Marching toward business process transformation

To meet what Gen. Paul J. Kern says are the “formidable challenges” of improving the way soldiers get supplies—everything from fatigues to tanks—the U.S. Army Materiel Command has gone knee-deep into one of the largest business process re-engineering projects in its history. “We have to harness the power of technology more quickly to reduce lead times, providing our forces with unmatched capability and exploitable advantages,” Kern wrote last summer in a white paper describing his command’s transformation vision. “We must continue to improve our organizations and processes to more responsively support our soldiers.”While the mission is crystal clear, the Army command’s IT needs are daunting. It catalogs and stocks more than 140,000 items. Its supply depots and offices span the globe. Some of its computer systems, tracking everything from orders to delivery schedules, date to the Nixon administration.“We have had to change the way we do business in the Army,” notes Sue Baker, a principal deputy in the materiel command, based at Fort Belvoir, Va., who is working on one aspect of the Army’s 10-year logistics modernization plan. “We feel it is crucial to have this business process network in place.”The Army’s journey is one of the most visible among the hundreds, perhaps thousands, of process management efforts under way in federal, state and local governments. Because the definition of BPM varies—covering everything from enterprise resource planning to supply-chain and customer-relationship management tools, and the new generation of service-oriented architectures—it is difficult to get a precise estimate of the scope of work in government sectors today.Using leading-edge software from SAP America Inc. of Newtown Square, Pa., a unit of the German business applications software company, the Army command is moving toward faster integration of dozens of different systems, as well as gaining the ability to do improved modeling and a host of other critical business tasks. The SAP software also enlists Web services, the catchall term for the complex technology that allows different software components to work with each other over the Internet. “The scope of this is really huge, it is incredible,” says Thomas Gulledge, a professor of public policy and engineering at George Mason University and president of Enterprise Integration Inc. of Alexandria, Va., which was hired to do architecture consulting on the Army project. “We are pressing the envelope.”Vendors, analysts and government agencies alike are keenly watching the materiel command’s foray into business process and enterprise changes. Not only is it a formidable technology shift, but one that will require a change in culture, especially in agencies where paperwork processes dominated for decades, where specialized software was more often than not written in-house, and where regulations govern the way business gets done. As Gulledge put it, “The technology is the easy part.”“Technology is not going to rescue us if we fail to solve our core process problems,” adds David M. Fisher, author of “Optimize Now (or else!): How to Leverage Processes and Information to Achieve Enterprise Optimization (and Avoid Enterprise Extinction),” published in December. “Web services don’t solve the problem of ‘garbage in, garbage out.’” Government efforts at business process management “are pretty advanced in certain respects, and not so much in others,” says Tom Davenport, a professor at Babson College in Massachusetts, and widely acknowledged as a leading authority and author on business process management trends. “The one thing in government that could accelerate this movement is the move toward enterprise packages.”Depending on how business process management software and services are defined, spending in the segment is expected to increase 10 percent to 20 percent this year, according to industry projections, while acquisitions and consolidation will shrink the number of companies in the marketplace. Government purchases make up a fraction of the market, estimated at $3 billion to $4 billion.“It is an immature market,” says Sharyn C. Leaver, principal analyst at Forrester Research of Cambridge, Mass., who spoke recently about industry trends at the ProcessWorld conference in Miami Beach, Fla.The Sarbanes-Oxley Act of 2002, which imposes strict rules for reporting and monitoring of business activities at public companies, has boosted spending for BPM packages and toolsets, analysts say. About a third of all private-sector spending for BPM software is coming from the financial-services industry while governments account for about 15 percent to 20 percent.Vendors promote BPM as a way for the private sector to streamline operations and improve profits, touting strong return-on-investment figures for business process software that essentially lets them mesh existing systems. For government clients, they have emphasized the potential for greater efficiency, accountability and forecasting.In government agencies, “we’re seeing it becoming part of their critical infrastructure,” says Laura Mooney, the director of product marketing for Metastorm Inc., a Columbia, Md., private company that has been developing and selling business process management software since 1996. “Things have really taken off. Last year was more of an education period … this year we’re seeing a lot more willingness to step in.”The federal enterprise architecture push, the continued emphasis on business plans to improve agency IT efficiency and outsourcing trends also are expected to sway more agencies toward business process management in the next five years, analysts say. “If you are going to be successful at outsourcing, you have to have an understanding of the outsourcing process,” says Davenport, the Babson professor. Process management systems can help define and model the processes.Although the federal government has been preaching reforms in purchasing for more than a decade, the advisory firm Aberdeen Group Inc. of Boston, in a survey done in conjunction with GCN this spring, estimates the federal government is losing billions of dollars each year through mismanaged contracts.Process management “is certainly a way to deal with the perceived amounts of waste” in government, says Brett Champlin, president of the Association of Business Management Professionals, a year-old, vendor-neutral nonprofit group. “That’s part of process re-engineering.”With about 120 members, the association has three active chapters—in the Chicago, Philadelphia and San Francisco metro areas—and others in emerging phases in at least seven other cities in the United States and Canada.“Maybe we need a Clinger-Cohen Act for” process management, or a similar congressional mandate, says Champlin, an internal-process consultant with a major insurance company. “A lot of times, that is what it takes.” The Clinger-Cohen Act, enacted eight years ago, created new requirements for federal IT purchases and performance.The Army Materiel Command’s venture has already brought some valuable lessons that Baker, who was invited to present a briefing on the Single Army Logistics Enterprise project at last month’s ProcessWorld conference, says could be shared with all the military branches. “The DOD is coming to the realization … that ERP is the way to go,” Baker says. “There are real opportunities to manage this and to work together.”Baker stressed that open channels of communications between the users and vendors are essential, and “without a strong governance structure, you go nowhere.” “In this culture there is no one person in charge,” says Gulledge. “Every decision has to be made by consensus. It requires very detailed and very concise documentation.”