When Vulcan Materials Company completed a massive overall of its core IT systems, its work wasn't quite done yet.
The Birmingham, Ala., company, which produces building materials such as gravel, concrete and asphalt, replaced legacy systems with Oracle Financials and Peoplesoft for human resources and payroll. The company also restructured itself, adopting a shared services model. Instead of having each division run its own administrative centers, Vulcan Materials established companywide services for functions such as accounting.
The enterprise resource planning (ERP) rollout was mostly done by 2010 - but automation gaps still existed around and between the new systems. The company's answer was to purchase a business process management (BPM) tool to fill those gaps. The company selected BP Logix's Process Director about 16 months ago to automate workflows associated with vendor maintenance, customer maintenance, capital project approval and other forms.
"We're very much affected by the construction economy. We've been through the wringer over the last several years, and now our sales are starting to pick up again," he says. "The concern is, if business picks back up, will the administrative costs pick back up, too?"
McLendon says the automated workflows for back-office processes will help keep selling, general and administrative expenses from spiraling as sales increase. The workflows are used across the company's divisions, complementing the shared services strategy.
"We can increase volumes and not see the same corresponding increase in the cost of doing the administrative work and the back end processes," McLendon says. "That is a huge deal ... in a very low-margin business like selling gravel."
Using BPM to Cut Red Tape
The economic downturn and slow recovery have compelled organizations such as Vulcan Materials to take a hard look at their business processes, which, in turn, has elevated the role of BPM. Hard times, paradoxically, may have reinvigorated the old product category. Some vendors report growth rates in excess of 30%, and Forrester earlier this year said BPM is ramping up toward a $6.6 billion market opportunity.
But BPM tools may be pressed into roles beyond providing do-more-with-less efficiency. BPM tools offer the potential for greater business agility, as workflow apps can be quickly rolled out and modified to deal with shifting business trends or changes in the regulatory environment, according to industry executives. In addition, some customers are looking to deploy BPM to improve customer-facing processes as well as back-office tasks.
BPM may be edging into different roles, but its capability to cut red tape remains an important attraction. "We have eliminated a lot of the busy work and rework," McLendon says, citing " administratium" as the heaviest element on the periodic table.
Workflow automation via BP Logix enables employees to pursue more productive activities. "Anybody in a mid-sized to large company, like us, who isn't doing this now needs to be on it," McLendon says. "It has been a force multiplier for us."
BPM Tools Provide Agility, Standard Methodologies
Gilbert, Ariz. reports a similar experience. The town, with a population of nearly 220,000, implemented K2's BPM tool in 2009. Gilbert first focused on automating IT request forms but has since expanded the use of BPM to include automating the town's budget process.
BPM has reduced man-hours and paperwork while increased the staff's time to do other things, not "chase paper," says Kirsten Larsen, IT administrator with the town.
The technology helps Gilbert keep its costs in check as well. Process automation has let the town handle its workload without hiring additional personnel. "We have one of the leanest staff-to-citizen ratios in the state," Larsen notes.
Meanwhile, other organizations seek improved business agility in BPM. BNY Mellon, an investment services and investment management company, uses a number of BPM tools. BPM helps the financial services firm respond faster to business needs, whether that involves building new applications or modifying existing ones.
The approach also drives continuous process improvement and introduces operational efficiencies, according to Alex Golbin, managing director and head of BPM Technology, which is in the Enterprise Delivery Services and Architecture group at BNY Mellon. "By using BPM, we can reengineer the process and really introduce agility to our operations and customer services areas."
BPM's agility also helps BNY Mellon keep up with regulatory needs, Golbin adds. New and changing regulations compel financial services firms to alter business processes and systems.
BNY Mellon's BPM toolkit includes such vendors as Pegasystems and IBM. Golbin says the company's goal is to continue using multiple tools but develop a consistent vision and strategy for deploying them.
To that end, BNY Mellon established a global BPM center of excellence to promote uniform, companywide methods around BPM tool use. That approach marks a departure from past practice, when BPM tools were used independently within individual lines of business.
"If you're trying to use [tools] as an enterprise strategy, you need good, talented people and a sufficient number of people who know how to use the tools," Golbin says.
The More Firms Use BPM, The More Complex It Can Get
BPM adopters tend to focus on inward-facing, back-office functions when they first use the technology. An enterprise's early projects may involve fairly simple forms and processes, but subsequent efforts grow in complexity.
Gilbert, for instance, first used K2's BPM tool to automate all IT forms - requests for VPN access, hardware and software, among others. The forms were designed with Microsoft InfoPath and then connected to the town's SharePoint and SQL servers using K2-built workflows, Larsen explained.
A "pretty complex project" followed the IT forms work, Larsen notes. The town used K2 to help create an Idea Management System that lets employees submit ideas for process improvement. The system sends ideas out for comment, then routes them to the town's managers and executive team.
Last year, Gilbert used K2 to retool its budget process. In the past, each department manager created a budget on Excel and submitted it to the budget management staff, which compiles the town's budget. Now, automated forms and workflows replace the individual spreadsheets.
The K2 and InfoPath combination provides a user interface to the town's core financial system and routes the data to the Gilbert's SharePoint server, which houses the town's master budget lists. The lists then become a one-stop view into all departmental budget requests for the next five years that the executive team can review and process.
Organizations are also beginning to look outwardly with BPM, toward customers and citizens. Golbin says BPM plays a role in areas such as call center automation but notes that even back-office processes may play a customer support role. "We always try to look end to end ... at our processes with the customer in mind."
Russell Keziere, senior director of corporate marketing at Pegasystems, suggests that other BPM users are moving in the customer direction as well. "CIOs are looking to us to better engage their customers."
E. Scott Menter, vice president of business solutions at BP Logix, adds that the conventional view considers BPM a back-office technology for improving internal processes. "The truth is, the technology gives you a lot more than that," he says, noting that BPM can help organizations reach out to customers, partners and suppliers.
BPM's Ease of Use Makes Workflows Straightforward
Customers say their BPM tools make it a straightforward task to create processes and workflows and modify them once deployed.
"K2 is able to put out workflows fairly quickly depending on how complex they are," Larsen says, adding that K2's designer component creates workflows in a drag-and-drop fashion and doesn't require coding.
Adriaan Van Wyk, K2 CEO, says speed and agility become important factors in a rapidly changing business environment, noting fast changing customer demand. He also cites the new generation of young workers who demand flexibility: "They see a problem and want to solve it immediately."
McLendon says Vulcan Materials builds the best process it can through BP Logix and then goes back later to optimize the process. The company, he says, may find that a process includes an unnecessary step that can be eliminated. If that's the case, "It's not really difficult to go back and modify things."
McLendon says a business analyst can modify the process "without mobilizing a group of programmers to do a whole new IT project." In some cases, however, a developer may be called upon for more complicated tasks, such as interfacing a process with an enterprise system.
In general, though, it's possible to go back and tweak a process without a lot of cost or disruption, according to McLendon. "Now, you don't have to put up with a bad process."
John Moore has written on business and technology topics for more than 20 years. His areas of focus include mobile app development, health IT, cloud computing, government IT and distribution channels. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn.
Read more about business process management (bpm) in CIO's Business Process Management (BPM) Drilldown.
This story, "Business process management provides agility in lean times" was originally published by CIO.