Their emergence has been so great, in fact, that market researcher International Data Corp., Framingham, Mass., estimates that the worldwide market for BPM applications of all stripes will double in size from $500 million in 2002 to over $1 billion in 2004.
Some offer to improve workflow; others, to reduce inventory or speed collaboration between partners. Many BPM developers are very industry specific in their approach, like Corecon Industries, which targets construction companies. Others, like Lombardi Software, can be customized for different industries, or, like PeopleSoft World Express, offer a variety of templates.
Which type of BPM software is best? No two are alike, making direct comparisons nearly impossible. To complicate matters further, most have complicated pricing models that weigh the number of users, CPU usage, or the number of business processes that need managing.
Any way you slide it, though, BPM software isn’t cheap. Large companies can expect to pay $500,000 to $1 million, while mid-sized companies can expect to pay $150,000 to $350,000 -- and that’s just for the licensing fee. Add to that integration and configuration fees that run two to seven times the amount of the license. That means the BPM software your company licenses for $150,000 will probably cost you $600,000 when all is said and done. On the lower end is the recently announced PeopleSoft World Express, a suite of BPM templates that run on IBM’s iSeries. For the hardware, and installation of an application that governs financial processes, expect to pay $50,000 to $100,000.
Is it worth such a heavy investment? Yes, industry analysts and customers generally agree, because the return is often two or three times greater than the investment. “When you want customization, it takes money,” said Rod Hardin, chief information officer of Pulte Mortgage, the lending arm of $9 billion Pulte Homes, based in Bloomfield Hills, Mich. “The money isn’t so much spent on software licenses as it is on building what you want. It’s a process. I can’t imagine anyone taking a construction or mortgage application and using it off the shelf.” Hardin declined to say how much Pulte Mortgage has spent for a limited license of Lombardi’s TeamWorks BPM software, but noted that implementation and customization costs are at least seven times the licensing fee. “We built our business processes around customer service. We tended to add value-added things like [automated reminders for agents to telephone customers] five days before the closing. Are you going to get that delivered out of the box? Nah.”
Tom Carrell, product manager for PeopleSoft’s supply chain software, agrees. Carrell, who spent 16 years as chief information officer of Pioneer Balloon Company, Wichita, Kansas, was a longtime J.D. Edwards customer but found “in the early days [he] had to do quite a bit of tweaking” to bolt on a BPM application to the ERP software and then customize the BPM software to fit the small manufacturer’s needs. PeopleSoft World software, he insists, is far easier to integrate and customize. “You must have highly customizable software,” said Carrell. “If it’s not, then you run into the danger of having something that’s so specific that the software can’t handle your requirements.”
Those considering BPM software should also consider these caveats:
- First decide what you hope to accomplish with the BPM application. Some enterprises find they want to overhaul their business processes to reduce waste. Others have processes that are simply not codified and automated. “Some guys find that the processes they have in place aren’t inherently bad, they just need to be structured,” said Phil Gilbert, Lombardi Software executive vice president and chief technical officer.
- If your enterprise is already a user of a larger ERP suite, you’re probably better off using a related module. “For example, if an organization has a reliance on SAP, it would be a natural that NetWeaver was included in the BPM software evaluations,” said Ken Vollmer, principal analyst in Forrester Research’s Enterprise Applications Research Group, Cambridge, Mass. SAP’s NetWeaver platform includes a business-intelligence module with BPM functionality.
- Don’t expect an ERP suite to manage your business processes. “I’d never look at a PeopleSoft ERP solution to automate business processes,” said Avi Greenfield senior analyst with Chicago-based Doculabs, an IT research and consulting firm. “It’s doesn’t have the extensibility.” Rather, consider PeopleSoft World, or PeopleSoft World Express for small- and mid-sized enterprises using IBM’s iSeries, he said.
- Two of the factors influencing the price of the BPM solution: the number of processes -- particularly those that need human intervention -- the BPM application needs to manage, and the amount of integration. If a wide variety of applications need to be integrated, industry analysts advise enterprises to seriously consider EAI software that has BPM functionality, such as that sold by IBM and Tibco.
- Industry-specific templates can be great, but they have their limits. “By nature, your business process is going to be unique, since it is that process that differentiates you from your competitors, making you, for example, faster or cheaper. So, ultimately you want to think about it, design it and build it yourself,” said Shawn Willett, principle analyst, for Sterling, Va.-based market researcher Current Analysis.