makes it a good technology for Sarbanes-Oxley, which requires public companies to codify financial processes and keep investors informed of key events. As Handler explains, "Today there is a hodgepodge of systems geared to a 30-day accounting cycle. BPM is the only thing that can span across all these [system] layers, takes a rules-based approach, and has flexible integration tools."

Editor's note: Senior Editor Gary Ruderman and Contributing Editor Craig Kuhl contributed to this article.