BPM: The Road Ahead :: AO
Michael Brown of Battery Ventures writes about BPM: The Road Ahead in AO.
Historically, senior management's view into a company's performance was limited to the financial data and metrics produced in statements by the CFO. Needless to say, there were very little, if any, objective non-financial measures with which to manage the business, and all the financial information available was historical. This method of management is analogous to driving a car while spending a majority of time looking into the rear-view mirror…with only one eye open.
The implementation of large transactional systems, such as ERP, CRM, SCM, and so on, in the 1990s significantly improved the collection of both financial and non-financial data. However, the data resident in these systems delivered only marginal relative value to management because the analysis and reporting of the data were limited to each individual application or a specific subset of applications through the implementation of a data warehouse; thus, it could not provide a holistic picture of a company's performance. Given the batch-process requirements of these systems, the data was not in real time and, consequently, of limited value.
This growth trajectory is primarily driven by three macro trends in the market:
1. Large ERP foundation.
2. New generation of BPM technology.
3. External market factors.
how do analysts think the industry will evolve? Although there are several schools of thought, the two primary theories are as follows:
1. The big getting bigger. Similar to the ERP market before it, some market pundits believe the BPM industry will continue to consolidate to the point where an overwhelming majority of the economic value and/or market cap is dominated by the top three or four vendors.
2. Market bifurcation. Believers in this theory state that vendors either have to achieve scale or specialize by developing either horizontal functionality or vertical market expertise. In short, there is no middle ground for a vendor to occupy.
Regardless of how the market structure changes over time, we believe there will be both evolutionary and revolutionary innovation as it matures. From an evolutionary perspective, the market will naturally demand a greater level of verticalization. Although a handful of vendors have tailored their solutions to address the requirements of a specific industry, most of the current solutions are akin to one-size-fits-all. The issues with this approach are longer implementation schedules and higher long-term maintenance costs. As the market matures, we believe vendors and/or their partners will look to verticalization as a way to both differentiate their solutions and drive incremental market growth.
More interestingly, we believe the market will significantly benefit from the next generation of BPM, which will include revolutionary technology such as predictive analytics. Not only will BPM solutions have the ability to predict how an organization will react to external economic events, but they will also prescribe actions/solutions to senior management to address the specific situation. This level of visibility and foresight will enable management, like the driver in our analogy, to concentrate on what's ahead, while only looking back to see how far the competition has fallen.
Fasten your seat belt and enjoy the ride.