New BPM Book Promises to Obliterate the Business-IT Divide
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A revolution in the way enterprises use information technology for competitive advantage is on the horizon, according to the new book Business Process Management: The Third Wave. Co-authored by CSC’s European CTO Howard Smith and noted industry expert Peter Fingar, the book details breakthroughs in process management thinking that promise to deliver significant business benefits.
The book describes the past, present and future of Business Process Management (BPM) and states that today a fundamental shift in business infrastructure services is taking place - from stovepipe applications and associated "data processing," to dynamic connected processes and associated "process processing." What this means is that the lag time between management intent and execution will be greatly reduced, as well as enabling the creation and manipulation of a raft of new processes, never before explicitly supported by IT automation.
Smith says, "Companies have always had processes and have always sought to manage them, but the way they have done this has changed fundamentally over the years. The third wave is radically new since it contains new process mathematics, new process thinking and new process systems. This book defines how BPM should now be done and how we believe it will be done."
Catching the Third Wave
The technology industry is on a never-ending quest to discover The Next Big Thing, and for many, the third wave of BPM just might be it. This time business appears to be in agreement, but there is still a raging debate over how best to make the switch to the "process-managed enterprise." The new book is intended to help business executives at all levels understand what is genuinely new in BPM, to cut through the confusion as everyone clusters around the term and so that companies can make informed decisions.
The first wave of BPM began in the 1920s with the introduction of theories revolving around work practices, methods and procedures. Processes were implicit in work practices and not automated. In the second wave of BPM of the past decade or so, processes were manually reengineered and, through a one-time activity, cast in concrete in the depths of today’s stovepipe applications.
As described in the book, in the third wave of BPM, the business process is freed from its concrete castings in technology and made the central focus and basic building block of all automation and business systems. They become first-class citizens in the world of automation. Change is the primary design goal because in the world of business process management, the ability to change is far more prized than the ability to create in the first place.
Smith explains: "Today, process has become much more of a focus of all IT systems and associated business thinking. It is now possible to build IT systems whose role is primarily to manipulate processes, any process, not just our usual notions of workflow, data management and application integration. This gives you a direct path to execution of any business design or strategy."
"With BPM today, the business defines, and then simply executes, the business processes. The breakthrough that was required for that had to encompass and synthesize many aspects of what we already had in place," says Smith. This means the unification of a number of enterprise entities, including business design, application development and data management. "We are taking change and innovation off the critical path and out of the IT logjam, by empowering the business as never before," he says.
Reengineering Reengineering
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In 1993, the New York Times best-seller Reengineering the Corporation, written by Michael Hammer and CSC’s James Champy, was the first mass-market book that brought business processes into sharp focus. The book was a milestone in business publishing in that it was the first book to succinctly describe the opportunity to improve performance by process re-design. It spurred a wave of reengineering efforts within companies across the globe. But Smith and Fingar contend that ten years later, the concept needs updating.
In a chapter entitled "Reengineering Reengineering," the authors detail the lessons learned in the decade that has followed the release of Hammer and Champy’s groundbreaking book. For one thing, in the third wave of BPM, process owners now design and deploy their own processes. Updating one of the underlying themes set forth in Reengineering the Corporation, Smith and Fingar proclaim, "Don’t bridge the business-IT divide, obliterate it."
"BPM says: ’If business is to innovate and develop new business processes, we ought to place that control directly in the hands of business and take it outside of the IT domain,’" says Smith. He adds that BPM provides an infrastructure "such that the business can discover, design, and deploy their processes and the role of IT is to provide a stable environment in which that happens."
Fingar says the key to tearing down the IT-business divide is "removing the software development process with directly executable business process models. This puts management of business processes directly in the hands of business people."
Business Process Management: The Third Wave revisits Hammer and Champy’s list of explanations for reengineering failures and provides a fresh set of perspectives. The conclusion is that what reengineering viewed as "failures" on the part of businesses are actually mission-critical business needs.
A Clear Path to Process Success
Almost without exception, IT industry analysts view BPM as a major force to be reckoned with. A number of recent studies have predicted a sharp increase in BPM-related activity around the globe. One, by market research company Ovum, states "BPM could become one of the great systems revolutions of the second half of this decade."
Business Process Management: The Third Wave moves beyond the industry hype by providing specific details on the actions organizations need to take to deploy BPM in order to achieve their business goals.
For example, the book offers 36 "New Rules for the Process-Managed Enterprise" that lays out the ways companies can capture and define existing processes and improve upon them. The book also details the six key factors that go into measuring returns on process investment.
In addition, the book contains an appendix that describes the key components that make up a Business Process Management System (BPMS). The authors argue that a BPMS is integral to the success a process-managed enterprise and signals the advent of a new software category that will be "the cornerstone of the company of the future." The analogy is drawn to the role of the relational data management system that underpins all business applications today.
Also discussed in the book is how companies can use BPM to meet the needs of customers and the many benefits it brings to business collaboration. Other areas that are covered include how BPM can be applied to the Six Sigma management technique and how it relates to business process outsourcing.
Writing From Experience
In publishing the book, Smith and Fingar bring more than 50 years of IT experience to the table. Smith has worked in the IT industry for more than 24 years, and is a highly sought-after speaker. In addition to serving as CSC’s CTO for Europe, he is co-chair of the Business Process Management Initiative (BPMI.org), a non-profit corporation that publishes open, royalty free, standards such as Business Process Modeling Language (BPML).
Fingar is an executive partner with the digital strategy firm The Greystone Group and has held a variety of IT positions over his 30-year career, including serving as chief information officer for the University of Tampa. He has appeared as a featured speaker at numerous industry events and is the author of the books The Death of "e" and the Birth of the Real New Economy and Enterprise E-Commerce.
On the heels of a publishing a string of well-received business technology books, Fingar says he turned his attention to BPM because "it’s the biggest breakthrough ever in how companies will use computers." Fingar says the book’s audience includes CXOs, analysts, decision-makers, and economists, and he also sees it as serving as an ideal university text.
Smith says the book is aimed at the techno-savvy businessperson. "BPM is inextricably about business and technology. Many companies today could not exist without technology and many processes are automated - yet few are managed. Technology is both a participant within business processes and through the third wave also provides the means of focusing, optimizing, redesigning and redeploying processes."
He adds, "Instead of trying to bring IT and business together, we simply say to the business, ’Here is a service that you can use to manage your own processes.’ Because our belief is that the demand for process improvement and the demand for new processes is very high."
In a world where companies are increasingly looking to save money by leveraging existing assets, Business Process Management: The Third Wave presents a smart and timely approach to tackling IT and business challenges.
Still, Smith says the concepts espoused in the book apply in any economic environment. "It doesn’t seem to matter if we are in an upturn or a downturn, the demand for process improvement seems to be ever-rising. Whether it’s to improve, automate, streamline, simplify, customize, extend, integrate, re-design, outsource or simply monitor processes, BPM is needed. There just aren’t enough programmers and system integrators on the planet to actually provide those processes and process adaptations as a set of point solutions."
Excerpt From the Book Business Process Management: The Third Wave
The following is the Introduction of the book Business Process Management: The Third Wave by Howard Smith and Peter Fingar:
Digitization represents a revolution that may be the greatest opportunity for growth that our company has ever seen.
-GE Key Growth Initiatives 2002
In The Max Strategy, Dale Dauten told some interesting stories about Walt Disney, or "Uncle Walt," as he liked to be called. Now there was a man fizzing with intelligence. Someone once asked him his "secret" and he said this: "Do something so well that people will pay to see you do it again."
"There’s a scene in Snow White where Snow is standing beside a well. And she tells a flock of doves that it’s a wishing well. She demonstrates, saying something like "I wish my prince would come." Then, we see her from the bottom of the well, right through the water. We watch her face, shimmering in the surface of the water, as drops of water fall into the well and create ripples moving out. Now imagine drawing a shimmering face reflected in water that’s rippling out in circles. Imagine how hard that would be, especially since this was long before computer animation.
As workers and as consumers, both online and offline, each of us is enveloped by a myriad of business processes - the intricate, dynamic, ever-changing manifestations of the economic activity of companies. Whether we are disinterested, or actively engaged, in these processes, in large part determines the wealth of those who weave them. Companies are looking for secrets, skills and tools that will enable them to create and mesh together business processes that are so outstanding that customers will "pay to see them" time and time again.
Like Walt Disney, companies are not lacking in imagination, but unlike The Walt Disney Company in 1937 that could afford to employ a thousand animators, companies today cannot afford to be distracted by the labor-intensive animation process. To create the compelling business processes they so desperately seek, companies are now looking for the business-process equivalent of Pixar’s computer-assisted animation methods - the ones Disney now uses. This book is the end of their search.
The third wave of business process management (BPM) is a fundamentally new approach to business process innovation and management. For on today’s battleground for economic growth, sustainability and innovation, companies like GE, with its Digitization Initiative, are arming themselves with explicitly defined business processes that can be manipulated on a scale previously unimaginable. The strategy they are chasing is not the piecemeal replacement of old processes with new, but a single program, the establishment of a capability for implementing and managing a continuous stream of business process innovations. The goal is twofold: hyper-efficiency and an unprecedented agility. Put simply, companies like GE want to take change off the critical path of innovation. GE seeks to empower every business unit and every workgroup to take control of their processes and to make all the assets of the company available to be reused, repurposed and recombined with those of partners. Only by freeing processes from the constraints arising in technology, software and networks, can this be achieved. A similar digitization process happened two decades ago as companies began to use data management systems. The third wave will create a new class of business asset that encompasses data but extends it dramatically so that little is left embedded and ingrained within systems or work practices.
Where last decade’s "reengineering" meant "starting all over, starting from scratch," process management builds on and transforms what already exists. The oft-used business engineering terms "as is" and "to be," which in the past referred only to processes, can now be applied to the entire enterprise. Companies can now build change management into the very structures of their organizations, where once it took up valuable resources as a painful "reengineering" item on the corporate agenda. This time it is not just companies that are being reengineered, but reengineering itself.
The problem companies face is how to operate in a state of perpetual change and adaptation. They are no longer wondering how to make a change; they are wondering how to repeat change, over and over again. They also know they need to create and test countless variants of countless processes, but have no idea how to make this happen. It’s not for want of trying.
Every day, in every company, someone is challenging the status quo that business processes, and the various automation systems on which they depend, are cast in stone, impossible to understand and modify without wholesale reengineering and replacement. Many companies are trying to break out of that situation by implementing a host of point solutions - piecemeal ways of exposing, integrating, transforming and connecting disjoint processes, information and machines. Their intentions are good, but only rarely do they achieve long term, meaningful results - a system not just built to last, but built to adapt. "Business architects" work to design flexible business systems while "systems architects" work to design flexible software - but the truth is that’s still not enough. There are simply not enough analysts and programmers on the planet, let alone working for any one company, to satisfy the pent-up demand for dynamic business processes.
Still, in the course of undertaking these individual process fixes, these companies are gradually creating an overwhelming demand for something new, and when the world wakes up to what the answer is, the demand for it will start a gold rush. At the moment, most companies are completely unaware that anything but piecemeal systems integration solutions exist. Others remain skeptical, as is only natural, and only a handful have yet to join the ranks of the early adopters. Whatever a company believes now, however, the third wave of business process management is inevitable - as sure fire as gravity is gravity.
In The Agenda, reengineering pioneer Michael Hammer observed that companies know how to do a lot of things that can be understood as processes, such as finding new customers, developing new products and opening new plants. On the other hand, converting a general process description into executable process action is hard for many companies, because it is not something they have a lot of experience doing. Improving processes to better serve current customers; using strong processes to enter new markets; expanding processes to provide additional services; taking a process that you excel at and providing it as a service to other companies; adapting processes that you excel at to the creation and delivery of other goods or services; creating new processes to deliver new goods or services-no one has much practical experience doing these things, the cost and complexity of which were prohibitive in the age of reengineering. Hammer warns that when companies undertake such activities-focusing on processes and customers rather than products-they are operating without a net. And he is right. Here are the things companies need:
Such "process processing" should not be confused with automation. Digital process models may have little to do with computers but a lot to do with business. While automation can be readily achieved with a raft of existing technologies, BPM has a wider meaning. Not only does it encompass the discovery, design and deployment of business processes, but also the executive, administrative and supervisory control over them to ensure that they remain compliant with business objectives for the delight of customers. Processes are the main intellectual property and competitive differentiator manifest in all business activity, and companies must treat them with a great degree of skill and care.
Merely perfecting a business process in terms of meeting requirements at a given time is a necessary, but insufficient, response to the challenge of change. Processes cast in stone through point solutions, one-time projects, habitual work practice or the straightjacket of packaged business software are as much liability as asset, no matter how excellent. For if incumbent companies are to compete against market disrupters large or small, they must exploit inherent advantages of the implicit processes embedded within their experience, their assets and their relationships. For this to happen, processes must be explicit. In short, companies must obliterate the business-IT divide, transforming legacy into an asset rather than a liability.
If this analysis seems extreme, consider the fact that every modern management theory ever devised -- reengineering, process innovation, total quality management, Six Sigma, activity-based costing, value-chain analysis, cycle-time reduction, supply chain management, excellence, customer-driven strategy and management by objectives -- has stressed the significance of the business process and its management. In light of this constant demand, it seems surprising that the IT industry has up to now delivered only "business applications," small fragments of end-to-end processes capable of nothing more than manipulating static business data using prepackaged procedures.
All information systems are imperfect simulations of the businesses they support. Companies understand that the principles of inter-connected and inter-related processes are the reality behind today’s IT-façade. This change is structural -- a shift in the tectonic plates that underlie the business-technology equation. It will only come about by abandoning the assumption that business information systems design must be based upon the separate notions of data, procedure and communication. Investment in information technology can no longer be justified if business systems remain a weak and incomplete representation of the CEO’s strategy. There must be a paradigm shift in the quality and expression of business processes if companies are to apply systematic methods to their development and execution -- in strategy, in practice and in information technology. Two decades ago companies implemented data management systems because they recognized the value of business data and the data problems they would face if data continued to be embedded in each and every business application. As companies face up to their process future, similar factors are at work creating the demand for the third wave of business process management. Processes are moving center stage, not just on whiteboards, but at the heart of a new business architecture and the systems that support it.
Do not mistake BPM for some new "killer app" or some fashionable new business theory. It is a foundation upon which companies can depend as surely as they depend on database management today. Like the Hubble Telescope peering back into the origins of the universe, the third wave exposes the fundamental basic building blocks that have so far been hidden and by which all business processes are expressed and through which they can be manipulated. Products and services are only the by-product of processes. In every case, the process is the product. When World War II broke out, no longer did coal and iron go in one end of Ford’s River Rouge plant and automobiles come out the other, tanks rolled off the assembly line. Ford’s "product" is its vehicle manufacturing process. In the 1950s, a young Ronald Reagan hosted the top-ranked television program, the General Electric Theater, and made GE’s slogan famous: "Progress is our most important product." If that program were to show today, the new slogan would no doubt be, "Process is our most important product." Good processes don’t make winners; winners make good processes.
This book sets out a theory and a practical approach to process management that takes what was good about reengineering - the creativity, the insight - but eradicates the pain of discontinuity and new process introduction. If companies want change built in, they must act now to build in an agent of change. Animate your business processes so your customers will pay to see them again and again.
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