Business process management (BPM) is gaining popularity among SAP customers as enterprise architects look for new and more cost-effective ways of meeting business needs in the recession, according to analysts.
Companies are buying BPM tools to improve the effectiveness of key enterprise processes to increase productivity and respond faster to customers.
"There's a lot of talk out there about BI," said Kathleen Donahue, who is the director of business process excellence at pharmaceutical giant Wyeth, an SAP customer that uses IDS Scheer's ARIS platform for BPM. "But unless you understand the process … you measure poor result after poor result. It's understanding the process and using the tools to improve the process that's going to improve measurement at the end."
During a recent AMR Research customer forum, about half of the enterprise-size SAP customers participating said they were doing business process management projects, according to Bill Swanton, vice president of industrial products at the Boston-based research firm.
BPM tool sales have been aided by the fact that many companies are preparing for, or are in the midst of, SAP ERP 6.0 upgrades. Typically, Swanton said, companies start such projects when they're doing major work on the ERP system and documentation is no longer up to date, they're trying to consolidate multiple instances, or they're facing an upgrade.
Getting started with BPM tools
In getting started with BPM, it's first important to understand that different types of BPM tools are used to accomplish strategic or tactical goals, Swanton said.
Madison, N.J.-based Wyeth is taking a business process modeling approach to BPM. Business process modeling involves complex documentation of business processes, the systems that support them and other business-oriented information. These tools lend themselves to long-term documentation and analysis of business, processes and systems that implement them, Swanton said. Models are built by defining the architecture of the business and take several years.
For these types of projects, SAP customers are using mainly BPM tools from IDS Scheer and Metastorm. SAP also provides some capabilities in SAP Solution Manager, which can capture business process outlines and documentation.
In Wyeth's case, the company wanted to adopt lean Six Sigma across its supply chain. Wyeth examined its supply chain and the hand-off with the other end-to-end processes it touches, such as discovery to launch (also known as research and design) and order-to-cash. It wanted to optimize its supply chain while also improving the way that it works in those two areas.
Wyeth, which started its project seven years ago, has one of the most sophisticated BPM programs among SAP customers, according to Swanton. Still, the company doesn't consider the project "complete."
"I think you're done with the project when you close the company down," Donahue said. "Because once you start, it becomes the way people think and the way people work. They want to get better, and now they understand how to get better."
The other approach to BPM is adopting business process management systems. These tools let a company add innovative processes on top of ERP and other applications that are already implemented, Swanton said.
It's more heavily used in industries like financial services, which have several systems. For instance, one business process, such as paying an insurance claim, involves a claim system, an insurance contract system, a payment system, and a risk management system. Instead of moving from system to system, a company can put a tool above them, connect the systems and automate the process.
"It tends to be very tactical. I have a business process making too many mistakes and using too many people, and I'm looking for a way to simplify and make it faster," Swanton said. "The company is automating a business process being done manually in one or more systems."
SAP customers are also using BPM tools from Lombardi and Pegasystems for these purposes. In turn, a new SAP BPM product sits on top of NetWeaver and will allow enterprise architects to compose a business process and automate it -- part of the so-called "Galaxy" technology.
NetWeaver BPM will likely be generally available by Sapphire in mid-May, according to SAP. A total of 40 customers have been using the technology in what SAP calls its "ramp-up" stage. Most of the ramp-up customers are looking at implementation of business processes that are not covered in core SAP applications and are very volatile -- for instance, involve changing numbers or type of partners, according to Harald Nehring, senior director of platform marketing for SAP.
"What customers expect here is much better integration with the SAP back-end than you can get from general purpose tools," he said. "Our goal is to use the Galaxy technology to model and show and actually make accessible and tangible the processes in the application."
SAP also provides some of the capabilities within NetWeaver, according to Forrester Research's Ken Vollmer, principal analyst at the Cambridge, Mass.-based firm. Some of those types of problems are being solved within the NetWeaver portal with guided procedures, Swanton said.
Challenges in BPM projects
The BPM systems piece usually isn't too hard to get started, he said, because the tools generate short-term value.
But a business process modeling project is a harder sell, Swanton said. Business people aren't going to spend time on that unless it's important to someone.
"The whole goal here is to have one answer and have everyone do it the same way," he said. "Governance is the hardest part about getting started -- getting people to sit still long enough to agree on what [the business process] is."
That means the biggest challenge is overcoming human resistance to change, Vollmer said. BPM tends to break down walls between siloed operations, and that is frequently an unpopular task to undertake. People fear potential job losses that process improvements may bring.
Vollmer recommends forming a process improvement team made up of key employees in each of the functional areas of the process. The team will analyze bottlenecks, evaluate possible remedies and implement actions to correct them.
"This fosters teamwork between the functional groups and results in a situation where the people with the deepest working knowledge of the process are the ones that end up selling the improvements to the rest of the organization," Vollmer wrote in a report. "Cultural resistance gradually fades into the background."
It's why senior management support is critical.
"I think that business process management is the bridge between a really strong business person and a really strong IT person. You need both," said Donahue, who herself has a primarily business background. "It has to be business people who understand IT and IT people who understand business. One of the challenges is to find that skill set."