July 26, 2002

Process of Improvement

Business process management is among the most exciting sectors in strategic software — and Web services makes it even more so

by Barry Murphy

For many organizations, past business process reorganization and present business process management (BPM) initiatives focused on integrating processes and application sets found in back offices and customer-facing operations. This is particularly true in extended enterprises and value chains. Over time, these environments have developed a well-earned reputation for persistently elaborating on operational processes and the technical infrastructures that support those operations. Managing that change, at both the process and infrastructure level, has been a key challenge.

For enterprises with sufficient experience, optimizing processes has matured over time: Reengineering was the craze of the late 1980s and early '90s, process automation and workflow took off in the early to mid-'90s, and the last half decade has seen the emergence of BPM software and Web services as solutions to problems associated with streamlining processes and integrating information systems.

As we emerge from this global recession, one thing is clear: Enterprises are focused on technologies that provide greater value from existing software assets. The scrutiny of IT buyers centers on the investments that will cut out the fat, speed their processes, and allow them to do more with less. Those goals imply the ability to "collapse" business processes by capturing and dynamically managing business logic with integrated application services; every organization wants to maximize IT resources, connect business processes with business partners, and integrate process knowledge within the business desktop.

Take a credit application process, for example. By connecting the applications, such as a CRM system, that supply information to a process directly to the process, an enterprise can optimize use of existing information when dealing with customers. That connection leads to better customer services and revenue generation opportunities.

In that same process, the enterprise can cut costs in two ways. First, by distributing process events into exceptions and nonexceptions in an effort to reduce the amount of human involvement necessary. Second, any exceptions that do require human intervention can be proactively sent to employees, as opposed to having employees react to them. This approach leads to reduced costs through both improved cycle times and reduced headcount.

BPM software, provided by vendors such as HandySoft, Savvion Inc., and Fuego, enables the design, analysis, optimization, and automation of business processes. It separates process logic from the applications that run them; manages relationships among process participants; integrates internal and external process resources; and monitors process performance. It's no surprise, then, that BPM is quickly emerging as one of the most exciting technologies in the enterprise software arena. Few areas of software will receive more attention in the coming years than BPM. Yet, as I'll explain, the greatest challenges to BPM implementation are the very forces making it so attractive.

Process Categories

Business processes can be grouped into three categories: process-to-process, person-to-process, and person-to-person. Figure 1 depicts these categories around the axes of complexity and duration. A simple process may involve an application-to-application data transfer, such as an ERP transaction, while a complex one may involve several applications and people, such as product development. Duration refers to the length of the process from start to finish; an ERP transaction typically involves simple data transformation, and as such, is of short duration. In contrast, product development can take months to complete.

The process-to-process category generally falls on the low end of complexity and the short end of duration. These processes are discrete and focused on data transformation. The goal is to get business objects from one application to another; the challenge is defining the business logic of transforming those business objects.

Transaction-centric processes are often defined by person-to-process interactions, such as individual validation of an automated task or resolution of an exception to an otherwise scripted process. For this reason, transaction-based process management typically involves repeatable processes with few variations among instances. It's usually state-based, involving person-to-process intervention at specific steps, while the remaining steps are automated (for example, credit approval for loans).

Finally, there is the person-to-person category where people are connected for collaboration purposes. Collaboration can be process- or knowledge-driven and involve explicit or tacit knowledge. Although resource scheduling may be more process-driven and based on explicit knowledge, actual project management is typically more knowledge-driven and based on tacit knowledge.

A holistic BPM initiative would ideally address all three process categories because each serves an appropriate and necessary role within most organizations. Such a solution, however, would need to comprise a combination of best-of-breed product offerings because each BPM vendor focuses on a specific area of functionality. (See Figure 2.)

Relation to Web Services

It's difficult to discuss BPM without also discussing Web services or Web services without BPM. As the impact of Web services begins to grow within many organizations, so will the degree of complexity surrounding this new enterprise computing paradigm. To fully leverage the advantages offered by Web services in the delivery of application resources and information requires the same type of coordination provided by BPM software. It's important to note, however, that more than half of the respondents in Delphi Group's recent software buyers' survey (Web Services and Business Process Management, Jan. 22, 2002) believe that process management standards are missing from current Web services offerings — which suggests prevalent confusion about the difference between BPM and Web services.

If you're following the development of Web services closely, you know that there are about as many definitions of the term as there are people offering them. Delphi Group defines a Web service as an XML object comprising content, application code, process logic, or any combination of these that can be accessed over any TCP/IP network using the simple object access protocol (SOAP) standard for integration, Web services definition language (WSDL) for self-description, and the universal description, discovery, and integration (UDDI) spec for registry and discovery within a public or private directory. Expressed in nontechnical terms, Web services are business assets that can be shared, combined, used, and reused by heterogeneous computing resources within an organization or among them. The user may be a human being or a machine.

Delphi's survey of software buyers found that a good deal of confusion surrounds Web services. Asked to define Web services, respondents gave answers ranging from "collaborative commerce enabler" (75 percent of respondents) to "Internet business model" (57 percent) to "Web site development environment" (42 percent) and "software development paradigm" (42 percent). As more businesses experiment with Web services, they'll begin to better understand the specific applications of this computing model and, undoubtedly, discover new ones.

It's important to understand the underlying standards implied by Web services. Although nearly one quarter of respondents were unfamiliar with SOAP, the majority correctly indicated that it's a standard interface that allows applications to integrate. Very few respondents (3.2 percent) confused SOAP with UDDI, but a significant number (15.9 percent) incorrectly defined it as a means to describe a Web service, which is the function of WSDL.

These levels of unfamiliarity and misunderstanding are natural for a technology that's just beginning its first wave of adoption. Web services are largely conceptual for many potential users and much education will be needed to correct misconceptions that have already been formed.

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