BPM Ecosystems Need Simulation and Optimization

According to a survey in The Economist, CEOs and CIOs from over 1,000 companies worldwide agree that innovation in business processes is a greater source of competitive advantage than innovation in particular products or services. So, it’s not surprising that Forrester Research has projected that the market for business process management (BPM) suites will reach $2.7 billion in 2009.

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Much of what we call business is actually a collection of processes, such as purchasing, manufacturing, selling, billing, and so on. As companies grow larger, more complex, and more global, the efficient management of business processes can have an impact on profitability.

Beyond the day-to-day management, BPM can also help provide top management with an overview of business health and a read on strategic momentum. Effective BPM, and the ability to modify business processes dynamically, is a sought-after goal in that it provides business agility. In this context, agility means the ability to change and adapt to market conditions faster than the competition.

BPM allows processes to be automated without programming, based on graphical designs that combine human tasks, application integration, and business rules.

In the first section of this article, I’ll present an overview of the advances in technology that have enabled BPM systems to evolve. In the second, I’ll show how future advances in business efficiency will come from simulation and optimization tools that help to improve the underlying business processes.

Aligning IT and Business Goals

So, if you don’t get the following right — optimum quantity discount, price response to currency fluctuation, optimum product bundling — what good is an improvement in, for example, time to complete the entire sales cycle?

The first rule of any technology is that automation applied to an efficient operation will magnify the efficiency. The second rule is that automation applied to an inefficient operation will magnify the inefficiency.

Many companies have no idea what an entire end-to-end process looks like, or why things are done the way they are. In most cases, the processes in place today were put in place long ago, before the Web, virtual teams, Blackberries, and outsourcing began to affect the workplace. Modeling gives the business the opportunity to rethink and simplify before plunging into design.

Ideally, business goals ought to reign supreme in business. The CEO should be able to make a deal with a new partner or swap out a poorly performing part of the supply chain without IT constraints. The board of directors should be able to approve a strategic acquisition without worrying that the cost of integrating the system will overshadow the financial gains of the transaction. The COO of a company should be able to dictate that a division is going to do financial reporting without having to worry about IT-based delays.