It is just hard to see how this news, courtesy of Steve Blank, could possibly be bad news:

Today, the National Science Foundation (NSF) – the $6.8-billion U.S. government agency that supports research in all the non-medical fields of science and engineering – is changing the startup landscape for scientists and engineers. The NSF has announced the Innovation Corps – a program to take the most promising research projects in American university laboratories and turn them into startups. It will train them with a process that embraces experimentation, learning, and discovery.

The NSF will fund 100 science and engineering research projects every year. Each team accepted into the program will receive $50,000.

I feel sure that some will nay-say.  But Steve Blank has documented on his blog how the government has fostered a startup ecosystem before in his Secret History of Silicon Valley series, and this has some of the same feel to it – but with the added impetus of a better way to wrap scientists and researchers brains around the concepts of startup formation.

As a process guy, I’m really impressed with how much the process of “starting up” has been improved upon in just the last decade – and Steve Blank and Eric Ries and others in the Lean Startup movement are behind much of it (too many contributors to name in one post – because it really is a collection of ideas from many people and companies). I’ll continue to follow along as it informs our own growth as a “startup” consulting firm, but also because there are interesting cross-pollination opportunities with the process improvement work we do.

Congrats to Steve Blank, the NSF, and everyone else who was part of making this I-Corps program come true.

We have some contrary data points.  Pega’s last quarter was good.  So was IBM’s.  But they’re both big companies with too much complexity for outsiders to easily carve out BPM revenue.  However, what I hear on back channels from more than one vendor is that the big vendors are taking dollar share from the smaller vendors, and that the market is also growing nicely. I’ll be interested to see what Gartner and Forrester have to say in their reports on the subject when those are updated.

Jacob Ukelson reports that ActionBase is retrenching in the Israeli market and focusing on professional services operations.  With today’s ASPs for small enterprise software companies, this isn’t surprising – likely much (all?) of the real profit comes from the professional services operation.  Cost of sales for enterprise software is high – but yet there is downward pressure on Average Selling Price (ASP).

Appian reports good results from the first half of 2011 as well:

• “The company signed 34 new-name customers across government, financial services, healthcare, energy and other industries” – Unfortunately, it isn’t clear to me what “new-name” customers means.  Perhaps special terminology withing Government purchasing circles.
• “Sales orders for the Appian BPM Suite grew 158 percent over 1H 2010.” – Unfortunately, it isn’t clear if this is the # of orders, or the US Dollar value of orders… Obviously one interpretation is much better than the other interpretation.
• “… with Appian Cloud orders growing 181 percent over 1H 2010.” – Again, number of orders or Value in US Dollars?

They also call-out some of their accomplishments in cloud and mobile BPM – well deserved pats on the back.  But I do wish I could get to the bottom of the numbers they’re reporting.

Dave Brakoniecki is also a little frustrated with Appian’s specificity: 

The problem is:  Those three numbers are all the information in the release.

No information on absolute customer growth or way to extrapolate into any actual financial performance. I’d love to know how many developers they currently employ and how many salespeople.  What is the trend on all these metrics?

As one of the last pure play vendors standing, a full set of Appian results might have provided interesting insight into the trajectory of the sector.  Tibco, IBM and Pega all have all sorts of other product lines to complicate the picture. Appian might have provided a pure proxy for the BPM market generally.

Still, 34 new customers is more than 1 per week in 2011 so I guess we should expect some good case studies in the coming months.

Unfortunately, this private company specificity isn’t anything new… even with the Appian results in 2009.  In fact, if you look back at those results, there was talk about international expansion (which, as I noted back then, is more challenging than it looks).  Subsequent reports I haven’t noted any discussion of international, and the numbers aren’t apples to apples. The only thing that is truly clear from the release is that Appian is acquiring customers at a rapid rate.  We can’t tell if it is a good business, but it is a good growth rate of named customers.

Speaking as another private company, I’m not sure we want to release revenue numbers publicly either.  But then, I’m not sure anyone is trying to extrapolate from our numbers to determine if the BPM market is healthy or not.   Directionally, things are good for services firms across several vendors.

I’d love to hear from people about what they think the real #’s are for BPM software for all of the BPM vendors out there – IBM, Pega, Oracle, Tibco, Progress, Appian, and the other independents / pure plays.  Drop me a line if you think you have a read on any of these.  Or comment anonymously!

We love our office space in Austin so much, that we have committed to twice as much of it.  The Austin Business Journal covered the news, which is gratifying:

The professional services firm, founded in 2007, said the added space will make room for its five new employees. BP3 will lease another 1,437 square feet adjacent to its existing 1,800-square-foot office at 7000 N. Mopac. The expansion will open Sept. 1.

We’ll be adding more people to our team before end of year, but hopefully this new space will hold us over for years to come. The building is in a fantastic location, and we love the open layout.

XKCD often hits the target squarely, and they’ve done so again with this little gem that everyone in the BPM / BPMN space can appreciate:

Sure, maybe there were only 3-4 BPM standards going to 5 when BPMN was introduced… but now there’s BPMN 2… and one gets the feeling that there will be more!

But Gosling has a fantastic repartee that even more closely nails it:

Tell me the BPMN 2 specification doesn’t feel like that…!

So we just completed our first company all-hands meeting.  Previously, the closest we’ve come was having our two co-founders meet for coffee on Sundays, and the near unanimous attendance we had at bpmCamp 2010 at Stanford University.  The short version of how I feel about this: why didn’t we do this sooner?!

We included all the crucial elements of a good company meeting:

1. Food.  We ate our way through some of Austin’s best restaurants.
2. Fun.  We carved out time for getting out on a boat on the lake the last afternoon.  But we also made time for checking out the local Austin bands playing on 6th street (a shout out to Empty-Handed Vagabonds and to the lead singer of Dysfunkshun Junkshun).
3. Location.  We held our meetings at the historic Stephen F Austin hotel.  The second floor balcony is a fantastic way to unwind and socialize after a day of business meetings, and the hotel itself oozes character and history. Often people ignore the setting of their meetings-  but this stuff matters!  The space you meet in affects how you think, how focused you are, how intimate the meeting feels.
4. Content. Sure, we reviewed important company metrics and business goals. But we also put a lot of content together individually to give everyone a chance to hear what  everyone else was up to.  I was really impressed with the quality of thought and content that was presented – and more impressed by the discussion that followed.  I learned a lot over the two days we met – about our team as well as about the topics they discussed.
5. Team.  Because we have a distributed organization, we have limited opportunities to gather in one place.  This is a really special team we’ve put together, and getting everyone in one place just made it more obvious how good they are.
6. Surprise.  We also had a surprise guest-appearance from Phil Gilbert, VP of BPM at IBM.  The Q&A session was memorable, as his take on the BPM space.
7. Shirts.  You’ve got to have shirts at a company meeting.  We rolled out fresh polo shirts and a surprise t-shirt addition to the lineup.

Often people will ask me why they should join up with BP3 instead of contracting – or why someone else would join up instead of contracting.  I guess if you don’t try it out, it is hard to understand the difference – but this sense of team, of building something bigger than any of us can do alone – it is very powerful.  I think everyone in attendance could feel how special this was.  You just don’t get that kind of validation and gratification as a solo artist.   You don’t get this sense of family.

So we’re building a company.  And investments like this are required to reinvest in community and team.  To say thank you.  And to give everyone a sense of the possible.  Our company meeting just made it clear to our team (and to me) why we’re special.   Thanks to everyone on the team!

I have been informed that “BP3 All Hands Meeting” as an operating name lacks a certain “flair”.  We’ll work on  branding for our event.  We might just call it “Getting the Band Back Together“.

There were several reports about BPM spending going into next year, mostly based on the Gartner report to that effect.  Much of the commentary around this report seemed to be to treat it with cynicism:

“I think this is the 10th anniversary of Gartner predicting hockey-stick growth in BPM. Sure to happen some day…” – Sandy Kemsley

Of course, part of the problem is that, if a market has CAGR (compounded annual growth rate) of 15% or more, EVERY year is going to look like the bend in the hockey stick when you plot it out on a linear graph.  And it appears that that is what we’re seeing in the BPM market today.

There are other interesting signs of a change afoot.  Lately, when I tell people what I do for a living in social settings, sometimes people actually know what BPM is.  Or they do when I start to explain it.  More surprising: sometimes they’re actually interested in it.  A few years ago I’d get looks like I was doing something incomprehensible or foreign.  So when gartner says “Spending on business process management (BPM) projects will increase significantly in 2011” I believe them.  Gartner considers 5% increase significant (54% of respondents) and 10% even more significant (20% of respondents).  That actually doesn’t sound like predicting hockey stick growth to me, but maybe the compounded charts into the future make it look that way.

I can relate to this somewhat just looking at the historical growth rate at BP3. We’re already having our best year yet in 2011, and setting up for an even better 2012 with the hiring we’re doing.  To anyone in the BPM services or product market, it anecdotally feels like a hockey stick growth curve.

Appian’s take:

The hockey stick growth that BPM analysts continue to predict year after year is achievable. But it will not come from the minority of people already focused on process. Neither will it come from incremental updates to old BPM paradigms or from the resolution of debates over BPMN minutiae, for examples. Exponential BPM growth will come through the majority and its rapid adoption of Mobile, Social and Cloud technology.

Well, no one was really talking about “exponential” growth were they? I think they were talking about 15% compounded growth, at most.  And while mobile and social may provide an exponential growth (for a time) in usage, they’re not likely to provide exponential growth in revenue, which is what Gartner is attempting to estimate.  Most users’ expectations is that these social apps are free.

(Appian goes on to mention that they’re hiring.  So are we!)

According to Diana Olick of CNBC, PMI Mortgage Insurance recently signed on to the “Responsible Homeowner Reward” program – a program that reward homeowners for paying their mortgages every month, on time, for the next 5 years.

It sounds like a pretty innovative way to encourage homeowners who are underwater to stay in their house and keep paying their mortgage (something they likely want to do anyway).  These underwater mortgages are particularly concerning, because a homeowner might conclude that it makes more financial sense to hand over the collateral (the house) to the Bank and default on the mortgage.

But Diana Olick comes down hard on this idea:

But current borrowers are current—plain and simple. Why do they need a bonus for fulfilling their financial obligations?? Credit card companies charge you a heaping fee the minute you’re a minute overdue, but now mortgage lenders and even mortgage insurers are so afraid of their customers, or have so little faith in them, that they’re paying them to pay up? They are literally willing to pay insurance on previously signed legal contracts?

Maybe Diana isn’t aware, but credit card companies pay a “bonus” for paying them off on time as well.  The bonus is in the form of frequent flier miles, award points, savings contributions, or cash back.

It is interesting that so many people find it immoral to renegotiate a contract, if that contract involves a single individual or family, and a house.  But businesses renegotiate contracts all the time!  They renegotiate debt servicing arrangements, payment terms, maturity of the debt obligations, etc.  And sometimes it makes sense to proactively offer to renegotiate terms with your customers, rather than to wait for them to make a drastic move.

An intelligent incentive to keep current on mortgage payments sounds sensible to me – I’d like to see more creative (and relatively inexpensive) ideas like this, not less.

The Statesman reports that the Austin Chamber of Commerce is exploring getting a startup district going in or near Downtown Austin:

The Greater Austin Chamber of Commerce is launching an effort to create Austin Live, a downtown work space that could serve as a home base for entrepreneurs and very early stage startups.

A search is under way for 10,000 square feet of space for the initiative, said Gene Austin , CEO of Convio Inc. and chairman of the chamber’s Greater Austin Technology Partnership, which is overseeing the project.

Austin Live would feature an open floor plan and a coffeehouse environment, and it would provide a place for people to plug in their laptops and exchange ideas.

“The idea is to give entrepreneurs a better runway to get out of the tough stages of going from an idea to a real business,” Austin said. “It’s hard to make connections when you’re working from your garage. We’d like this to become a magnet for funding. Hopefully, it will become a centerpiece for a much stronger tech ecosystem.”

Many in and outside of Austin will complain that the government should not be involved in the effort (“If some government entity is involved in running or controlling it, it will never work.” – Austin Startup says).  Concerns about control are legitimate, but I’d point out that the government has already been involved in many of the foundational conditions that allow startups to thrive in Austin, and they haven’t screwed it up (too much) yet – University of Texas, Austin Convention Center, and lobbying important organizations and corporations to locate here (a list too long to repeat here), not to mention major transportation changes that changed Austin:  360, the 360 bridge, Mopac… Many of the tech companies are out on 360 or along Mopac.  Downtown might be the right place for the startup district but don’t be surprised when they migrate out of the core business district for less expensive real estate.

Whoever is responsible for the startup district, it should be about facilitating, collaborating, and enabling – not about controlling or running.  If the startup district becomes a reality, it will be an interesting an important step for Austin.

Appian is again taking shots at others’ acquisitions from the sidelines in “Another Monster is Born”:

Bigamy is one analogy for what’s happening in the stack vendor land-grab for the BPM market. Another is “Frankenstein’s Monster.” And we all know how that played out…for the Monster and the townsfolk.

That’s only the beginning.  Appian is not impressed with OpenText’s acquisition of Global 360.  Frankly, I’m surprised they reacted at all (were they really competing that often with Global 360 or OpenText?)  But here’s a statement I strongly agree with:

BPM is not yet commoditized for the simple reason that BPM is not yet done evolving. Perhaps more than any other enterprise IT market right now, BPM is in a process (no pun intended) of innovation. BPM software is just now learning how to reach more people, drive more value and truly transform a business. Cloud BPM is driving a growing percentage of the market. Mobility has entered the game, as has social technology. This market is not yet complete.

In fact, there are other areas in which BPM is learning to reach more people and incorporate more mature technologies, as well as emerging tech.  But cloud and mobile are certain two big trends to watch (and, to Appian’s credit, two trends they bet on early… compared to other BPM vendors at least).  BPM is not yet commoditized.  But the demand is growing faster than the independents could satisfy it – faster than they could build their sales channels and development teams.  So it looks to me like a lot of interesting innovation will happen in pure plays or niche plays, but that bigger vendors are likely to acquire and incorporate those innovations (hopefully, not destroying them in the process). The question is, can BPM reach its true potential without the deep pockets of public market money or big company R&D?

But leave it to Appian to misunderstand what some of its competition are up to:

It seems to me that all the mega-vendors think BPM is simply a commodity. The mentality is that the more BPM technology you can acquire, the better; loosely stitching them together to create a creature that will succeed through sheer mass. OpenText is the latest example, but look at IBM, Oracle, Progress, etc.

I can’t speak to whether OpenText views BPM as “simply a commodity”.  However, I have some personal knowledge about Oracle, Progress, and IBM.  Oracle: guilty as charged.  They have a BPM strategy but it doesn’t feel like they are putting the gravitas behind it.  Ditto for SAP.  Progress has made BPM (aka RPM) the center of a coherent go-to-market strategy.  When a company reshapes their value proposition with BPM at the heart of it, I hardly call that treating it as a commodity or trying to succeed through sheer mass.  There are legitimate criticisms of the Progress approach, but they have brought together sound technical solutions across a range of product areas that pure plays don’t play in, and they’ve found a way to get behind a process vision for that.

Finally, looking at IBM – Appian is sadly mistaken if they think IBM looks at BPM as a simple commodity that it need not worry about.  Anyone attending IBM Impact in May can see how seriously IBM is taking BPM.  IBM’s customers and partners are taking it equally seriously.  In the very last session of the day on the third day of the conference, our own session at Impact was full to overflowing – as were nearly all the BPM sessions at Impact all week long.  IBM is hearing the message, and the investment in rationalizing their products into a much improved BPM offering is quite obvious to see for those of us in the trenches.

Bruce has a nice write-up of the Global 360 acquisition, and hits on a couple points really well:

On the analyst call, Open Text admitted they are still working on the roadmap, but I came away with the impression that nothing would change very much.  Metastorm would keep on being Metastorm, G360 would keep on its track.  Only the company letterhead would change.

And if so, I think that would be too bad.  If you compare IBM’s acquisition of FileNet (leave it alone) versus Lombardi (revitalize the core offering), there is no question which path is better…

I agree, it would be too bad if they don’t really rationalize the offering and carve out a vision for the future.  And yet, it fits the pattern (so far) with OpenText.  Bruce’s recommendation:

Yes, merging case management and conventional BPM is a good thing – a no-brainer, really – but simply recycling 1990s technology is not the way to do it.  Better to take a page from IBM’s  Lombardi playbook and choose the best pieces from across the portfolio and then do the necessary engineering to create a world-class unified offering.

Exactly.  Perhaps the world needs a world-class BPM offering on Microsoft technology.  So far, Microsoft isn’t building it.  Maybe OpenText can fill that void.  But we haven’t heard the vision for that yet.

Lubor Ptacek comments on the Global 360 acquisition on his blog:

With the combination of Metastorm and Global 360, we are now the largest provider of BPM solutions for the Microsoft ecosystem. The BPM solutions complement our existing information governance and archiving solutions for SharePoint and Exchange. But what’s more important, Global 360 increases the critical mass of process management focus inside of OpenText.

(I didn’t know anyone was still blogging on blogger…)

Being the biggest Microsoft BPM partner is sort of like being the biggest Microsoft Cloud partner.  There are bigger players in both markets, with more traction, momentum, and ecosystems.  But being the biggest in the Microsoft ecosystem is probably better than not being the biggest.

Lubor continues:

The Global 360 acquisition is unique, though, as it allows OpenText to not only expand its offerings, but also reach a critical mass needed to establish itself as a serious contender in a new market. This is not a minor matter.

I think this is the key point.  The ECM vendors need the BPM market to revitalize their growth and increase their addressable markets.  It isn’t a bad thing to be strong in both content and process.  Of course, this isn’t just three companies, OpenText + MetaStorm + Global 360.  MetaStorm and Global 360 each had acquired several companies as well, so this is a roll-up of roll-ups and integration challenges are going to be many and diverse.  The interesting questions will be about a year from now-  what is the roadmap for BPM at OpenText, the roadmap for innovation, etc.

Forrester has a quick summary of the acquisition as well:

OpenText is at it again — and another independent BPM provider is gone. This time it’s Global 360. But Global 360 was more than BPM; it had done a good — no, great — job revitalizing what was at its core an ECM rollup of midrange and questionable solutions (remember Kodak, Keyfile — I actually met an original Keyfile developer there — and ViewStar?). But it nurtured this account base well and  built a fast-growing BPM and case management business. It’s now been purchased by the ultimate ECM rollup, OpenText.

Craig Le Clair’s article emphasizes even further what a monumental integration challenge this will be.

In a surprise (to me) move, OpenText has acquired Global360:

Waterloo, Ontario – 2011-07-13 – OpenText (NASDAQ: OTEX, TSX: OTC) announced today it has acquired Global 360 Holding Corporation, a leading provider of process and case management solutions. The acquisition continues OpenText s expansion into the fast growing business process management (BPM) market, adding to its technology, talent, services, partner and geographical strengths, as well as giving the company important new capabilities in dynamic case management.

Merger Agreement
The transaction purchase price is approximately $260 million (1), subject to customary purchase price and holdback adjustments. Global 360 has generated approximately $90 million in trailing twelve months revenue and is profitable. The transaction has closed in the first quarter of fiscal 2012 and is not part of the fiscal 2011 fourth quarter and year-end results of OpenText. The management team of OpenText will provide further information regarding the future plans of the combined company when it provides fiscal year-end results on August 10, 2011.

A press release in June 2011 claims 30% revenue growth YoY for Global360′s BPM unit for the quarter, but I can’t find any references to the baseline revenue # for either the company or the BPM unit.

So, given that OpenText just acquired MetaStorm, what will they do with Global360?  The press release points to leveraging their strengths in Dynamic Case Management and the Microsoft BPM ecosystem.

OpenText says they’ll continue on with roadmaps for MetaStorm and Global360.  But the questions flying on Twitter yesterday were references to indigestion, concern over merger issues, and doubt about how these products fit together.

The question I have is whether this is truly a software acquisition or a financial management acquisition.  In the latter, you simply acquire the company to capture their customer base and maintenance revenue stream – and then cross-license and work off the maintenance while slashing all costs. In the former, the new acquisition not only benefits from your bigger sales channel, but also helps you sell more of the product you already have into a new customer base.    Too early to tell what the real rationale is, or whether it is simply that they didn’t get what they were looking for in the MetaStorm acquisition.

Others commented that Global360 was one of the last of the original pioneers of the space (actually, it was the successor organization to eiStream, which was one of the original pioneers).  The number of viable commercial BPM suites seems to be declining even as the market is growing, which seems counter-intuitive.  I think that partly this is a function of lower ASP (average selling price) in enterprise software, and lower valuation multiples (these companies aren’t getting big multiples on revenue and growth as they might have in the 90′s).  That leaves them vulnerable to being acquired by someone big enough or determined enough. Not to mention, these firms have taken big VC or PE stakes, and those guys want their money out so they can put it back to work elsewhere.

We’ll keep an eye out for updates on this acquisition and report back.  But given how little coverage the OpenText-MetaStorm combination received, I’m not sure how much coverage to expect this time around.

I have to admit I was a bit puzzled by the distance between the ADP report and the official jobs report. Not to mention, I was a bit puzzled by the net-18,000 job gain, while around me I’m seeing more hiring than laying off going on.  Yes, we’re in Texas, but tech workers all over the country are finding work.

But of course government employment was a big drag on the monthly number, as the number of state, local, and federal workers declines in the face of less stimulus spending and budget shortfalls in most of the states.  So, it turns out if you *don’t* add seasonal adjustments to the monthly jobs report, the US actually added 376,000 jobs, according to Joe Weisenthal at Business Insider.

So, to explain:  we added 376,000 jobs in June.  But, the federal government applies a smoothing function to make month-to-month comparisons easier over time, that reduced the reported numer to 18,000.  But, we can compare June 2011 to June 2010 to get a sense for whether things are better or worse in 2011, in actual job number terms:

June 2010:  +107,000 (not seasonally adjusted)

June 2011:  +376,000 (not seasonally adjusted)

Seasonally adjusted or not, jobs in June 2011 were better than June 2010.  Having said that, this doesn’t mean that jobs won’t take a turn for the worse later in the year, or that we’re out of the woods.  Government budgets continue to shrink. Minnesota has shut their government down temporarily, and some firms are struggling a bit as of late. (The article does take pains to point out that in this case, it looks like a Cisco-specific issue rather than the economic headwinds)  It takes a lot of hiring to make up for a 10,000 person layoff.

No one said it was going to be easy to dig our way out of the recession, but I still think we’re making progress, based on what we see at BP3 with our customers, partners, and colleagues.

David Brakoniecki comments on the ACM discussion on LinkedIn:

Over on Linkedin, there is a spirited debate over several aspects of the Adaptive Case Management (ACM) movement going on.  The whole thread makes is worthwhile a read if you are trying to understand what exactly ACM is trying accomplish, how the community is organized and who some of big players are.

I commented on his blog but thought I’d repost here:

I saw this thread-  too bad it descended into something – how shall we say it-  not very professional.  I like the definition of DCM – it makes that particular definition much more apparent.  And I agree with you – almost every BPMS out there is also DCM.  I’m sure there are/were a few exceptions, but the surviving BPMS’ all have good rule systems to leverage (or can leverage external rules).

Now we’re just left with the muddy ACM definition.  I found it particularly amusing to see that people who have previously argued that BPM can’t succeed because we can’t agree on the definition, then turn around and argue that no definition of ACM is needed!

And I also find myself agreeing that I don’t see the technology issues with case management.  The differences that are communicated are at a really high level, unsubstantiated by an actual software artifact or code snippet or API (to give a few examples).  Philosophically the difference between basketball and “soccer” is quite large, but to a kid with a ball, it turns out he could play either one.  Actually, a kid could probably play either of these sports with any decent ball if he/she was motivated…

I’d recommend reading David’s summary more than the original thread, or at least stop reading the thread when it leaves off the constructive and starts to get a bit heated.

Shared with permission of Gary Samuelson, original post here.

The image is getting across the finish line in less-than-optimal conditions. As first-timer BPM projects go, let’s think of engine smoke and a hopeful driver.

I need to remind myself on this point: not everything lands in one piece when focused on winning. Vision is just about everything in this race. Parts wear out, pieces come unglued, bad stuff happens. There will be lots of failures along the way. As BPM does it most certainly will test your infrastructure – weakness points itself out by design and discoveries as painfully obvious as a flat tire and engine smoke… these will show themselves. There’s no avoiding weakness on a BPM project, or any project that touches so many different parts of the business and IT. It’s better to understand limitations both going into and during the race. These can be fixed. The end-goal however cannot be un-done. We either win or lose – never forget the vision. Winning may not be graceful but there’s always a thousand reasons and rationalities for losing. Stay focused, save the apologies, and stow the complaints. We’re in this race until it’s over.

Ironically the race is between “us” on big, enterprise BPM projects. We only need to cross the finish line to win!

Congratulations to iTKO – “a leading provider of service simulation solutions for developing applications in composite and cloud environments, for $330 million in an all-cash transaction.“  iTKO has roots in Dallas and Austin – and a couple of very good friends of ours work there, including two of the founders (one of whom I had the good fortune of working with at a prior company, and the other I’ve had the good fortune of meeting socially).

It is always great to see a local company do well. But what makes it even more interesting to us at BP3 is that iTKO is also an IBM partner.  They had a  modest presence at Impact in 2010- with a small booth on the trade show floor.  But then this year, 2011, they had a helicopter on the trade show floor, and they were one of the prime sponsors of the whole Impact event.  That is quite a turn of events for a company that once upon a time did not believe in marketing.  From the press release:

ITKO’s approach and pioneering service simulation technology has disrupted the traditional application development market. It also has rendered conventional application lifecycle management (ALM) methods and technology obsolete for organizations developing complex composite applications, employing agile development, and leveraging cloud services and components. ITKO customers are able to accelerate application delivery cycle times, improve the quality of services, and save millions in lab infrastructure and testing costs. ITKO’s more than 100 percent bookings and revenue CAGR over four years   is a testament to their ability to work with the world’s largest enterprises and systems integrators.

ITKO’s LISA solution enables organizations to “mock up” a service at enterprise speed and enterprise scale—even if the application is unfinished or unstable or the physical resource is unavailable. LISA, which is used by more than 125 enterprise customers, virtualizes an environment by simulating the behavior of external services without actually invoking them—e.g. how a checkout or fulfillment process should interact with a service, without actually authorizing a credit card or putting a box on a truck. “What-if” capabilities offer a whole new way to understand how an application might behave if components are changed—e.g. swapping an internal RDBMS for a cloud-based database or changing package shippers.

Our hats are off to iTKO – and CA technologies, who acquired them.  What a great success story -

Not too long ago we were talking with an insurance company about claims processing and BPM.  Flournoy Henry, with years of experience in the Insurance business, thought he’d share a little bit of our perspective on the topic of BPM in Insurance:

When it comes to insurance, Claims Processing is the life blood of a successful insurance company, second only to policy sales. Unlike product sales or other service industries, insurance companies sell a promise; a promise that when needed, your policy will pay out. If a claim is not processed accurately in a timely manner, that promise is unfulfilled – customers lose faith in that promise and new policy sales suffer accordingly. With a growing number of insurance variations and increased regulation concerns, claims processing often becomes overly complicated and difficult for the insurance company to manage. However, with a disciplined approach to process management and greater visibility into operations, these same companies can turn a difficult situation into a competitive advantage.

When policy sales increase, claims demand follows suit. To keep up, either hire more staff or innovate; it’s just that simple. An obvious choice for innovation is automation; thereby processing more numbers with the same or fewer people. However, what should be automated? What step in the process is most valuable or time consuming? What decision points seem to change most often and require better management? Without the proper visibility into the claims process, we can’t answer these questions with any certainty. And when customers depend on your choices, and your investment dollars are at stake, certainty counts.

In addition to automation opportunities, workload distribution is often an overlooked drain on your company’s ability to execute. Many companies have higher waged Supervisors and Managers spending time dredging through spreadsheets, stacks of work, and outdated reports only to make a decision of who should work a claim. This is not only a misuse of your staff, but a costly choke point in your process. With an enlightened view of your process and real-time feedback metrics, these choke points can often be eliminated to greatly improve the performance of your overall process.

Regulatory constraints are an unavoidable and costly nuisance for almost any insurance process. With each state variation and federal release, are you spending the project budget re-writing applications to handle these revolving issues? Can your claims process adapt quickly and respond to new constraints?

With increased process visibility and performance comes control. The ability to analyze risk, understand your impact, and react quickly to a changing market and increased regulatory concerns will not only keep your policies selling; but will reduce your cost of ownership and increase your profitability.

Activiti keeps rolling with its incremental releases – impressively so.  In this release, we see new quick-edit capabilities in the Activiti Designer (essentially, it looks like it let’s you model original process / user tasks in the designer directly, skipping the Activiti Modeler), and changing the element type of a BPMN element after it has been added to the canvas – shortening edit times for quick changes (e.g. choosing the wrong gateway type and then wanting to change it after the fact).

Some of these are features that have been in the commercial tools for a while – but despite the rapid progress of Activiti, and great community support, it takes time to catch up to some of the more user-oriented features and conveniences.  So far, I think the Activiti team is doing a great job of making a little progress in each release.

The Activiti in Action blog has great coverage of some of these features, including short videos that aptly illustrate usage.  I assume this designer update will be part of an upcoming Activiti release as well.

Anatoly has posted another process pattern: the Incoming Processor Pattern.

It is a good pattern – and actually forms the basis for a lot of variants of that pattern (in a sense, it is the base case of a wide variety of patterns).

Essentially, Anatoly describes a process that begins with a message start event listener:

Beyond that, Anatoly points out there is a challenge with respect to having more than one instance of this process:

But here is the question: how would the message from client John Smith find its way into specific process instance associated with him? Let’s not forget that there are about thousand of instances behind the single pool “Credit card issuance” shown in the diagram. [...]

But when a message is sent into the middle of a process (i.e. to the intermediate event) one must specify the process instance ID. Moreover, the process instance ID is the internal BPMS data so we can’t expect that a message from an external entity (from collapsed pool on a BPMN diagram) would contain it explicitly. In our case it’s just client’s words “hello, I want my card.”

He even diagrams this “incoming processor”:

I found his description of this pattern interesting, because the BPMS that I use most often (Lombardi / IBM BPM) wouldn’t require the incoming processor pattern for this use case.  The typical case for BPMS’ is that the event listeners can hear events targeted at their process instance id.  But Lombardi took a different tact that IBM has preserved – events “correlate” on any piece of process instance information – process instance id is certainly one option, but so is a name, or a debit card number.  And the logic to find and message the right process instance is built into the engine.

Not only that- a message my correlate with more than one process instance -automatically- based on the various correlations.

So this is a case where the BPM engine allows the models to be both more expressive and more concise, and to leave the incoming processor logic as a black box that “just works.” But if your BPMS doesn’t do this for you, or if you need to do additional pre-processing logic before the process instance is triggered, this pattern will do the trick.

Once again, a great, thought-provoking post from Anatoly’s blog.

Not that long ago, one of the prime examples given by Keith Swenson in support of the “ACM approach” was a medical example (picture Dr. House examining the really-out-there cases) – check out the comment stream from this post for background.  Jacob Ukelson and I, not long after, proposed a way to think about ACM and BPM approaches in a complementary fashion – where ACM is concerned about an individual case, whereas BPM is concerned about the aggregate of all “cases” or processes.  I used Keith’s medical analogy to make my point.

From twitter (thanks @elliotloh), I ran across this PBS story on a Denver Hospital that fairly well proves my point with respect to hospitals. There’s video, but I’ve quoted a few passages below.  First, what was the outcome of this focus on aggregate quality of care?

DR. PATRICIA GABOW, Denver Health and Hospital Authority: What that translated to at Denver Health last year is that 213 people walked out of here alive who would have been expected to die. So, that makes the statistic into a very personal aspect for people who, in fact, lives were saved.

Think about that – 213 people alive today that statistically, would have passed away at the average hospital.  And they’re not cherry-picking the patients and doctors, as the following passage demonstrates:

DR. DONALD BERWICK, Center for Medicare and Medicaid Services: They are getting levels of performance that most of the rest of us in health care can only envy. The vast majority of their patients are either uninsured or Medicaid patients. They deal with a very, very stressed population. And they are proving that that kind of care isn’t just kind of good enough. It can be the best care — actually, the best care in the country. They are showing the rest of us what’s possible.

But was this process improvement effort really goal-driven? (emphasis added in italics):

BETTY ANN BOWSER: One of Berwick’s chief goals is to reduce hospital-acquired infections in the next two years.

Was this really anything at all like a BPM project? Well sure it was, absent the BPMS software (emphasis added):

BETTY ANN BOWSER: CEO Gabow wanted a cultural change, so she brought in a team of efficiency experts from the business world and asked how they solve problems.

Out of that grew adoption of the Toyota automobile production system’s Lean principles, to eliminate waste, fix problems, and promote constant improvement.

WOMAN: So, as a group, we’re going to process-map it. We’re going to identify your waste. We’re going to pick part those defects.

It sounds pretty familiar, doesn’t it? And they looked at process times, steps, measurement, alerting -  not the checklists a doctor might operate from, or a nurse, but the systemic approach to the overall care-giving processes:

SELEEM CHOUDHURY, Denver Health: People come in and they are sick. And when they are sick, we need to see them as soon as they arrive upon — you know, upon arrival.

And so we had to reexamine our process. We got Post-it notes — we put them on the wall — from every single aspect, from walking through the door, to seeing the nurse, to going through registration. And we had up to maybe two hours’ wait to be seen for that process. And just by making some simple changes, we cut that wait time by half.

(It does pain me a bit to see that they had to resort to post-it notes rather than software…)

But what is driving this change? A change to Medicare payments – tying them to efficacy and safety rather than just performing a service.  This is going to force hospitals to re-examine how they provide care and think about how to serve patients more effectively.  Of course, we can bemoan the fact that it takes a financial incentive to drive this change in quality of care, but maybe we should take improvement at face value, whatever the driving force behind it.