As companies and their software suppliers focus on the processes that control their business, the potential for the “commoditization” of processes is growing. How can companies differentiate themselves, yet still take advantage of the new technologies and approaches in process management?
Let’s start by considering why processes are becoming commoditized.
As companies and their software suppliers focus on the processes that control their business, the potential for the “commoditization” of processes is growing. How can companies differentiate themselves, yet still take advantage of the new technologies and approaches in process management?
Let’s start by considering why processes are becoming commoditized. The first trend driving this commoditization is the growth in the use of Business Process Management Systems (BPMS).While there are many advantages to BPMS, the growing use of process templates in this context means that there is a real danger that an organization’s competitors may use the same process, thus diluting the “value add” from one company to the next. Similarly, as the major application suite vendors focus more on process-centric automation, they too push companies towards a common process design. Lastly, as companies turn to outsourcing, they find that the standard processes required to make an outsourcing contract workable make them look more and more like their competitors.
How can organization resist this commoditization and continue to offer unique services to their customers? One approach, clearly, is for the organization to build their own. This might mean not buying an application suite or buying one but planning for extensive customization. It might mean adopting a BPMS but not the standard templates the vendor offers. It might mean outsourcing no process except those offering zero competitive advantage. These options are, however, expensive and limiting. Instead companies can drill into the problem and focus on different kinds of differentiation, for there are two: Process Differentiation and Decision Differentiation.
- Process Differentiation means performing the steps in a process in a radically different order, or at a radically different pace. Adopting a build-to-order process could fall into this category.
- Decision Differentiation means performing the same steps in a process in a similar order, but choosing when to use which steps/branches or whether to price/approve transactions differently. Essentially driving the process from the transaction.
Decision Differentiation is a way to deliver a different feel for customers, different outcomes and yet use a standard process. For example, if an organization approves low-income customers more readily than its competitors it represents decision differentiation even if they both use the same loan paperwork processing vendor. Historically this has been done using different policy manuals or by training decision-making staff. BRMS offer another, more automated way to do this.
A BRMS is a complete software solution that helps companies define and manage the rules that drive their business. The software also helps companies deploy those rules into decision-making services, which can then be managed and updated seamlessly as the rules change. Most BRMS allow the rules to be deployed as actual services (for use in an SOA) or as a variety of other components (from .NET assemblies to EJBs to COBOL programs). If the key decision points ( approve/decline, complete/incomplete, treat as a good/average/poor customer) within a process are automated using such a system then changing the rules in those decision points will differentiate the process, even if the process steps are very standard. In addition, this approach delivers real agility as business managers can update and redeploy their rules quickly as their business changes.
How can a company work with its outsourcers, application suite vendors and BPMS vendors to make this work – who should do what? First, a company must identify critical decisions within its business and determine if the processes around them really are critical. For those situations where process differentiation or both process- and decision-differentiation are critical, the company can still adopt a BRMS and process-centric software, but it is not going to adopt common process definitions. Next, the company will need to automate and control the decisions that drive its business. For those processes where control of these decisions represents all the differentiation required, the company can outsource or adopt templates that best support its business. A side advantage of this approach is the company’s increased ability to change its mind about outsourcing a process at a later date – control over the decisions regardless of who runs the process will help insulate customers from the impact of a change. If a company is outsourcing a process, it might want to push its outsourcer to automate steps within the process using a BRMS and expose the rules to companies so that it can customize the process. Regardless of the approach (outsource, BPMS, Application Suite) companies are going to want software vendors to think about the decision points in a process and understand that these will require a decision service integration, not just a work list.
The trend towards common processes, whether through software or outsourcing, is not going to slow as the cost savings from it are real. The judicious use of BRMS to automate decision points in these processes can help ensure that common processes do not become commoditized and that customers will always feel like they are dealing with a real company, not faceless automaton.
