Bpm - The Adoption In The Financial Industry Versus Early Expectations

Since the earliest days of commercial IT, no sector has taken to technology better than the financial services sector. Few other sectors have spent as large sums of money on systems and applications customized to their vertical or have been as adept in using them to cut costs and improve performance. Part of the reason has been that technology is integral to financial businesses, dealing as they do with information rather than physical assets. Also, the sector most easily yields to the automation of business processes.
The maturity of IT adoptions in the financial sector is reflected in the paradigm shift that has occurred in recent years. Thus, technology not only automates existing paper-based tasks and functions but facilitates an end-to-end approach to streamlining and coordinating core business processes.
No surprise then that one of the most sought-after technology suites is Business Process Management (BPM), a holistic management approach that promotes business effectiveness and efficiency while striving for innovation, flexibility and integration with technology. According to surveys, the BPM market has been growing at a steady clip of 20% annually over the last four years, with sales expected to reach $3 billion by 2009. Add to this results from one survey in 2004, which claimed that over 90% of BPM adopters surveyed had achieved an average 15% return on the project, while 55% had returns in the $100,000 to $500,000 range.
Resistance
Despite these rather encouraging numbers, however, there is still a great deal of reluctance in the financial sector that belies the much higher expectations for BPM adoption. One of the primary reasons for this reluctance is the unnaturally high expectations placed on BPM. As one commentator put it a couple of years ago, BPM technology has reached a peak of inflated expectations, and what is to be expected now is the backlash that results when the inevitable trough of disillusionment sets in. There are a number of reasons for the occasional, moderate failure of BPM and hence for the backlash that comes from certain quarters:
Failure to adopt a holistic approach to BPM
A common approach many organizations adopt is to implement BPM as a response to a particular pain point. Even where a wider business perspective is adopted, many organizations fail to look wide enough. Obtaining organization-wide support is important for a successful BPM implementation, especially senior-management support. This is because a BPM implementation seeks to change the very way the organization functions and this will not occur without support.
Failure to adopt an ongoing approach to BPM
Many companies fail to recognize that BPM is a journey, not a destination. Thus they treat BPM as a one-time IT project, neglecting to learn from experience and tweak services and processes for optimal benefit. Instead, many companies remain content with the small gains of a one-time redesign.

Failure to lay down clear business rules and processes
Many organizations are quick to lay the blame for failed BPM implementations at the feet of vendors. However, failed projects more often occur because of people rather than technology problems. Many companies have few business rules identified to serve as the basis for the modeling processes. Thus, they are often guilty of not defining their own processes granularly or the degree of automation and process management required.

Failure to look beyond process automation
While workflow and process automation can deliver amazing bottom line business results, this is not to be confused with BPM. What many companies fail to do is to focus on BPM as an enabler to deliver a better customer experience. It is the act of looking at a company from the outside and questioning the way everything is done that differentiates real BPM work from mere process mapping, documentation and automation.

What BPM can really do for the financial sector
Applied properly, BPM offers financial firms a plethora of opportunities for improving customer experience, change management and risk management:

Integration and process optimization
Reducing the time lag between sale and fulfillment is key to enhancing the customer experience and optimizing revenue in any financial transaction. Successful financial firms are those that fully integrate not only across processes such as lending, payments and trading, but also with third parties supporting key components of complex financial products. True integration on such a scale can only be achieved by a comprehensive BPM strategy that welds together a firms disparate, bespoke, legacy systems into a fully integrated whole.

Change management
One of the most radical sources of change in the financial sector today comes with mergers and acquisitions. Such events can force an organization to reassess and possibly radically redesign their core processes, a process that is severely limited by the lack of integration in most legacy systems. Even outside of such exceptional circumstances, the competitive, up-to-the-minute nature of the financial sector, new products and instruments must often be put together in days and sometimes hours. All of this requires a strong change management capability, which is provided by an effective BPM initiative that allows integration across systems and processes.
BPM also allows for a structured and powerful approach to Process Discovery combining the ability to change a new process easily while maintaining a high degree of control as required by a financial industry process. A new product or process can be launched in a short time, optimized easily to reach a matured process status with the next decision point of integrating closely or loosely with other existing systems.

Compliance and risk management
Easily the most difficult problem for financial firms today is compliance management. From SOX to Basel II to MIFID to anti-money laundering laws, financial firms today are practically under siege from multiplying regulatory frameworks. Achieving compliance is an uphill and seemingly-endless struggle, marked by high costs and time-consuming processes that change on a regular basis and hence require repeated effort to stay compliant.
Many of the difficulties of compliance, however, can be avoided with effective BPM tackling process definition and process monitoring, which are at the heart of compliance. BPM technology allows businesses to automate and standardize processes that are both auditable and consistent, which allows the enforcement of rules-based behavior across information silos. On the process monitoring side, BPM automatically captures information on a companys processes, as required by a number of regulatory mandates, and creates an audit trail.
There are a number of key advantages that Business Process Management offer financial organizations. However, these advantages are not realizable unless BPM is applied in a holistic, ongoing, enterprise-wide manner and treated as a means to better overall business performance - rather than merely a tool for automation and minor cost savings.
Applied in such a manner, BPM has the potential to deliver not just cost savings, but the strong revenue gains that automatically come out of a service-centric organizational ethos.