First, doc capture specialist Kofax has acquired Singularity, a BPM and case management provider.  Kofax has been part of many a BPM project, whether they realize it or not, as the doc capture element.  Almost every BPM project needs that transition from “physical world” to “electronic bits” or “process world” – and document capture is a common entry point.

Neil Ward-Dutton, of MWD, comments:

In a call first thing today, Kofax CEO Reynolds Bish highlighted that he expected the acquisition to double the size of the company’s addressable market – in large part through the expansion of sales coverage and effort for Singularity’s products, which Singularity itself had largely confined to the UK.

In other words, Kofax expects to expand the reach of Singularity, as well as of their product set itself.  Interesting, to me, was that Singularity’s revenue mix was 50% services, and that Kofax intends to adjust that downward.  Good news for Singularity partners or services experts.

Meanwhile, in another corner of the BPM world, Progress has acquired Corticon, a pure-play rules management (BRM) vendor:

Progress is pitching Corticon as a crucial ingredient as it continues to develop its RPM story, and this makes sense. Progress’ Savvion BPM technology already had a fair business rules capability (BizRules) as an integrated component, but my view is that Corticon’s technology is more widely-applicable, as well as being widely acknowledged for a very strong ease-of-use story, enabled by its heavily model-driven and graphical approach to rule specification. Its open stance towards rule management repositories will also serve it well, as Progress seeks to blend Corticon’s tools into broader capability mixes.

In a previous life, we used Corticon for rules for a while.  We didn’t find it particularly compelling and ended up writing our own, similarly non-compelling rules solution.  More often than not, customers would use ILOG or Fair Isaac or Drools. But it has been several years now, and no doubt Corticon has made some progress in that time (pun intended!) on their rules capabilities.

The conclusions I’m drawing from these acquisitions:

1.  BPM and Rules are a natural combination.  BPM seems to be the value driver, as it is the rules vendors getting gobbled up.

2.  BPM and Content Management or Document Management combinations are also happening.  But the major BPM vendors have (largely) already purchased Doc Management or Content Management solutions… So the remaining players in these spaces are forced to go pick off the weaker BPM vendors instead (OpenText acquired two of them, Lexmark acquired Pallas Athena, and now Kofax is in on the act).

3.  There’s still a lot of shakeout to occur in the market – and execution at a detailed level for each vendor is really going to matter.  At this point it isn’t all marketing fluff – real differences in product are apparent.  But the target keeps moving.  A well-integrated solution that is coherent to the end-user is going to win the day.

Related posts:

1. MWD on BPM in 2011
2. Progress’ Vision at Analyst Day
3. Risks of ACM Failure in 2011?

In a recent installment, the topic was calling BS on “Our technology makes your business more agile.”  Of course, it is silly to think that any technology by itself can make your business more agile:

Making a business – or at least, the parts of it that make sense – more agile requires you to review and be prepared to change people’s incentives, business measurement systems, skills and training plans, information sharing and collaboration practices, operating models and procedures, and management culture – and probably more. Even if we just confine ourselves to the technology domain then increasing business agility is likely to require you to review architecture, governance, portfolio and change management practices. If you don’t at least think about this stuff, then the most you might be able to do is increase potential technology flexibility.

It’s nice to see some of the stereotypical pitches blown up in this series…!

As Neil says:

The key realisation here is that agility is something that – if you’re serious about it – has to be sustainable and sustained for the long haul. It’s not something you can just worry about for 6 months and then forget about.

Exactly.  Which is why it is so frustrating to hear pundits or analysts say that something like “continuous process improvement” is a pipe dream.  What they’re saying is that companies should throw in the towel and just stop trying to keep up with a changing world. That’s madness for a corporation.  If a corporation wants to be agile, it takes constant attention.  This isn’t a philosophical point, it’s just reality.

Related posts:

1. Agility and BPM

So, having set out to purchase Metastorm in February, Open Text has followed up less than 6 months later with the acquisition of Global 360. It’s not much of a secret that Global 360 was looking to be acquired; the hiring of some key webMethods executives in 2008 signalled the start of a concerted effort to shape the company up for a sale. Still, it caught many industry observers (including me) by surprise to see the company follow so closely in the footsteps of another BPM technology vendor and be snapped up by Open Text.

The surprise factor may be one of the reasons this acquisition made so much more news than the Metastorm acquisition.

Related posts:

1. Bruce Silver’s Perspective on the Global 360 Acquisition
2. More on OpenText and Global 360
3. MWD on OpenText + Metastorm

The company is currently publishing full-year revenue guidance of around $430m for 2011 – up from $330m or so last year – which means it’s grown 30% in each of the last three years. As it digests its Chordiant acquisition and finds ways to combine the technologies it now has to hand for new customer scenarios, the company is clearly riding high and full of confidence[...]“

But Neil asks a few questions that I think are pretty interesting:

But – is it actually a BPM technology provider?

Well, it spent a lot of effort getting re-branded as a BPM provider a few years ago, when BPM was an up-and-coming tag for a category of software.  But Pega was never really a pure-play BPM software vendor. This is the first time I’ve seen an analyst of any kind question whether Pega is really in the BPM business.

So onto the other question, quickly: is Pegasystems a BPM technology provider? In his opening keynote, Alan Trefler claimed that the company’s recent growth makes it more than 10 times larger than its nearest pure-play BPM rival – but in truth this comparison is a little sneaky. Pegasystems isn’t really a BPM pure-play.

It is a BPM technology provider – but in the same way that SAP’s BPM investments make it a BPM provider.

It actually does matter – the difference between the mentality of a pure play and an SAP is larger than one might think.  The distance is so great, in fact, that IBM bought Lombardi to get that pure-play DNA into its veins.  But Neil doesn’t find that question nearly as interesting as whether Pega is selling to IT or selling to Business.  It is an interesting point:

They talk about Pega technology as a way to make the thorny tradeoff between the need for consistency in business execution, the need for competitive differentiation, and the need to specialise execution for particular markets and segments. They are fantastic advocates for the business benefits of working with Pegasystems. But these are not people who really naturally engage with the idea of ‘situational layer cakes’.

I’m sure Pega would argue that they just have to do both – sell to the business and IT.  That’s not a bad recipe.  But from reading Neil’s post, it sounds like Pega isn’t sure what its organizing principle is – what is the mission?  Improving business processes?  Improving customer service?  “Driving Customer Success” is admirable but bland -  it describes a whole host of companies in different industries…

Related posts:

1. “It Just Confirms I’m as Smart as I Thought I Was”
2. Bruce Silver’s Pega Update
3. MWD says the Big Guys are Getting it Together

MWD recently published their take on the acquisition:

OpenText is no stranger to acquisitions, of course – its 2009 acquisition of Vignette being the most high-profile to date. But with key competitors IBM and Oracle now very firmly in the BPM game and pushing forward with investments to combine ECM and BPM capabilities for case management applications, it’s no surprise that OpenText would be on the lookout for a suitable BPM tools vendor.

That’s about how it reads to me, too.

Related posts:

1. More on OpenText and Global 360
2. OpenText Picks up Global360
3. MWD on Open Text + Global 360

So it was with great interest that I clicked on the link to read the 2011 outlook for BPM.  Right off the bat, MWD notes that the BPM value proposition is holding strong even as the economy improves (something, I’ll note, that we at BP3 predicted in early 2010).  MWD reminds us of four value propositions from BPM:

BPM has four ways it can add value: driving operational efficiency and quality; driving product and service innovation; driving business model innovation; and lastly, driving improved collaboration between IT and business teams.

Typically everyone gets stuck on the first two.  Or, we dismiss the last one as not a value proposition in and of itself, but a constraint that needs to be addressed in order to achieve the value of BPM.

The one prediction MWD makes that I disagree with: the decline of the BPM Suite.  While the arguments MWD makes in this regard make sense and hold together, the force for consolidating SKUs among large software vendors is just too strong.  The labeling (BPM Suite) may change, and the specific components may change (perhaps BI, reporting, etc. will be split out… while rules and the like might be more explicitly included – we’ll find out!).  And bundling vertically in the stack (for example, including the application server with the BPM product) will likely continue.

I found MWD’s take on ACM interesting:

Adaptive case management (ACM) – Most importantly, perhaps, a group of vendors has spent significant marketing money and effort through 2010 attempting to “break away” from the BPM technology market segment, at least in part as a response to the impact in the market of activity from software platform vendors like IBM, Oracle and TIBCO.

That aligns with what I felt was going on with the ACM movement over the last year – more marketing and positioning than substantive differentiation.  Although, one can hardly blame them for trying to change the terms of debate, and the terms of product selection.  If you can create a new market segment you have a chance to be evaluated by every company in that segment. If you’re competing for the same market segment, many customers have already bought “one of those” and may not want to buy another one.

MWD also turns their attention to consultants and integrators, noting that their market momentum is increasing.  As MWD notes:  “Until a couple of years ago, almost all the activity from systems integrators and consultants associated with BPM practice was carried out by small, local specialist firms rather than the big players.”  MWD sees the big players finally getting serious about BPM practices – and he’s right.  But it is still the case that the most capable firms are these small, local, specialist firms – some might even say boutique(!) firms.  (As an example in the IBM Lombardi niche, I believe BP3 represents both the biggest and the most experienced firm for Lombardi BPM deployment.  We would definitely be considered a smaller firm, despite our ability to cover the US geography.)

Read the report – and get used to reading MWD’s analysis – it is among the best out there, and they often put out free or registration-only reports that can help keep you informed.

Related posts:

1. More BPM Acquisitions in 2011
2. Risks of ACM Failure in 2011?
3. 2011 a Breakout Year for ACM?

Neil starts with a little history of the IBM Impact event – how it has evolved from Websphere to SOA to BPM – and with a legitimate business track in effect now.  As Neil pointed out – BPM wasn’t the only theme getting traction at IBM Impact (though you might get that impression reading my blog posts, because that’s what I’m focused on) – but it did get its share of attention in they keynotes.

What was more telling here was not the platitudes about the importance of business processes – but the frequency with which technology from recently-acquired Lombardi was placed front and centre in those same keynote sessions (see Bruce Silver’s note). And as Scott Francis from BPM implementation specialist BP3 pointed out the Lombardi-specific breakouts were very heavily attended – this stuff clearly impressed attendees from what I heard and saw.

I agree-  the surprise was how they put Lombardi front-and-center.  It wasn’t the “what’s new” from Lombardi, it was the wholehearted adoption of the new acquisition that was surprising (and if you’re a BPM advocate, encouraging).

Neil identifies twin themes in IBM’s recent acquisitions of Lombardi and Cast Iron:  consumability of the software (ease of use), and consolidating vendor relationships that require smart competitive tactics. I’m going to write more about the first theme-  I think that ease of use will be critical for BPM success going forward.  It may be the most important factor in the end…

He goes on to say that time is of the essence in defining its go-to-market strategy – not because the customers must have an architecturally perfect solution tomorrow, but because the competition has gotten its act together, and BPM is hitting the mainstream – so firing on all cylinders now is critical for success.  I think his analysis is spot-on.

Related posts:

1. #IBMImpact: IBM’s Vision for the Future of Lombardi (and BPM)
2. #IBMImpact: Introducing Complementary IBM products to Lombardi customers
3. #IBMImpact: Erik Keller, Sirva, and the Process-Driven Organization

The distinction between “old school” and “new wave” process improvement approaches (I’ve called these “high church” and “low church” before) is just continuing to get stronger. 10 years ago, the vast bulk of process improvement activity used to be driven by the “high church” crowd: lots of ceremony, burning of incense, and so on. Scientific improvement efforts driven by highly-qualified specialists are essential in situations where there’s a lot at stake (for example when you’re reengineering an auto manufacturing line: get it wrong and it’s going to cost you a lot to put it right). And don’t get me wrong: there’s definitely a place for this.

This description and the ensuing thoughts reminded me of our early experiences with BPM at Lombardi.  Lance and I (and others at Lombardi) were often running into process improvement experts with a grounding in Six Sigma or Lean (or less often, IDS Scheer, or Enterprise Architecture modeling).  We were sometimes supported by these folks, and sometimes they resisted our approach (and “BPM” in general).  On the whole, there was a lot of resistance, as our approach to process improvement was somewhat heretical.

So Lance (now CEO of BP3), embarked on a journey to get behind the curtain, to understand the vestments of the Six Sigma and process improvement community so that we could better work with these folks.  After going through the first rounds of training at the Green Belt level, he started to get others of us to go through the training as well.  And what we found was that you didn’t have to adopt the religion of Six Sigma to get the value.  The statistical tools are just that :  great tools you can use.  The “high church” trappings are wholly unnecessary but they do create an aura of authority for those who exercise them.  Lance went on to become a certified Master Black Belt, but we continued to apply what we learned from Six Sigma in an eminently practical way.  The point isn’t to be “pure” – the point is to get to value faster.  If statistics can do that for your business, then you use them.  In our mind, if a BPMS can do that for your business, then you use it.  Make the best of the tools at your disposal to get the maximum benefit.

Still, there are those whose self-interest is aligned with keeping the “high church” ceremonies and orthodoxy firmly in place.  The challenge is to keep it in perspective – scientific approaches can inform the “new wave” way of thinking without slowing things down.

One of the ironies now is that some of the newer entrants to the Business Process space now see BPM as the high church (old school) and their own approach as the new wave.

Related posts:

1. Sloan Review on Process Improvement
2. Launching Lean 6/BPM for IT Training!
3. Statistical Significance of Observable Data

Interestingly, if BPM vendors provide the right tooling, a SaaS BPMS (or even a hosted one) could be ideal tooling for pulling together these other services to support cross-functional processes for the business.

Related posts:

1. Apple and Small Business Service Overhaul
2. BPM for Users, or BPM for Developers? BPM for all?
3. The BPM Experiment is Over

It sounds like it was a good year – as MWD reports, its license revenue was up 59% (but we don’t know from what base, much like Lombardi’s reported numbers before it was purchased), and customers doubled.  Of course, another way to phrase this is that ASP declined by 20% (if my math is right), or that revenue mix has shifted from prepay (enterprise license revenue) to either post-pay or subscription revenue.

MWD’s assessment is that international revenue will grow faster than domestic revenue.  And while this argument makes sense, having worked at more than one company Appian’s size in my career, I can attest that international revenue can be very erratic.  For a few reasons:

1. When starting from a small base, a single deal (or two deals) can dramatically affect the percentage growth internationally or in a region.  However, with so few data points, it may say next-to-nothing about going forward revenue.
2. Even off of a bigger base, international revenue has so much to do with your sales operation, and so little to do with your product.  There are other products out there.  There are big consulting shops out there. Whether you capture the money (revenue) that is being spent to solve the problems your software solves depends almost entirely on your sales and marketing operation.
3. American companies of this size rarely understand the international markets well enough, and make mistakes which cause big revenue swings up and down.  This is true because the executives usually lack field operational experience overseas, and though they may hire that experience, they may not be able to successfully evaluate those international experts and may end up throwing good money after bad.
4. I’ve seen a single sales rep bring in 30% or more of a small company’s revenue for a single year, only to bring in zero revenue the following year.  Individual sales rep performance is crucial to small enterprise software companies.

Appian may well overcome all of these pitfalls.  But revenue in both the US and Internationally is coming off of a small enough base that we should expect to see high beta for any of the smaller vendors.

The conclusions that Appian’s results really drive home:

• BPM is growing, not dying.  And growing faster than enterprise software generally. (Not just from this datapoint, but from Lombardi, IBM, Savvion, Pega reported results)
• The BPM pure plays were doing well in 2009.
• The remaining pure plays may still have legs and room to run while Lombardi and Savvion acquisitions are digested – even if those acquisitions are quite successful.

Related posts:

1. Appian 2011 Results
2. WashTech post on Appian
3. Financial Results in BPM