BPM and the Economy Q3 2008

Scott Francis
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It’ll be interesting to see what the BPM vendors report in for Q3.  Its clearly a challenging sales environment in general, right now, but we’ve been hearing from a couple of folks in the business that sales have been brisk in Q3 and into Q4.  Since I don’t have access to raw #’s, I don’t know if “brisk” is relative to lowered expectations, or whether its relative to possibly more optimistic plans made at the beginning of the year. Sandy captured some notes from the Lombardi conference call here, and Dennis captured additional notes here.  They both do a good job capturing the gist of the call -maybe we’ll get invited one of these days :) One thing Dennis points out from the call is fewer pilots, just diving in and doing it.  This makes sense in a rough economy, as the pilot process is expensive.  A long selection process is expensive.  If you can get the right product and skip some of the expense of a pilot, so much the better.  I’ve heard similar points made by other folks in the business lately. Sandy points out that while she believes BPM is well positioned in a tough market, that she thinks the real spending will be on projects with customers who have already swallowed the capex to buy software.  We’ve definitely observed this phenomenon in the market – expanding on old solutions, building new ones on existing infrastructure.  Its good to be a BPM consultant in this environment, and really see the yield that customers can get on this process improvement investment. I’m looking forward to seeing if some of the other vendors in the space will do these calls as well, and see if the trend of good news is across the market or localized with just a couple of the vendors.  I think the big news was continued growth of license revenue, and the fact that they are profitable for 2008.  Given the funding environment right now, it seems like A Very Good Thing to be profitable. Ok, back to work on processes now… UPDATE (11/24/2008): Since making this post I had several people write me privately to tell me that things are tougher than what I described here – and I didn’t mean to sound oblivious to the real strain on major segments of the economy and on companies that have previously been at the forefront of BPM adoption. A couple of vendors had layoffs in the last 3 months, for example, and more generally, it seems the financials and the northeast are really locked up right now as they get through this difficult time.  I think for the BPM vendors that are heavily (over?) exposed to the financials, they are going to have a rough Q4.  The more diversified vendors are going to find demand down in financials (if not non-existant), but demand up most everywhere else.  I also think it is worth noting that Insurance companies may behave differently than banks and investment houses, as they (typically) have a different level of exposure to the market issues, AIG notwithstanding. We still see the economic climate increasing the level of scrutiny companies are giving their processes, and increasing the level of interest in projects that are driven by ROI first and foremost.  That said, even the best-positioned company, technology, or person, can find themselves swept up in the wave of bad news.  Positioning well with respect to these trends still doesn’t guarantee a positive economic outcome – its just giving that outcome a fighting chance.

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