Enterprises Shift To Smart Process Apps To Engage Customers
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- Milo Griffin
- 8 years ago
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1 A Custom Technology Adoption Profile Commissioned By Kofax Executive Summary Historically, companies have invested in systems that make the business more efficient systems like customer relationship management (CRM) and enterprise resource planning (ERP) that are primarily for internal purposes. These have worked well for well-defined, highly structured processes where volume, scale, and straight-through processing dominate system design. Our study found that IT professionals feel that these apps are poorly integrated, difficult to change, and inadequate to handle emerging mobility, analytic, and information access management needs. These gaps result in people-intensive and highly variable processes that must be maintained in order to support business activity. In order to address these areas, organizations are looking to bridge the gap between systems that engage customers, using the latest mobile, social, and analytics technology and systems of record, which are often packaged apps like ERP, CRM, or proprietary legacy systems. Within the next five years, a new generation of smart process apps will augment and, in some cases, replace the heavy packaged apps designed from the inside out that drive customer interaction today.
2 Industry-Specific Processes Are On A Par With Packaged Apps As Investment Priority... Forrester s data shows that ERP, industry-specific apps, and CRM continue to be investment priorities. Investing in collaboration, business intelligence (BI), and finance and accounting software have similar priority levels; together, these are the strongest planned investments within the next 12 months (see Figure 1). However, our data shows that a company s investments in industry-specific apps are roughly equal to the investment in its top packaged app. Enterprises will balance investment in packaged apps with more focused solutions that address specific business needs. However, the highest response category regarding application investments over the next 12 months was don t know (22%). Uncertainty may result from enterprises holding back investment in these systems as they strive to meet the higher customer experience goals that have resulted from the explosion in consumer technology. Figure 1 Application Investment Base: 1,631 IT Decision-makers (percentages do not total 100 because of rounding) Source: Forrsights Software Survey, Q4 2012, Forrester Research, Inc. Page 2
3 ... Yet Firms Also Look To Internal Development To Meet Business Needs Despite historic investment in ERP and CRM systems and other systems of record, enterprises are motivated to develop their own software applications or purchase best-of-breed solutions from niche vendors to fill in gaps in packaged apps (see Figure 2). The top motivator for internal development within enterprises is the inability of packaged apps to meet core business needs, followed by the need to protect their intellectual property and develop stronger customer experiences. Enterprises feel that they can improve customer experiences and their competitive position through internal development. Mobile support, a top concern for all businesses today, is last on the list, indicating that enterprises are not looking to packaged apps to help meet mobile requirements at least for now. This is due to two factors: mobile support is still developing for these platforms, and the core function of these platforms is more internal record-keeping than customer engagement. Figure 2 Gaps In Packaged Apps Drive Internal Development Base: 871 IT decision-makers at firms with 20 or more employees that are using custom business applications (multiple responses accepted) Source: Forrsights Software Survey, Q4 2012, Forrester Research, Inc. Page 3
4 Gaps In Packaged Apps Start With Integration Challenges Enterprise apps are great at recording what has happened or driving straight-through processes to conclusion, but they often do a poor job of connecting with the customer or business goals due to integration challenges and inflexibility (see Figure 3). In short, the ERP system does not directly support the customers problems, becoming an expensive tracking and history system. According to respondents, the reasons ERP systems do not meet process goals are that: Integration with critical systems is not supporting the complete customer journey. Integration challenges are the top obstacle to getting the full value from ERP. Proprietary packages, legacy systems, and untamed processes are part of many business processes.1 Many ERP integrations are still handled through point-to-point batch processes. Improved ERP vendor integration tools, web services, and service-oriented architecture (SOA) design approaches are making integration easier, but major IT challenges remain. Integration becomes critical in the age of the customer: the current goal is to create an integrated and consistent experience across channels, function, and geography to support the complete customer journey.2 ERP collects information well, but it s difficult to make changes. ERP systems are great at being the system of record that a company can depend on. They absorb and manage structured content efficiently, but haven t done a good job of making it available generally. Respondents cite the lack of flexibility and the difficulty of making changes as a barrier. As a result, process tools such as business process management (BPM) suites, business rules, and dynamic case management (DCM) are gaining favor. These tools keep process changes like workflow, rules, templates, and data associations outside of the core systems and add agility to the underlying systems. Multiple ERP packages and vendors create impenetrable silos. Multiple ERP systems result from divisional autonomy, poor IT services management, and acquisitions. Even when a common vendor is used, multiple installations are common, and software versions vary. One of the largest European pharmaceutical companies has 70 different ERP installations across 10 vendors and more than 30 unique versions. While multiple ERP systems may be necessary to meet the varying needs of operating units, it then becomes more difficult to share data in particular unstructured content and coordinate processes across departments. Page 4
5 Figure 3 Limitations Of Packaged Applications Base: 55 decision-makers responsible for packaged application strategy at firms with more than 1,000 employees that use packaged apps Source: A commissioned study conducted by on behalf of Kofax, July 2013 Enterprises Want Smarter Processes Smart process solutions provide industry-specific capture, analytics, process management, and information access that are highly tailored to customer-facing business processes. Forrester calls this new category smart process apps (SPAs).3 These are industry-specific apps that are easy for people to use, aiding effective collaboration, yet can adapt to the rapid pace of change required by today s dynamic business demands. They do this by automating both structured and unstructured work activities (untamed processes) in support of collaborative processes. Forrester foresees a large and growing market for SPAs (see Figure 4). Enterprises clearly see value in SPAs for closing gaps in reporting, data access, and overall process visibility and pointed to deficiencies in core systems that give rise to this need (see Figure 5). Visibility in particular, metrics-based performance management for the complete or end-to-end process is a much-desired attribute of SPAs. Enterprises have report difficulty correlating information across packaged apps or legacy systems aligned with functions or departments. For example, enterprises want to understand the number of successfully delivered orders for a product or service as opposed to specific metrics aligned with taking the order, using the warehouse fulfillment system, or successfully posting the order to the financial system. The second-highest ranked benefit was the opportunity to provide a more intimate customer relationship. SPAs can help free workers from mundane tasks to provide more quality time to build or recapture the human connection. Forrester believes that, after years or relentless automation and self-service, leading companies will strive to provide a more human and personal experience, doing business the way the customer wants rather than the way organizations require. Page 5
6 Our market forecasts agree. Forrester projects that the existing $10.7 billion market will grow to $21 billion by Forrester projects a 15% compound annual growth rate for existing smart process apps between 2010 and 2015 due to companies increasingly automating their core transactional business processes. Organizations look to smart applications to help them decrease the number of often very manual and low-value nontransactional processes that fill the gaps left by older applications and bulky packaged apps. New and/or unidentified smart process apps will likely see an even higher growth rate than those currently being implemented. Figure 4 Smart Process Applications Source: Smart Process Applications Fill A Big Business Gap, Forrester Research Inc., August 8, 2012 Page 6
7 Figure 5 The Value Of Smart Process Solutions Base: 55 decision-makers responsible for packaged application strategy at firms with more than 1,000 employees that use packaged apps (percentages do not total 100 because of rounding) Source: A commissioned study conducted by on behalf of Kofax, July 2013 Page 7
8 SPAs Will Target Common Business Processes We asked respondents to select which business processes will most benefit from smart process solutions from a list of work processes that are used in every industry (see Figure 6). Enterprises selected financial processes as having the highest potential benefit, with financial reporting and contract management taking the top spots. Forrester believes that advancing analytics, particularly BI, is a key reason that enterprises see opportunity in financial reporting. However, customer onboarding a pain point at many companies Forrester speaks with had the most No. 1 selections. Claims and service requests, invoice processing, and compliance processes also scored well and are ripe for emerging process solutions that target difficult and expensive exceptions, where the majority of costs and service issues reside. Figure 6 Benefits To Business Processes Of Smart Process Solutions Base: 55 decision-makers responsible for packaged application strategy at firms with more than 1,000 employees that use packaged apps Source: A commissioned study conducted by on behalf of Kofax, July 2013 Page 8
9 Key Findings All firms require a single consolidated version of the truth and will continue to rely on structured processes, transactional systems, and packaged apps to record customer and business information. But over time, these systems have developed inflexible architectures and have become aligned with silos built around business functions that now present a serious barrier to many fast-moving companies. While the underlying transaction processes may be automated, there are still a lot of manual workarounds that make it difficult to link business capabilities across departments, leading to poor customer experiences, unmet business goals, and untamed processes. The result is a higher cost of doing business, a trend that will only accelerate as consumer technologies expand the engagement gap that already exists between businesses and their customers. In the future, companies will address process and application gaps not by customizing on-premises software, but by linking best-of-breed SPAs using accessible and adaptable processes built on top of DCM or BPM suites. Today s customer experience requires front- and back-office integration. The customer journey extends across functional, channel, and geographic boundaries. Enterprises are challenged to provide a seamless and complete experience and cite poor integration of front- and back-office systems as a leading culprit. Poor integration also is a barrier to more automated transactions and extending customer self-service options. An outside-in or customer perspective, followed by new solutions that help integrate internal systems, is a strong direction for surveyed customers. Attention is shifting away from core systems to SPAs that engage customers. In short, organizations will require new processes that will support an emerging workforce and newly empowered customers. Many of our respondents are looking to smart processes, supported by smart process solutions. to provide better capture, analytics, process management, and information access that are highly tailored to the business service on an industry basis. Enterprises look to agile processes to support the empowered customer. Emerging technology will allow customer-facing employees to operate fluidly and make greater contributions by giving them the ability to understand customer context and leverage mobile solutions. Companies enabling workers and customers with advanced process support will provide a greater level of customer experience. In short, most enterprises we surveyed desire process agility, giving the ability to handle exceptions in more capable ways by having expert guidance, quick communication with experts, and the ability to start new processes. Page 9
10 Appendix A: Methodology This Technology Adoption Profile was commissioned by Kofax. To create this profile, Forrester leveraged its Forrsights Software Survey, Q supplemented this data with custom survey questions asked of 55 US business decision-makers responsible for packaged application strategy at firms with 1,000 or more employees. In this May 2013 survey, respondents were asked about their view of packaged applications and of smart process solutions. The survey was double-blind, conducted in English, and respondents were given a small incentive for participation. For more information on Forrester s data panel and tech industry consulting services, visit Endnotes 1 Often, processes not tackled through packaged apps get approached in tactically haphazard ways. Source: Untamed Business Processes: When Even The Best Of Intentions Go Awry, Forrester Research, Inc., August 21, Source: Application Delivery Must Enter The Age Of The Customer, Forrester Research, Inc., August 25, Forrester has forecast that smart process apps with BPM will become a $34 billion market by Source: Smart Process Applications Fill A Big Business Gap, Forrester Research, Inc., November 5, About provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit , Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to [1-M6ERBN] Page 10
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