white paper February 2010

white paper February 2010 STRATEGIC FOCUS REPORT SaaS BPM: Silencin the Skeptics Develop a SaaS stratey to stay ahead of the ame Sponsored by: Corporate headquarters 1875 Explorer Street 4 th Floor Reston, VA 20190 703.442.8844 appian.com EMEA headquarters 73 watlin street london, ec4m 9bj +44.0.207.152.1130 appiancorp.co.uk

SaaS BPM: Silencin the Skeptics Table of Contents OVERVIEW MARKET IMPACT TECHNOLOGY EVOLUTION COMPETITIVE LANDSCAPE CUSTOMER IMPACT 2 3 9 13 15 overview Catalyst Business process manaement (BPM) has been a critical part of the enterprise technoloy market for over three decades. Traditional on-premise BPM has helped oranizations respond to business challenes, support key business processes, and enerate competitive advantaes throuh execution. As business processes chane, it is imperative that BPM transforms accordinly. A successful contemporary BPM suite should be able to provide end-to-end support and customization for processes, many of which will reside partly or completely off-premise in the future. Furthermore, BPM will also have to retain its appeal to the business user, facilitatin easy consumption but deliverin robust functionality. For those reasons, this report looks at the applicability of the software as a service (SaaS) model to BPM systems. Summary This report provides a comprehensive evaluation of the bureonin SaaS BPM market, assessin the market opportunities, technoloy evolution, enterprise requirements, competitive landscape and o-to-market strateies. Datamonitor draws the followin conclusions: The market for SaaS BPM is still nascent but is pickin up momentum. The arument for SaaS BPM will become increasinly compellin as more processes move off-premise. Some parts of the BPM stack are well suited to the SaaS model, drawin vendor attention. Most vendors are still divided on whether to offer complete execution in the SaaS model. Competition is sparse iven the market s immaturity but the early movers could capitalize on this phase. Prudent o-to-market strateies should taret maximum payoff areas of SaaS BPM first.

MARKET IMPACT The evolution of the SaaS delivery model and the increasin adoption of BPM over the last two years have been nothin short of remarkable. While SaaS continues to outrow the inhibitions of users in almost every field of enterprise applications, BPM has rown in importance as the application of choice in the current economic environment. The onoin recession has helped the cause of both SaaS and BPM. The SaaS model has endeared itself to customers that are wary of upfront capital investments, while BPM has helped businesses adapt quickly to the massive chanes in the external environment. The inherent success of the delivery model and the application has forced many vendors to rethink the oft-debated question: can and should BPM be offered throuh the SaaS model? Datamonitor believes that this is the riht time for BPM to take its SaaS stratey mainstream. The BPM vendors of the future may need to have a balanced mix of on-premise and on-demand solutions in their portfolio, with a proper miration path both ways. This report explores the latest developments in the field of BPM and looks at SaaS BPM offerins critically. The key to BPM s success in the recession is in its ability to facilitate chane The business environment has underone a sea of chane since the last two years, pushin oranizations to drive chane initiatives that can help them respond to business challenes. By adoptin BPM, enterprises have been successful in supportin key business processes and defendin competitive advantaes even when the external marketplace has underone sinificant transformation. BPM as a discipline has helped companies cut costs, manae processes and execute chane. The environment in which oranizations operate continues to chane at a rapid pace, more so durin the recessionary environment that the lobal economy is currently witnessin. If an oranization is to maintain or improve its market position, then it must continually re-evaluate its internal competencies and its external surroundins, adjustin priorities and launchin new initiatives to ensure the efficiency and effectiveness of its operations. The effect of this chane on the IT oranization is substantial. The architecture of traditional IT systems has been application-centric, implyin that an application platform desined to address a business issue at a point in time cannot be easily applied to similar problems in the future. In the case of transaction-based systems, the core assumption has been that processes remain relatively static. This myopia of vision has in turn resulted in inflexibility, leadin to the creation of a eneration of applications that are fit for a sinle purpose, but difficult to modify as business needs chane. As a result, IT is perceived as a barrier to chane that is unable to react quickly to meet new initiatives, requirin additional investment for each new project. The eternal build versus buy arument has also plaued IT projects. While buildin a new system for every incremental chane in technoloy is virtually impossible, buyin commercial off the shelf (COTS) technoloy usually means modifyin processes to suit the functionality offered, rather than vice-versa. 3

SaaS BPM: Silencin the Skeptics To overcome these issues, an approach to IT that incorporates flexibility in all aspects from architectural desin to models of delivery must be practiced. From an application perspective, this will translate into adoptin a process-centric view of business, makin it easier to relate software to business functions. BPM, business rules, composite applications, and model-driven development will play an important part in enablin this chane. From a delivery model perspective, BPM will also have to evolve. This success of BPM will depend on whether it is able to retain its capability to alter its role in the oranization. In downturns, BPM will need to combine tools and methodoloies to help transform an oranization, makin the business more efficient and cost effective. In better times, BPM will need to help businesses identify rowth opportunities and become more aile to chane with market needs. Dynamism will therefore remain a critical component of BPM solutions. Business chanes warrant a transformation in processes Given that processes are the lifeblood of any oranization, it is evident that with chanes in the overall business environment, processes must chane accordinly. In essence, process reenineerin for the current recession should focus on revampin business processes and systems in order to foster effective production, develop a leaner supply chain, stabilize sales, control costs and reduce capital expenditures. Process chane initiatives must examine opportunities for removin elements that do not add value at every step, doin away with ones that create unnecessary cost. Whether in services or manufacturin industries, there are stron economic imperatives to process improvement. Based on the positive pre-2009 sentiment, businesses would typically invest in revenue expansion initiatives. In process terms, this could involve launchin a bier marketin campain and taretin expansion into non-native eoraphies. However, as sentiments turn neative, the same businesses could consider foldin these initiatives and oin into the cost cuttin mode. The same processes should now help the businesses consolidate operations, strenthen partner relationships, and cross-sell to their existin bases. There are tanible financial and time costs associated with projects that undertake process improvement. Many oranizations that look to undertake frequent process chanes find themselves restricted by a number of limitations such as hih costs, hih people involvement, lon rollout time, and less flexibility. Durin the recession, Datamonitor expects demand for process improvement initiatives that do not impact the bottom line by a lare amount, are quick and easy to set up, and retain their flexibility even as the external environment chanes. BPM solutions delivered throuh the SaaS model can effectively position themselves to address this business need. Datamonitor expects demand for process improvement initiatives that do not impact the bottom line by a lare amount, are quick and easy to set up, and retain their flexibility even as the external environment chanes. BPM solutions delivered throuh the SaaS model can effectively position themselves to address this business need.

Process chanes have been driven by external factors and industry events Process reenineerin as a discipline came into prominence in the early 1990s with Michael Hammer s ideas on reenineerin the corporation. Most oranizations that bean to reenineer BPM efforts did so by focusin on parts of the process that were easy to control, due to the virtue of their execution inside the enterprise. Parts of business processes which were supported by partners and service providers outside the enterprise were larely inored. Over the last decade, outsourcin has rown at an exponential rate, threatenin and eradicatin many internal divisions in an oranization. Due to outsourcin, many businesses have realized reater cost savins and increased scalability. The need to realize cost savins, one of the primary drivers for outsourcin, has also resulted in rampant standardization of outsourced processes. For example, many oranizations turnin to BPO often focus too deeply on cost containment to care about process improvement at the provider s end. Process reenineerin, in its oriinal form, has therefore not been successful in developin a comprehensive framework to tweak parts of processes which are outsourced or otherwise executed outside the company s immediate confines. Growth in outsourcin will brin about a need for process visibility and flexibility BPM software is one of the primary tools used in process improvement. Because of this, it has to maintain end-to-end process visibility. Many business processes now touch areas that are executed or consumed outside of an oranization, such as BPO, SaaS CRM, SCM and cloud computin infrastructure. As the number of external touch points in a process rows, it becomes imperative for BPM to be able to customize the external services it consumes. Datamonitor believes that businesses which outsource part of their processes will increasinly look beyond cost control. While outsourcin will continue to flourish as a business model, clients will increasinly expect reater visibility and business process flexibility from providers of outsourced processes. Many common business processes now require interaction with cloud-based services. For example, most oranizations in the financial services domain now inest industry data to ratify their processes aainst external benchmarks. Similar examples exist across verticals and functions in the form of fraud check audits, credit card databases, stock price checks, RSS feeds, reulatory news trackers and industry key performance indicators. Datamonitor believes that creatin a competitive advantae throuh processes will require continual assessment and rationalization of every part of the process. As processes reach out beyond the boundaries of the enterprise, process excellence may need to be supported by tools that reside outside a company s IT framework. The success of cloud computin ensures that more applications move to the cloud Cloud computin is fast becomin a widely accepted model of software consumption and delivery. In Datamonitor s definition, cloud computin is an IT consumption pattern that relies on abstracted, shared and elastic resources accessed over an IP-network that are typically paid throuh some form of the utility model. The SaaS delivery model is one of the various uses of cloud computin. SaaS applications typically reside with the vendors and allow multiple end users to access the same instance of the application (multi-tenancy) remotely. However, many SaaS 5

SaaS BPM: Silencin the Skeptics vendors now offer various other tenancy models such as isolated tenancy, in which the basic software instance is not shared, althouh the database instance may be. Cloud applications now offer a diverse set of capabilities, coverin almost all classes of enterprise and consumer applications. Several vendors also offer infrastructure as a service (IaaS), with comprehensive middleware capabilities delivered throuh the cloud computin model. Datamonitor s report, Can Cloud Computin Help Enterprises Weather the Economic Storm? (Market Focus) (DMTC2267), published in April 2009, presents a selection of 35 cloud vendors across CRM, HR, enterprise resource plannin (ERP), collaboration, office productivity, BPM, business intellience (BI) and IT systems manaement. Alon with these areas, performance manaement and analytics are also makin a mark in cloud-based environments. The increasin popularity of cloud computin will ensure that many such applications mirate to the cloud environment. Processes that cut across several applications will therefore need to develop a cloud stratey. BPM will have to evolve with current business chanes BPM is currently seen as the adhesive that binds various components of a process toether in a simple, code-independent environment. In many ways, it has become a de-facto development platform for business users. While what constitutes the core value in a BPM suite is open to debate, typical use cases illustrate that BPM is mainly used for process automation, application development and interation. All these areas have been sinificantly impacted by the SaaS model of delivery and the cloud computin environment. Process automation throuh modelin any process automation exercise usually beins with modelin processes. Process modelin is inherently collaborative, makin applications distributed throuh the SaaS model a perfect fit for this purpose. Datamonitor notes that a lare number of BPM vendors such as IBM, Software AG, and Metastorm have launched SaaS modelin capabilities in the recent past. Application development while many vendors now allow process model editin in SaaS mode, only a few such as Appian, Cordys and Vitria offer application development and complete execution in the cloud. As the span of SaaS vendors and SaaS solutions increase, it may be easier for SaaS BPM offerins to bind these services and execute composite applications on the cloud. Lihtweiht applications can also be created throuh mashups drawin on various cloud applications, furtherin the case for SaaS BPM. Datamonitor believes that there is a hue potential for user developed applications in the future. BPM technoloies are naturally suited for caterin to this market iven that they can easily provide the orchestration and workflow capabilities required for creatin such ad-hoc situational applications. To that end, exposin SaaS BPM capabilities to customers could help kick start this fledlin market. Alon with BPM mashup providers such as Appian and Cordys, IBM s Mashup Center and Serena s Business Mashups are notable. Both these are available in the SaaS mode and use BPM technoloies such as workflow enines in the backround to help business users create applications. Interation the presence of a lare number of SaaS-based applications creates the necessity for code free interation enabled throuh major pre-confiured web services. As business users are increasinly exposed to services delivered over the web, they will start expectin BPM to help them seamlessly interate SaaS applications into their processes. Vendors such as Boomi, Jitterbit and RunMyProcess

provide pre-confiured interation services, which can be used within an existin workflow without the need for additional codin. While not all of these can be called BPM, they can certainly help BPM suites achieve functionalities that end users miht expect. Usin the same, users can create applications spannin major SaaS providers such as Goole Apps, Salesforce.com and Zoho. The major use cases for BPM will increasinly be impacted by the SaaS paradim in more ways than those listed above. Datamonitor believes that in the future, possessin a clear SaaS stratey will become imperative for vendors. To maintain the status quo as an enabler for business processes, BPM as a discipline will be ill-advised to inore the SaaS model of delivery. A SaaS BPM maturity model Datamonitor s view of the SaaS BPM market considers two possible scenarios. Fiure 1 illustrates the maturity model, and shows leadin vendors alon both paths. These paths divere after stae 2. Up to that point vendors will most likely aree on the path to market. Datamonitor believes that over the loner term, many vendors will choose to deliver modelin and business rules capabilities throuh the SaaS model alonside an on-premises version. The path beyond point 2 will likely be dependant on vendor and customer preferences. Some vendors such as Appian, Cordys and Vitria may choose to retain their focus on SaaS solutions, concurrently offerin on-premises deployment as an option (path 3). Datamonitor believes that more vendors would attempt level 4 only when they have arnered customer trust and are able to convince customers of their commitment to the SaaS model. By this token, vendors such as Salesforce.com that have already manaed to convince customers of their SaaS intentions and ained the trust of a lare user community could have a sinificant ede should they choose to offer BPM execution capabilities throuh their PaaS offerins. Datamonitor does not consider the entry of eneralist PaaS providers in this area to be unlikely. Fiure 1: SaaS BPM maturity model with two principal solution evolution scenarios 7

SaaS BPM: Silencin the Skeptics On the other hand, several BPM vendors may choose to keep all execution in the on-premises mode (path 3). Datamonitor believes that, as of now, the on-premises model caters for a supermajority of the BPM market. In the future, a healthy market for on-premises BPM will continue to exist. The path to SaaS BPM contains opportunities and challenes To sum up, Datamonitor believes that there is an emerin market in SaaS BPM ripe for exploration. The aruments in favor of SaaS BPM will increasinly move from convincin to compellin, mirrorin similar developments in other areas of enterprise applications that now have mature SaaS offerins. Datamonitor reaffirms that not all vendors will need to adopt the same SaaS stratey. However, vendors would do well to reevaluate their offerins in the liht of recent developments and discover their sweet spots in SaaS. Key business benefits of SaaS BPM will include: Reduced business continuity risk Unification of rules and modelin repositories Easier reach into multiple eoraphies and customer size bands Easy mashups and simplified application development Greater collaboration durin modelin and manual discovery Key challenes of SaaS BPM will remain: Security concerns Lack of richness in functionality Customization

TECHNOLOGY EVOLUTION Many vendors provide modelin capabilities in the cloud Lombardi Blueprint, IBM Blueworks and Software AG Alinspace all provide valid cases of standalone on-demand modelin platforms that provide modelin capabilities in the cloud. Lombardi s Blueprint, for example, provides standard modelin capabilities and the company is plannin to introduce additional workflow capabilities in the medium term that would allow users to run simple processes in the platform s modelin environment. On the other hand, Appian, Cordys and Vitria provide on-demand modelin alon with an option to execute it over the cloud as well. For tacklin relatively unstructured processes, Cordys case manaement provides a ood example. Its Case Manaement module in the Business Operations Platform (BOP) enables hihly unstructured business processes to be manaed alonside structured ones, throuh the entire process lifecycle from desin throuh to execution, enablin non-sequential, event-driven processin of case-based processes. Alon with supportin static, interation-centric processes (the flow of which is always the same), Cordys BOP also supports patterns from case-oriented that is, hihly dynamic and loosely structured processes. Emerin practices that have yet to be deemed as well-established processes can be approached usin solutions that serve as a precursor to modelin platforms. For example, ActionBase s ActionMail allows the addition of live links and tools to e-mails to help project manaement. Usin ActionMail, users can create tasks and timelines within normal emails and help manae and track a completely unstructured process flow. The vendor plans to soon release a plu-in that will help convert the process lo, once completed, into an XPDL process diaram. Datamonitor believes that this will be an interestin area to watch, iven that Goole has announced Goole Wave platform, oriinally intended for the consumer market, but which could convert standard email into a rich, collaborative interface with versionin and trackin capabilities. All other parts of the BPM stack require execution in the cloud environment Beyond modelin capabilities and business rule desin, most of the other parts of the BPM stack require execution capabilities or workflow enines in the cloud. However, one of the most conspicuous debates in the modern BPM landscape revolves around whether execution capabilities should be offered in the cloud. While a few vendors such as Appian, Cordys and Vitria are in favor, others seem content with pushin out modelin suites into the cloud only and keepin the rest on-premise. One of the positives inherent in offerin full execution in the cloud is reduced round trippin due to a unified Cloud-based execution also translates to more options for modelin and execution environment. Cloud-based execution also translates to the customer, enhanced more options for the customer, enhanced collaboration (can spur innovative collaboration (can spur mashups and on-the-cloud interation with BI), and maximal use of SOA innovative mashups and investments. Complete cloud execution also advocates the development of unified on-the-cloud interation with BI), and maximal use of SOA process repositories that are abstracted from underlyin infrastructure, ensurin investments. that business rules and models are not hard coded into inflexible hardware which can act as hindrances to chane. Alon with the positives, a lare number of neatives and concerns around SaaS BPM exist. Fiure 2 lists the neatives of this arument. 9

SaaS BPM: Silencin the Skeptics Fiure 2: Should execution be offered in the cloud? Vendor lock-in and data security are perhaps the most pertinent of these aruments that o aainst the SaaS BPM execution model. For keepin data secure, it is now possible to move data in and out of the cloud with hybrid clouds. Services such as the Amazon Virtual Private Cloud (VPC) now enable enterprises to connect their existin infrastructure to a set of isolated EC2 resources via a Virtual Private Network (VPN), helpin customers extend their existin manaement capabilities such as security services, firewalls, and intrusion detection systems to include their AWS resources. Usin these services, customers can create a virtual private cloud on AWS s infrastructure, bride toether their VPC and IT infrastructure via an encrypted VPN connection, and add AWS resources, such as Amazon EC2 instances, to their VPC. BPM users usin these services can effectively run their BPM instances on EC2, while movin their sensitive data between their datacenters or their private clouds as required by the BPM application. Users who can route traffic between the VPC and the internet over the VPN connection so that it can be examined by existin security and networkin assets before headin to the public internet. Over the loner term, this could help allay the fears of customers that are only willin to expose a small part of their data to the cloud. Additionally, this could also help transfer data securely between vendor platforms. Another part of the vendor lock-in issue centers around application interoperability and transfer amon platforms. Consider an example in which a customer builds an application usin the model driven approach, to execute it on a SaaS vendor s platform. Althouh exportin this process model built usin standard modelin notations is possible, exportin the workin application may not be easy. The application could be usin native components specific to the platform or run on business loic which is not exposed to the user. Datamonitor stresses that proper miration standards and customer support can effectively mitiate some lock-in problems. Most SaaS BPM vendors that offer execution in the cloud have a unified code base with their on-premise version, meanin users can easily mirate cloud applications to on-premises. However, miratin a workin application from the Cordys platform to Appian, for example, miht require extensive support from both vendors. It is worth mentionin here that the same issues could arise in the case of application miration between two on-premise BPM vendors. To that end, execution, whether in the cloud or on-premises, should be preceded by meticulous plans on how to mirate applications and data to other providers/internal IT should there be any chanes in future plans. Cohead s recent

demise has spurred the rowth of a horde of application and data miration offerins overniht, some of which are listed in Fiure 2. However, further development is needed in this area to ensure that customers can easily mirate applications and business loic written on various development platforms (whether on-demand or on-premise) amon each other. Hybrid implementations could transform the BPM deployment lifecycle The success of any BPM project depends, amon other thins, on its deployment stratey. Traditionally, BPM has been rearded as one of the most challenin kinds of software to deploy, due mainly to the level of detail and the number of touch points it involves. The key steps to a BPM deployment cycle include discovery, modelin, testin, execution and monitorin, each requirin a different amount of time for completion. However, oranizations very often prioritize these staes erroneously and end up with a flawed deployment that fails to enae the participants in the riht fashion. Fiure 3 shows the typical deployment cycle of an on-premises BPM implementation with averae timelines for each stae. Fiure 3: Traditional BPM deployment timeline waterfall 11

SaaS BPM: Silencin the Skeptics It follows that staes which involve human participation should receive hiher priority and time durin deployment, while tasks of automation should ideally be shorter in duration. Given its collaborative nature, Datamonitor believes SaaS BPM can properly alin the BPM deployment cycle to the ideal time required at each stae. Fiure 4 shows a modified deployment cycle that may be achieved usin a hybrid/pure SaaS BPM implementation, with averae timelines for each stae. The manual discovery, model and test phases have been portrayed in the same color in this diaram iven their natural overlaps. Datamonitor believes that the collaborative SaaS BPM solutions could make these phases less distinct and more entwined within each other, reducin total time taken. Fiure 4: Hybrid BPM deployment timeline waterfall

COMPETITIVE LANDSCAPE Some BPM specialists now offer components of their BPM suite in the SaaS version Most of the prominent participants in the SaaS BPM market come from the BPM specialists sement. Pure-play BPM specialists are typically below $200m in revenue and privately owned, makin them slihtly more aile than multi-billion public conlomerates. These vendors derive almost all of their revenues from BPM, which necessitates that they keep ahead of larer stack conlomerates with continuous innovation. Given that larer conlomerate vendors are typically more difficult to take on in the interation ame, BPM specialists use their nimbleness to deliver new and inventive approaches to processes, be it new models of deployment such as SaaS, new licensin models, or adherence to latest standards. In addition, some of these vendors also have a presence in the small and medium business (SMB) sement and see SaaS as a viable stratey to better service this taret market. As a result, it is not surprisin to see many of the prominent SaaS BPM offerins emere from BPM specialists. Althouh purists miht consider many of these offerins to be quasi-saas (devoid of a multi-tenant architecture), these offerins definitely serve to add to the diversity in the competitive landscape. BPM specialists that currently offer one or more modules of SaaS BPM include: Appian (Appian Anywhere). Cordys (Cordys Business Operations Platform). Lombardi (Lombardi Blueprint). PeaSystems (Pea SmartBPM Suite). Metastorm (Metastorm ProVision). Vitria (Vitria M3O). Some of these specialists have manaed to tap into the underpenetrated SMB sement Small enterprises (below 1,000 employees) have conventionally been a sore spot with BPM providers. Such enterprises traditionally start by addin applications and infrastructure on a need-to-have basis, and the limited complexity in their IT infrastructure does not make robust middleware a distinct need in most cases. However, exceptions to this rule do exist. For example, small tradin and investment oranizations in the financial services domain typically handle billions of dollars in assets with a small roup of hihly trained employees. Such oranizations differentiate themselves with the help of their skill-sets and the robustness of their processes. In many cases, such firms have to quickly chane their processes to capitalize on an emerin opportunity in the markets in which they trade. Similarly, professional services companies that handle hih volumes of data and revenue with a small number of employees also require process adherence and versatility. However, very few vendors currently offer BPM solutions packaed to the convenience of such enterprises. Fiure 5 shows the current state of BPM adoption in oranizations of different sizes. Currently, just 15% of oranizations with fewer than 1,000 employees have deployed a BPM or workflow solution. The adoption rate remains equally low amon medium enterprises (1,000 4,999 employees) at 16%. The situation improves sinificantly in oranizations above 10,000 employees, with a penetration of 38%. Datamonitor believes that the low penetration in SMBs can be improved by matchin customer needs with the riht kind of solutions and pricin plans, furtherin the case for BPM delivered throuh the SaaS model. 13

SaaS BPM: Silencin the Skeptics Fiure 5: Greenfield opportunities are maximum in enterprises below 1,000 employees Appian provides some ood examples for SMB deployments. The vendor has clients such as the Steel & Pipe Supply and Lasecelles de Mercado which use Appian Anywhere for processes such as employee on-boardin and supply chain manaement. Datamonitor believes that with SaaS BPM solutions, other vendors could also tap into SMB opportunities without incurrin lare costs.

CUSTOMER IMPACT The customer and user communities are expected to be the primary beneficiaries of the SaaS model of BPM deployment. The biest ain from SaaS BPM systems will be in the involvement of a larer number of people in the process modelin exercise, helpin to recreate processes that accurately reflect real world scenarios. SaaS will inherently render the modelin process more inclusive, ensurin that oranizations lean the experience of participants that have traditionally been inored. For example, a call center may deploy a team of consultants and business manaers to desin a transaction processin system, but end up inorin the inputs of call center executives that actually perform the day-to-day transactions. As opposed to traditional methods, SaaS-based modelin environments will serve as a viable route to capturin the tacit knowlede from process participants without incurrin prohibitive costs and extended timelines. Enterprises usin SaaS BPM could witness a faster response time in reactin to events in the external marketplace. In many cases, SaaS BPM will also help in accurately mappin total project costs to benefits. Overall, Datamonitor believes that SaaS initiatives will inviorate the perpetual business and IT alinment exercise. Overall, Datamonitor believes that SaaS initiatives will inviorate the perpetual business and IT alinment exercise. Impact: SaaS BPM to monitor its own infrastructure usae Appian Anywhere is a ood example of a SaaS BPM offerin that relies on IaaS and helps end-users tie infrastructure requirements to BPM, and ultimately, business cases. The vendor offers two versions of Appian Anywhere, namely, premium and standard. The standard edition provides an instance of the BPM software hosted on the Amazon Elastic Computin Cloud (EC2) infrastructure. The premium edition provides dedicated server(s) for each customer hosted by OpSource, for which the customer pays an additional fee. Usin either of the two editions, a customer is able to accurately monitor the amount of infrastructure used and tie the same to business action. This inherently makes for a stroner business case for purchase. Appian s recent deployment at financial services oranization Manulife Financial is worth notin in this context. Manulife s business users (the marketin department in this case) required a centralized system for receivin and manain service requests. However, IT could not prioritize or support solution development due to internal constraints. Appian successfully cleared the selection process at the customer with their SaaS BPM offerin that was deployed in about 60 days, with near zero impact on internal IT. Usin the solution, Manulife can now obtain data to measure and optimize the marketin department s SLA attainment. Plottin the same data aainst overall project costs can easily demonstrate the return on total investment includin the infrastructure behind the solution. Appian successfully cleared the selection process at the customer with their SaaS BPM offerin that was deployed in about 60 days, with near zero impact on internal IT. 15

SaaS BPM: Silencin the Skeptics SaaS BPM will add new impetus to the business IT alinment exercise Since its inception, BPM has been seen as an enabler of chane by its end-user community. While most technoloies from the silo application development and monolithic stack era have struled to maintain their versatility, in the process becomin inhibitors to proress, BPM has remained a solution capable of deliverin the much needed aility in the day to day operations of a company. One of the inherent objectives of a BPM system is to enable stron linkaes between the business and IT. Business requirements chane often, necessitatin chane in technoloies that enable business. However, users continue to strule with technoloy solutions that are built for a sinle purpose and cannot take on major redevelopments when operational chanes occur. BPM has traditionally helped business overcome this issue by fosterin a code-free environment that allows business users to monitor and manae business the way they want to, without requirin intervention from IT. To maintain this flexibility, Datamonitor believes that it will be important for future BPM solutions to have a presence in the cloud. On the one hand, cloud-based products existin in harmony with an on-premises offerin will expand the amut choices for the end user. On the other hand, possessin capabilities in the cloud will also help BPM solutions et closer to adjacent enterprise applications that will choose to operate in the pure on-demand model. Datamonitor believes that manain chanes in business models will require BPM vendors to think of alternative ways to service business, and SaaS could emere as an enabler.

Authors Surya Mukherjee, Senior Analyst, Supply and Demand Analytics Vuk Trifkovic, Senior Analyst, Supply and Demand Analytics smukherjee@datamonitor.com vtrifkovic@datamonitor.com Disclaimer All Rihts Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopyin, recordin or otherwise, without the prior permission of the publisher, Datamonitor. The facts of this report are believed to be correct at the time of publication but cannot be uaranteed. Please note that the findins, conclusions and recommendations that Datamonitor delivers will be based on information athered in ood faith from both primary and secondary sources, whose accuracy we are not always in a position to uarantee. As such Datamonitor can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect. 17

About Appian Appian is the lobal innovator in enterprise and on-demand business process manaement (BPM). Appian provides the fastest way to deploy robust processes, collapsin time to value for new process initiatives. Businesses and overnments worldwide use Appian to accelerate process improvement and drive business performance. Appian empowers more than 2.5 million users from lare Fortune 100 companies, to the mid-market and small businesses worldwide. Appian is headquartered in the Washinton, D.C. reion, with professional services and partners around the lobe. For more information, visit www.appian.com. Copyriht 2010 Appian. All rihts reserved. Corporate headquarters 1875 Explorer Street 4 th Floor Reston, VA 20190 703.442.8844 appian.com EMEA headquarters 73 watlin street london, ec4m 9bj +44.0.207.152.1130 appiancorp.co.uk