bi, bam and bpm: the best of three worlds - · pdf filesee the acquisitions of hyperion,...

BI, BAM and BPM: The Best of Three Worlds

Enterprise Integration Summit

April 13-14, 2010 WTC HotelSao Paulo, Brazil

Bill Rosser

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The elements of business activity monitoring (BAM) business process management (BPM) and businessThe elements of business activity monitoring (BAM), business process management (BPM) and business intelligence (BI) are converging. Each element has been operated at arm's length, often by separate groups. The need to adopt performance management, and the business need to drive competitive advantage and dominance in the market, have led to the conclusion that these elements must come together — a "big bang" in reverse. Hopefully, it won't take as much energy as the Large Hadron Collider or won't have as much trouble getting started. This is a simple idea, but it is a hugely challenging concept to execute beyond the odd example that exists in the market (for example, demand planning, and financial planning and budgeting/CPM applications) These forces are not coming together easily; in fact the market is showing the strain from thisapplications). These forces are not coming together easily; in fact, the market is showing the strain from this evolutionary advance. See the acquisitions of Hyperion, Business Objects and Cognos by Oracle, SAP and IBM, respectively — three significant acquisitions that signal the mass-market recognition of this forced convergence. However, acquisition is just the start; it is just one stage of perhaps many! Mere integration between the massive silos at a customer site will not yield the desired objects from performance management. Data, metrics and process reusability from interoperability across a firm's BPM/BI/BAM environment is what is required. And this at a time when IT organizations must protect investments already made and exploit

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established architectures. So, where to start?


BI enhances BPM by providing continual BAM and process analysis as well as delivering historical currentBI enhances BPM by providing continual BAM and process analysis, as well as delivering historical, current and predictive information at decision points within a process. Although there is much to gain, deployment of the individual solutions is mainstream, but deployment of BPM with BI and BAM has been limited to early adopters.The Key Issues of this presentation are: • Why are BI, BAM and BPM technologies converging?• How can BI technologies improve business processes?• Which tactics help to successfully link BI and BAM with BPM?




Definition: Intelligent decision management is the use of business logic, fed by analytical insight, to automatically determine the optimal next step in a business process.

Key Issue: Why are BI, BAM and BPM technologies converging?Key Issue: Why are BI, BAM and BPM technologies converging?BI adds value to process management in two ways — inserted within a process and providing information about a process. Intelligent decisions help business processes be more effective. Processes without decisions are static, inflexible and inefficient, but decisions made on guesses or inaccurate data, rather than factual information, cause problems, too. When BI is integrated into business processes, decisions are more repeatable, scalable, traceable and accurate. Properly implemented BI integrated into a process, often through business rules, is the basis of competitive differentiation and customer satisfaction. BI is also used to decide when to add steps to make the process more effective or to remove steps that would be less expensive or cause less waste.less waste.When BI is used to monitor processes, the metrics are linked to business goals. Many process monitors look only at the efficiency of a process, such as how efficient an automobile engine is. BI tools incorporate other data, so the business alignment is known, such as if the automobile will arrive on time. The BI tools provide status about processes, both modeled and unmodeled. Alerts are issued if the process is at risk, either now or in the future. Many BI systems provide real-time updates as the process goes on but also operate in batch, depending on business needs. Process optimization, both in terms of efficiency and effectiveness, may be determined by analyzing how the processes are running and have run in the past. This provides a basis for adjusting and improving them.



j g p gAction Item: For any process, identify ways that BI can help make decisions within the processes, watch the results of ongoing processes and improve the performance of each step.


Tactical Guideline: When adding intelligence to automated processes, monitor the decisions that are made, so that errors in business rules are more quickly caught.

Key Issue: Why are BI BAM and BPM technologies converging?Key Issue: Why are BI, BAM and BPM technologies converging?Different analytic techniques can be employed when linking BI tools with processes. For example, wisdom-of-crowds-based information can be inserted within website content. Netflix encourages users to rate movies, adding value to its other customers, and, in return, the service suggests movies the customer should enjoy. Multivariate testing improves website yield through a process of offering content variations, then delivering the optimal combination. Many casinos use BI in the process of operations to determine which free offerings will optimize customer engagement. Real-time information about room or show-seating availability is used to minimize the offering costs. BI is also used to improve the speed of approval processes, such as online loan applications. BI systems import external data sources and analyze customer profiles to produce scores that can quickly be matched against the details of a process instance and business rules. Automated discovery of processes is used in the healthcare industry to see how patients with similar illnesses are handled. Supply chain processes benefit in many ways by embedding BI. In this example, it is used to help a dispatcher decide between holding a plane and risking delay penalties, and shipping cargo that doesn't match a preapproval manifest sent to international customs agents thus risking fines



manifest sent to international customs agents, thus risking fines. Action Item: Leverage the multitude of examples where processes have been made intelligent.


Tactical Guideline: Focus on a combination of disciplines to achieve business success —converging business intelligence and process management is one important aspect.

Key Issue: Why are BI BAM and BPM technologies converging?Key Issue: Why are BI, BAM and BPM technologies converging?While BI, BAM and BPM technologies are converging, it is not soon enough, fast enough or complete enough for organizations that strive for process excellence. The world of BI has matured, with the market worth more than $5 billion and with most organizations using some BI tools in their business processes. The market for BPM suites has passed $2 billion, but from a technical point of view, BI and BPM markets have been separate. Many BPM suite vendors offer basic reporting on the activity within their product set or of externally queried data, but no BI platform. Business users need the two worlds to combine. They must be aware that business patterns are changing, analyze what to do, and model and adapt to important changes in business patterns. p g g, y , p p g pThey also need an integrated environment to map processes to performance to strategy. The BI world provides the awareness and analysis. The core technologies of the BPM world provide business rules, process models and process orchestration. As the worlds converge, links must be built between BI and BPM so that a better and more compatible context is applied to business rules, and the results of process execution are measured for alignment with business goals. Gartner's Pattern-Based Strategy™ research initiative overlays with this concept well. It approaches the problem holistically and will provide business managers with the strategic justification to bring BI and BPM together. A I S l BI d BPM b h l d d l l Th h ld



Action Item: Start aligning BI and BPM now, at business, technical and vendor levels. The urgency should reflect the opportunity. Read Gartner's research on Pattern-Based Strategy.


Tactical Guideline: Growing BI and process maturity begins with a proper assessment of where you stand. The degree of maturity is a good indicator of how much agility you may achieve, if required.

Key Issue: Why are BI BAM and BPM technologies converging?Key Issue: Why are BI, BAM and BPM technologies converging?One driver of BI and BPM convergence is coming from organizations that are maturing from process ignorance to process awareness and control. Although enterprises pass through numerous maturity stages, not all will traverse the full maturation model. This is understandable, and there are benefits to be had at each stage of the process. Acknowledging business inefficiencies, or even just measuring them, is a step toward process awareness and can be assisted by BI measurement and monitoring techniques and tools. Once a need for change is established, analysis and modeling of target business processes is the next natural step. Process automation — placing the modeled BPM process into action — gives way to process optimization, making the p g p g y p p , gprocess more efficient and effective. Departmental processes give way to enterprise processes and enterprisewide benefits. Many enterprises will stop at this point. For those that continue, there are two high-value stages:• Enterprise valuation control — Creating a business performance framework that links business valuation (in near real time) to process execution. This is where convergence of BI and BPM becomes deep.• Agile business structure — Innovating new businesses, products and services through agile business architecture.BPM lik BI i diffi l j H h d b i l i (ROI)



BPM, like BI, is a difficult journey. However, the rewards are substantial: return on investment (ROI), increased stakeholder satisfaction and agility.Action Item: Join the governance of the BI and BPM maturity journey through common sponsors.


Tactical Guideline: Establish a BI competency center, using the Gartner BI framework to ensure the proper aspects of a BI solution have been addressed.

Key Issue: How can BI technologies improve business performance?Key Issue: How can BI technologies improve business performance? Like process management, BI is not just about technology. The Gartner BI framework, shown in this slide, lays out the different views and components needed to implement a BI, analytics and performance management program. The framework is descriptive rather than prescriptive, with various components for describing a solution rather than a specific solution architecture. The people view requires looking at how BI will be enabled and involves enterprise information management practitioners. Analysts bring out insights in the data, making it available to those who will use it. Processes are required to ensure quality data, brought together formaking it available to those who will use it. Processes are required to ensure quality data, brought together for analysis and used to make business decisions. The technology view involves many IT disciplines and is the plumbing for linking BI and BPM. The BI tools may be an enterprise platform standard, embedded reporting tools or even Excel. Analytic applications and process applications are what workflow or business rule users see. Across any BI framework, program management and metadata management is needed to ensure sustainability. Action Item: Read more about the framework in "Gartner's Business Intelligence, Analytics and Performance



Management Framework," G00166512.


Strategic Imperative: Define agility requirements; measure what is available and what is possible based on current and incremental investments.

Key Issue: How can BI technologies improve business processes?Key Issue: How can BI technologies improve business processes?Any enterprise that aspires to effectively sense and respond to a changing environment must plan and execute a strategy for agility. In that environment, planned production is optimized, patterns are recognized, and contingencies are well-rehearsed. Awareness is the first element to address. No matter how inefficient, inflexible and rigid an organization is, its performance can be measured. As agility grows, awareness of capabilities, trends and situations is the front line in defending process integrity. Productivity is the engine that executes the day-to-day business. Perfect optimization is an unrealistic goal, but continuous improvement is a management style that many successful companies adopt. Using BI to determine which processes need improvement, then working to optimize, automate and regulate them, will pay off. When issues arise, flexibility and adaptability are required, or productivity will suffer. BI and process experts should work together to ensure that patterns are identified and contingencies are available for expected situations, such as empty store shelves, using modeling, simulation and rehearsal. When something unexpected happens, such as a product recall, informed decisions must be made. BI tools are the key to being informed. If the data is unavailable or of poor quality then adaptability suffers risking productivity and the performance toward



unavailable or of poor quality, then adaptability suffers, risking productivity and the performance toward business goals. Action Item: Target agility as a goal, investing in the changes that deliver on that goal.


Tactical Guideline: Most business processes can be improved by the application of a wide variety of analytical techniques.

Key Issue: How can BI technologies improve business processes?Key Issue: How can BI technologies improve business processes?BI functions include many styles that can be used across the BI continuum of activities. Traditional BI requirements center on information delivery and analysis functions. With the advent of process integration with BI, a new set of skills is useful for BI organizations, along with business users. These new skills are often beyond what organizations have, and investments are needed to move forward. Following are some examples of how BI functions may be useful:• Events or alerts are used to trigger processes. Processes are a common event emitter.• Reporting, dashboards and visualization provide an organized and contextual view to process participants.

R l i dif d i i hi h h l t t d k ffi i tl• Rule engines codify decisions, which helps automated processes work more efficiently. • Process mining analyzes transactions and data flow to automatically build process maps.• Service-oriented APIs are supported by BI platforms, so that functions may be called by process execution engines.• Event processing keeps track of critical business indicators and identifies known patterns.• Data mining identifies patterns in data to estimate the likely outcome based on prior instances. • Simulation defines expected behaviors and "what if" outcomes, based on test data and assumptions. • Optimization identifies necessary actions based on predefined sets of behavioral assumptions and



• Optimization identifies necessary actions, based on predefined sets of behavioral assumptions and constraints. Action Item: Document which BI functions could improve your process and what the value would be.


Strategic Imperative: BAM applications do not just plug in and start providing answers. Questions need to be defined, then a BAM application can be tasked with answering them.

Key Issue: How can BI technologies improve business processes?Key Issue: How can BI technologies improve business processes?BAM applications address the questions that business users must answer to be effective and efficient. A business environment is composed of many processes — human and automated, internal and external, modeled and unmodeled. Through sensors and agents, a BAM observation layer watches events and key metrics of the business environment and its processes. The observation layer may be visually presented to end users or used in automated analytic processes. Different types of questions may be answered about the current business environment; for example — "Are things working well?" or "What problems exist or are about to exist?" — all answered in context of a user's perspective Other questions may be about checklists to see if information is upanswered in context of a user s perspective. Other questions may be about checklists, to see if information is up to date and prerequisite processes have been completed in sequence. An observation layer can track information on resources ranging from the presence of people online to processing capacity to raw materials. A BAM platform answers these questions using a set of analysis techniques, including baseline, threshold monitoring, correlation, root cause, and impact analysis and predictions. As an added bonus, BAM systems don't require a change in applications — only access to events they generate.Action Item: Focus on building an observation layer that is rich enough to address the business questions that affect the organization's efficiency and effectiveness



affect the organization s efficiency and effectiveness.


Key Issue: How can BI technologies improve business processes?Key Issue: How can BI technologies improve business processes?Emerging technologies offer a great potential, especially as each technology area adopts a more-SOA-based approach. In the future, it will likely be possible to use BPM-like technology to orchestrate the creation of composite processes comprising analytic and transaction-processing services. This will allow users to inject analytics into business processes as necessary and to recombine analytic and transaction-processing services as their needs change.However, although this is likely to be the ultimate endgame, it isn't going to happen broadly anytime soon. Thi i b l ti li ti ll 18 th t th b hi d b i li ti iThis is because analytic applications are generally 18 months to three years behind business applications in their adoption of SOA, and repositories of analytic services (the analytic equivalent of a business service repository, or BSR) are only starting to emerge. Although business applications are more mature in their adoption of SOA, their business repositories tend to be proprietary in nature, making it hard to orchestrate services outside a particular vendor "ecosystem." Finally, although BPM suites could offer much of the functionality to provide orchestration capabilities, business users lack understanding of what information should trigger actions. Consequently any organization wanting to reap the benefits of process-centric BI during the next five years is



Consequently, any organization wanting to reap the benefits of process centric BI during the next five years is going to have to consider iterative approaches. Action Item: Tap into any SOA skills in your organization to integrate initial BI and BPM initiatives.


Market: Vendor consolidation is driving the convergence of process management, transaction processing applications and BI.

Key Issue: How can BI technologies improve business processes?Key Issue: How can BI technologies improve business processes?Until 2007, most BI vendors had only light investments in process-oriented tasks, and efforts were gaining little traction. Starting in 2006, when Microsoft acquired ProClarity, and accelerating in 2007, vendors of process management software started to acquire BI platform functionality. Oracle acquired Hyperion for its performance management functions, adding to the analytic features it acquired with Siebel. Tibco bought Spotfire, SAP bought Business Objects, and IBM bought Cognos. The vision of these companies is good. By providing BI functionality as part of a process and application development stack, the vendors can build tight interfaces, stress best practices and retain account control. Oracle has a jump on the other vendors, because Siebel applications already use Siebel Analytics functionality, but now it must extend that and Hyperion functions into more of its applications. It is too early to tell how well SAP and IBM will execute their BI acquisitions, and Microsoft and Tibco have yet to fully capitalize on the vision. Nevertheless, the consolidation of vendors has happened, and an integration of technology will follow. There are still BI vendors not tied to a BPM vendor. These vendors are working on improving their service interfaces, so processes can call reporting and analysis services



and analysis services. Action Item: Weigh the integration benefits against the lock-in risks of sourcing strategic BPM and BI solutions from the same vendor, especially if that vendor is also providing business applications.


Strategic Imperative: Process designers are responsible for addressing data quality and data integration issues across the entire information value chain, not only inside their firewall.

Key Issue: Which tactics help to successfully link BI and BAM with BPM?Key Issue: Which tactics help to successfully link BI and BAM with BPM? Bad data destroys trust. Data integration and quality levels are important for processes, just as for BI. The challenge of achieving success with data integration, and controlling data quality throughout flows of data, becomes greater when parts of the data flow reside outside a process, department or organization. As processes extend beyond an application boundary, the source of data may come from another department, customer or trading partner. To ensure that poor-quality data from external sources does not damage or degrade the operations of internal processes and applications, organizations must establish a data quality "firewall." Analogous to a network firewall which is intended to keep hackers viruses and other undesirables out of theAnalogous to a network firewall, which is intended to keep hackers, viruses and other undesirables out of the corporate network, the data quality firewall exists to keep poor-quality data out of internal operations and applications, thereby ensuring processes work only with "fit for purpose" data. The firewall may apply some data-cleansing operations to address known issues in the data. This will cause the data to meet minimum quality requirements for process steps and will reduce the effort for the process modeler. Service-level agreements, both inside the enterprise and between enterprises, will become crucial for setting goals and expectations, as data integration and data quality services become adopted and widely used.A ti It E t t i f h t ti dd d t i t ti d d t lit f th



Action Item: Ensure your strategies for process orchestration address data integration and data quality for the data flow, including both internal and external data providers and consumers.


Strategic Imperative: A shared enterprise metrics framework can link different aspects of performance management into a coherent reflection of enterprise performance.

Key Issue: Which tactics help to successfully link BI and BAM with BPM?Key Issue: Which tactics help to successfully link BI and BAM with BPM? Having a common metrics framework that is applicable across business applications, processes and BI platforms is an important part of integrating end-to-end processes. Each enterprise function produces unique reporting and analytic artifacts, useful for local use but not always easy to share across departments. Some metrics and analysis have to be shared if corporate performance goals are to be achieved, such as "cost of sale" or "profitability," but they are often inconsistent across different business units. A properly defined enterprise metrics framework is part of the answer. It provides logical linkages between different areas of performance management and because different analytic applications will be implemented in different domains andmanagement and, because different analytic applications will be implemented in different domains and functions, it can provide an end-to-end view of how each business function impacts overall corporate performance. Defining an enterprise metrics framework is a challenging task; however, the challenge doesn't come from identifying which metrics to measure, because most organizations already have plenty. The real challenges are in getting consensus as to what are the most-important metrics to measure, or standardize, and how these relate to each other. There are several methodologies to help organizations bring structure to their existing metrics. Gartner's Business Value Model is a starting point for such an exercise, but there are other

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methodologies that can also be used. Action Item: Define an enterprise metrics framework as a foundation for an end-to-end approach to performance management.


Strategic Imperative: If none, create a BI competency center with a balance of authority and power between business, technology and analytics members to achieve its maximum potential value.

Key Issue: Which tactics help to successfully link BI and BAM with BPM?Key Issue: Which tactics help to successfully link BI and BAM with BPM? Some organizations have formed a BI competency center (BICC) to improve the development and focus of the resources needed to implement a successful BI strategy. These centers are chartered to evolve the organization's BI strategy from an IT-driven initiative into a business-driven, cross-organization initiative that encompasses a wide range of users, customers and partners. The center develops the overall strategic plan and priorities for BI, defines the requirements (including data quality and governance), and helps the organization to interpret and apply the insight to business decisions. Regardless of the organization's structure, its BICCto interpret and apply the insight to business decisions. Regardless of the organization s structure, its BICC should report to the CIO, CFO or main business executive. In addition, it should have a mandate and a stable core but be flexible in size. To improve BI and BPM convergence, the BICC should not be isolated from other competency centers in the organization. Application integration and BPM skills, whether in a competency center or not, should link into a virtual "business competency center" — with a large pool of skills, reporting to business or IT management. There are many forms of competency center structures that work — the most important issue is to have one.



Action Item: Figure out where the skills for BI, BPM and application integration reside, then build a virtual team of competence to help drive projects that link BI and BPM.


Tactical Guideline: Engage your BI competency center in defining a converged BI/BPM architecture. The overall driver may come from an enterprise architecture group, but BI must be seen as a critical and competent component.

Key Issue: Which tactics help to successfully link BI and BAM with BPM?Key Issue: Which tactics help to successfully link BI and BAM with BPM? The "megavendors" are trying to make it attractive to pick a software stack that includes BI, BPM and application development. SAP and Oracle go one step further and provide applications on the stack. Although this is the direction the market is going, not every vendor's stack is well-integrated yet, and the applications provided don't all use the BI and process services within the stack.• One course of action is to pick a stack vendor and ride its maturity curve. This has the advantage of better integration as the stacks mature, but it also carries the risk of vendor lock-in and predatory pricing.• A second architectural choice is to pick a best-of-breed solution, one that includes a BI platform, BPM suite, SOA and ESB middle are and an application de elopment en ironment This approach brings control o er more of theESB middleware, and an application development environment. This approach brings control over more of the technology but requires high investments in skills and adds the risks of market turmoil and more-frequent migrations. This approach might be a tactical decision because of legacy investments, such as using SAP for business applications while being heavily invested in IBM/Cognos for BI.• A third option is to focus on a BI platform approach, picking a set of tools that meet as many requirements as possible. Data integration and information management is a critical component of this strategy, making data sharable across applications, with BI embedded within applications and processes.• The worst strategy is to do nothing and let chaos reign. A collection of unique BI tools, analysis techniques and data

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models will grow along with uncoordinated purchases of business applications. Each application may work well in isolation, but it's difficult to develop agile processes that cross departmental or application boundaries. Action Item: Define an architecture of how BI, BA and BPM merge. Don't allow it to develop on its own.


Strategic Imperative: Develop key metrics for initiatives that link BI and BPM. Establish what went right and wrong, employing the process of continuous improvement.

Key Issue: Which tactics help to successfully link BI and BAM with BPM?Key Issue: Which tactics help to successfully link BI and BAM with BPM?Gartner clients report several key obstacles to using BI to improve processes:• Corporate culture and politics. Obstacles to process change are corporate culture, entrenched management practices and internal politics.• Adopting a different funding model. Measurement of an end-to-end process model makes it hard to accurately assess cost and value by group.• Lack of formal governance. Governance principles are key in establishing responsibility for work that might be driven by BI or an alert from BAM; however, few enterprises use governance service-level agreements y ; , p g g(SLAs). Use governance to help define and enforce a metrics framework. • Organizational restructuring. Process change challenges an organization, encourages cross-functional collaboration and expands decision making. Improving processes requires trust, education and vigilance. • Mismatched compensation and rewards. Many process improvement projects fail because compensation guidelines do not support new work roles. In the worse cases, users gain rewards without more-effective work.• Focus on the customer. Too often, process overshadows customer service at the front lines. Encourage feedback on customer-facing processes and give audited autonomy in bypassing some aspects of the process. A I Add h f h h l



Action Item: Address the management issues of process improvement, not just the technical ones.

bi, bam and bpm: the best of three worlds - · pdf filesee the acquisitions of hyperion,...

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