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  How to Automate Human Resources Forms with BPM Software

  Amy 11:06 pm on March 8, 2010 | 0 Permalink | Reply
  

  In my previous post I talked about the similarities of BPM software to a GPS system; namely that BPM software walks an employee step-by-step through common HR business processes (such as a leave application) just as a GPS system provides driving directions.  I’d like to highlight, however, a key difference: unlike a GPS system, BPM software can completely automate important steps of HR forms and workflows, greatly minimizing the need for inputs from the end user and reducing opportunities for error.

  Let’s examine the opportunities for process automation using my favorite example: the leave application.   In this example, an employee initiates the leave application process when she fills out a vacation request form.  If this vacation request form were paper-based, then the employee would have to enter all of her personal information from scratch, wasting time and leaving room for error.  However by leveraging the database connections of BPM software, the BPM software itself can automatically populate the vacation request form with employee information (including name, date of birth, employee ID number, department, etc).  The employee only enters the dates of her vacation request, and submits the vacation request form with a single click, reducing redundant data entry and eliminating opportunities for end user error.

  A second opportunity for automation occurs when verifying the vacation request form.  The BPM software can automatically cross-check the requested leave against a database containing the employee’s vacation data (including total vacation days, remaining vacation days, total sick days, remaining sick days, etc) to determine if the employee is actually eligible for the vacation she requested.  In a paper-based leave application process, the verification would have to be done manually by someone from the HR department, again wasting more time and creating more opportunities for errors and delays.  The BPM software eliminates the need for someone from HR to participate in the process at all!  And without the need to administratively review HR forms, the Human Resources department is free to work on other more important tasks.

  A third opportunity for automation occurs when the employee is notified of the status of her request.  Based on the automatic cross-check of the vacation requested, the BPM software can automatically generate an approval notice or denial notice advising the employee of her request status.  Automatic notifications and escalations ensure consistent results, transparent record-keeping, and again save valuable human resources.

  A final, and very important, opportunity for automation occurs when the employee returns from her leave of absence to report her actual leave taken.  A  one-click confirmation from the employee or her supervisor can automatically update the HR database, deducting the days taken from the total vacation days.

  A comprehensive business process management system does much more than guide the end user through completing HR forms; it actually automates administrative human resources tasks, and allows the human resource department to streamline the leave application process at multiple points, creating an easier end-user experience and ensuring the accuracy of leave reporting and the efficiency of the human resource department operations.

  
   

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  BPM Software: Like GPS for your HR Forms

  Amy 2:17 am on March 6, 2010 | 1 Permalink | Reply
  Tags: hr forms, human resources forms

  As tax season once again rolls around, I was struck by the recent advertisement campaign of one of the major tax preparation software suites. This particular software claims to be “like GPS for your taxes”, the idea being that the program guides you step-by-step through the virtual twists and turns of tax preparation, just as a GPS guides you to your final destination.

  The same can be said for what a BPM software system can do for human resources forms, or any forms-based business process for that matter.  BPM software can function much like a GPS system for the human resources department, automating human resources forms and guiding employees through the completion of those HR forms from beginning to end, thereby avoiding wrong turns and eliminating wasted time and effort.

  Take a classic example: the employee leave application. The leave application begins when an employee fills out a vacation request form, including details such as type of leave requested, dates of leave, etc.  The vacation request form may then need to be routed to a Supervisor for review, who then sends the vacation request form on to the human resources department. Someone from HR then reviews the HR forms and takes the appropriate action. A database containing employee HR records is updated, and the employee who initially filled out the vacation request form is notified via alert that her leave application has been approved.

  BPM software doesn’t entirely automate the leave application for the HR department; certain inputs are still required from the end user, just as a GPS requires you to actually drive the car.  But unlike a GPS, BPM softwarecan pull information, like employee data and remaining vacation days, from a database, and update the HR database automatically based on information from the forms.  By automating certain administrative tasks, the BPM reduces error and saves valuable human resources.  BPM software also sends the leave application on the correct route, efficiently and without delay, every time.  Think of it as GPS with cruise control for the HR department.

  Now if only doing my taxes were so straightforward.

  
   
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  Cloud Computing aka SaaS for Business Process Management

  kurt 4:47 pm on March 4, 2010 | 0 Permalink | Reply
  Tags: BPM (19), business process management (5), business process management software (6), Cloud Computing (2), SaaS BPM (2), Software as Service (2), Software-as-Service BPM (2)

  
  BPM in the Cloud with SaaS

  This post is my last in a series of posts examining past trends in the learning management software market to understand future trends in business process management.

  Over the last year or so, the buzz has been over cloud computing. The online training software industry embraced cloud computing when it was called Software-as-a-Service (SaaS). Increasingly, companies began outsourcing the hosting of their leaning management systems, rather than installing and maintaining a licensed copy of software. Some companies, such as GeoLearning and Learn.com, were purely SaaS companies that only offered a hosted LMS. Other traditional LMS companies began offering an SaaS version of their software.

  One factor that drove this trend was a change in market dynamics. Many larger companies with deep pockets had already invested in an LMS and switching costs made them reluctant to switch vendors. Newcomers to the LMS market, as well as market leaders who wanted to maintain and grow market share, found small to medium sized businesses to be an attractive target. Cloud computing offered these companies, who often had little internal IT support, lower total cost of ownership and automatic software upgrades. Of course, cloud computing has its disadvantages. For example, SaaS offerings are often less customizable than licensed software.

  Does cloud computing in online training software foretell anything for the BPM industry? In 2007 Lombardi software introduced Blueprint™ as an on-demand business process management solution. Appian began funding its SaaS venture in 2008. (Learn.com, one of the leading SaaS LMS vendors began in 2001). The business process management industry’s adoption certainly seems as though it is headed in the direction of SaaS.

  However, BPM customers may not adopt SaaS as readily as LMS customers have. Ovum analyst, Surya Mukherjee, says that SaaS products tend to be strong in visualization and design but weak in workflow engine and execution (Barry). (Blueprint is a process discovery product.) Unlike online training software, business process management software in the cloud can expose more sensitive data to a security risk. For SaaS to become as ubiquitous in the BPM market, as it has in the LMS market, managers will need to feel more comfortable with the security of cloud computing.

  
   
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  LMS and BPM Trends, Part 2: Social Media Tools for Business

  kurt 12:03 am on February 26, 2010 | 0 Permalink | Reply
  Tags: business process management software (6), Social Media

  Another trend, another LMS and BPM comparison. Part 2 in my series of postings on what past trends in the learning management software industry might say about future trends in business process management software. In this post, I took a look at the trend of social media tools for business.

  Many enterprises are already using blogs and forums. In the past few years, LMS software vendors have rushed to add these social media tools to their features by providing ask the expert panels, access to mentors, and communities of best practices. Business process management hasn’t been immune to the social media hype and the possibilities that Web 2.0 tools may hold for the industry. Does it make sense for either industry?

  One of the driving factors for LMS software vendors to adopt social media tools has been to improve the efficiency of informal learning. The great majority of learning is informal, occurring between individuals in conversations and other casual communication. By adopting these tools, LMS software has hoped to demonstrate a way for corporations to facilitate this type of learning and capture that knowledge into a searchable database. Is there an analogy to informal learning in the BPM market that would validate the use of social media?

  At its surface, it would seem that social media or Web 2.0 tools are the antithesis of business process management. The purpose of BPM software is to establish predetermined, formal paths to follow when performing a task. How can social media be contained in a process diagram? I can think of at least one example—providing customer service or technical support. It is not uncommon for companies to direct customers to blogs, forums, or wikis to get support before they submit a support ticket or talk to company staff.

  Another place that social media can have a place is in process design. I recall hearing a pre-Web 2.0 story about an airline company where employees at one particular terminal transcribed best practices for processing passengers in notebooks. When discovered, these best practices were distributed throughout the company. (This is an example of informal learning in action.) Social media can facilitate this type of information exchange. For example, an automotive company could use the wisdom of the crowds to arrive at the best process to deliver customer service at dealerships.

  Of course, including these social media tools in a business process requires a lot of work. It requires community building and a customer base that can contribute to these communities. Too many companies launch the social media technology, but they don’t do the necessary community building or they don’t have the active customer base required to make the use of these tools a true business process benefit.

  If done right, however, it seems that social media can be contained in a process and the following could be true:

  

  
   
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  Workflow Software, BPM Software, and ERP Software - How does it all fit together?

  brian 9:02 pm on February 4, 2010 | 1 Permalink | Reply
  Tags: ERP (2), Great Plains Software, JD Edwards Software, openbravo (3), Purchase Request, Purchase Request Process, Workflow (9)

  It is nothing new to state that Business Process Management Software (BPM Software or Workflow Software) and ERP software go hand in hand.  In fact, I can probably count on one hand the number of meetings I have had with private companies in which ERP wasn’t discussed in the initial BPM meeting.  In private industry, the ERP and the BPM or Workflow solution are inextricably intertwined.  So much so, that the BPM consultant will end up discussing the client’s ERP within the first 30 minutes of the very first consultative meeting.

  Today I was in a meeting with a small company (100 employees) that had developed their own in house ERP software.  Present in the meeting were the executive president, numerous technical managers, and a number of different business area managers.  As is often the case, the president was not very technical.  He started the meeting by talking about the company system (he didn’t call it an ERP) at a very high level and how this system was designed to handle all of the company processes.  He hadn’t yet seen our BPM Software, but he ended his initial remarks by asking, “If we already have a main company system (i.e., ERP)  that handles all of our company processes, then why would we need BPM Software or a Workflow system?”

  This is a very good question.  The question points to a general weakness of the BPM Software Industry and a strength of the ERP industry.  ERP vendors have positioned their software as the system of systems.  They claim that this is the system that will run your business.  It manages your accounting, materials, inventory, and production process.  Once you have it installed you will have an efficient, modernized company.  And yes, it will even make your coffee.

  Of course, that sort of sales pitch is effective.  It goes to the heart of the insecurities of every General Manager or President, especially those that aren’t so familiar with the latest acronyms and systems jargon.  That is why the ERP vendor has historically been able to convince these businesses to fork over hundreds of thousands if not millions of dollars and go through a traumatizing process of installation that will usually last many months if not years.

  Of course, the ERP solution is important.   I am by no means suggesting that companies can forgo this investment.  However, the result is that when the BPM vendor or workflow software provider rolls in to town, the reception is usually one that begins with a strong bit of skepticism.  So, the question is, how does the BPM sales person now explain to this decision maker that there really is a need for a new business process system.  Hell, the BPM vendor doesn’t even have new language to describe what he/she is selling - it sounds just like the “other” system the company already has installed.

  This is a real problem when dealing with SMEs because of the limited attention span the decision makers usually have when it comes to technologies.

  I don’t have an easy answer.  I watched today as one of the sales guys on our team sloshed his way through a standard BPM explanation.  I would have kicked him under the table had I been sitting closer in order to tell him to just get on with the demo.  The description just wasn’t doing justice.  However, as is often the case, 30 minutes later as we were wrapping up the demo, the customer’s face had changed, and he was now rattling off ideas on where his business could implement BPM Software.  Why is BPM so difficult to describe yet often so easy to demonstrate?

  In the case of this customer we were demonstrating a Purchase Approval Process.  Of course, the customer’s ERP manages the purchase process - every ERP vendor will tell you that their software has a purchasing module whether it is SAP, JD Edwards, Great Plains, or Openbravo.   But it usually isn’t until many months after the ERP solution is installed that the company managers realize that an important part of their purchase process still isn’t automated.  Yes, the ERP will record the purchase of the product, create the appropriate accounting entries, produce the Purchase Order, allow for the reception of money, deduct the product from inventory, and confirm the delivery of the goods or services and receipt of payment.  But what about all the company best practices that go into the act of making the decision to make the purchase?  Ahh, that just sort of got let out as an after thought.  Or maybe it was specifically left out so that the ERP vendor could try and go back a year later to sell another product?  (I am really not a conspiracy theorist).  Either way, most businesses sooner or later come to the conclusion that their ERP still left them with a lot of Process Problems.

  This is where workflow software or BPM software (there is no difference - that was another marketing blunder) adds a much needed layer of process management to the company.  Let’s take the Purchase Process. In this company, the process went something like this -

  1. Employee makes a Request
  2. Request stake into consideration existing products and reference pricing
  3. Based on the reference pricing either one or two levels of management approval is needed
  4. Once approved, the purchasing manager sends out 3 Quote requests to approved vendors
  5. The quotes come back and need to be compared
  6. Final decision and a final approval ocurr

  Following best practices in this business process could save hundreds of thousands of dollars in the case of this company.   But time and time again the company didn’t follow best practices because the process was executed differently every time.

  I’ll let you know next week if they decided to buy the BPM Software… 

  
   
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    Shahid 4:42 pm on February 16, 2010 Permalink
    

    Hi Brian,
    Thanks for sharing. We have some clients who want to integrate ProcessMaker with an erp. What do you think about integrating openERP with ProcessMaker?
    Thanks,
    Shahid

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  Looking at the Learning Management Systems Market to Uncover the Direction of Current BPM Trends

  kurt 2:32 pm on January 30, 2010 | 0 Permalink | Reply
  Tags: BPM (19), business process management software (6), learning management systems, LMS software, trends

  

  BPM and LMS Software Markets Follow Mergers and Acquisitions Trend

  After hearing about the recent acquisition of Lombardi Software by IBM, I was reminded of another industry, the learning management system (LMS) industry. The BPM and LMS software markets are both highly fragmented markets with numerous vendors. Do the recent BPM acquisitions mirror activity in the LMS software market? Can we look at learning management system trends and uncover some BPM trends?

  Consolidation among major LMS software vendors began five years ago. One of the most significant mergers occurred in 2005 when Click2Learn and Docent merged to become SumTotal Systems, becoming the largest learning management system company in the market. The following year another vendor, Saba, acquired some of its LMS software competitors. Blackboard, the largest learning management system company in the education market, acquired the second largest company in the same market. Most recently, in 2009 Blackboard acquired ANGEL Learning. The merger and acquisition activity continues in both the LMS software market, as well as related markets (learning content management systems). At the same time consolidation has occurred among companies that exclusively develop and market LMS software, larger software vendors and consulting firms have acquired smaller companies or added learning management system functionality to their own enterprise software.

  Even with the high level of consolidation, which is expected to continue, enterprises and educational institutions still have a bewildering number of LMS software options to evaluate. According to Trimeritus eLearning Solutions Inc., at 250 corporate learning management systems exist in the market, excluding education and open source LMS software. One explanation is that the pace of consolidation can’t keep up with a growing market and a constant incoming stream of small independent vendors feeding established companies.

  In the BPM market, we have two recent examples of both a larger enterprise software company adding a BPM to its wide range of software offerings (IBM acquiring Lombardi) and a BPM company acquiring an competitor (Progress Software Corporation acquiring Savvion). If the learning management system market is an indicator of a current BPM trend, you can expect that consolidations will continue but the number of vendor options won’t.

  
   
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  The Unanticipated Business Process Management Consequences of Corporate Procurement and Incentive Payment Card Programs

  kurt 9:13 pm on January 16, 2010 | 0 Permalink | Reply
  Tags: BPM (19), business process management (5), incentive card program, procurement card program

  Businesses that need to reduce costs by streamlining processes can replace paperwork with credit or debit card programs. Two examples of processes impacted by these card programs include procurement purchases and incentive payments.

  Corporate Credit and Bank Card Programs

  Procurement card programs simplify purchasing and accounts payable processes and reduce the paper trail of invoices that these processes traditionally create. These programs are intended for small purchases (less than $500), which typically make up the bulk of procurement transactions. With a credit card these small dollar purchases are summarized on the monthly statement, which eliminates the need to issue multiple invoices to a single vendor for several payments. Overall, the use of a procurement card can reduce internal cost per transaction by an estimated 35 to 40 percent (Loftis). In addition to cost savings, buyers can also get their goods or services much quicker by bypassing the typical purchasing and receiving processes.

  An incentive card program issues employees with prepaid debit cards that are reloadable. Each time the employee earns an incentive payment, it is credited to their debit card, which they can use to make personal purchases. The program replaces paper-based check payments with electronic payments on a debit card. Not only do the electronic payments reduce costs by eliminating paper checks, they also eliminate the processing costs of generating and mailing the checks.

  The Unanticipated Business Process Management Consequences

  However, while both the procurement and incentive card programs can increase efficiency and simplify processes, they may create a need for additional process management elsewhere.

  For example, for tax and cost management reasons, a business that has implemented a procurement card program must now be able to manage all of the charges being made to credit cards held by many different card holders. Depending on the size and resources of the business, it may need an auditing process to review paper statements (a smaller business) or to review data feeds from the bank that issues the card to the business’s financial systems.

  Incentive payment card programs face their own process issue. To be successful an incentive program employees must connect their behavior to the rewards. In a paper check-based system, the employee receives a tangible reward for a specific accomplishment. When payments are automatically and invisibly loaded on a debit card, the employees may not connect reward to behavior.

  To ensure that incentives reinforce solid performance, a business needs a reporting process that shows employees why they received incentive payments on their debit card. By seeing their incentive payment history, they can identify what performance goals they met and can focus on meeting future goals.

  Of course, these unanticipated business process management consequences should not discourage a business from considering a corporate procurement or incentive payment program. On balance the business process management trade-offs associated with implementing a program may still outweigh the costs and inefficiencies of the traditional processes.

  
   
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  BPM Software Vendor Buying Spree continues with Savvion being acquired by Progress Software Corporation

  brian 10:50 pm on January 11, 2010 | 0 Permalink | Reply
  Tags: BPM (19), BPM acquistions, Progress Software, Savvion, Savvion compared to Lombardi, Workflow (9)

  The BPM land grab continues.   For those that follow me on EbizQ and other sites, you might remember that I was probably the first in the BPM and Workflow Industry to predict that the IBM acquisition of Lombardi would set off a small BPM Software and Workflow Software Vendor buying frenzy in 2010 as other large software vendors look to stake claims in the deservedly hyped BPM/Workflow space (See my original prediction here).

  Of course, I drink my own coolade, I just didn’t think it was this highly concentrated.   It is an understatement to say that both VCs and Industry Execs have a herd mentality.  Of course they do.  This is for obvious reasons - some good and some bad.  There is a feeling of safety in numbers and there is a general belief of the wisdom of the herd in venture investing.  Furthermore, most VCs worry about the market health first, executive team second, and then the strength of a particular product suite third.  In other words, if the market is good, VCs will continue making bets on it and not necessarily all in the same company.

  So, what does this second major BPM company acquisition announcement in less than 30 days mean?  Well, let’s look at the numbers.  In the case of this acquisition, we’ve got a publicly announced price tag - $49 million.  There isn’t a BPM CEO on the planet tonight that isn’t trying to calculate multiples based on Savvion’s revenues and profit margins.  Every industry needs benchmarks to know how to value companies in that particular industry.  Now we’ve got two cases (albeit Lombardi’s is still unknown) and two sets of possible metrics.

  I’m sure in the next couple of days we will get some good clarity on Savvion’s exact numbers.  However, in the announcement by Progress Software, they claim that Savvion had 350 customers (and 24 Fortune 100 customers).

  According to a write up by Timothy Prickett Morgan, he calculated Savvion revenues at around $18 million, i.e. 2.7x annual revenues, based on a revision in sales forecasts by Progress Software.   Tony Baer seems to suggest the acquisition was a 1.5x multiple in his column.  Other writers suggest that Savvion was growing very slowly during recent years and either in or near red numbers.

  Funny, if we look at a product brief by Upside Research published in 2007, it claims that Savvion had $25 million in Revenues and 25 Fortune 100 customers in 2005.  What - something does not add up?  Was Savvion just taking the piss out of Upside and its readers back then? Or did Savvion undergo a serious erosion in their business model?  I have to assume it is mostly the former (which will raise some eyebrows and require Upside Research to do some fast explaining).

  So, here is my initial conclusion and comparison of the back to back acquisitions.  IBM acquired a strong and growing market Leader probably paying 5-8x revenues.  Saavion was probably a more desperate sale of a company that despite a booming market was starting to stumble and lose its way.  The business was probably being shopped to strategic buyers who realized that Savvion would nicely fill out their customer strategy and allow them to participate more fully in a very extended and still not very “neat and contained” market.  So, Savvion probably felt that they were getting a nice bounce thanks to the market and a renewed chance as a company inside a larger entity instead of one that would be going it alone in a quickly changing landscape.  Some cash and some stock options in the new company probably looked like the best way to keep moving forward.

  This brings me to my next blog (coming in the next few days!) regarding how BPM acquisitions will continue but may have less to do with BPM and more to do with complex customer acquisition strategies and more holistic product ecosystems.  But, I’ll get some sleep and leave that one for later this week.

  
   
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  The 3 Most Important Reasons Why IBM acquired Lombardi and Why the BPM Market is so Hot

  brian 10:50 pm on December 29, 2009 | 1 Permalink | Reply
  Tags: BPMN, business process management (5), IBM, Lombardi, Workflow (9)

  The Business Process Management market segment just got a whole lot hotter thanks to IBM’s announcement of their proposed acquisition of Lombardi - a tier 1, independent BPM vendor.   Twitter and the blogosphere have been jumping over the last week or so for anyone who follows BPM and related markets.   And the acquisition has given the BPM and workflow journalists and analysts a nice New Year’s bonus of news to talk about.

  After reading lots of the analysts out there, I must say I am dumbfounded.  Almost every analyst or blogger I have read seems to have missed the main point of this acquisition.  Then again, maybe I’m just seeing the acquisition through the eyes of someone who runs a BPM company and not as a journalist or self acclaimed BPM pundit.

  According to Bruce Silver, the acquisition was bound to happen.  But he seems to imply that IBM made the acquisition for technological reasons.  Even stranger is the implication he makes that Lombardi probably needed to accept the offer because the IPO market looks grim these days so this might be the best offer they would get.  Are you kidding me?  What market is Bruce referring to?  The Dow dipped below 6,500 right around March 6th of this year.  9 months later the market is now back over 10,000.  That’s a pretty nice run if you ask me.  If you have a company that is riding high on a cresting market then now is not a moment of desperation by any means.  And if ever there was a market that will be hungry for IPO’s it will be next year’s market (especially for a leading BPM company).

  Clay Richardson has also focused too much on the software and the potential overlap.  He gets a little closer to the business side of things by citing something he heard from Lombardi President Phil Gilbert regarding how “Lombardi is doubling down on delivering more powerful tools for business stakeholders to collaborate on scoping and discovery for enterprise process initiatives.”  This is a pretty insightful take away if you look at the way IBM sells and has always sold.  Their consultative sales approach is made for taking advantage of an ever greater depth of tools that can be sold to stake holders working on enterprise process initiatives.  And, it’s pretty obvious that any VC backed BPM company is going to be highly focused on “enterprise initiatives” because this is the place that ARPU is highest and where growth is the most sustained.

  Neil Ward-Dutton also seems to get stuck focusing on the product overlap.  He can’t seem to get past the fact that there is lots of product overlap.  Neil says, “Although the strengths of Lombardi’s tools are different from IBM’s there is almost 100% product overlap. What’s more the design philosophy of Lombardi’s offering is almost diametrically opposed to that of IBM’s offering…”

  I can certainly appreciate why it seems everyone is focused on how these products will get mixed together and if Lombardi will die a slow death inside the behemoth IBM or not.  And sure, BPMN 2.0 might make it easier for these products to work together in the future as Bruce points out.  But, I think these guys are totally missing the business perspective here.  And these types of purchases aren’t made by techies, they are made from a business perspective.

  THE THREE THINGS THAT MATTER IN THE IBM ACQUISITION OF LOMBARDI

  1) MARKET SIZE

  2) CHANNEL STRATEGY

  3) THE END GAME

  I’m not going to say anything more about whether Lombardi’s SaaS product is any good, whether BPMN 2.0 means the Lombardi product can eventually work with other IBM initiatives or not, and I certainly won’t talk about product overlap.  None of these issues matter.  So let’s look at what does:

  1) The Market - Market research outfit IDC estimates that the market for business process management (BPM) software and services will hit $3 billion by 2013, more or less doubling in size from where it is today at around $1.7 billion.  Ok, so every other blog mentioned this, nothing new right?  But nobody seemed to stop and look at these numbers.  This market size is significant…i.e. every VC in software knows these numbers and every VC will want to get in on this game.  The market is a multi-billion dollar market which means there will be some big exits in the coming 12-36 months.   Also, there are some related markets that will affect almost every VCs portfolio.  Namely, ERP, SOA, EMC - etc.  These are all inextricably tied to BPM.  So, if you’ve got investments in one or the other, you are going to have to invest in all of them just to make sure you’re not throwing money off the table.  I got a call from a VC last week looking to make an investment in a BPM company for the sole reason that he had just invested in a DMS company and realized that their segment was growing very fast and literally throwing cash off to supporting BPM solutions.  So their conclusion was that they needed to take a stake in an appropriately positioned BPM company.

  2) Channel Strategy.  If you look back at an analyst call that Lombardi had on 11/18/2008, there is an interesting bit of information hidden in the summary.  In the Column 2 summary of the call, you’ll read that from “a services standpoint, [Lombardi's] own professional services staff is increasing, and they’ve moved from having 5-7 partner staff delivering billable services around Lombardi solutions for every one Lombardi billable professional services staff, to having about 15 partner people to one Lombardi professional services person. They expect this ratio to grow further, and are increasing their efforts in training and certification to support this partner growth.”  Just think about this for a moment.  BPM, ERP, and related software does not get installed by software vendors; it gets installed by partners.   No BPM vendor has a huge number of clients.  How many did Lombardi have when the acquisition was announced.  Maybe a thousand?  Maybe less?  So, how do you really grow a BPM company to the $200-$300 million in revenue mark?  The answer:  partners.  If you want your BPM company to successfully implement in Mexico, Brazil, and China - you better damn well have partners there.  So, if Lombardi was truly able to more than double their ratio of Lombardi staff-to-partner-staff per deployment in 2008, then it means they were becoming very successful in this area.  This ties in well with their focus on their training programs.  So, should I keep going with this line of argument or is it clear?  What does IBM really have globally?  You got it - a pretty nice Channel.  They sell lots of competitive products and that’s ok.  They just need to make sure they have the right solutions so that their “consultative approach” works.  Look at their new Smart Market initiative and BPM - there’s several BPM products being offered on that box ( my company included).

  3) The End Game - So what is the End Game for BPM?  That’s just it - NOBODY KNOWS.  This market is very fragmented, growing nicely, and there are no clear leaders.  BPM has not reached anything close to the maturity of ERP.  Most of the buying market still doesn’t even know what BPM stands for - Beats per Minute (no DJs out there?), Business Process Monitoring, Business Process Management, Business Performance Management?  So, if you are a portfolio investment company (yes, IBM is no longer really a software company), then you had better have a number of slightly competitive, slightly overlapping products in order not to get caught with your pants down if the market starts to slide in a slightly unanticipated direction.  Also, if the market is as fragmented as it is, then the only way to get a more interesting piece of the $3 billion market to be is to own a couple of key players.  If you aren’t sure which horse is the winning horse, then you want to have several horses which will all place, right?

  You are certainly free to disagree with me.  But think about the way GE makes acquisitions.  They usually are not trying to fit the individual pieces together; rather, they are simply fitting the pieces into the markets.

  
   
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    John Januszczak 8:15 am on December 30, 2009 Permalink
    

    Great post Brian. I’ve been forwarding it to a few people. Besides the specifics re: IBM/Lombardi, this is a nice analysis of the BPM market.

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  "72% of organizations recoup their BPM investment within 2 years" according to new BPM study

  brian 12:28 pm on November 27, 2009 | 0 Permalink | Reply
  Tags: BPM (19), business process automation, business process management (5), business process managemet, HR workflows, SOA

  According to recent research by AIIM, 50% of organizations using Business Process Management (BPM) tools achieve a payback of their investment in 18 months or less. In all, 72% recoup their BPM spend within 2 years.

  Wow!

  This is some wonderful new data on the power of BPM in the enterprise today.  Also interesting is the finding that once a company has implemented an initial Business Process Management project, additional projects take an average of 8 to complete. In addition to cost savings, users report faster process throughput and improved compliance from more consistent processes.  No surprises there.

  A majority of respondents reported that they have only addressed 1/5th of the potentially profitable BPM projects in their organisation, and consider BPM to be “significant” or “imperative” to their business.

  Other important notes from the study include information on what tend to be the most popular processes for organizations to automate.  These processes include: accounts payables (scanning, routing, approving of incoming invoices), processes from customer support, and HR processes.

  Not too surprising, one of the biggest challenges for organizations is actually defining and agreeing upon the process.  As I have mentioned time and time again in this blog, my number one recommendation and point of focus with organizations implementing Business Process Management is on the Statement of Work (SOW) because if you cannot correctly define your process in a simple format, then you are not ready to automate it using BPM software.  I think the conclusions of this study undeniably support this statement.

  One last note of interest is that despite claims by most BPM vendors that their tool is for “business managers,” fully 30% of all BPM projects originate in the IT department.  The reason is simple - most BPM projects involve integration with existing applications and integrations always involve IT.

  Conclusions:  spend the time and money on your SOW.  Define your business process or workflow before trying to automate it.  But DO IT - the payoffs are significant and pretty darn quick.