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The Wizardry of Business Process Management - Part 3

Written By: Predrag Jakovljevic
Published On: June 19 2009

Part 1 of this blog series provided a lengthy discussion about business process management’s (BPM's) necessary parts and parcels, and the software category’s value proposition. At the end of the article, I mentioned my recent attendance of a witty presentation that attempted to explain the essence of BPM via some humor and metaphor of the classic “Wizard of Oz” movie.

Namely, on March 23, 2009, Alan Trefler, Pegasystems’ founder and CEO, gave his luncheon keynote presentation at the Gartner BPM Summit in San Diego. His theme was “Don’t just Survive… Capitalize.” Trefler begun by reminding the audience that in today’s turbulent economy we are all “not in Kansas anymore” and may just need some "ruby slippers" to find our way back home to profitability. If you have 14 minutes to spare, you can re-capture the spirit of the event here.

In the main part of his presentation in Part 2, Trefler maintained that to follow the "Yellow Brick Road," which will lead any business to Oz (and back to profitability), requires three capabilities in particular, starting with the ability to directly capture business objectives into the BPM system by the business users.It cannot be overemphasized how important it is for business users to be able to capture corporate objectives directly into the software technology so that these new objectives can immediately impact their customers, partners, and employees. The ability to easily record, erase, revise, and organize business rule changes creates the foundation for organizational agility. Letting organizations design for both planned and (even more importantly) unplanned business changes is of paramount importance.

It’s About (the "Six Rs” of) Automation, After All

Companies have to optimize their processes through technology that automatically integrates new objectives into their systems to adjust for every specific situation. They need a “brain” that ensures that processes and decisions are optimized per these new objectives in both mainstream and exceptional situations.

The idea is to get the initial process quickly and iterate later. Business users can do it one customer issue at the time, starting with any business process that needs improvement: e.g., open a new account, charge dispute, detect fraud, increase credit line, handle a missed payment, and so on.

As said in Part 2, Pegasystems (also known as Pega) users can use the familiar Microsoft Visio diagramming tool to visually create (model) the processes that will deliver better customer service. There are many pre-built solution frameworks with industry best practices to get them jump-started if necessary.

But the second brick in the Yellow Brick Road is the ability of the technology to automate all necessary computer programming. Namely, business people can draw nice pictures and diagrams to capture objectives, but if between that model of what you want and ultimately running your business you need to do lots of tedious Java or C++ programming, you cannot be agile and nimble enough. To that technical end, the model that business users create should actually automate the programming that makes the business process run.

The final brick in the Yellow Brick Road of BPM is the automation of business processes that then “drives the work to be done” by, well, automating the actual work. In other words, the work is not merely tracked or routed for human intervention, but is also completed with the power of smart automation and minimal manual effort.

Nirvana would be to ultimately automate the work for people, who then only add value as required. Although the human touch is always needed, the point of business process automation (BPA) is to eliminate any distractions.

Again stepping out of Trefler’s presentation’s narrow scope, let me try to explain here how Pega’s SmartBPM suite really turns work automation into a tool for business changes on the fly. Let’s explore the “Six Rs” of driving work to be done via Pega’s BPM technology.

As the first “R,” the BPM product makes it easy for users to receive the work that needs processing. SmartBPM has a broad ability to receive input out-of-the-box from virtually any conceivable channel.

To that end, flexible, self-expanding extensible markup language (XML)-based data structures make it easy to capture whatever data, attachments, images, or other content may be appropriate, so that users can always have the right information at hand. Web services, e-mail notifications, and so on are all treated through a common software architecture, to ensure that processes designed for one particular channel can be leveraged in a multi-channel environment.

The second “R” stands for route. To that end, rules ensure optimal work management for either people or systems by organizing related work into Cases and Folders, thus prioritizing and managing them. The duplicate checking ability prevents redundancy, while skills-based routing (SBR) optimizes work assignments.

For the third “R” of automation, report, the system offers over 100 standard reports, plus an open database to integrate with other customer information and enterprise reporting systems. Canned reporting capabilities can even be extended to include real-time business activity monitoring (BAM). For instance, built-in Service Level Agreement (SLA) management and statistical sampling provide management impacts in real time.

Customers use these capabilities to coordinate and control key business functions. For example, National Australian Bank (NAB) uses SmartBPM to control the receipt, prioritization, and execution of billions of dollars of high value payments, ensuring that every wire transfer request is handled according to the best practice.

The Exceeding "Three Rs” of BPA

But these are just the basic three “Rs” of BPA, something like the reading, writing, and arithmetic abilities in elementary school. They are the basis of what was originally called workflow automation that represents the procedural side of the world.

These days, competitive organizations need much more than the basics. To that end, PegaRULES Process Commander, a thin-client collaborative environment for both business users and IT departments, brings the further benefits and the power of automation with the additional three “Rs” that make the procedures even smarter.

Thus, the fourth “R” stands for research: the ability to dynamically get the data needed to automate work when and as needed, and use the best sources. Retrieving data if and only if it is needed saves resources and money. In addition, the system saves users’ time by only asking relevant questions and making it easy to dynamically insert alternative data sources.

Then comes the “R” for respond: the ability to reduce effort and provide service by ensuring that interactions with people are “smart.” For example, users are able to alter the forms and fields of the hypertext markup language (HTML) screens based on the rules and the situation. In addition, companies are able to notify partners, customers, and other relevant parties effectively and appropriately, and even have them directly participate in the completion of the work over the Web.

Last but not least, the sixth “R” stands for resolve: the ability to drive work through to completion with the power of an inference engine. In other words, it is the ability to fully automate work where possible and guide users if and when user involvement is needed.

The "Six Rs” of Automation in Action

Pega’s customers use these BPA capabilities to weave policies and other declarative rules into their procedures. As an illustration, let’s see how the "Six Rs” would work at an insurance call center:

  1. Receive – A New York customer wants to add boat coverage to his homeowners and auto insurance plan. He or she goes to the online portal, gets partially through, but has questions about what happens if he or she moors in Maine in the summer, but brings the boat back for storage in New York in winter. He or she picks up the phone, switching from the Web to the phone channel.

  2. Research – In the background, the system pre-determines that the local insurance agent is not skilled enough to write the policy for a boat moored in Maine, calculate the right policy for a commission sharing (and potential discounts), and up-sell.

  3. Route – Thus, the customer profile triggers an SBR to a preferred customers queue in the call center. The right customer service representative (CSR) quickly asks a few relevant questions (e.g., near-shore or offshore sailing?) and recommends an additional multi-line coverage umbrella.

  4. Resolve – The customer receives a quote to his liking and the change in policy is resolved by underwriting and a system-driven straight-through processing (STP) to be bound.

  5. Respond – The customer gets an automatically generated confirmation e-mail with a print snail mail follow-up and confirmation of the change of policy and debit acknowledgement.

  6. Report – The activity is monitored for ongoing process improvements and optimization via productivity and quality alerts.


The benefits of such intent-driven user experience are that it eliminates the CSR’s guesswork, since the system analyzes information on the customer history, coverage, value, prior interactions, etc., as well as the insurance provider’s business goals to determine the best course of action. Furthermore, CSRs benefit from improved effectiveness and efficiency, since the SmartBPM suite guides the agent through the interaction process and delivers the appropriate scripts, process steps, and customer information exactly when needed. In addition, Pega dynamically alters the agent experience to accommodate multiple roles (e.g., sales vs. service) and locations.

The Wizardry of Closing Execution Gaps

Going back to Alan Trefler’s luncheon presentation, in summary, he concluded that it takes the following: corporate courage (not to flinch in these times, but to instead try to see what can be done), a BPM brain (to capture the business intent), and a heart (a service oriented architecture [SOA]-based infrastructure). This creative cinematic BPM metaphor did not come out of thin air, since the presentation took place exactly on the 70th anniversary of the great “Wizard of Oz” movie.

Another salient point in Trefler’s creative speech was that the market for BPM software is driven by competitive businesses that seek to close the execution gaps that may exist between their business objectives and their actual business processes. Pega’s target customers are large, industry-leading service organizations faced with managing transaction-intensive, complex and changing processes that seek the agility needed for growth, productivity, and regulatory compliance.

Financial services organizations require software to improve the quality, accuracy, and efficiency of customer interactions and transactions processing. Pega’s customer process management and exceptions management products allow its financial service customers to be more responsive to changing business requirements. Representative Pega’s financial services customers include Bank of America, Barclays Bank, Citigroup, Credit Suisse Group, HSBC Group Holdings, JPMorgan Chase & Co., National Australian Bank (NAB), and TD Bank Financial Group.

Pega’s financial industry knowledge and experience has resulted in solutions to help these customers close execution gaps and improve the following processes:

  • In Bank Card Operations: Multi-channel service; Self-service account opening; Product roll-out; Fraud processing; Customer on-boarding, etc.

  • In Retail Banking: Event-driven marketing; Account opening; New product introduction; Service case management; Specialized fulfillment, etc.

  • In Wholesale Banking (e.g., wire transfers and treasury management): Proactive service monitoring; Account servicing; New product introduction; Compliance trade monitoring; Exception management, etc.


For their part, healthcare organizations seek products that integrate their front-office and back-office initiatives and help drive customer service, efficiency, and productivity. Representative Pega’s healthcare customers include: Aetna, Blue Cross Blue Shield of Massachusetts, Blue Cross Blue Shield of Minnesota, Group Health Cooperative, HealthNow New York, Kaiser Foundation Hospitals (Kaiser Permanente), and Wellpoint.

Pega’s healthcare industry involvement has resulted in solutions to help these customers close execution gaps and improve the following processes: Automated Underwriting; Sales Renewals; Appeals & Grievances; Consumer Directed Healthcare (CDHC) offerings;  Facilitation; Authorization Management; Small- and Large-Plan Enrollment and Servicing; Disease/Care Management, and so on.

Insurance companies, whether competing globally or nationally for customers and channels, need software to automate the key activities of policy/contract rating, quoting, customization, underwriting, and servicing as well as products that improve customer service and the overall customer experience. Representative Pega insurance industry customers include: American National Insurance Company, former American International Group (AIG) that recently changed name into American International Underwriters (AIU), John Hancock, Farmers Insurance Group, Nationwide Mutual Insurance Company, and The Prudential Insurance Company of America. Pega’s insurance industry knowledge and experience has resulted in solutions to help these customers close gaps and improve the following processes: automated underwriting; event-driven marketing; product cloning; claims management; legacy transformation, etc.

A CRM Provider Too?

While its customers are typically large companies in the financial services, healthcare and insurance markets, with SmartBPM Suite, Pega is also able to offer solutions to a broader range of companies and industries, such as telecommunications, government, life sciences, manufacturing, and travel services. Marquee customers here include Amgen, Advanced Micro Devices, Inc. (AMD), General Electric Company (GE), Ford Motor Company, Novartis Pharmaceuticals Corporation, Starwood Hotels & Resorts Worldwide, and The ServiceMaster Company.

All of the abovementioned companies are largely concerned about their customer service levels. Pega’s customer interaction know-how has also resulted in solutions to close gaps and improve the following processes: Customer retention and cross-selling; Specialized fulfillment; New hire training; Post-order clean-up; Objection handling; Reducing on-call time, Product warranty and servicing management, and so on.

In fact, Pega is also regarded as a customer relationship management (CRM) provider. ZDNet’s 2007 blog post mentioned Pega within a Forrester’s CRM Wave research document. Pega does acknowledge the competition from CRM application vendors including Chordiant Software, Microsoft Dynamics CRM by Microsoft, Siebel by Oracle; Pivotal CRM by CDC Software, and Consona CRM to name but a few.

There is also competition coming from companies that provide application specific software for the financial services, healthcare, insurance, and other specific markets such as Norkom Technologies, SmartStream Technologies, SunGard, The TriZetto Group, Oracle's solutions for financial services, Misys, etc. An interesting nugget of information is that Pega used to be a Salesforce.com on-demand CRM customer. The vendor recently made a decision to replace Salesforce.com Enterprise Edition with its own CRM system, in an “drink your own champagne” manner.

Part 4 of this blog series will provide more of Pegasystems’ value proposition and BPM secret sauce. In the meantime, your comments, thoughts, suggestions or individual experiences with BPM solutions are more than welcome. If you are SmartBPM user, I would appreciate you sharing your experiences with the product and the company.
 
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