BPM Is Helping Firms Control Critical Business Processes

Business process management tools becoming mission-critical IT need

After lawsuits were filed by several state attorneys general against large businesses in the late 1990s and early 2000s for crimes like price fixing and kickbacks, many corporations began major efforts to build transparency into client transactions.

Christophe Marcel, enterprise software architect at Integro Insurance Brokers in New York, noted that in lawsuits filed against several insurance firms by New York Attorney General Eliot Spitzer in the early 2000s, “there were a lot of questions about transparency and disclosure of where [insurance] fees came from. There has been an industrywide initiative for quality improvement processes.”

Integro, founded last year, is banking on business process management technology to help provide its clients with access to real-time account information through a portal.

One of the core missions of the company — and how it aims to differentiate itself from competitors — is “offering transparency across everything that we do,” Martel said.

“To do that effectively,” he said, “you need BPM.”

Integro is using San Jose-based BEA Systems Inc.’s AquaLogic BPM Suite (gained through its acquisition of Fuego Inc. in March) for a new client-services application set to go live in the first quarter of 2007, Marcel said. In addition to providing clients with up-to-date information, the application will give Integro executives visibility into proc¿esses through a dashboard, he added.

BPM was once commonly viewed as a tool that a single department could use to automate low-level administrative tasks, but the technology is increasingly being used to handle mission-critical tasks across an enterprise, users and analysts said. The growing interest in BPM is being fueled by maturing BPM suites that allow companies to model new processes, identify potential bottlenecks in existing processes and demonstrate substantial bottom-line returns, users say.

“[BPM] is a really central part of our architecture and how users are going to be doing their work,” Marcel said.

The BPM resurgence is also bolstered by the growth in companies moving to service-oriented architectures (SOA), analysts said. Many of these firms use BPM software to orchestrate the execution and linkage of the services that make up a business process.

Spot Trading LLC, an equity options trading firm in Chicago, last month began using BPM software to handle its mission-critical expiration process. That process includes dozens of steps that must be taken on the third Friday of every month before 4:30 p.m., when option contracts expire and traders must state their intentions about exercising those options.

“There is no reason for us to believe the [BPM] software is not reliable enough to use in a mission-critical environment,” said Govind Rabindran, Spot Trading’s director of software development. “The products have matured such that it is just another tool for software implementation.”

The company currently uses Lombardi Software Inc.’s TeamWorks BPM software and Web services.

Next year, Spot Trading plans to begin using the Austin-based vendor’s tools to create and run exception-based risk management proc¿esses, Rabindran added.

BPM Trends

Corporatewide use of business process management is expanding because:

•  Regulations such as Basel II, the Sarbanes-Oxley Act and the Health Insurance Portability and Accountability Act require better control of business proc¿esses to prevent tampering and to provide audit trails.•   Lower-cost and easier-to-use BPM software is becoming available as vendors such as IBM unbundle components of BPM suites.•   Adoption of composite applications that require tools to orchestrate processes is increasing.

Source: Disaster Research Inc.

Such processes could be used to automatically alert a manager if a trader violates an established threshold that could create risk for the company, Rabindran said. “As soon as these kinds of exceptions occur, they can get to the appropriate people right away, and there will be the appropriate audit trail,” he added.

TeamWorks includes an Eclipse-based modeling tool for building processes, a portal for users to collaborate and process-optimization software, Lombardi said.

Harcourt Assessment Inc., a developer of content for scholastic tests, plans to have its first application using BPM software from Savvion Inc. running by the end of this year.

San Antonio-based Harcourt intends to use the Santa Clara, Calif.-based vendor’s BPM suite to manage the workflow associated with its core function: providing potential test questions to clients and receiving feedback on that content.

The company, which has long gathered feedback from clients verbally over the phone or in person, plans to use the BPM tools to create an automated online process for the task, said Roberta Henson, a program manager at Harcourt. The company expects to offer the online capability to 500 internal users by year’s end.

By the time of full rollout next year, about 1,500 internal users will be using the application, Henson said.

Savvion’s BusinessManager suite is designed to allow users to model new processes and then use simulation to identify potential bottlenecks before a process goes into production, the company said.

Henson said she expects the automated process to keep track of when clients approve test questions, the percentage of questions that are approved by clients, and other items. “It is really going to highlight to us where we need to put more efficiencies in and increase the response time for our customers,” she said.

Enterprisewide BPM

According to Forrester Research Inc., the BPM market will more than double between 2005 and 2009, growing from $1.2 billion to more than $2.7 billion. Forrester analyst Ken Vollmer said that as stories from early adopters bubble to the surface, more and more companies are eyeing BPM tools for mission-critical applications.

“Organizations are taking a serious look at how BPM suites can improve business operations,” he said.

In addition, the maturity of BPM suites is prompting many organizations to shift BPM from a purely departmental effort to an enterprisewide endeavor, Vollmer added.

While early BPM tools focused mostly on integration and process improvement, the products have evolved into “comprehensive technology stacks that can also provide an SOA foundation,” Vollmer said.

SRA International Inc., a systems integrator in Fairfax, Va., now has four processes running in a BPM system that is used by 800 to 1,000 employees, said Jason Adolf, project manager at SRA.

The company’s goal is to eventually have all 5,000 of its employees using the system, he added.

“We’re getting such good feedback [about the BPM project] that we have a prioritization list that changes according to the needs of the business,” Adolf said.

SRA began using Vienna, Va.-based HandySoft Global Corp.’s BizFlow BPM suite in January to help accommodate the company’s rapid growth, he said.

Although SRA’s earlier manual customer and subcontractor invoicing processes had worked adequately, “the volume of transactions we were handling was too great for the current staff,” he explained.

Before installing BizFlow, SRA had a mix of paper-based processes and processes that were handled with desktop tools such as Microsoft Access, Outlook and Excel. That disjointed strategy didn’t allow the company to standardize best practices or provide visibility into processes, he said.

“When things are on paper, there is no way to tell how long things take to process,” Adolf said. “There is no way to aggregate how long things sit on a person’s desk.”

By using the statistics and metrics accumulated in BizFlow, the company doubled the efficiency of its subcontractor invoicing proc¿ess, Adolf said. He noted that the BPM system may be expanded to analyze employee performance and to manage the security clearance process required for government employees and subcontractors.

Adolf said commercial BPM tools can help companies overcome the notorious problem of getting users to adapt to the accompanying cultural changes. Such changes often impede the progress of BPM projects.

Commercial BPM systems can accommodate development changes more quickly than custom-built tools can, Adolf said. That helped SRA quickly win the support of end users.

Users were also involved throughout the implementation process, since the company sought feedback from the start, Adolf added.

Todd Januzzi

Todd JanuzziVornado Realty Trust, which owns and manages 58 million square feet of real estate nationwide, avoided user resistance to its BPM projects by ensuring that training for its system could be completed in 10 minutes, said Todd Januzzi, vice president of application development.

The training process is “all based on drop-down menus,” he said. “There wasn’t a lot of keystroking involved.”

Vornado’s first foray into BPM was an accounts payable and invoice-approval application; the company has since added several other proc¿esses to its HandySoft BPM tool, which is available to 500 users.

The next effort, to be completed by year’s end, will have the tool manage the Paramus, N.J.-based company’s entire leasing process. The new application will automatically generate a lease after a prospective tenant indicates interest and employees perform tasks such as credit checks, Januzzi said.

“BPM was so well accepted, we decided we can [now] fix other business processes,” he said.


Copyright © 2006 IDG Communications, Inc.

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