Leveraging Technology to Maintain a Competitive Edge During Tough Economic Times -- A Panel Discussion Analyzed Part Two: Business Process Modeling

Introduction

At the IFS Executive Forum, which took place on March 29 and 30 in Orlando, Florida (US), leading research analysts and industry experts discussed how companies can still leverage technology to maintain their competitive edge, even during tough economic times. The event was held in conjunction with IFS World Conference 2004, and it included six panel discussions, with each panel including top executives, analysts, and journalists. Some of the renowned panelists were Geoff Dodge, vice president, Business Week; Dave Caruso, senior vice president, AMR Research; Barry Wilderman, vice president, Meta Group; Leo Quinn, vice president of operations, Global Manufacturing Solutions, Rockwell Automation; Dave Brousell, editor-in-chief, Managing Automation; David Berger, Western Management Consultants; and Josh Greenbaum, principal, Enterprise Applications Consulting. Breakout sessions explored such topics as turning global competitive threats into opportunities, increasing the bottom line through operational efficiency, complying with the Sarbanes-Oxley Act of 2002, and using enterprise software to prepare for future challenges.

Technology Evaluation Centers (TEC) was represented at the executive panel titled "The Future of Enterprise Software and How It Impacts Your Profitability", which was aimed at helping companies find out where enterprise software is going in the next five years, and how it can make or break their profitability and market share. The panel, which was moderated by Josh Greenbaum, included the following participants: Barry Wilderman; Peggy Smedley, president and editorial director; Start Magazine; Dave Turbide, an independent consultant and renowned columnist for magazines such as The Manufacturing Systems; and Predrag Jakovljevic, research director, TEC. In preparation for the event, we polled the thoughts and opinions of our experts and contributors: Olin Thompson, Jim Brown, Joseph Strub, Kevin Ramesan, and Lou Talarico, given they were unable to attend the event in person.

Below are the questions and consolidated thoughts and answers that transpired from the panel discussion. We also took the liberty to expand with a few pertinent questions and thoughts that were not discussed at the panel per se (due to the time limit), but transpired from many other interactions and presentations at the conference. Also, some pertinent articles published previously on our site, which may shed more light at the respective topic are mentioned as further recommended readings.

The questions are

Q1. What is the one piece of new software or technology that will be a must-have in the next five years? (see Part One)

Q2. Some pundits say the future of enterprise software lies in service-oriented architectures and component applications. True? False? (see Part One)

Q3. How does the development of new business processes and business process modeling fit in? (see Part Two)

Q4. What are applications hosting and other service models? (see Part Three)

Q5. Radio frequency identification (RFID) is on everyone's mind these days. Let's discuss the software issues around RFID and what kind of software solutions will be taking advantage of RFID. (see Part Four)

Q6. Technology aside for a moment, what can we say about its impact on profitability? (see Part Five)

Q7. With all this new technology, the question is what happens to existing applications and technology. Nobody wants to start over, but how much will existing IT systems have to change? (see Part Five)

Q8. Will the newest and greatest only come from packaged software? What about custom development? What is the build versus buy equation look like in the near future? (see Part Six)

Q9. How will the latest improvements in software flexibility and agility play in the single-vendor versus multi-vendor solution equation at multi-division corporations? (see Part Six)

This is Part Two of a multipart trend note.

Each of the following parts covers questions and answers addressed by the panel.

Questions and Answers (continued)

Q3. How does the development of new business processes and business process modeling fit in?

A3: Well, as mentioned earlier on, the focus of Web services and composite applications is on processes, as well as on data and transactions. A business process is any function performed on an ongoing, recurring basis with two or more steps or actions necessary to complete it, and thus, these steps must be expressed explicitly. Order taking, customer billing, order fulfillment, business partners' interaction, shipping, human resources (HR) management, quality assurance, project management, manufacturing, and so on are all examples of business processes.

These processes will embody one of the following: current best practices, unique practices, or "next" best practices. Furthermore, organizations are increasingly realizing that their business processes are a fundamental source of competitive advantage. Companies should be able to take advantage of current best practices, and also have the flexibility to quickly adapt to discover unique practices that should help them compete or reduce costs, and also the ability to adopt new best practices as they emerge. Enterprise-wide applications that can be tailored to a business without significant re-programming and development have a distinct advantage over those that cannot. To that end, business process management (BPM) is the new approach to automate cross-functional processes, which allows processes to be modeled and then dynamically (rather than in a rigid, hard-coded manner) maintained as business requirements are refined or modified.

Regardless of the type of function, all business processes are built around the idea of workflow, which means that each process has a predefined "map" or model. This workflow map includes steps (that might be actions or decisions) and routes, or paths. A more complex workflow may have many steps and routes to cover all of the possible scenarios that can occur within the process. Workflows typically have a single start and end step, but some complex workflows may have multiple end steps, while extremely complex workflows can even have multiple start steps for entering the workflow.

Action steps require an action to be taken either by a human or machine, whereby the input may be manual or automatic, with the more automated being the aim. There are also informational actions, which do not require input but, instead generate a notification of some type as a process passes through the action step. Further, based on the decision criteria (which can also be automated or manual), the flow will be routed either to path A, path B, or elsewhere. The combination of a start step, action or decision steps, a route or routes, and an end step constitutes a workflow, which in turn represents a business process. Consequently, BPM has evolved from workflow tools, but it also entails activities like process modeling, application integration, process monitoring, and rapid application development tools. The system starts from a model that is usually built using a graphical tool or flowcharting program. This model or flowchart defines how and where data will travel (i.e., be orchestrated) along the process pipeline, as depicted above.

We do not see BPM as a significant factor for mature ERP or computerized maintenance management systems (CMMS) applications, particularly not in a single-site environment. Indeed, how many ways do there need to be to pay vendors, create invoices, book debits and credits, or schedule maintenance? However, with respect to more "extrovert" applications like SCM and CRM, it is important to be able to model the application to how an organization does business with trading partners, and not be constrained by the software. The need for SOA, Web services, and BPM has been boosted by these external processes, which are most often automated workflows that involve multiple companies and a diversity of existing enterprise systems. These workflows send messages through application programming interfaces (APIs) to and from the various disparate systems involved. Usually, these communications are sent over the Internet as XML messages, although they also can be transmitted by a number of other means.

Addressing Reality

Thus, the next generation of enterprise applications architecture must address the reality that business processes cross application boundaries. The architecture will need to provide business process modeling and integration, application integration, and application extension in order to allow companies to realize the full potential of their current applications. With all of these capabilities, the new architectures will initially be used to pull together diverse applications in a way that the resulting composite application is better than the sum of its parts. Eventually, the next generation of enterprise applications will also embrace these architectural capabilities in the application itself.

Companies should seek to gain several values from BPM, such as a better agility and control over their business by having defined rules-based processes, and a greater visibility into their processes and the information to identify areas for improvement. Typically, how a manufacturing enterprise, such as organizes, plans, and schedules its production lines represents a competitive and strategic advantage in the marketplace. Accordingly, they do not want to have to make business process changes due to the software rigidity and possibly lose the efficiencies that may have taken years to gain. Business processes must be enabled across the artificial boundaries of disparate applications that must work together to support these business processes. To that end, BPM could assist in compliance issues, can reduce training requirements and can increase overall efficiency of the business.

For more information, see the following recommended readings: BPM Weaves Data and Processes Together For Real Time Revenues, Business Activity Monitoring—Watching the Store For You, Integrating All Information Assets, and Mid-Market Getting the Taste of Some Emerging Technologies.

This concludes Part Two of a multipart trend note.

Each part covers questions and answers addressed by the panel.