A few years ago, I wrote of the scramble by CFOs to document the finance department processes in the wake of the various scandals that led to Sarbanes-Oxley and other regulatory mandates. For many, identifying specific financial processes was a revelation.

Back then, a leading HMO had been put into receivership in large part because its finance processes were invisible and out of control. A $90 million loss suddenly morphed into a $200-plus million loss. Ooops. Management didn’t know what processes they had, what they did, and how they operated. The lack of finance process transparency obscured the real condition of the company.

The HMO clearly needed to get its financial processes under control. Today, organizations face suddenly swelling losses and the need to reduce staff. This requires that they not only identify and streamline financial processes but also that they optimize them. In short, they need modern business process management (BPM).

BPM has lately emerged as particularly hot topic, according to Gartner, the research firm based in Stamford, CT. Gartner noticed an “increase in the number of buyers looking to support continuous process improvement and drive business transformation with BPM,” according to the 2009 Gartner Magic Quadrant for BPM. (Don’t confuse this BPM with business performance management, which was discussed here in an earlier posting.).

According to Gartner, BPM today allows business professionals to identify, model, track, change, execute, and manage dynamic business processes without relying solely on IT to tweak the systems for every little change. Business managers need to be able to do it themselves. In addition, BPM enables those same business professionals to collaborate with IT more easily and consistently by using models to provide a shared language, thereby improving communications and understanding. This is a reference to the IT Holy Grail, business-IT alignment.

Gartner identifies four primary BPM use cases:

1. Improve a specific business process.



2. Support continuous process improvement.




3. Expedite process redesign as part of a service-oriented architecture (SOA) implementation.




4. Enable business transformation initiatives.

Behind all of these use cases is process optimization in one form or another. “In the finance organization, there almost always is room for process optimization,” says Mika Matsumura, vice president, Software AG, one of the BPM leaders in Gartner’s latest BPM Magic Quadrant. Other vendors in the leader quadrant include Pegasystems and Lombardi Software.

Gartner reports about 40 BPM players and features 22 in its Magic Quadrant. The usual big vendors — IBM, SAP, EMC, Oracle — are among the 22 featured, but Gartner does not identify them as category leaders.

Beyond process optimization looms the question of control. The newest BPM systems shift control of BPM from IT to the business person. “IT has to collaborate with the business users on this. With BPM there must be a shift in the balance of power,” adds Martin Redington, Microgen, a relative BPM newcomer that hopes to crack the next Gartner Magic Quadrant for BPM.

In the past, BPM focused on efficiency, which is no longer sufficient to compete in the global environment, according to Gartner. Now the issue is continuous process optimization and real-time business control through information transparency. This is a far different BPM than even a few years ago. ###