In April 2006, with his back against the wall and the national press calling for his resignation after it emerged that over 1,000 convicted criminals destined for deportation had been allowed to stay in the UK, then-Home Secretary Charles Clarke MP pointed the finger at a familiar scapegoat: IT.
The process which was supposed to monitor and execute the deportation of foreign ex-cons had broken down because it relied upon “information technology systems which are different in the different areas,” said Clarke.
A fudge, perhaps, but the timing could not have been better for a growing section of the software industry that has a message it needs to broadcast – business processes rely on integration.
The market for business process management (BPM) software, tools designed to optimise and rapidly re-engineer processes, has recently become a hive of activity, with integration platform and stack vendors muscling in on the rapidly expanding space. Forrester Research reckons that the annual market for BPM suites (collections of business process execution, monitoring and optimisation tools) is worth over $1 billion and growing by around 20% per year – the only software market of such a size to be growing so quickly.
The theory behind BPM is not new: It stems from consultants Michael Hammer and James Champy’s 1993 book Re-engineering the Corporation, which advocated a process-centric view of business and elucidated the need for process flexibility to enable businesses to react quickly to shifting market conditions.
But two things have changed over the years and are now bringing BPM into urgent focus. Firstly, the barriers to entry in many industries have dropped considerably. As a result, a management team can find a new instantly viable competitor emerging in a matter of weeks rather than years. All the previously defining characteristics of a business – product, price, geography – can now be quickly copied, leaving a company’s internal processes as one of the few remaining opportunities for differentiation.
Secondly, an integration approach has emerged that has the potential to deliver the technological flexibility that the rapid re-engineering of business processes demands: service-oriented architecture (SOA).
Process plus services
As the fiasco at the Immigration and Nationality Directorate demonstrated, a process that spans disintegrated systems is hard to manage and error-prone. The business’s SOA, a mesh of its (and theoretically other’s) malleable and reusable software services, allows BPM tools to quickly re-coordinate the technological assets supporting business processes. Or as Phil Gilbert, CTO of BPM software specialists Lombardi, puts it: “SOA takes the friction out of doing BPM.”
The BPM and SOA markets have therefore become closely associated, especially in recent months. “Merely a matter of months ago, only three or four of the vendors at a BPM conference in the US would be mentioning SOA in their marketing,” says Deon Newman, director of marketing for middleware at IBM, shortly after attending the BPM Summit hosted by IT consultancy Gartner in June 2006. “At the Gartner BPM Summit in June [the premier sector event], 70% of participating vendors were now talking about BPM as part of an SOA strategy.”
That change in messaging among the BPM vendors is almost certainly a reaction to the moves by SOA platform vendors into their patch. In March 2006, BEA Systems bought established BPM pure-play Fuego and in April, Tibco announced the release of its Business Studio software, a BPM application aimed at business users that represents the successful combination of Tibco’s software with technology developed by Staffware, the UK-based workflow software vendor it acquired in 2004.
“BPM is not a programming paradigm; it is about giving business people better control of their processes.”
Alan Trefler, Pegasystems
Through BPM, platform vendors can make a case for SOA to a business audience – the audience most likely to have the budget to purchase their products. The view is emerging that BPM speaks to business concerns, whereas SOA alone addresses technological interests, and building return on investment cases is much simpler in BPM than in SOA.
“Business users don’t care about the flexible reuse of software services,” says Gartner research VP and distinguished analyst Jim Sinur. “They care about being able to manage their business processes.”
It is through BPM that businesses will co-ordinate software services in a way that makes business sense, argue many analysts, including Sinur. As he bluntly states, “you can’t do SOA without BPM”. That gives the pure-play BPM vendors an opportunity to sell to businesses building SOAs, and SOA platform providers the chance to pitch to companies interested in BPM.
An example that would appear to justify the platform vendors’ strategy of seducing businesses with BPM comes from financial services giant Citigroup.
A project to optimise transaction processing in the equity brokerage department saw Citigroup purchase Fuego software before the software vendor had been acquired by BEA. Meanwhile, Citigroup had picked up some BEA middleware, as well as related products from other vendors. In the light of the acquisition, says Citigroup’s vice president of equities technology, Robert van Kaufman, Citigroup will now standardise on BEA’s Aqualogic service-oriented platform to support future BPM projects.
But examples such as this are not yet common. Information Age’s own research, which is consistent with analyst investigations, has found that roughly 50% of businesses are implementing or considering service-oriented architectures. Few among those will have yet placed BPM in as central role within the SOA as the analysts are now recommending, says Melvin James, practice director of IT consultancy Diagonal Consulting.
However, James adds, that is the right way to implement an SOA, and the way that businesses will be doing so in the future. “The SOA vendors have to date been focusing on the technological case for SOA. Now the vendor community is turning towards the process message, and that is the right way to be thinking about it.”
Big versus small
Aside from pure-play and integration platform specialists, a third group also looms large over the BPM market: stack vendors such as Fujitsu and IBM. These giants have as much interest in BPM as any vendor; it elevates their role from technology partner to process support.
Unsurprisingly, pure play vendors are scathing of the stack vendors’ technology. “What we are seeing is three or four independent vendors who are setting the pace for BPM, especially in the business process optimisation area,” says Lombardi’s Gilbert. “Technologically speaking, the stack vendors are years behind us.”
On the same wavelength, Alan Trefler, CEO of Pegasystems, says that the IT giants lack the pure-play vendors’ business focus. “Some vendors act as though BPM is a programming paradigm. We think that BPM is about giving business people better control of their processes.”
Sinur agrees with the assertion that the specialist vendors are way ahead in terms of technology, but adds that not everyone needs the level of control afforded by high-end BPM products. Pegasystems, for example, differentiates itself by having a business rules engine that is distinct from its process logic repository – any change to a business rule will therefore update the way processes run without having to change the systems that support the process.
“The closer you get to real-time change of business processes, the more important this is,” says Sinur. “If your business is like a jet fighter, you need real-time control. If it’s more like a train, it’s less important.” Sinur agrees with the overarching trend of businesses increasingly needing rapid control of business processes, but few to ‘fly-by-wire’ quite yet.
And while the stack vendors may not have the cutting edge of BPM functionality, they do have the ability to manipulate interoperability standards to their advantage. Although the adoption of service-oriented architectures, which are based on open standards, will in theory break down the interoperability barriers that stack vendors often use to lock their customers into using own-brand products, in practice it is not that simple.
“What they’re doing is developing their own versions of BPEL (business process execution language – a standard for programming non-human automated business processes),” explains Sinur. “It’s just like what happened with SQL: that standard was meant to be 100% interoperable, and 95% of it is – it’s just that the 5% that’s left can make all the difference.” By tweaking the standards, the stack vendors may be able to manufacture customer lock-in.
The stack vendors control about 10% of the BPM market at the moment, says Sinur, but he predicts that in three years time that figure will reach about 50%.
From the perspective of one further player, currently waiting in the wings of the BPM/ SOA stage, this may all be just the warm-up act.
SAP, Europe’s largest business software vendor and the technology perhaps most closely associated with processes, has the highest market share in the enterprise resource planning, customer relationship management and supply chain management markets, according to Gartner research.
It is arguable that SAP’s software supports more business processes in the world today than any other – at least among large companies. If SAP was to build business process flexibility into their product line, the size of the market available to the rest of the BPM market would immediately shrink.
That is no mean feat, but it is exactly what SAP is attempting to do with its NetWeaver service-oriented architecture product.
In a seven year undertaking, SAP has converted elements of its software into interchangeable services. In 2005, the company announced the integration of BPM vendor IDS Sheer’s ARIS process platform into NetWeaver.
“SAP has let everyone know what their BPM strategy is, way in advance of completion,” says Diagonal’s James. While companies with multi-vendor software strategies will still have many options for BPM partners, those which are heavily reliant on SAP applications may find its BPM offerings too convenient to refuse.
That was the dilemma facing Anthony Lorraine, project manager for London Underground’s incident reporting system. When applying for budget in order to purchase BPM software to control the system, Lorraine was repeatedly confronted with the same question from senior management: ‘Why do we need extra software; can’t our SAP system do this?’ London Underground ultimately went with specialist BPM vendor Metastorm.
But as SAP develops its BPM offering, says Lorraine, “that question is going to get harder and harder to answer.”
BI and BPM: friends or foes?
The continued rise of business process management will certainly have an impact on the business intelligence (BI) market, but will it present BI vendors with an opportunity or a threat?
One view suggests that the shift to process-centric management will heighten the demand for performance management software, as businesses seek to get a detailed view of the consequences of process change.
“I don’t see how you can do process management without performance management,” says Martin Richmond-Coggan, EMEA VP for performance management software vendor Applix. “If you alter a process, you are setting an expectation that the key metrics will improve. How do you know if you’re successful without accurately capturing those metrics?”
And the process-centric view may provide an opportunity for BI vendors to overcome a significant problem with their products: poor user adoption. Instead of being a supplementary application, business intelligence functionality could be built directly into business processes.
For this to be possible, BI vendors need the keys to the business process platforms. Partnerships between the spaces have already begun to emerge; Cognos incorporates Lombardi process intelligence software into its performance management platform, for example.
However, some believe that simply injecting BPM technology into BI platforms is not going to provide customers with the kind of process intelligence they want. After all, process intelligence is a very different animal from ‘static’ business intelligence.
“OEMing BPM technology is settling for second best,” says Gartner’s Jim Sinur. “What the BI vendors need is their own process intelligence engines. But some of them are refusing to recognise that.”
But unless they want to find themselves out of the BPM and SOA loop, says Sinur, BI platform vendors need to get to grips with process intelligence, and soon. Gartner research finds it to be more than highly likely that by 2008, BI platform vendors will be seeking acquisitions or mergers with process management vendors, and vice versa.