BPM in the trenches

The experiences of four companies reveal how business process management bridges the gap between business and IT

Lately it seems the moon and the stars are perfectly aligned for BPM (business process management) -- the tools and methodologies for modeling, developing, and maintaining enterprise business processes. Scores of vendors now offer BPM software, which provides the means to analyze, optimize, and automate business procedures, from procurement workflows to insurance underwriting.

BPM's growing popularity stems mainly from businesses' relentless desire to streamline processes and save money. But the graphical view of workflows offered by BPM also gives business managers a broader view into and more direct control over business process logic, thereby fostering innovation, flexibly, and smoother compliance with shifting regulations. The growing adoption of SOA combined with progress in systems integration have made it easier to create layers of software that sit atop multiple systems and help manage end-to-end processes.

With all the talk about BPM and its various permutations, many wonder how enterprises are using it. Has it lived up to its promise? What lessons have early BPM adopters learned? To get answers, we talked with four enterprises in various stages of deploying BPM initiatives.

Pulte Mortgage: Making success repeatable

Business has been good for Pulte Mortgage, which issued $7 billion worth of mortgages in 2004 for its parent company, Pulte Homes. But a couple of years ago, according to Senior Vice President and CIO Chris Burckhardt, the company recognized it needed to streamline and consolidate its operations to handle growing business volumes.

The company had grouped its 1,000-person workforce into teams, each with its own best practices, relationship management approaches, and reporting systems, Burckhardt recalls. "We needed to identify best practices across all these groups and implement a BPM tool that would allow us to take performance to the next level and provide consistency across a broad workforce," he explains.

As for technology, Burckhardt recalls, the company had many different systems for loan origination, servicing, and reporting, written in a host of different languages, including Java, Cobol, and C#. "We wanted a layer across all that technology that would make it more consistent and drive the work across all those systems," Burckhardt says.

After getting buy-in from top management and going through a rigorous tool selection process, Pulte chose to deploy a system from Lombardi Software. According to Burckhardt, step one was to use the tool's scoreboarding capability to understand the current business, including how the various teams and individuals were performing against specific metrics.

"We identified some major 'ah-has' in terms of where time and energy were being spent," including opportunities to expedite time-consuming steps such as loan pricing and customer contact, Burckhardt recalls. Another realization, he says, was that "we can more effectively allocate work -- giving more complex products to more experienced underwriters, for example, rather than a round-robin-type allocation."

Step two was to use these insights to design new process flows and have the BPM system drive the business. "We have fundamentally automated the majority of the loan process with BPM," Burckhardt says. "There's a lot of communication between various folks, and we use BPM to task all those folks with when it's time to do their portion of a task, whereas before, that coordination had to be manual."

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Burckhardt notes that the BPM system links directly to the company's major applications systems, such as the Fidelity National Information Solutions' Empower loan origination system. It also links to several external partner systems for ordering credit reports, flood certifications, and so on, whose functions can be called automatically based on an event-driven architecture. The system uses Microsoft BizTalk as its middleware layer.

Burckhardt says Pulte had to clear several implementation hurdles. The most dramatic problem arose during deployment, when the realization came that the Lombardi software would need two-way integration with the company's apps. When someone made a change in the loan origination system, for example, that change might also need to trigger a new BPM workflow process such as a review of loan terms, which would require writing agents to monitor each app and feed events back to the BPM system. "It's one of these things you don't really think through until you're in there," Burckhardt says.

What has Pulte learned from its BPM experience so far? "It requires much more of a partnership between business and IT. It raises the bar in terms of IT's participation," Burckhardt says. "This is really about changing the way the business works, talking about how we want the business to operate, so you have to be a player at that level."

Loral Skynet: Merging complex processes

When two divisions of Loral Space & Communications merged in 2002, Charles Bihler's life got a whole lot more complicated. At the time, Bihler, process manager at the Loral Skynet division, was already deploying a BPM system to automate the workflows associated with selling the company's satellite-based video and data transmission services.

But when Skynet absorbed Loral CyberStar, a networking services company, Bihler had to refocus the BPM effort midstream in order to optimize the much more complex set of processes required for delivering customized network services. In particular, his team turned its attention to modeling Loral Skynet's critical sales and fulfillment processes, base-lining the status quo and creating scenarios for improvement. "We focus on cycle time in service delivery, efficiency, reliability, and eliminating rework, such as poorly written contracts or equipment sent to the wrong site," Bihler says.

As part of a quality group within Loral Skynet's finance department, Bihler and a few others are the primary users of a stand-alone planning tool from Proforma, used for modeling potential process improvements and clarifying existing process flows in order to facilitate the company's Sarbanes-Oxley compliance efforts.

When fully deployed, the system will enable Loral to assign time, cost, and resource utilization properties to process objects and to run Monte Carlo or other discrete event simulations to determine cycle times within a statistical distribution. "It models the real-world variability you have in the process," Bihler explains.

Although Loral maintains some legacy process models in Microsoft Office, SPSS, and Visio, Bihler strongly advocates use of an object-oriented BPM package to enforce a rigorous sequential model with predefined rules, thereby avoiding any ambiguity about the details of workflows and transactions that can result from free-form drawing tools.

Bihler says enterprises will get the most out of BPM if they are also using a methodology framework such as Six Sigma, ISO 9001, or PQMI (Process Quality Management and Improvement), which prescribe steps such as base-lining processes, finding critical path activities, and looking for ways to break bottlenecks. "The key to doing any kind of business process improvement is you have to have a methodology," Bihler says. "The value of a BPM tool is using it to enforce a methodology."

And finally, Bihler stresses the importance of getting the right people involved in the modeling process up front. "I do it the old-fashioned way, I pull the people who need to make the decisions into the room, with multiple versions of the same process flow," he explains. "We don't force processes on people from the top down -- everybody needs to feel like they're a co-creator of the process."

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District of Columbia Municipal Government: Project greenfield

When you're a 210-year-old city, you don't get a chance to do too many greenfield projects. But that's exactly what the municipal government of the District of Columbia did recently, deploying a phalanx of new IT systems and a BPM system to boot.

In 2002, the city embarked on a $75 million project to replace legacy mainframe and paper-based systems for procurement, HR, budgeting and planning, performance management, payroll, and a host of other critical city functions, according to Sanford Lazar, director of ERP at the Office of the CTO of the District of Columbia.

As part of a best-of-breed approach incorporating packages from vendors such as Ariba, Hyperion, and PeopleSoft, the city acquired an integration and BPM solution from enterprise middleware vendor SeeBeyond "as the glue" to link all the pieces together, Lazar explains. The SeeBeyond package provided code conversion and format translation from each application back to the legacy general ledger and other relevant systems.

Putting in BPM as part of a total applications refresh enabled the city to begin rethinking many of its core business processes. "It gave us the ability to look at how we did it before and take out things that don't add value," Lazar says. As its first BPM project, the city totally revamped its antiquated paper-based procurement system, first monitoring and modeling workflows and then cutting out layers of unnecessary approvals in a system that serves 72 city agencies and handles more than $1 billion in transactions.

"We've gone in some cases from a 20- or 30-step process down to a four- or five-step process," says Lazar. "It used to take three weeks to months to get a transaction approved, and now we average seven days, with many being approved in one or two days." Most importantly, he notes, the city gets a total time-stamped audit trail of every single transaction and every point where a person touches a transaction. If something is amiss, an exception is generated for reconciliation.

Getting the system up and running efficiently required some tinkering, Lazar explains. Specifically, finalizing the integration architecture required a rewrite of the initial Java prototype code, which used intermediary staging tables to obtain and update data from the general ledger system. Although this method worked and provided better transaction records, it turned out not to be less efficient and scalable as using direct, real-time calls right into the general ledger's database, Lazar says. "We built a lot of code in the prototype to see it working end to end and did a lot of testing," he recalls. "When we went live, it worked like a charm."

Lazar says the system's end-to-end process visibility has given better insight into causes of delays and bottlenecks. "Why can this group do it faster than this other group? Typically it's a training issue, or in some cases groups will put more approvals in as a throwback to the old way of doing business," he explains. "Well, they may have always approved it before, but now they don't need to because it's in the system."

Although change is always difficult, Lazar has been pleasantly surprised by the city employees' reactions to BPM. "We've seen really amazing change in relatively short time. It's about overcoming the skepticism," he says. "Once they see backing from executive management and that investment to do it right [has been] made, [employees] go along with the flow and bring up new ideas. Employees will gravitate toward anything that helps them do their job better."

American National Insurance Co.: Starting early

Way back in 1998, when e-commerce was all the rage and nobody was talking about process, American National Insurance Co. (ANICO) decided to become an early adopter of BPM. "We weren't visionaries. We just had a problem to solve," says Gary Kirkham, vice president and planning director at ANICO.

The problem was that the company's strategy of offering a highly diversified product line had created a raft of specialized systems that weren't necessarily linked together, preventing call center reps from providing quick answers to customers' questions. ANICO sold so many products, including property and casualty, health, and life insurance and annuities, that agents were left to "dive-bomb" into multiple systems and use their own judgment to try to find the right steps to come up with answers.

ANICO's solution was to create product-specific customer service processes, workflows, and interfaces for its agents using software from Pegasystems, called PegaWorks. The software integrates with the company's seven "systems of record" -- a mix of imaging systems, group policy systems, individual policy systems -- to pull up everything an agent needs to answer a customer's question without transferring the call.

The PegaWorks software consists of the core BPM functionality running on an NT server, a middleware module also running on NT, and a mainframe module on z/OS. The PegaConnect middleware module has links back to all seven systems of record, capturing data fields from those systems for use by the agents at the appropriate point in the workflow.

"If someone's on the phone asking about their latest hospital visit, on the bottom of the screen will be a button [that allows you] to get a definition of any medical term," Kirkham explains. "On another part you'll see the actual image of the policy and coverage, and an image of the invoice that was sent to the client. From a system standpoint, you can see what has and hasn't been paid, what's pending, and why ... all from different systems of record."

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