OMG ThinkTank Keynote 1: Economics of BPM

Scott Francis
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Jim Sinur, VP at Gartner, gave a talk in the morning session about the economics of Business Process (or BPM).  The basic contention was that BPM is something that will do well in up markets, and well in down markets.  The argument basically is that at the micro-economic level, when the economy is tough, you have to do more with less – achieve results with limited resources.  Constrained systems tend to reward those with better processes.  One example not mentioned in the presentation is that if you’re in a deflationary system, you don’t want to hold inventory.  The company with the shortest inventory turnover time generally has an advantage.  In the 90’s and early 2000’s that was Dell… Until the other players figured out how to either catch up or change the game. In addition, BPM is a good fit for tight economic times because BPM projects produce reliable returns from relatively small investments, generally increasing productivity and quality at the same time.  As I mentioned in a previous post about BPM growth in this economy, companies are still able to take down BPM purchases, and BPM deployments.  In particular, BPM deployments allow for incremental improvement in short-order rather than big-bang deployments of ERP and other large systems.  If we needed more support of this, check out this article on SAP warning that their earnings will miss based on just the last couple weeks of the quarter having big transactions fall through.  This might be convenient posturing but I suspect its true: that those companies that might have otherwise made massive software purchases have put those off.  But I don’t see the same thing happening to BPM efforts at this point.  I don’t think we will unless potential customers move from caution and concern to panic.  So far reason is prevailing in terms of running the business. I thought the most interesting point Jim made was about productivity.  Indexing productivity per hour of labor, if I read the chart right, the index was 100 for the US, and 140 for Luxembourg, and about 41 for South Korea.  So, the good news is, we don’t have to do a moonshot to improve our GDP by 40% without working any extra hours – Luxembourg already demonstrates that you can be 40% more efficient with the hours you have!  And if you look at countries like South Korea, potentially that could be a 3-4x improvement.  So, while some might focus on the shortcomings we have with respect to some of the European nations, and some might focus on the dangers to our economy if all the Eastern/Asian countries dramatically improve their productivity, I tend to focus on the positive here.  There is lots of opportunity for improvement, and no doubt much of the improvement in the US will come from process improvement. In the Q&A Session at the end, Derek Miers brought up a great point that the opportunity for BPM is not just other IT-managed system replacement, or IT-managed processes… it is actually a space defined by the # of Excel, Database, and Sharepoint sites out there in the corporation (or at least some significant number of them!).  Good start to the day… Once again, best coverage of the event as a whole is on Sandy’s blog