The current financial crisis isn’t a threat for BPM because there must be a boom before to talk about a crisis and there were no boom in BPM.
Some people anticipated the boom by calling BPM “The Next Big Thing”. Pure-play BPMS vendors have made big bids on the boom. The stack vendors aquired BPM assets.
In Russia, every BPMS vendor now has about one and a half BPM project - one successful and one decent - and shows them at every event. The first BPM conference in Moscow held in 2006 so companies invest into BPM marketing minimum for three years now. The results aren’t very impressive; not a boom anyway.
Instead of assesing the global market let me refer to the point made by Rashid Khan. It has special value because until recently he headed a well-known BPMS vendor Ultimus, and now owns a BPM consultancy firm. That is, he knows the matter from inside and at the same time he can afford speaking freely. Rashid Khan drew attention to the fact that year after year industry analysts assess the BPM market volume at 1-3 bn dollars range and predict annual growth of 10-20%. Even with 10% the market should be at least at 4 bn now. But recent reports still give the figure 2 billion - apparently the promised growth is yet to come.
Maybe it’s time to stop portraying optimism, admit the serious problems and try to answer three everlasting Russian question: who should be blamed, what to do and what to do with those who should be blamed?
Recalling discussions that I had with potential customers, analyzing BPM projects experience, I came to the following reasons:
1. The legacy of process disciplines
Process management exists in one form or another for decades. TQM, reengineering, Six Sigma, Lean manufacturing, BPM - they agree on certain points yet serously diverge on others. Each of these theories have followers who are unaware of alternative approaches (I still meet people who only view process management through “as-is” and “to-be”) or are involved into holy wars with other camps.
Imagine the ideal prospect: an ambitious director interested in process management. He has a book entitled “Business Process Reengineering” on the shelf. Some time ago external consultants conducted an inventory of business processes and resulting process diagrames can be found in the drawers. The MBA courses told him about Six Sigma. Now he hears at BPM conference that there were some issues in reengineering but now measures are taken.
Is it any wonder that some business people got a kind of allergy: at the moment you say “business process” the conversation ends. Anyone who passed through reengineering or complete business process inventory project will never agree to go through something like this again. He is not interested in details - is it BPM or whatever: “thank you, been there”. I have observed such reaction many times.
2. Concept erosion and terms substitution
It drives me mad when BPM is called an “umbrella term”. In fact, BPM is a holistic concept combining management methodology, dedicated software tools and agile development principles.
Yet to develop a true BPM understanding it’s not enough to read some articles or view some presentations, you should put hands at least on a small pilot project. It’s much easier to say instead: “don’t you tell me about BPM, I’m doing it for more than 10 years, we were drawing IDEF0 process diagrams back in 1995″. This is how the diversity of process disciplines (see point 1) leads to concept erosion.
And software vendors add confusion by substituting terms. Relabelling is an old tradition: at the time, all DBMS became relational in a year term. You don’t need to release a new version of your product, it’s enough to update marketing brochures. Now a Visio plugin and a primitive workflow built into accounting package both carry the BPM label.
But come on! Inventing a new term just to cover all process techniques of the last twenty years - isn’t it a silly game?
3. A process-driven enterprise is an utopia
Let’s assume that process management produces positive financial results. But there are lots of other ways: receiving preferences from the state, tax evasion, tampering with records, the using a monopoly, the corrupt tenders etc.
Business men are pragmatics, not to say cynical. Idealists simply don’t survive. Suppose some of the mentioned bad things are rooted in the economic realities. Can you afford being the one who don’t give bribes in tenders when all competitors do?
It happens in politics that the man making the right moves looses his popularity and the one coming after him gathers the benefits. BPM promises durable competitive advantage but it requires serious and long-term efforts. How many top managers will push the idea which probably will bring payoff only after them? Will the shareholders of a public company approve such moves?
So a process-driven enterprise is like a “shining city on a hill” - a dream hardly compatible with this imperfect world.
4. It’s always either too early or too late
During the first years of company’s history there is a cult of heroes, and rightly so. The formalism maybe harmfull. There is no room for processes when a company grows to hundreds or tens of percent per year.
But when the company is facing a serious crisis, it’s too late to deal with processes. BPM as a part of anti-crisis measures? It’s very doubtful - a vulgar “reengineering” is a proven method for massive labor force reductions.
Of course there is an interval betwen the rapid growth period and a period of approaching crisis and this is precisely the time to engage processes mangement. But are there many able to do so? Yes, “only the paranoid survive”, but it’s so boring to be paranoid.
5. Too complicated to be practical
To successfully practice BPM a company must have expertise in business analysis, information technologies, project management. Process modeling and optimization, BPMN and BPEL, Web services and SOA Governance, Web 2.0 and Agile methodology… isn’t it frightening?
To make things worse, even if the required competences exist they are posessed by different departments. Process analysis in particular can’t be done by IT only if we are talking about core processes of the company. From the point of view of CIO who usually plays significant if not the major role in a BPM project, BPM looks more complicated than any other information technology. When working with computers the most difficult part is working with people indeed. Only when you deal with a special case “system-to-system BPM” - totally automatic processes or processes with minimal human participation - BPM gets simlified dramatically. Such processes are typical in banking and telecom hence these industries prevail in BPM success stories.
CIOs and other project participants are not ready to learn that much. The exception are company that made innovations cult part of their culture.
Others will change perception only when today’s students learning BPM at universities will become IT specialists, business analysts, functional managers. The good new is that BPM became a popular discipline in Russian universities.
6. Another paradigm shift
When a BPM project is conducted by the people with pure functional thinking it’s absolutely clear: nothing will happen.
On the other hand it’s a stress when someone request that you to change the paradigm. And what if a paradigm shift happens every five years (see point 1) - will you accept that?
As in point 5, either constant innovation is a part of company’s culture or a paradigm change will happen only with the change of generations. But the latter is way too slow.
7. Bad luck
BPMS vendors suffered twice: first from dot-com crash and now from the global crisis. Any technology is vulnerable at the initial stage of its development - if you do not gain the required pace, there is a risk of not obtaining the necessary level of market acceptance and fall into “Moore’s Chasm“.
Innovations in BPM mostly come from pure-play vendors. They are relatively small companies depending on a venture capital and their prospects aren’t shining with the current state of capital markets.
8. ERP vendors position
I have heard from prospects: “Business Processes? We have them all in SAP”. ERP systems are part of legacy (see point 1) and ERP vendors have succeeded in substituting terms and erosing concepts (point 2). If you are able to model business processes with eEPC it does not mean that you have a BPM system.
The substitution happens when a vendors assures that his system is flexible and can be configured to your business processes. They don’t mention that it can be done only once at initial configuration of the system. A ERP system at deployment is like cement slurry while later on it’s a block of concrete. Current ERP systems follow reengineering, not BPM: design “to-be” thoroughly, implement it in the software and enjoy running the optimal process. The essence of BPM is the ability to change business processes freely and to improve them on permanent basis.
The situation is changing - meaning what SAP is currently doing at SOA and BPM (see the note and the whitepaper at Bruce Silver’s blog). According to SAP roadmap we are now close to see what has been predicted by analists years ago: a fully SOA-based and BPMS-aligned ERP system.
9. Business processes are the top secret
Business people don’t like strangers looking at their processes. Not by security reasons mostly but because of jealousy.
Imagine that you’ve spent half of your life on this company, you know it inside out, many things are done with your personal efforts. And here comes some expert or analyst, half your age, to assess you as in the exam: this process is perfect and this one is bad. “What does he know, he never led a major company in his life! Besides he doesn’t know our industry.” By the same reasons they don’t like to disclose processes even to their own IT.
They fear that it may break the internal harmony - their belief that everything is well-arranged. If this is the case then it can be overcome only by a gun at his head - if the company faces really tough problems. But then we go back to point 4: it’s usually too late to think about processes.
There is another way of thinking: for some companies regular reassessments is part of the culture. “There is no untouchables here. Any department should be ready for external audit at any time. Take it or leave.” - the words I once heard from a top manager.
10. BPMS are too expensive
Well-rated BPMS aren’t cheap. They aren’t expensive either if compared with a total budget of large company’s BPM project. Strategic project (and BPM is a strategy) can’t be cheap anyway.
But the price is prohibitive for mid-size businesses. And it’s bad for BPMS vendors themselves. The mid-size business is more agile, more open to innovations so BPM could accumulate the practices developed by them. Large companies are few and they have lots of other options (see point 3). BPMS vendor should think about more flexible licensing and about granting free access to their technologies for universities (see point 5).
Of course I exaggerated a little yet I believe that all the above reasons are present at some degree.
And what’s the situation at your countries - in Europe, Japan, South Africa, Brazil, in the US, in India, in Australia etc.? (I’m referring to the visitors map that was recently added to the blog.) I’d greatly appreciate your comments. Maybe the initial thesis is badly wrong and everything is fine with BPM industry? Or did I miss the main reasons?
Not to end at pessimistic note let me cite from Gary Rummler’s interview to Gartner:
I am convinced “process” is here to stay. It has already survived the “re-engineering” fad, and I’m sure will survive the technology confusion. Why? Because businesses need valued products and services, leading to profits. And those two things come about only as the result of sound internal work processes. I think the next phase in the evolution of process is the recognition by business that process is the building block of the value creation system required for their ultimate success.
Whatever problems the BPM industry is facing, the management science did not invent anything better (there is also project management but it’s another domain). There are and will be the men with ambitions and morale forcing them to build a business not on corruption but on innovations. Today’s students will grow to managerial positions. Software prices will go down (just compare DBMS prices today and 10 years ago). And some day it’d be impossible to manage a company without BPM.