Thank you all for your time today. What I would like to do is share with you some of insights on what we see as challenges for businesses globally, how Business Process Management provides solutions to those challenges, define IBM’s approach to BPM and finally, lay out what could be our next steps.
Main point: The new normal is a complex and uncertain world where the line between IT and business is vanishing Speaker notes: Think about this – - 90% of CIOs expect significant change to their business - 82% of CEOs expect high or very high levels of complexity in their businesses. - Only half of CEOs felt prepared to handle expected change. Change, complexity, and uncertainty are the new normal. And the pace of change and complexity is accelerating.
MAIN POINT: What’s on your CEO’s mind? CEOs are demanding agility from their organizations in the face of today’s environment of accelerating change and complexity. SPEAKER NOTES: CEOs recognize the need for agility. In May of this year, the IBM Institute for Business Value published our global CEO study exploring leadership in the new economic environment. From face-to-face interviews of more than 1500 CEOs around the world we heard that today’s business environment is distinctly different. It is increasingly complex and change continues to accelerate faster than ever. You can see that the vast majority fundamentally believe the world is SIGNIFICANTLY more volatile, more uncertain, more complex and structurally different. As a result, “operational desterity” or agility to manage and handle this kind of disruptive change was a top CEO priority. As CEO interviewed put it , organizations need to become “change animals!” A separate study shows the real benefits that agility delivers. Higher earnings per share, return on investment, revenue growth, and the rest of the metrics you see on the right hand side are all beneficiaries of greater agility
Main Point: To focus on improving processes, organizations must consider their broad business network of customers, partners, and suppliers, and how their processes span across this network. To improve these processes they must be supported by robust and flexible connections across the business network to eliminate hand-off bottlenecks, and accommodate the pervasive change throughout their extended enterprise . Speaker Notes: For a moment, think about your business network – no not just your IT infrastructure, but the broad network of relationships and interactions that make up your business. Most organizations reflexively think of their business network within the walls of the business, but the fact is that the business network is significantly broader than most organizations initially perceive – composing an extensive set of relationships between employees, customers, suppliers, and partners. Here we ’re looking at an example of an insurance company and the broad set of interactions that make up their business network. The company outsources some low-level claims processing and customer service, maintains and manages relationships with demanding customers, and must maintain a large network of independent agents and producers that are the lifeblood of the business. Each of these external connections is just as important as the ones inside the business, and in fact, may becoming more important. In a recent survey of business executives, 79% said that they expect the number of collaborative relationships they have with 3 rd parties to increase 1, while 87% of CIOs think their organization will be more collborative in the next five years 2 . As more, and more functions move outside the walls of the businesses, the distinction between external and internal members of the business network is disappearing, and companies must look to maximize the value of the interactions throughout their networks. The broad business network also profoundly effects how your organization can improve business processes. The pervasive processes that we ’ve discussed don’t take place within the four walls of the business, they span across the broad business network. In this example we see how three of our insurance company’s processes touch multiple points inside and outside of their business. In order to improve these processes, you must also consider the touch points and connections between the different entities in the business network. Otherwise these hand-offs between the business and external entities will remain a performance bottleneck. Even more challenging is the fact that this broad business network is anything but static. Relationships with partners and suppliers are constantly changing as companies change policies, business models, or even go out of business altogether. In addition, in many industries, customer switching costs have dropped dramatically causing a surge in customer churn. This pervasive dynamism throughout the extended enterprise means that not only must the processes that span the network be robust, but also flexible enough to easily accommodate change without disrupting business activities. 1 Economist Intelligence Unit – Companies without borders, Collaborating to Compete 2 IBM Global CIO Study, 2009
-Wet Cement -Unkitting the sweater
Here is a deeper look at the problems that cause process management problems. The key points here: Yes, you have systems. But they typically only solve part of the process. At the human level, the problem is that work is not well controlled Finally, there is no end to end visibility to the process – that spans humans and systems Good problem example: Aflac wants to grow their business at 100%, but their invoice reconciliation process is so manual that it will cost too much. Also, delays in resolving invoice issues affect customer satisfaction Transition: BPM is the solution to these problems
So, a good way to think about BPM is that it is a layer that gives you the control and visibility over the processes. Key points: It sits between people and systems and manages the process across those participants Prioritizes your work, but also gives you visibility and control And when the process evolves and changes – you can quickly implement that change and that is immediately How do we at IBM go about defining and implementing BPM?
This slide shows three examples of how Rules and Events are used together to improve customer acquisition in the insurance industry . Problem: Signing up insurance customers through multiple channels is a challenge especially due to abandoned shopping sessions and the many customer touch points. The left third of the slide show customer contact channels and incoming events: Grey arrows: Business events, in this case insurance quote requests Green arrows with red dots: Insurance quote requests that match a pre-defined pattern Box with red dots (event correlations) refer to insurance quote patterns detected using the business events capability. The middle third of the slide shows business rules and business event logic – The green text: The pre-defined event pattern of interest The blue text: The business rules that are triggered, based on the event pattern in green The right third of the slide shows the comprehensive business decision that can be made by the combination of rules and events in the middle third of the slide Scenario 1: Increasing deductibles Detect: The customer requests a series of quotes with increasing deductibles. This tells the system that the customer is trying to get a lower monthly payment. Decide: Price sensitive customers will often experiment by raising the deductible to see what level of coverage they can get for a particular premium. Having established the customer’s intent, the system triggers the right set of business rules to decide if the customer is a good prospect, and worth offering a promotion to acquire. Respond: If the rules determine that the customer should be offered a promotion, the best promotion that matches the customer’s personal attributes is chosen and offered to the customer in real-time. Scenario 2: Multiple forms of contact Detect: The customer has made 2 quote requests over the web and has made contact with an agency within the last 3 days. This tells the system that the customer may be trying to find the best level of coverage for their personal situation. Decide: Knowing that the customer is seeking clarity on the offering, the system triggers the set of business rules to run a product recommendation analysis for the customer using their specific characteristics. Respond: An agent can call back to assist the customer with the latest product recommendation and explain the features of the recommendation to the customer to help close the sale. Scenario 3: Zip code experiments Detect: The customer has requested multiple insurance quotes for the same vehicle, but listed addresses in different zip codes. The varying zip codes may suggest that the customer is trying to work out which address results in a lower premium. Decide: Insurance companies often determine premiums based on zip codes where the car is garaged. The event pattern triggers the set of business rules that determine if the customer is trying to game the system to get a lower quote, if a different address and zip code is provided. Respond: An agent can call back, or the company can send an email asking if the customer plans to park the car at the different addresses and which address would be the primary one. This will ensure that the company is charging the right premium for the risk level at the primary address.
One key design of our BPM tool is that it places the right tool in from the right individual Business Analyst can Designe the process based on their experience The process developers in IT get their requirements directly from the Business and have a simplified tool to bring that process to live The Business Leaders have visibility into the process and their KPIs The Business Users have a simplified interface to perform their tasks All the data resides in a Central Repository We have a well defined and proven method of implementation.
It has become common knowledge in the BPM space that in order to deliver business value, the only methodology that works is iterative delivery of a process. The traditional waterfall methodology has high risk of failure, because the business and its requirements may change by the time the “final” process is ready to be deployed. Instead, through iteration and playbacks you can engage the business throughout the development phase and they will be able to share with you where the key points of value are in the process, which ultimately ensures that the right application gets built. When using IBM BPM we suggest conducting at least three major playbacks in each project delivery. It is imperative that you bring together all stakeholders and step through the process application at three or more playbacks over the course of a 10- to 12-week long project. We even have some customers who, after realizing the importance of playbacks, hold them every week! Let’s look at how we at IBM Play in the BPM Space
Main Point: IBM Differentiation spans across software, expertise, ecosystems, and even what our customers are doing . Speaker notes: Once you are ready to chart your path to success with BPM, make sure you the industry leader is your guide! IBM is rated #1 in BPMS market share, and has been consistently recognized for market leading products in several BPM categories by analysts such as Gartner and Forrester. IBM has over 5000 BPM customers in over 30 countries and growing. These customers are innovating and achieving new business breakthroughs building upon a Smart SOA foundation with process integrity, and using IBM’s market leading BPM products and capabilities for some of the most mission critical, transaction intensive processes imaginable. IBM is also unique in providing an unrivaled combination of market leading capabilities for BPM spanning services, partner and best practices: Market leading products for both BPM and SOA Recognized BPM leader by Gartner, Forrester, others Deep industry knowledge and pre-built assets 1000's of pre-built industry assets 20+ BPM training and education courses Next steps.
Video: http://www.youtube.com/watch?v=123Wlk3Auuw Main Point: Now is the time to get started developing the dynamic business processes you need to achieve agility, and respond to the market shifts that are effecting businesses around the world. Speaker Notes: As you get ready to begin your projects, you can find a wealth of additional information at the IBM Website (ibm.com/bpm & ibm.com/soa) including whitepapers, demonstrations, and client case studies. To help prioritize business goals and identify project areas you can leverage the IBM BPM Business Value Analyzer ( www.ibm.com/software/info/integrate/launch/index2.html). You can also contact your IBM representative or business partner to schedule a business process improvement workshop at your facility. These sessions can help with p rocess analysis and recommendations, solution analysis and definition, and proof-of-technology for an in-depth product experience.
Focus on private community: Enables more open communication since it never leaves the company Curated feed of public tweets and blog posts: Provides most relevant process information and filters out the noise Streams of information: Highlight important process activity tailored to each user
The New Normal: Change, Complexity, Uncertainty $488 billion $534 billion Lost in process inefficiencies In mobile in Fortune 500 companies transactions by 2015 85% 50% Of enterprises use Of businesses plan to adopt external cloud services more collaborative sourcing models 70% 50 billion Of businesses outsource one Devices connected to or more strategic activities the Internet by 20203
Complexity exists within organizations and the broader business network Companies need end-to-end process management To orchestrate human … to increase tasks… visibility… Agents & Partners & Producers Re-insurers Insurance Carrier Internal Employees Con- Auto sumers Commercial LOB Con-sumers LOB Home LOB DMV Out- Financial sourced Service Institutions Providers 3rd Party Services … to manage exceptions and cases… … and for scalable transactions… … everything you need to manage end-to-end business networks5