BPM A Better Mousetrap?

Unfortunately, there is one early parallel between BPM and CRM, according to Janelle Hill, senior program director of integration and development strategies at META Group. There is a lot of hype in the sense there are a million vendors claiming to be in BPM, she says. She also cautions the BPM technology market still is emerging. Vendors are taking advantage of that to make [the term BPM] mean whatever they want.

But analysts do see some differences. While BPM certainly has the risk of being another overhyped category of technology, it also is more than technology. It includes management disciplines, management practices [as well], and from what were seeing, people seem to be getting that more so than they did with the other acronym technologies, says Rod Travers, senior vice president of technology at the Robert E. Nolan Company.

There is a market maturity out there, especially in CIOs who lived through CRM or other initiatives and know this is more than an acronym, he adds. BPM is something companies have been doing a long time; there just hasnt been the elegant technology at the end of it.

Such is the case at P&C insurer Mid-Continent Group, Tulsa, Okla., a member of the Great American Insurance Group. Darlene Smrke, assistant vice president of electronic document services at Mid-Continent, has 18 years experience in information systems and explains BPM at the insurer is an ongoing business initiative rather than a technology project. My first priority is to improve the process, she says.

Keys to BPM Success

Making BPM the success CRM wasnt begins with setting clear and realistic objectives for BPM projects. Hill identifies key objectives insurers should target, including easier learning, improved quality and error reduction, removing time from the process, institutionalizing best practices, and closing gaps in the process, anywhere from system disconnects to breaks in the supply chain.

Among these, taking time out of a process is the goal most often cited by insurers. We go after everything that is labor-intensive, Smrke says. We look at what we are doing today and whether there is a faster, better way to do it. She currently is in the midst of a project to deploy the Exigen Workflow system enterprisewide to improve document imaging, access, and routing.

Mid-Continent chose Exigen, she notes, because it allowed the carrier to leverage its existing investments in scanning and imaging systems, connected well to its AS/400-based administration systems, and provided bar-code support for faster document routing.

The benefit of reduced time has been most apparent in areas that previously did not have automated workflow. The commercial audit department was 100 percent paper based, Smrke says. It took six months to do an audit. Now, it takes 60 days, and there is no backlog. Billing audit premiums more quickly also has had a financial impact, she says.

At QBE Insurance Australia, based in Sydney, it was the need to speed up the administration of workers compensation claims and meet mandatory compliance deadlines that led the insurer to target the process for improvement, according to Kim Mo, project manager at QBE. Part of the solution included the deployment of BizFlow by HandySoft, which QBE began rolling out in 2003 to standardize the workflow of the case-management component of claims.

While all case managers previously had access to the same claims administration system, they would each keep their own diaries, using different systems, Mo explains. Currently, a Web-based front end presents a standardized diary and calendar for adjusters, links them to back-end legacy claims administration systems, and integrates with document management and printing systems. Ultimately, the system will support the entire workers compensation process, using a rules-based workflow to assign claims, collect data and related information from claim administration systems, and manage exceptions.

Likewise, North Carolina Farm Bureau Insurance Group (NCFB), Raleigh, N.C., also looked to cut the time it took to process its mobile-home new business, which was as long as three weeks. Pam Hiovich, operations division manager at NCFB, reports important secondary objectives were to improve the accuracy of coding and rating, which had both been done by hand, and to make the system easy for new hires to master.

At the core of NCFBs solution was Tranzax from Clear Technology, an automated workflow solution that incorporates a rules engine to perform much of the application validation, coding, and rating that previously had been done manually. While the system, installed in 2003, has cut policy processing time to as few as two days, it also has reduced training time for new policy processors from two months to two days, Hiovich says.

To help ensure the success of BPM initiatives, insurers can learn from the lessons of past efforts, particularly the reengineering projects of the 90s that became synonymous with downsizing. Says Travers, Across-the-board cost cutting is not true reengineering, but it got that label.

Therefore, even though BPM can reduce operational costs, that should not be the overt goal. The problem with [targeting only] cost cutting is theres little analysis involved in what this might do to your business processes and your service levels, says Travers. Cutting staff in a call center because youre overstaffed at certain times of the day can have catastrophic impacts on service at other times.

Model Improvement

Todays BPM systems represent both an evolution and a consolidation of previous technologies. Weve had workflow technology before that kept track of human interaction; weve had EAI that kept track of system interaction; weve had document management that tracked where documents were. But we never had [systems] that brought all of it into one management console, says Hill. Most BPM systems now include one application or more performing process modeling, auto- mation, and monitoring day to day for workload balancing and over time for continued process improvement.

Process-modeling tools have evolved from simple flowcharts to systems that allow you to design, simulate, and test business processes. There are a number of good tools out there, says Travers, naming System Architect by Popkin as very comprehensive. Hill adds Microsofts Visio, ProVision from Proforma, and ARIS from IDS Scheer.

Modeling tools give you the ability to look inside the data and make decisions. You then can correlate volumes and quality levels and job types and staffing levels, create business rules, and make organizational alignments. These tools are tremendous at helping you see those relationships and understand them at a level that couldnt be done in one place before. Thats a relatively new capability, Travers says.

The modeling step might lead you to change processes or even eliminate parts or all of them, he adds. Its great to reduce the number of pieces of paper in an application or claim, but the real question is, Why do we have that paper at all? What value does it bring to the organization?

It also might lead you to retain, rather than automate, a manual process. We look at any point where the insurance side of the business is performing a manual process and whether it should be automated, Smrke says. If it does need to be manual, we evaluate whether its being done by the right area.

For example, Mid-Continent eventually plans to automate the policy printing process completely. But in the interim, a recent change to move the policy printing task from policy ratersvia distributed printers on their desksto a centralized policy printing area has both reduced the number of manual handling steps and freed up time for the more highly skilled raters. Smrke prefers to use Visio for process modeling, although Exigens native modeling component was used by Mid-Continent staff and Exigen consultants in the commercial lines component of the project.

In modeling processes, insurers must decide whether to make those improvements in the process before or after automating it. If the existing process optimally addresses business objectives, the order may not matter, but automation is not a solution for fundamentally flawed processes. Speeding up a bad process just allows you to incur costs and deliver bad service faster than before it was automated, says Travers.

Burlton adds a warning to the practice of automating, then improving. There is a danger you never fundamentally change your process, he says. People often will automate [workflows to match] whats in the vendors technology already, and then it doesnt fit. You end up with these massive redesign projects after the fact.

He admits, however, most companies take the latter approach. And in Smrkes opinion, there is a valid reason for doing so. My preference is to improve the process by doing the reengineering upfront, but remember you have the user out there who is going to use the system, she says.

The unfortunate thing for a lot of workflow systems is users cant adjust to them, and whether its a good product or not, it will be viewed by the users as a bad product, Smrke adds. Therefore we build with the workflow learning curve in mind and make it as comparable as possible to what they were used to doing. Thats a different viewpoint than most of the people in the industry, but I have to deal with the users every day, and if theyre not happy, I havent done my job.

Insurers also need to decide who should model processes. Tools today are easier to use, graphically based, and more intuitive; however, systems staff, rather than business units, still predominantly handle design.

Disability insurer UnumProvident, Chattanooga, Tenn., for instance, used Staffware Process Suite from TIBCO to reengineer its claims processes, beginning in the return-to-work area. The system provides a graphical, drag-and-drop interface that allowed UnumProvident to represent complete claims activities as a mapped process, showing retained manual steps and identifying applications to call and data to pass in automated subprocesses. UnumProvidents systems area was responsible for that process design.

We have some business staff who are starting to use the [Process Suite] tool, explains Randy Robinson, vice president of information technology, but we probably wont make the shift completely over to the business area.

Robinson has created, however, a consulting organization within the company to jump-start the process of change management. That has been very successful. I have one of my senior consultants in charge of that area, and he is knowledgeable about the tool and is working closely with business partners.

Process-centric Design

Insurers often equate BPM with workflow automation, and in fact, the process-automation capabilities of current BPM systems are akin to the workflow systems of yesterday. However, todays BPM technologies take a process-centric approach to system design and architecture. By their nature, BPM systems include an independent process layer that separates process from application logic, an access layer, and a services layer to interact with both back- and front-end applications that are part of the overall process.

Ten years ago, processes were buried within business applications, says Laurent Lachal, senior analyst at London-based consultancy Ovum. This hindered the adoption of workflow systems, he maintains, by making those hard-coded processes difficult to change and essentially imposing the vendors view of how a process should operate on an insurer. [Today] vendors have realized the value [of BPM systems] is allowing people to define their own processes via the application. Processes now are explicit and extracted from the application.

When it comes to connecting the business applications that support a process to a BPM workflow engine, XML Web services presently provide a means of integration that Travers points out wasnt possible even two years ago. Most, or at least many, organizations have gone through an e-commerce or other kind of Web-enablement [initiative] or systems-renewal project that has introduced some contemporary architecture into their environment. That makes it easier, since those battles already have been fought because those systems were opened up in those projects, he says.

The modeling effort [in BPM proj-ects] creates XML metadata that can be interpreted, executed, and managed by the state management engine of the BPMS, Hill explains. However, insurers need to identify critical IT assets and expose them as Web services, which is not particularly easy to do, especially for insurers that have a lot of legacy systems, she says.

This reality means insurers still may grapple with typical EAI challenges in the automation phases of BPM projects. It never would be practical or feasible for an IT department to expose all parts of a system before its actually needed, says Mark Christiansen, vice president at Exigen Group. There always will be some system, with some data or transaction, that wont be available in time via SOA [service-oriented architecture], so we use a number of native approaches for integration until such time SOA can be leveraged.

At NCFB, staff worked with consultants from Clear Technology to custom build Web services interfaces to connect the workflow engine to its legacy administration systems. Hiovich reports the carrier also chose to deploy a completely new front end to the policy processing staff, replacing the green-screen interface previously in use, which has helped reduce training time on the system dramatically.

Although this upfront integration work was needed, NCFB expects to be able to reuse those components going forward. Were using the Web services we built for this project for other applications, says Michael Adams, analyst in the advance technology group at NCFB, including a host of agent-based applications for the Web portal. As other applications need data from these systems weve already interfaced, its easy to do that rather than building whole new lines of code.

Unlike NCFB, UnumProvident wanted to keep the existing front ends to which claims and underwriting staff were accustomed. The workflow system from Staffware operates behind the scenes, linking to those front ends as well as numerous legacy administration systems via Web service APIs.

Weve got a very layered architecture, so most of the queue interaction occurs as a result of a Web service call from an application to a Web server, and the Web server interacts with the Staffware engine through the API level. Once you build that layered architecture, theres not so much interaction with the legacy, Robinson says.

Merits of Monitoring

BPM systems should provide process monitoring. On one level, this monitoring occurs on a real-time, day-to-day basis. For instance, at Mid-Continent, documents that enter the rating pool automatically are routed to a rater not only based on that individuals capabilities but also based on current workloads. Additionally, supervisors can monitor work queues and make adjustments as necessary. It works wonderfully, Smrke says.
But the bigger-picture impact is in long-term monitoring for process optimization. One of the big promises out of [BPM] is, with a properly connected set of systems, the byproduct is the measurement of the performance of the process. That has been lacking [in the past], says Burlton.

The HandySoft system at QBE Au-stralia, for example, includes BizFlow Process Simulator, a simulation and analysis environment. Process Simulator allows QBE to look at existing processes and create what-if scenarios to optimize process automation.

Changing the workflow in response is not too difficult, Mo asserts. We just map and define a new version of the business process.

Ultimately, it is the implicit concept of continual improvement that best separates BPM from discarded acronyms that have gone before it. There is an understanding BPM is not defined at the [technology] product level, says Lachal. Today, BPM is not a product; its a state of mind.

Can One BPMS Do It All?

Among the claims of BPM solution vendors is the capability to do it all: to allow insurers to design a process, identify and provide the mechanism for the necessary connection of staff and integration of systems to a rules-based workflow system, and provide ongoing monitoring for process improvement. But do those claims add up?

Janelle Hill, senior program director of integration and development strategies at META Group, refers to these systems as BPM suites and says their capabilities are quite robust. The earlier tools only modeledthey produced pictures, she says. In the newer BPM suites . . . the main difference is these tools provide not only a modeling environment but can turn that into an executable.

Where [these suites] are limited is in [handling] multiple processes with shared services that are reused and where, if you mess [that service] up, it will impact everything, says Roger Burlton, president of Process Renewal Group. The vendors are not good at modeling the architectural components and the impact of one shared process on another. That is our next big challenge.

META is tracking more than 100 vendors that claim to provide a full BPM system, Hill reports. There are no leaders right now, she says.

Each system, depending on its lineage, has strengths and weaknesses, Rod Travers, senior vice president of technology at the Robert E. Nolan Company, maintains. Some of the vendors are more upfront about that than others. He also cautions against be-lieving all the marketing hype. What you see in the ads is a drag and drop, you draw the lines, and systems are connected. Thats not how it works.

Initiatives and Impacts

Insurer: UnumProvident

Initiative: Streamline claims handling, be-ginning with the return-to-work process, and underwriting, beginning with evidence of insurability forms while dealing with different systems collected from various business mergers and acquisitions.

Strategy: Used TIBCOs Staffware Process Suite to design workflows and link the Staffware workflow system to existing claims and underwriting front ends and numerous legacy administration systems through Web service APIs.

Impacts: Fully electronic document routing in targeted processes. Deployed to 5,800 staff members and handling 1.3 million system transactions daily. Workload leveling to allow for seasonal claim peaks to be handled with no increase in staff. Reduced cycle time and greater accuracy in work assignment.

Insurer: QBE Australia

Initiative: Standardize the case-management process, lower operational costs,

and meet compliance deadlines for claims handling in workers compensation.

Strategy: Deployed Web-based BizFlow from HandySoft to claims staff, beginning with claims case managers in branch offices throughout Australia, to connect them to back-end CICS-based systems, standardize claims diaries, and provide rules-based workflow.

Impacts: Currently in roll-out phase. Early benefits include faster and simultaneous access to claims logs and information, updated in real time; an operational cost reduction of 7 percent to 10 percent is targeted.

Insurer: Mid-Continent Group

Initiative: Eliminate decentralized hand scanning of documents and allow for bar-code-based, automated document routing companywide.

Strategy: Used Microsoft Visio for process design and Exigen Workflow for workflow automation. Integration of workflow with production scanners, bar-code server, and AS/400-based administration systems.

Impacts: Currently deployed to personal lines, commercial lines, human resources, and accounting areas with remainder of enterprise rollout to be completed by year-end. Gains exist by department, such as in reducing commercial audit time from six months to 60 days. Reduction in scanning staff despite more than doubling document volume.

Insurer: North Carolina Farm Bureau

Initiative: Reduce the time to process new policy applications, the number of processing staff involved, and the amount of time needed to train new users on the processing system.

Strategy: Used Tranzax by Clear Technology to automate the workflow for mobile-home business, building Web service APIs to connect Tranzax to a new front-end and NCFB mainframe administration systems.

Impacts: Reduced policy turnaround time from three weeks to two days, eliminated four staff roles in the process, reduced training time from two months to two days, and increased accuracy in rating and overall customer satisfaction.

What Is BPM?

Part of the confusion in the hype surrounding BPM is exactly what the acronym means. In this article, we mean business process management, the discipline that evaluates how people and systems interact to perform one or more end-to-end tasks and seeks to improve those interactions. This differs from business process modeling, which is one subset of the management process. It also differs from business performance monitoring, a completely different discipline.
BPM systems, or BPMS, are the number of technologiesor the suite of applicationsthat help an insurer target ongoing BPM.

Tech Guide: BPM

AWD
Kansas City, Mo.
816-843-8222
www.awdbpm.com

BEA
San Jose, Calif.
800-817-4232
www.bea.com

BMC Software
Houston, Tex.
800-841-2031
www.bmc.com

BroadVision
Redwood City, Calif.
650-542-5100
www.broadvision.com

Cartesis
Norwalk, Conn.
203-956-2800
www.cartesis.com

Casewise Systems
Mount Laurel, N.J.
856-380-1400
www.casewise.com

Chordiant Software
Cupertino, Calif.
408-507-6100
www.chordiant.com

Clarity Systems
Toronto, Ont.
877-410-5070
www.claritysystems.com

Clear Technology
Westminster, Colo.
303-583-4100
www.clear-technology.com

Cognos
Ottawa, Ont.
613-738-1440
www.cognos.com

Computas
Sammamish, Wash.
425-391-2000
www.computas.com

CSC
Austin, Tex.
512-275-5000
www.csc.com

DSPA Software
Mississauga, Ont.
905-279-9993
www.dspasoftware.com

eiStream
Dallas, Tex.
214-520-1660
www.eistream.com

ePolicy Solutions
Torrance, Calif.
310-819-3200
www.epolicysolutions.com

Exigen Group
San Francisco, Calif.
415-402-2600
www.exigengroup.com

Fair Isaac
Minneapolis, Minn.
612-758-5200
www.fairisaac.com

FileNet
Costa Mesa, Calif.
800-345-3638
www.filenet.com

Fiserv
Brookfield, Wis.
262-879-5000
www.fiserv.com

Fuego
Plano, Tex.
972-801-4200
www.fuego.com

Fujitsu Siemens Computers
Sunnyvale, Calif.
408-746-6000
www.fujitsu.com

GeniSys Outsourcing
Toronto, Ont.
416-934-2390
www.genisysoutsourcing.com

Handysoft
Vienna, Va.
800-753-9343
www.handysoft.com

Hyland Software
Westlake, Ohio
440-788-5000
www.onbase.com

IBM
White Plains, N.Y.
888-426-4968
www.ibm.com

IDS Scheer
Berwin, Pa.
610-854-6800
www.ids-scheer.com

Intalio
San Mateo, Calif.
650-577-4700
www.intalio.com

ISCS, Inc.
San Jose, Calif.
408-260-3980
www.iscs.com

iWay Software
New York, N.Y.
212-330-1700
www.iwaysoftware.com

Knightsbridge Solutions
Chicago, Ill.
312-577-0210
www.knightsbridge.com

Lombardi Software
Austin, Tex.
512-382-8200
www.lombardisoftware.com

Magma Group
Lavendelplein,
The Netherlands
+ 31 (0) 342 406 200
www.magmagroup.com

Metaserver
New Haven, Conn.
877-789-8090
www.metaserver.com

Metastorm
Columbia, Md.
877-321-6382
www.metastorm.com

Microsoft
Redmond, Wash.
425-882-8080
www.microsoft.com

Pegasystems
Cambridge, Mass.
617-374-9600
www.pegasystems.com

PeopleSoft
Pleasanton, Calif.
925-225-3000
www.peoplesoft.com

Popkin Software
New York, N.Y.
646-346-8500
www.popkin.com

Proforma
Southfield, Mich.
248-356-9775
www.proformacorp.com

Pure Edge Solutions
Victoria, B.C.
888-517-2675
www.pureedge.com

RulesPower
Burlington, Mass.
781-272-1111
www.rulespower.com

Sajus Technologies
Mississauga, Ont.
905-602-7507
www.sajus.com

SAP
Newtown Square, Pa.
800-872-1727
www.sap.com

Solimar Systems
San Diego, Calif.
619-849-2800
www.solimarsystems.com

Sterling Commerce
Dublin, Ohio
614-793-7000
www.sterlingcommerce.com

TIBCO Software, Inc.
Palo Alto, Calif.
800-420-8450
www.tibco.com

Valley Oak Systems
San Ramon, Calif.
925-242-4600
www.valleyoak.com