More now than ever in these tight economic times, leading financial services companies are turning to business process management (BPM) solutions as a means to accelerate time to market, increase operational efficiency and streamline IT. Gartner predicts that investments in BPM will increase by over 500 percent by 2012. At the same time, Gartner also reports that more than 50 of these initiatives will fail.
This clearly is an extremely high ratio that is creating significant risk to organizations embarking on BPM-based solutions. That risk is not only in sunk costs but also visible in lost market opportunities, decrease in revenue and erosion of competitive positioning. While some percentage of failure can be attributed to "normal" project challenges, the majority of failure is due to organizations failing to adapt old methods of application development to the paradigm that BPM solutions require.
Traditional application development methodologies have included waterfall approaches with heavy front-end emphasis on requirements documentation and solution design. It emphasizes control gates at each stage of the waterfall which allows management to measure progress and make decisions about future phases while delivering the desired functionality. While this approach has been and continues to be successful in many areas, it creates several challenges when applied to BPM initiatives.
BPM projects are focused on changing an organization's processes to achieve benefit. This is a subtle but core difference. Among the key benefits BPM projects typically strive to achieve are agility, flexibility, quality improvement, cost reduction and performance improvement.
Central to BPM is the concept of continuous process improvement, which can only be done by understanding processes from end to end, being able to monitor and measure them, implementing improvements, and starting the cycle over again. A BPM methodology needs to include process analysis, process modeling, and process design and implementation to allow an organization to achieve continuous optimization. It is this focus on process change that stands in contrast with traditional application development methodologies which focus on functionality from the outset. Most organizations are not equipped to handle the governance, process focus and subsequent change management required to succeed in BPM projects.
Certainly most organizations begin with the best intentions by starting with procuring a BPM vendor solution (BPMS), which typically provide an array of tools to allow users to define, model, implement, monitor and change processes. They also generally invest in prerequisite training on these BPMS and yet, as the data from Gartner shows, they still struggle to successfully deliver. One key reason is that they do not fully adapt their traditional application development methodology to the requirements of BPM projects. They assume that because they are using a BPMS tool, they must therefore be following best practices for BPM implementations. Upon further analysis, however, you find that most organizations have struggled to separate the act of using a vendor's tool from an organization's execution approach to such projects.
To be successful in BPM implementations, organizations must not only pick the right BPMS tool for their specific needs (this is topic for another day), but also adopt a methodology that is customized to BPM projects. This starts with restructuring the way projects are conceived and scoped, budgeted and governed, to the ways in which users are engaged and finally the execution of the design and builds process. Key elements that should exist include:
In conclusion, BPM programs done correctly can drive phenomenal benefits by allowing an organization to achieve dramatic gains in core process improvement, while at the same time accelerating IT's ability to deliver capabilities. Having the right implementation approach is a large key to success.