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  • CFO Magazine


New software enables business managers to fine-tune important processes virtually on the fly, with only minimal involvement by the IT department.

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. 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 $10,000, as bank policy dictates. But a simulation may show that it would actually be more profitable to raise that threshold to $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. In fact, most process-modeling tools work visually, enabling business and IT managers to drag and drop items from a palette of icons to define new processes. When a process map is complete, the tool can translate the diagram into executable code.


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