RE-REENGINEERING
Fine-tuning with the aid of BPM software could eliminate major technology revamps.
By John Verity

Two years ago, LexisNexis realized that its ability to serve new web-based customers was severely strained. Thousands of small and midsize law firms represented a huge business opportunity for the company's legal information services, but they often had to wait 48 hours to have their web accounts activated after signing up. For smaller firms seeking to buy documents in small quantities, often to apply to pending cases, such a delay was intolerable.

Clearly, LexisNexis needed to revamp its customer sign-up and order-fulfillment processes, which were designed for large law firms and the ordering of hardcover legal tomes. But instead of spending millions on a massive new enterprise resource planning (ERP) system, LexisNexis chose a somewhat unorthodox and unproven route: by reworking some key workflows to require fewer manual tasks and installing a new kind of software (from Intalio) that choreographs the activities of several existing back-office systems, it was able to get new web accounts running in a matter of minutes.

Equally important, though, is that the so-called business process management (BPM) software that made this speed-up possible is spurring changes within Lexis-Nexis that any company would welcome. Thanks to powerful new modeling tools that can fully describe even the most complex business processes, the IT department is working more closely than ever with business-unit managers. Contention and misunderstanding are giving way to avid collaboration. Indeed, business managers themselves are fine-tuning important processes almost on the fly, with only minimal involvement by the IT department.

"In my view, if there's a business process," says Allan McLaughlin, senior vice president and CIO of LexisNexis, "it's the business department that owns it, and IT's role in it should be transparent."

That's a goal, of course, for which many executives have been aiming ever since consultants Michael Hammer and James Champy began urging Corporate America more than a decade ago to start identifying and reengineering its most critical business processes. But reengineering called for a slash-and-burn approach, using automation to eliminate massive amounts of manual work. BPM, in contrast, emphasizes the monitoring and fine-tuning of business processes, as such becoming a critical business process in itself.

Malleable Apps

Howard Smith, CTO (Europe) at Computer Sciences and co-author of Business Process Management: The Third Wave, sees BPM (which should not be confused with business performance management, an emerging approach to financial analytics) as the very basis for most future enterprise software. Today's ERP and customer-management systems, Smith says, are splendid at manipulating data, but they tend to embody a single business process. By focusing on BPM techniques, however, it will be possible to create highly malleable applications that can be quickly and safely altered to handle a broad range of processes.

For example, the process of managing a sales campaign necessarily varies depending on industry, product, type of customer, and at what step in the campaign each customer happens to be. That calls for a level and kind of flexibility that packaged software often lacks. Today's BPM software can modify existing applications to make them more flexible; down the road, it may be built into many different types of software, providing new flexibility as a matter of course.

Slick technology alone won't guarantee success for the two dozen start-up companies that have made BPM a hot area, or for IBM, Microsoft, and other established companies currently touting BPM tools. Top executives must lead an important cultural change, too (see "Hammer Time Again?" this page). But having come up during the era of reengineering, today's managers are nothing if not process-aware. They've seen how success in supply-chain management and e-commerce depends on a strong understanding of key processes. And increasingly, executives recognize that agility is essential to profitability, even in seemingly stodgy markets.

"We're always trying to improve our short-term planning," says John Wheeler, senior vice president and CIO of Nova Chemicals, which produces raw materials used to make plastics and other products. But "demand forecasts are never true." So, using BPM tools from IDS Scheer of Germany, Nova Chemicals is seeking to "be able to react faster" to unanticipated fluctuations in demand.

Essential Ingredients

From a technology point of view, there are five essential BPM ingredients, says Hollis Bischoff, vice president of technology research services at consulting firm META Group:

1. Tools for modeling or diagramming processes in detail, including every person, system, and task; the business rules that determine the sequence of activities; and the timing of those activities.

2. Business process execution tools (also known as business process orchestration engines) that oversee the movement and routing of data and documents between individual desks and computers.

3. Integration server tools that help disparate computers exchange data and cooperate in executing complex transactions.

4. Monitoring and measurement tools, used to observe processes in action and identify bottlenecks.

5. Simulation optimization tools, for simulating processes in detail and evaluating proposed changes.

Although the idea of continuously improving business processes has been discussed in academic and business circles for years, recent progress in several areas of technology may finally put full-blown BPM within practical reach. One key driver: web services, a standards-based scheme that enables disparate systems and pieces of software to exchange data and work together easily without a substantial integration effort. Meanwhile, tools for measuring, analyzing, and simulating the performance of complex processes have also improved. Together, analysts say, they help create a vital feedback cycle: measure, analyze, optimize, measure again, and so on.

Simulating a process in depth can yield surprising results: how should a bank address the increased volume of loan applications it expects to receive toward the end of each fiscal quarter, for example? It might simply add more people, assigning them to manually underwrite loans of more than US$10,000, as bank policy dictates. But a simulation may show that it would be more profitable to raise that to US$15,000, thereby routing a greater number of loans through the speedier automatic underwriting process. That might increase the bank's risk, but the extra business it would close might more than compensate.

Another important development is business process modeling language, or BPML, which provides a mathematically rigorous scheme for describing every aspect of a business process. Much as modern computer programming languages hide all the binary codes that used to boggle programmers' minds, BPML may provide a standard way to hide the technical plumbing and mind-numbing intricacies that make business processes tick. And that's just the beginning. New software, called a process engine, is designed to keep track of every document and transaction involved and make sure different computers exchange the right data. The great benefit of this approach is that simply changing the high-level process model can automatically reprogram the process itself, perhaps expanding its capacity or rejiggering a few of its underlying business rules. In this way, BPM could make the enterprise itself a programmable entity. In theory, anyway. But for now, companies may be satisfied with a tweak.