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TRENDS IN BUSINESS PROCESS MANAGEMENT

Huberts, Arjen, Erasmus University Rotterdam, arjen.huberts@vrisbi.nl Petten, Alexander van, Erasmus University Rotterdam, alexander.vanpetten@vrisbi.nl

Abstract BPM is continuous changing and there are different trends within this management. A company that has implemented BPM systems uses tools to design, enact, control and analyze business processes involving humans, organizations, applications, documents and other source information. A company uses BPM to have a competitive advantage. BPM systems are constantly developing. One of the last, and also one of the most exciting trends at this moment is the simultaneously implementation of SOA and BPM. An SOA makes it possible to design more flexibility in the design of processes and therefore it is more adaptive to external changes.

BPM can be seen as a tool for an SOA because it gives an overview of the service specifications for the technical services that are used to create an SOA. So it is the actual business processes and not the services that determine the SOA design.

Hence it would be a mistake for company to implement one without the other.

Companies, who only use one of the two, miss the opportunity of enhancing their business efficiency.

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1 INTRODUCTION

1.1 Introduction

This paper is a result of the study project Economics & Informatics 2007/2008. The main theme of this study project is innovation. Within this research our focus will be on trends in Business Process Management.

Every company has certain goals and objectives. They all want to understand the processes that have been used to reach their goals. Almost every company uses Business Process Management to some extent to get a grip on their business processes.

Companies cannot afford to make extra unnecessary costs anymore. At first the companies wanted to decrease their costs with getting a better view on their processes. But now Business Process Management, BPM, focuses on the business goals and organizational structure.

BPM has developed rapidly and is still developing. There are some different trends in BPM at the moment. The Business processes are more automated then a couple of years ago. The processes shift more towards the customer side. The gap between customer and service provider has become obscured. This is known as the personalization of BPM.

Business Rule Management systems maintain a repository of business rules that represent the policies and procedures of an enterprise results. Therefore systems are faster in development, faster maintenance, clearer auditability, more reusable business logic, greater consistency and better alignment and understanding between business and IT. BRM will be used as a service to applications and processes. BRM will therefore become a tool for BPM. 1

BPM using simulations will become more important. Simulations offer many opportunities. With BPM you already know what happens within a process, you know the inputs and you know the outputs. With this information it is possible to create a good simulation model. These models will have an advantage on the operational systems.2

A new trend is the implementation of BPM and SOA simultaneously. Some believe it will bring business process evolution into a new phase. As it will now be possible to flexibly automate dynamic processes.

1.2 Research question

The relationship between BPM and SOA is a new development and is at the moment a ‘hot’ topic within the BPM area. Many people have high expectations using these two methods simultaneously. We will examine this trend in our paper. Our main research question is:

Why should a company implement BPM and SOA simultaneously?

With sub questions we will further discuss the man research questions. The sub questions will focus on what the advantages are, what the disadvantages are and how is it used in practice at the moment.

1 Business Rules And Information Systems, Morgan A. 2 From the interview with W. van Aalst

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1.3 Methodology

This paper is mostly based on the literature concerning BPM, SOA, and the relationship between BPM and SOA.

For this study project we went to different companies in the Netherlands and in Ireland. Our goal was to discover how different types of companies use BPM systems and what the latest trends are in this segment. Most of the companies we visited did not implement BPM into their systems. We also went to a symposium where we had an interview with a BPM expert Wil van der Aalst. He was able to tell us about some trends in BPM.

This led us to scope our research into one trend and using literature to describe it. The trend we chose is the combination of service-oriented architecture and BPM, because it is a very popular topic now and there is a lot of information available on this trend.

We will first explain what BPM and SOA are and afterwards we will discuss the integration between BPM and SOA.

2 BUSINESS PROCESS MANAGEMENT

2.1 What is Business Process Management?

In the last 30 years companies have become more business process aware. A business process is simply the complete and dynamically coordinated set of activities and transactions that deliver value to the customers or market. The emphasis is upon how work is done within the company. A business process can be simple or complex, short-running or long-running, function-specific or industry-specific. It can be for a department, the entire enterprise or the whole value chain (supply chain management). A business process is typically difficult to make visible.3

Companies understand the importance of business processes as it helps them with critical business goals such as cost efficiency, compliance, customer retention and length of service and production time.

At first the processes were managed with workflow management and enterprise application integration. With workflow management people were connected by automating inefficicient manual processes within a single application. It was limited because it couldn’t connect applications. The enterprise application integration could connect these applications by writing information between them so that the data was automatically synchronized. But enterprise application integration couldn’t connect people, as it could not automate long running processes or interactive processes.4

Business Process Management brought these two applications together. Business Process Management, BPM, covers activities performed by organizations to manage and, if necessary, to improve their business processes. This definition doesn’t explain how this is done. A better definition is that BPM is a management that combines a process centric and cross functional approach to how organizations achieve their business goals and improve their business goals. A BPM solution uses tools to design, enact, control and analyze business processes involving humans, organizations, applications, documents and other source information.

3 Business Process Management; The third wave H. Smith and P. Fingar 4 www.bpm-research.com

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2.2 Using a BPM model

As said earlier business processes have become more important for companies. Therefore it is useful for every company to pay attention to their processes. The majority of the companies use a business process model to manage these processes. At first business process models used diagramming tools to gain initial understanding of their current processes. These diagrams had limited value because they are difficult to change and could be hard to be mapped against actual business processes. It also didn’t show what would happen if a process would change.

Today a business process model provides an abstract view of complex structures. Such model has a number of advantages. Firstly, the model has a good foundation because the meaning of each process is precisely defined. Secondly, the models are graphically and are easy to understand. Different users can look at a process but they will al interpret it the same way. Thirdly, new processes can be modelled by combining existing processes or components in new ways or new functions. Finally it can focus on specific parts of a structure. It can highlight key relationships and ignore less relevant aspects. This will result in a more efficient and collaborative BPM.5,6

It is important that the main goal is not forgotten or has become a subordinate of al kinds of political processes. A business process model should always be seen as a tool and never as goal. 7

2.3 What are the benefits of BPM?

Different companies have different reasons to use BPM for their company. The most obvious reason is the increases of the business’ profitability as the costs decrease and the output is optimized.

The process time is reduced as processes are optimized and unnecessary processes are not used anymore. The processes that are implemented can be improved when necessary or changed when business condition changes. The service, the production time and information will improve. This will result in happier customers and more customers will be retained. The compliance within the company will increase because the manual processes are automated, which will lower the risk of errors.

Throughout the entire company the efficiency will be improved as the processes are now more visible. The manager now understands what is happening instead of what has happened. Data about what, and how, processes are done are logged and can be retrieved when necessary. This makes it possible to analyze what happened and the bottlenecks can be found and repaired.8

The decreased costs and increased revenues are the most obvious benefits of BPM. But the biggest advantage of BPM is the business’ agility improvement. Business rules ensure that processes adapt automatically to changes in the business environment. This helps allow the company to be aware of their processes. The company has a competitive advantage as it can react faster and it has the ability to learn faster than its competitors.

2.4 What are the challenges of BPM?

When a company want to start using a BPM solution there are some challenges. The expectations of the new system can be too high. In the company it is possible that some persons do not want to

5 Workflow Management, v.d Aalst W. 6 www.aris.com 7 from the interview with W. van Aalst 8 BPM and SOA: Better Together, Noel J.

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work with a new system and are reluctant to use BPM. There are more management-related challenges such as change management and resource commitment.

Another challenge is the integration with back office systems. It is necessary that all business processes are redefined and simplified. The business processes should be fully understood otherwise it will cause several problems.

Once BPM is implemented there are new challenges awaiting. The most common mistake is over customization. There is too much custom code. This type of mistake is often seen in the beginning of the implementation. In this phase there should not be much more then a prototype.

BPM initiatives require near and long term planning and goal setting. The goals and means by which to achieve them must be accepted by the executives of the organization. Without a clear planning on the goals and without the commitment to the BPM process the initiative will not succeed.

Communication within a company, between departments, can provide great challenge to improve processes. BPM processes are no exception. Knowing these challenges it is obvious that the first BPM projects are the most difficult ones. There is little expertise in the company and reluctance will be the greatest in the beginning. But in time this will diminish.9

3 SERVICE ORIENTED ARCHITECTURE

3.1 What is Service Oriented Architecture?

Nowadays organizations are experiencing the need to integrate increasingly complex IT resources. This is a very complicated task, because organizations simultaneously need to make sure that their technologies remain aligned with their business goals.

The problem that currently takes place in most of the organizations is that critical business systems such as customer relationship management (CRM) operate in isolation from other critical business systems, even though some business processes make use of multiple systems.

In order to gain a complete view of business processes, integration of information is inevitable.

One approach that organizations can implement is service orientation. The common misunderstanding of SOA is the fact that SOA can be purchased as a product and is the same as Web services. Service orientation modularizes IT resources, creating loosely coupled business processes that integrate information across business systems. For businesses to achieve maximization of business agility, it is required that service-oriented architectures are producing business process solutions that are relatively free from the constraints of the underlying IT infrastructure.

Service Oriented Architecture (SOA) is able to deliver dynamic applications. These applications provide end users with more accurate and complete information and insight to the processes. They also provide end users with the flexible access to this data.

Dynamic applications are what enable businesses to improve and automate manual tasks. They also make it possible to have a consistent view of customers and partner relations.

The main idea of service orientation is thus that it is a means for integrating across diverse systems. Each IT resource whether an application, system, or trading partner, can be accessed as a service. These services are available through interfaces. When service providers have different

9 http://www.microsoft.com/biztalk

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operating systems or communication protocols, it causes complexity, which results in inoperability. 10

Service orientation makes use of standard protocols and interfaces to facilitate users with access to business logic and information among diverse services. The most commonly used protocols are Web services. Web Services are the set of protocols by which services can be published, discovered and used in a technology neutral, standard form. Because of the standard form of the services, the underlying implementation of the individual service providers is free to change without impacting how the service is used.

3.2 The aim of SOA

It happens very often in businesses today that their existing IT resources do not adequately meet specific business needs. The systems are costly to manage and maintain and they can not easily adapt to business growth and change. Businesses can replace systems or applications or completely renovate them, but this is very costly.

SOA offers a solution for businesses to integrate their operating systems instead of replacing them. By implementing service orientation, systems become more responsive to business needs, simpler to develop, and easier to maintain and manage. SOA also helps businesses to plan ahead for change, rather than responding reactively.

3.3 The users of SOA implementation

In general SOA is implemented by developers and solution architects. Of course one needs to take the roll of stakeholders into account. The roll of the stakeholders is that they need to participate in driving the design of the SOA solution.11

The developer of the SOA solution needs to map the sources of business information (systems, staff, trading partners etc.) into a unified and complete view for the business analyst. This provides the business analyst of the organization with a clear view of the costs and benefits of various IT investments.

The CTO of an organization needs to make sure that the SOA solution meets the needs of the business analyst, the integrity of existing and the preservation of the application resources.

The IT manager is concerned with effective integration of distributed IT systems in order to realize simplification of management. He works together with the developer to reach these goals.

Finally the developers and the solution architects are concerned with the development of the dynamic applications. They can achieve this by implementing the service orientation approach.

3.4 The SOA life cycle

The heart of every IT system consists of IT assets: data, legacy systems, line-of-business application, packaged applications and trading partners. The resources can be seen as service providers who are responsible for producing numerous highly specific outputs (f.e. inventories, customer data).

Service orientation is the link between these autonomous sources of information, hereby creating a bridge of a wide range of operating systems, technologies and communication protocols.

10 www.microsoft.com/biztalk 11 www.microsoft.com/biztalk

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The process of service orientation consists of three parts. The first part is the creation of services (exposing). The second part consists of the aggregation of services (composing). And the final part makes outputs available for consumption by the user (consume).

Source: http://www.microsoft.com

Expose

The expose phase of the SOA approach focuses on creating services from the underlying applications and data. There are two ways to create services: • Fine grained service creation. This is a single service that can be linked to a single business

process. • Coarse grained service creation. This consists of multiple services put together to perform a

related set of business functions.

Another important feature of this phase is the implementation of services. The functionality of IT resources can be made available if they already speak Web services. Compose

After the creation of services these services can be combined into more complex services or applications. Because services exist independently of one another as well as of the underlying IT structure they can be combined and reused with increased flexibility. Consume

After the creation and the composition of services, this new application or business process must be made available for access (consumption) by other IT systems or by end users. In this phase the main goal is to deliver dynamic applications that enable increased productivity and enhanced insight into business performance. Users can reach (consume) these composed services in different ways. Some of these are web portals, rich clients, office business applications and mobile devices.

3.5 The benefits of using SOA

The central focus of service-oriented architecture is reaching greater business agility from existing IT investments. SOA helps businesses to automate their processes by connecting systems. SOA also ensures that the appropriate resources are only accessed by users who have authorization to do so. 12

12 www.microsoft.com/biztalk

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SOA benefits increase efficiency within the organization at two levels, that of the IT organization and that of the business user.

SOA solutions address a number of top level business concerns that are central to growth and competitiveness. These solutions promote: • Stronger connections with customers and suppliers. By increasing the availability of

dynamic applications to customers and suppliers, customer/partner satisfaction will grow. SOA also enables better alignment of processes with organizational strategy.

• Enhanced business decision making. Decision making becomes more accurate and complete through combining business services and information into a set of dynamic business applications. Also the flexibility to gain access to information is improved.

• Greater employee productivity. SOA also leads to the increase of employee productivity, because employees now can direct all their energy on the processes in the value chain rather than having to conform to the limitations of the underlying IT systems.

3.6 The challenges of using SOA

Even though SOA offers a lot of business benefits by integrating and creating new services, business can only reap fruits from this approach if they carefully attend to governance of the systems. Insufficient management and monitoring of services, their performance and reliability, and especially their security can lead to inefficiencies and disrupt business processes. Businesses need to make clear policies of what new business processes and services can be implemented. Also it should be clear how these processes should be implemented and how possible success of the new implementations will be measured. 13

There are also challenges in the reuse of services. It might call for additional work when an existing service does not exactly provide what a business process requires.

Part of the design phase of a service consists of accurately predicting what future needs will be. And since no one can predict the future this might lead to difficulties.

4 BPM AND SOA

4.1 Combining BPM and SOA

Nowadays it is very important that companies are able to quickly adapt to the changing market conditions with adequate products and services in order for them to succeed. Many of these companies use BPM systems to increase their operating agility. Companies use BPM for a broad range of purposes, one of these is the optimization of processes. BPM is the main method for documenting how the company functions. By doing so it offers more transparency about how the business processes add value within a company. IT resources support these business processes to make them more effective and efficient. However this can only be done if they have a good understanding of the business processes. Through BPM the business processes are modeled and optimized. The IT department needs to implement these optimized processes in the IT landscape as quickly as possible, but often enough there are significant delays in doing this. The fixed networking of applications and process workflows on a central gigantic application structure, as has been done in the recent years is extremely time-consuming and costly to modify. Also missing documentation and non-transparent

IT-landscapes have helped IT act more as a brake than an accelerator.14

13 www.microsoft.com/biztalk 14 On the way to SOA, Klückman J.

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These delays have led to the fact that companies want to integrate SOA with BPM software.

SOA should optimize the use and benefits of software in companies. According to research done by analysts by the Gardner group, in 2010 at least 65 % of large companies will have switched more than 35 % of their application portfolios to a service-oriented architecture.

The forecast for the next five years is the biggest global companies will save up to USD 53 billion through SOA.

The vision of the SOA architecture concept is breaking down the corporate software into functional function units, which are executed by small software components. When these function units are automated with technologies like WSDL, BPEL, and SOAP, they are called services. By splitting up these software components, SOA enables more flexibility in the design of the processes. In other words, SOA brings along the ability for processes to be more adaptive to external changes.

Therefore it can be concluded that BPM is a precondition for the reflection of functional requirements in terms of company controlling in IT systems. These requirements are the service specifications for the technical services. Consequently functional Business process management forms the basis for designing and implementing an SOA.

4.2 BPEL

Business Process Execution Language (BPEL) is a recognized industry standard used to describe executable business processes. The main focus of BPEL is the integration of different application systems using Web services, hereby offering access to program functions of existing application systems. The function of BPEL is to describe how Web services are linked to each other chronologically, so that a business process can be implemented. 15

BPEL is a XML-based language and is becoming extremely important in the integration of SOA into business process management. Within more complex business processes, BPEL is a solution because it combines or orchestrates technical services. 16

Using BPEL, a programmer formally describes a business process that will take place across the Web in such a way that any cooperating entity can perform one or more steps in the process the same way. For example, in a supply chain process a BPEL program might describe a business protocol that formalizes what pieces of information a product order consists of, and what exceptions may have to be handled. However, the BPEL program does not specify how a given Web service should process a given order internally.

4.3 Methodology for service-oriented BPM

When organizations are modeling their business processes, they use a multilevel method, starting at the top of the process hierarchy and successively breaking down the processes into greater detail. Within the SOA methodology the technical service hierarchy is constructed at the same time as the business process hierarchy. For the modeling of the business processes a top-down approach is used, whereas for the arrangement of the services into technical processes a bottom-up approach is used.

15 www.ids-scheer.com (modeling standards, BPEL) 16 10 Steps to Business-Driven SOA, Klückman, J.

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Source: www.ids-scheer.com

The figure above shows you how the business processes are broken down into three levels and how they are mapped to the appropriate service in the right hand pyramid. The business processes can automatically be transformed into BPEL processes through the technical improvement of the event-driven process chain (EPC). After all the three levels have been transformed into BPEL processes, the BPEL processes in the second level of the right hand pyramid can be combined into more improved and complete business services. These business services can call a complete process at level one or combine it in a service.

So the advantages of nesting these technical processes leads to the fact that complex business processes can subsequently be executed using business services. All processes are combined in a higher-level BPEL process at level three of the right-hand pyramid. So finally we can conclude that close integration of business processes with technical service orchestration makes business-driven SOA a reality.

5 CONCLUSION

5.1 Conclusion

The last trend really changes the traditional way of looking at BPM and/or SOA. BPM and SOA are two systems that can work perfectly independent of each other. But together they are a perfect combination for enterprise computing. BPM provides the higher level abstraction for defining business processes and managing, or improving, these processes. SOA provides the capabilities for services to be combined and to support and create a flexible company.

Just like the implementation of every other tool it is important that it is implemented correctly and that there is enough knowledge of the tools. Once it is implemented it is must be used in the correct way otherwise the combination SOA and BPM will not cooperate together.

A service oriented architecture begins and ends with a company’s business processes. Similarly a SOA cannot be service-oriented if the business processes to be supported, are not known. Without knowledge of the user department processes, there is a high probability that business software development mistakes that were made in the past will be repeated. If IT systems within a business are inflexible and fail to meet user needs, the business efficiency will decrease. And this is where SOA plays its part. It prevents these kinds of scenarios from taking place. In doing so it needs

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business-driven BPM because it is the actual business processes and not the services that determine the SOA design. 17

These facts have led us to think that in the near future most of the big software companies will integrate the SOA concept into their BPM systems.

17 On the way to SOA, Klückman J

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References

Sites: http://www.bpmtrends.nl/site/ www.bpm.com http://en.wikipedia.org http://www.bpminstitute.org http://aiim.org/article-docrep.asp?ID=30562 http://fp.tm.tue.nl/beta/publications/working%20papers/Beta_wp52.pdf www.aris.com www.microsoft.com/biztak/solutions/bpm/overview.mspx www.microsoft.com/biztak/solutions/soa/overview.mspx Books: Workflow Management; Models, methods and systems; W. van der Aalst and K. van Hee. Business Process Management; The third wave H. Smith and P. Fingar Articles: Trends in Business Proces Analysis; W. van der Aalst BPM and SOA: Better Together, Noel J. Business Rules And Information Systems, Morgan A. On the way to SOA, Klückman J. 10 Steps to Business-Driven SOA, Klückman J. Aberdeen group in a current IT Benchmark Report (Fontanella, John; Saia, Rick: The SOA in IT

benchmark report, dec 2005; Aberdeen Group. Interview: W. van der Aalst

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Appendix Summary interview:

Respondent: Mr. Van der Aalst

Interviewers: Alexander van Petten, Arjen Huberts

Date: 18 October 2007

Duration: 30 minutes

On Thursday the 18th of October we went to a symposium held at the University of Tilburg. One of the guest speakers at this symposium was Wim van der Aalst. He is known for his expertise in business process management.

During the lunch we asked him about what his vision is of the latest trends within BPM.

Mr. Van der Aalst thinks the management of business processes will get easier if it is implemented together with SOA.

He is not convinced that the use business rules management systems in combination with BPM will become very popular. He says business rules are nothing else than parts of processes. So using BPM models gives a better oversight of the processes.

Afterwards we asked him if he thinks that people will play a bigger role within BPM (humanization of BPM). He stated that BPM has proven itself to be useful in processes where employees have little influence. These processes are becoming more and more automated. For example processes within the medical care. The consumer is becoming more responsible within the processes, because the middle man is less relevant due to the IT improvements.

He also told us about a couple of BPM models. ARIS is a widely used platform for businesses who want to map their processes. Two essential components of this system are: • ARIS PPM (process performance management). This system relates the mapped processes

with the actual outcomes. • ARIS audit manager. Model used to support the auditing processes.

And finally we asked him which trends he thinks will become popular in the near future. He thinks that a combination between BPM and Simulation models will be a new trend. Simulation offers a lot of possibilities for business systems. Not for the strategic systems but for the operational ones. With BPM you already know what happens within a process, you know the inputs and you know the outputs. With this information it is possible to create a good simulation model.

Mr. Van der Aalst thinks that a process-orientated approach has advantages for every company. However one of the main disadvantages of modeling the business processes is that you spend too much time on political processes which are not important.

Some books he advised us to read: • Process aware information system (Riley) • Business process management (Weske)

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INNOVATION & ICT

VRiSBI International Research Project Ireland 2007

Study Association VRiSBI Kamer H11-02

Postbus 1738

3000 DR ROTTERDAM

Email: info@vrisbi.nl

Internet: www.vrisbi.nl

Tel: +31-10-408 8846

Emiel Caron Assistant Professor

Room H10-19

P.O.Box 1738

3000 DR Rotterdam

The Netherlands

Email: caron@few.eur.nl

Tel. +31-10-4081342

Fax. +31-10-408 9162

VRiSBI is the study association for the study Economics & Informatics at the Erasmus University Rotterdam. We have over 350 members and there are around 100 students currently in their final year of the bachelor or master program.

One of our most important tasks is to connect students of Economics & Informatics with companies to give them an inside look how it is in the field. We try to do this by regularly organizing different kinds of activities in association with interested companies.

The development and the pleasure of learning for the student is important to us. We do this by organizing all kinds of activities like company visits, study trips, symposia, etc. etc.

This report in front of you is part of the VRiSBI International Research Project Ireland 2007. The CD-Rom contains all the reports and it also contains the presentations from the symposium ‘Innovation & ICT’.

ISBN of the complete report: 978-90-812660-1-7

VRiSBI International Research Project

“Innovation and ICT”

Comparing Ireland with The Netherlands

Please visit http://studiereis2007.vrisbi.nl for the complete paper of this presentation.

Other papers and presentations are also available.