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Business Process Management (BPM) Offers Growth When the Economy Slows

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Posted June 20, 2011 By Herman Mehling     Feedback

In a slow-growth economy, BPM software helps companies make the most of what they have.

The future of the business process management (BPM) market seems pretty strong, if you don't mind markets that tend to be counter-cyclical in nature — meaning they thrive in bad times and tread water when the economy is robust.

So what is business process management, and what benefits does it offer?

BPM is a set of software and services that support human and application interaction with business processes, said Adam Deane, head of BPM at Casewise, a provider of software and consultancy solutions to major global organizations.

BPM suites automate manual processes by routing tasks through departments and applications.

"These routings are rule and action-based, and are defined in a set of formulas," said Deane. "Actions can be automatically triggered, without an underlying rule requiring additional information; therefore, the process can be continuous, and manual processes can be avoided."

Organizations use BPM systems to improve the effectiveness of their core operations. Some companies leverage BPM to create compliance management for such mandates as the U.S. Sarbanes-Oxley Act or International Organization for Standardization (ISO) requirements, for example.

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Leading vendors in the space include Global 360, HP, IBM, Microsoft, Oracle, Pegasystems, SAP and TIBCO.

BPM, Lean, Six Sigma work together

While some see BPM as a narrow technical issue, Forrester Research sees it as a wide-ranging management solution offering such methods as Lean and Six Sigma, along with customer-centric (outside-in) engagement approaches and organizational change management, said Forrester analyst Derek Miers.

"Each one of those methods ties back to a flexible and adaptable enterprise architecture that implements an evolving business strategy," said Miers.

Such an all-encompassing approach can help focus on strategic priorities, as well as opportunities to both differentiate the value proposition and sharpen the competitive edge, he added.

"While some would argue that Lean and Six Sigma are separate — that they are 'in the business' — our research data suggests that the most successful BPM initiatives are run 'by the business, for the business and are of the business,' to paraphrase Lincoln," said Miers.

Forrester estimates that only about 20 percent of BPM process improvement initiatives are run by IT — initiatives that Miers believes are not sustainable in the long term.

"If you are charged with maintaining a BPM program from within IT, perhaps running a BPM CoE, then one of your primary tasks is to a) identify and b) work with any Lean/Six Sigma programs that are out there," he said.

Improving economy could mean slower BPM sales

BPM software sales have been boosted by the harsh economic climate, said Martin Butler, principal at Martin Butler Research, a UK-based consultancy.

Butler believes there are two very strong reasons why BPM software sales will slow next year.

"The first comes purely from an analysis of the logistic curve that characterizes all technology adoption," he said. "Putting some numbers into the curve shows that we should top out at some point over the next two years."

In terms of absolute values, the estimates of market size vary wildly from between around $2 billion to $5 billion for 2011, said Butler.

"Fortunately, we do not have to rely solely on these figures, but can take some comfort in fairly consistent predicted growth rates of around 15 percent," he said.

Somewhat conveniently, the math ties in quite nicely with an expected upturn in economic activity during 2012 and 2013, at which point process navel-gazing will probably lose much of its appeal, he noted.

Of course BPM sales will continue, but the growth will slow and eventually plateau probably around 2013 to 2014.

Here's the second reason — businesses are inevitably tied to the wheel of efficiency and growth.

"During growth periods, people are too busy to focus much on efficiency, while during efficiency periods there is little growth activity and so minds can be focused on process details," Butler explained.

In 2012, Butler said he expects to see significant growth in new technologies that support marketing and sales activity in social channels — it's going to be as big as the dot-com boom, he says — and probably deflate just as quickly, but with lasting effects.

In April of this year, a report from Global Industry Analysts (GIA) predicted that the worldwide BPM market would exceed $5 billion by 2017.

The report also noted that cloud computing is rapidly gaining prominence and emerging as the core of many BPM initiatives, due to its ability to provide up-to-date information in usable format.

GIA noted that the combination of internet and cloud computing is expected to grow the BPM space, with BPM serving as a platform for providing private cloud services.

Cloud computing offers BPM solutions at affordable prices and facilitates building applications without any programming, GIA noted.

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