Agenda Overview for Business Process Management, 2013

Transcription

1 G Agenda Overview for Business Process Management, 2013 Published: 3 January 2013 Analyst(s): Michele Cantara Reducing costs, growing revenue, innovating and transforming the business require changes to business operations and to the way organizations work. Our 2013 BPM agenda focuses on business processes involving the routine and creative work of people and systems to optimize business performance. Analysis Figure 1. Business Process Management Agenda Overview Source: Gartner (January 2013)

2 Executing a business strategy and producing desired business performance forces business and IT leaders to run a business operations gauntlet. In the past, detailed process mapping and standardization were often enough to get them through this gauntlet unscathed and deliver productivity improvements and cost reductions. However, that's no longer enough for business and IT leaders with higher ambitions who want to master business change and lead their organization through a business operation gauntlet that is constantly changing as a result of evolving business and technology forces. Business operations involve business processes the work done by people and systems, spanning an organization and its value chain partners (see Note 1). Balancing innovation and control in these processes to deliver business outcomes that meet or exceed strategic business goals is at the heart of Gartner's 2013 business process management (BPM) agenda (see Figure 1). Structured, repeatable work can be easily controlled and has been the primary target for automation. However, unstructured, ad hoc, collaborative work can drive innovative breakthroughs, and it's at the core of many critical knowledge worker processes. Unstructured processes represent a largely untapped opportunity for business performance improvement (BPI). Too much standardization makes your organization stagnate. Too little produces chaos. Gartner has defined five BPI roles (see Note 2) that are key to helping businesses expand their ambitions beyond process standardization. These roles are looking to exploit unstructured processes, intelligent business operations, and social BPM to achieve the right balance between process innovation and control. 1 Our research will show these roles how to foster best practices, resolve organizational conflicts, and exploit technology trends to deliver incremental, innovative and transformative business performance results to address the following challenges: Measuring and improving business performance Motivating organizations to change, and getting people to adopt behaviors that improve rather than block performance improvement Identifying and obtaining the right skills and setting up the right organizational structure Instrumenting human, system, and social interactions in a process context and combining predictive analytics and BPM technologies to improve decision making and reduce risk in business operations Selecting the right technologies for discovery, modeling, analysis, execution, development, integration, monitoring, and optimization and simulation of business processes Rationalizing application portfolios with process improvement goals Maturing the management practices, organizational competencies, and technologies for a particular BPI project or program, or the entire organization Our research will also use Gartner's five-level BPM maturity model (see Figure 2 and "ITScore for Business Process Management, 2012") to frame the challenges facing these personas, and to identify the benefits of moving from one maturity level to another (Note 3). Page 2 of 15 Gartner, Inc. G

3 Figure 2. Gartner's BPM Maturity Model: A Representative Journey With Key Milestones Source: Gartner (January 2013) Key Issues How can the business process owner transform the work and processes of the business to deliver the higher degrees of business performance? How can senior IT executives deliver better business outcomes for the enterprise and its value chain partners by maturing business process competencies? How can the director of business process shared services make and sustain appropriate tradeoffs between process standardization and variation to optimize both cost and innovation? How can the business process director establish and sustain the people, technology and process competencies necessary to help the organization consistently deliver improved business outcomes at the pace business requires? How can a solution architect or application manager design, implement, and manage applications that support the different business process styles and software life cycles required to deliver business outcomes? Gartner, Inc. G Page 3 of 15

4 How can the business process owner transform the work and processes of the business to deliver the higher degrees of business performance? Although the business process owner has the primary responsibility to deliver ongoing business performance results from a business process improvement project, he or she may not have authority over many of the people in other parts of the business and IT that are critical to delivering these results. To complicate matters, most business process owners are able to devote little time to their business process improvement project. 2 Organizational politics and lack of expertise also get in the way. Inquiries with clients and our broader surveys of BPM adoption show that business process owners also struggle to align BPI project goals with their business's strategic objectives. Despite the growing abundance of big data, that data is usually collected in a piecemeal fashion or not correlated to specific business process activities, use of resources and worker behavior. This lack of business process context means that the BP owner may be awash in data, but will still struggle to analyze what this data says about process performance, to assess the effectiveness of worker decisions within the business process, and to carry out "the next best action" that optimizes business performance outcomes. Planned Research Our 2013 research will focus on helping the business process owner with strategic alignment issues, metrics and measures, navigating the maze of organizational politics, especially in a highly volatile business climate, and managing processes that involve collaboration and decisions as well as process automation. Our research will also clarify the roles and responsibilities of a BP owner relative to other process stakeholders. For example, the chief medical officer (the business process owner of clinical care processes at a hospital) was tasked with increasing time spent on patient care and decreasing time spent on administration (see Note 4). How can senior IT executives deliver better business outcomes for the enterprise and its value chain partners by maturing business process competencies? Senior IT executives are faced with a number of challenges. IT costs are increasing, although IT budgets are remaining flat or moderately increasing in most industry sectors. 3 Increasing costs are driven by regulatory and compliance requirements, an application portfolio that is mushrooming out of control, and complex integrations that stymie most attempts at business innovation. Business stakeholders are demanding more rapid change and information and analytics infrastructure to help target the most profitable growth opportunities and resolve the costliest operational problems. Senior IT executives struggle to turn IT from a cost center into an engine that is critical to the growth of their business. For example, the CIO at the state tax agency described in Note 5 led a successful business process improvement initiative that demonstrated just how vital IT was to the agency's business outcomes. The BPI program was able to prevent $1.2 billion in payouts for fraudulent claims and increase tax revenues collected. Planned Research In 2013, the BPM agenda will help Senior IT executives understand how to rationalize their applications and integrate them with business process management technologies to produce more Page 4 of 15 Gartner, Inc. G

5 flexible applications that support differentiated and innovative processes. It will also show them where BPM can help IT marshal the Nexus of Forces (cloud, social, mobile and big data) to deliver business outcomes. Another major focus of our agenda is helping senior IT executives overcome obstacles in organizational structure, stakeholder motivation and alignment between process governance and IT governance. The CIO at Lincoln Trust provides a good example of applying organizational and governance best practices in a large-scale business transformation initiative (see Note 6). How can the director of business process shared services make and sustain appropriate trade-offs between process standardization and variation to optimize both cost and innovation? Organizations tend to decentralize IT support for business operations when they are looking for innovation, and recentralize IT when they are looking to reduce costs and more tightly manage operations. The director of business process shared services is tasked with delivering a common set of business process services to multiple business units, regions, product lines, and so forth, while reducing costs, improving process quality and increasing or at least sustaining customer satisfaction levels. A director of business process shared services has a great deal of responsibility, but little authority, for mandating process standardization across all of these organizations. They perennially struggle to change the way decisions about process standardization and variation are made. Rather than make business decisions about whether process variations will improve business outcomes, despite extra costs, most organizations succumb to "we've always done it that way" excuses for process customization. Note 7 shows how the director of BP shared services at a process manufacturing company successfully navigated through this minefield. He took his organization on a multiyear journey to move distinctly different financial operations systems and processes for 20 countries to a single BP shared service in Eastern Europe. Planned Research Our 2013 research helps directors of business process shared services apply Gartner's Pace- Layered Application Strategy to business processes and applications, and focuses on identifying the impact of process standardization (or differentiation) on costs, risk, quality, customer satisfaction and other metrics that are critical indicators of a company's progress toward realizing its strategic business outcomes. Our research for this persona also focuses on the alignment between process and IT governance, so that making these trade-offs becomes an intrinsic part of the way the shared-service center operates. How can the business process director establish and sustain the people, technology and process competencies necessary to help the organization consistently deliver improved business outcomes at the pace business requires? Most business process (BP) directors start out doing this role alongside their regular day job. Successful BP directors can turn this into a full-time responsibility and even use it as a springboard to positions such as chief process officer or director of business innovation services. The BP director is responsible for heading up a business process competency center (BPCC) or process Gartner, Inc. G Page 5 of 15

6 center of excellence that helps business process owners throughout the organization meet or exceed the performance outcomes targeted by their BPI projects and programs. Typically, the BPCC is a dedicated or virtual team that provides mentoring, tools, standards and resources to BPI projects and program teams. BP directors may report to the business or IT and have much responsibility, but they typically have very little authority to mandate business process improvement guidelines. For example, a new BP director at a telco provider was given the responsibility for improving process quality and reducing costs in processes spanning customer care and billing, even though he did not own these processes (Note 8). Planned Research The 2013 focuses on helping new BP directors get started with their first quick wins to establish credibility with management and to establish a business case for building and sustaining a BPCC. We also focus on helping the BP director design an organizational structure and governance model that expedites process improvement decision making. For more seasoned BP directors, our research focuses on making the business case to move the organization to higher levels of BP maturity to deliver better business outcomes. We also provide BP directors with a road map for moving from each level to the next. How can a solution architect or applications manager design, implement, and manage applications that support the different business process styles and software life cycles required to deliver business outcomes? BPM as an approach to BPI advocates a build-to-change versus a build-to-last approach to solution development. It aligns with agile methods and encourages citizen development. More advanced technologies, such as business process management suites, provide sophisticated integrated composition environments (ICEs) for building more flexible next-generation applications. Application managers struggle to rationalize their application portfolios and figure out where processes need to be standardized and where they need to be differentiated. Solution architects wrestle with the degree of process agility and integrity required for build-to-change or build-to-last solutions. Both are looking for ways to extend the capabilities of existing applications and, in some cases, they are looking for BPM-platform-based alternatives to traditional packaged applications. Planned Research In 2013, we will further explore the use of BPM disciplines and technologies to develop more flexible applications in support of agile business operations. Our research will help solution architects identify which technologies are most appropriate for supporting different process patterns, such as form-based workflow, case management, dynamic network optimization, collaboration and decision support. We will also expand our research into process templates, prebuilt solutions based on BPM platforms that are being used to augment or replace functionality in existing packaged applications (see Note 9). Page 6 of 15 Gartner, Inc. G

7 Related Priorities Key Initiatives address significant business opportunities and threats, and typically have defined objectives, substantial financial implications, and high organizational visibility. They are normally implemented by a designated team with clear roles and responsibilities, as well as defined performance objectives. Gartner, Inc. G Page 7 of 15

8 Table 1. Related Priorities for BPM Key Initiative Business Process Management Analytics Application Governance and Strategy Business Gets Social Innovation Business Intelligence and Performance Management Cloud Computing Innovation Focus BPM is a discipline that treats business processes as assets that directly contribute to enterprise performance by driving operational excellence and business agility. The analytics Key Initiative focuses on three analytical styles: predictive, real-time and content. Investments in these areas will yield insights to optimize various business domains. Application governance and strategy helps application organizations effectively and efficiently allocate resources to achieve business results, using a set of policies, procedures and rules to create a path to the future. Socially driven processes are disrupting traditional approaches to business. Social techniques and tools allow people to connect and interact with unprecedented speed and ease as business gets social. BI and performance management initiatives help enterprises align their organizations with consistent and insightful measurement and decision support systems. Cloud is a style of computing where scalable and elastic IT-related capabilities are provided as a service to external customers using Internet technologies. Source: Gartner (January 2013) Page 8 of 15 Gartner, Inc. G

9 Suggested Next Steps Depending on the areas of our planned research that most piqued your interest, we recommend that you consider some mix of the following activities: Attend the BPM Summit in London in March, in the Washington DC area in April, or in Sydney Australia in May. This will give you an in-person opportunity to learn more and explore the issues and emerging solutions we've discussed above. Read some of the recommended research, think about how you might apply this guidance to your own situation, and book an inquiry with a BPM analyst to get answers to questions prompted by this research. Set up additional inquiries with an analyst on the BPM team to discuss whether to and how to set up a business process competency center, and how to mature your business process competencies. This will help you tailor the research to meet your specific needs. Schedule an inquiry with an analyst on the BPM team to review the business process improvement plans, strategy documents and organizational structures you are working on. Take the ITScore for BPM Assessment. Many organizations are stuck at Level 2. We strongly believe the majority of organizations should map out a plan to reach Level 3 in the next year or so. Sign up for the Business Process Management Key Initiative to ensure that you automatically receive the research most appropriate to support your current improvement efforts. Related Agendas Analytics, Business Intelligence and Performance Management Application Development Application Infrastructure Application Strategy and Governance Applications Architecture Business Innovation and Emerging Trends Business Process Services Cloud Computing Customer Relationship Management Customer Strategy and Experience Management Enterprise Content Management Gartner, Inc. G Page 9 of 15

10 ERP and Enterprise Suites: HCM, Finance and Procurement Information Innovation Information Management Nexus of Forces Project and Portfolio Management Social Software and Collaboration Recommended Reading Some documents may not be available as part of your current Gartner subscription. "IT Score for Business Process Management, 2012" "Predicts 2013: Business Process Improvement Leaders Need to Stop Tackling the Tactical and Get Strategic" "Three Best Practices to Avoid Ineffective Business Process Ownership Damaging Your Business Performance" "Toolkit: First 100 Days of the BP Director" "Toolkit: Building a Business Process Competency Center" "Two Factors That Help Identify the BPM 'Sweet Spot'" "Use the BPM Sweet Spot Framework to Identify the BPM Technology You Need" "The Case for Case Management Solutions" "Magic Quadrant for Intelligent Business Process Management Suites" "What the BP Director Needs to Know About Using Cloud to Improve and Manage Business Processes" "Four Best Practices for Understanding Your Business's Needs for 'Workflow'" "Master Social BPM to Build a Social Organization" Page 10 of 15 Gartner, Inc. G

11 Agenda Manager Profile Michele Cantara is a research VP in Gartner's BPM research team and agenda manager for Business Process Management. Her research coverage areas include roles, skills, consulting, outsourcing and multiple cloud topics relating to business process management and improvement. She also covers process templates and their role in a Pace-Layered Application Strategy. In previous roles at Gartner, Ms. Cantara was lead analyst covering middleware, consulting and system integration markets, and focused on trends in the service-oriented architecture, Web services and open source software markets. Prior to joining Gartner, Ms. Cantara worked at Digital Equipment Corp. and Compaq, and has more than 30 years of experience in the IT industry. Evidence 1 A July 2012 survey of more than 550 businesses throughout the world showed that business process standardization was the most popular approach to business process improvement. Furthermore, 62% of organizations with business process improvement initiatives were targeting differentiating or innovative processes. "Reliance on Business Process Standardization at Odds With Focus on Differentiating Processes" 2 Gartner Worldwide BPM Survey (July 2012, N = 556). None of the survey respondents spent 100% of their time on their BPI project, and 50% of respondents spent less than half of their time on their BPI project. 3 "IT Key Metrics Data 2012: Executive Summary," Figure 8. IT Spending as a Percent of Operating Expense, by Industry, Note 1 Business Processes Are the Work of One or More Organizations Business processes consist of different types of interactions and resources that span multiple organizations. These may include: Human tasks Work done by systems (applications, machines, devices) Decisions Collaborations that occur between workers inside and outside the enterprise Social interactions Events (such as interest rate changes or even natural disasters) Analytics Information flows Gartner, Inc. G Page 11 of 15

12 Business rules and policies Shadow processes hidden work practices that are the implicit glue integrating the work your business does Unstructured processes, in which the sequence of interactions is different each time (Unstructured processes often involve ad hoc collaboration, decisioning, or goal-directed processes that are event-triggered and rule-driven in order to dynamically reach an optimal business goal.) Note 2 Five BPI Roles Addressed by Gartner's 2013 BPM Research Business process owner a business person who is responsible for establishing the metrics and delivering the business outcome targeted by the business process improvement project or program. Senior IT executive a CIO, a CTO or an IT director who is looking to help IT better deliver business process change and improved business performance at the pace the business requires. BP director a business or IT person who is charged with improving business performance or delivering business innovation. The BP director typically heads up the business process competency center (BPCC). Alternative titles may include chief process officer, director business process excellence, or director of business innovation. In many cases, a BP director may start out being an enterprise architect or program manager. Director of shared business process services a director of shared-service business operations centers that provides a common set of business-process-focused services for multiple groups within a company. Solution architect/apps manager an architect responsible for designing solutions to support end-to-end business processes or augment more flexible applications to replace or integrate applications in the current application portfolio. This role may also include the applications manager responsible for optimizing investments in the enterprise's application portfolio. Note 3 Six Domains Addressed by the BPM Maturity Model Our BPM maturity models helps organizations overcome business process improvement challenges in six domains: Organization and culture Process competencies Metrics and measures Methodologies Process governance Technologies and architectures Page 12 of 15 Gartner, Inc. G

13 Note 4 Chief Medical Officer Drives Organization to Spend More Time on Patient Care and Less Time on Admin in Clinical Care Processes A chief medical officer at a large hospital found that clinical care processes were not keeping up with demand for beds. As patients lived longer, they required more complex and more frequent care. As this complexity increased, care providers were spending more time searching for information and resources, resulting in less time with their patients and delays in delivering necessary care services. Not only did patient experience suffer, delays in delivering patient care meant longer time to discharge and fewer free beds to service growing demand. The solution was to implement a closed-loop communication process between care practitioners in hospitals and other providers involved in the patient's "circle of care." This patient-centric end-to-end view of the process reduced the time it took care practitioners to "hunt" for information. Easily changed "business rules" guided the structured interactions, less-structured decision making and collaboration processes that take place between practitioners. Patient outcome metrics were associated with decisions, care protocols and practitioners, making it easier for the hospital to analyze and improve its clinical care processes on an ongoing basis. Note 5 CIO Reduces Exception Cycle Time by 60% and Prevents $1 Billion in Fraudulent Payouts The bottom line for process improvement is surrounded by solid goals and metrics to measure endto-end process improvement, as well as functional excellence. This state department tax agency needed to resolve more than 400,000 exception filings in a timely fashion, without adding head count. In the first phase of the initiative, IT automated the capture and routing of exception claims, reducing exception cycle time by 60%. In the second phase of the program, IT implemented an intelligent business operations system to detect potentially fraudulent claims, saving the agency more than $1 billion in tax revenue. Note 6 CIO and COO Create High-Value Business Process Competency That Drives Lucrative Partnership Sustaining BPM in an organization requires building the competency and having a vision about how BPM disciplines and technologies will function within the enterprise. Lincoln Trust, a provider of financial services processing, was able to deliver 120% return on investment (ROI) in the first year of its BPM program (see press release, "Gartner Announces Winners of the 2011 BPM Excellence Awards," 15 March 2011). Both business and IT matured their BPM competencies to the point where BPM became an intrinsic way of conducting Lincoln Trust's business, which culminated in a partnership with Pensco to support a seamless, integrated process that will enable individual investors, financial advisors, plan sponsors, attorneys and accountants to administer alternative assets more intelligently and conveniently. Note 7 New Director of BP Shared Services Establishes Center in Eastern Europe to Centralize Distributed Operations in North America and Europe A process manufacturer with 20 distinct financial operations centers in North America and Europe had operated as a private company. When it became a public entity, it needed to ensure that its financial processes would meet compliance requirements. It also needed to reduce its administrative costs. The initiative began with rationalizing redundant systems and improving Gartner, Inc. G Page 13 of 15

14 processes to meet more stringent public company reporting requirements. As a result, the CFO appointed a director of BP shared services and charged him with implementing a BP shared services center in Eastern Europe to centralize financial operations processes for 20 countries. Working with IT, the director of BP shared services decided to use a BPMS for its shared services platform, and because it gave business stakeholders visibility into process performance as well as flow. This would allow the director of shared services and country-level process owners to make more educated decisions about the business value of process standardization versus differentiation. When process variation was warranted, it allowed these variations to be supported by the same application instance, reducing overall cost of services. The resulting solution reduced the time to close books by 80% and reduced audit fees by 48%. Note 8 BP Director Establishes BPCC and Accelerates Time to Market for High Margin Offerings A telecommunications provider with an overly high cost structure and an over-reliance on fixed-line services was losing market share to competitors. Rigid applications were preventing the telco from introducing new mobile offerings. The company's board funded a business process improvement and legacy application modernization initiative and established a virtual BPCC, reporting to the CIO. Led by a BP director, who was originally a senior member of the Telco's EA team, the BPCC overhauled legacy CRM and billing applications, and worked with executive management to align business process and IT governance policies. The BPCC oversaw a series of BPI projects that implemented end-to-end processes across sales, direct access services, logistics and service delivery functions. The end result was a 98% reduction in billing errors and 50% reduction in development and maintenance costs. Customer retention increased from 80 to 87%, and higher margin mobile services were introduced 60% more quickly compared with other service launches. Note 9 Solution Architect Increases British Airport Authority (BAA) Revenue by 20 Million, With New Process for Aircraft Departures The enterprise architect for operations at BAA was charged with designing a new collaboration solution to help airlines, ground handlers, air traffic control and airport staff to share information about the status of inbound and outbound flights, manage traffic, and improve on-time flight departures at Heathrow airport. The architect realized that existing applications for the airline industry lacked the flexibility to dynamically respond to information events such as delays in inbound flights, weather conditions, crew availability, maintenance problems, catering delays and so on. The architect designed an intelligent business operations solution using an intelligent business process management suite. The solution improved on-time departures from 68% to 83%. Retail operations represent 50% of a typical airport's revenue. The BPM solution provided more timely and accurate departure information, allowing passengers to remain in the departure lounge longer and do 20 million more shopping (see "Heathrow Saves 30 Million With Business Process Management Project"). Page 14 of 15 Gartner, Inc. G

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