Insights on the emergence of Business Process Management (BPM) and changes in the software and technology market with Madu Ratnayake, Vice President and General Manager Virtusa Sri Lanka:
Q: BPM technology is seen as a very new entrant to the IT arena. There is growing interest in this field. Gradually, the number of conferences on BPM is increasing. It has been highly recognised by famous market research companies like Gartner and Forrester Research. 2010 has been named the Year of BPM. What are your views on where BPM technology stands globally, in its current context?
A: Let me give you the background to the evolution of BPM first. If you look at the evolution of software development, initially developers wrote programes directly on the machine using machine code. Then came the operating system. A lot of mundane things like file handling, etc. were encapsulated by the operating system and programmers wrote on top of the operating system. And that’s one level of abstraction. Then came the application servers, like WebLogic, WebSphere, etc.
They abstracted another layer of functionality: transaction management, state management, etc., and the programmer wrote code on top of that. BPM is the natural evolution to the next level. Now we’re encapsulating almost all the basic technology functionality; and exposing a platform for coding the business functionality at the very top. So if you look at the evolution of programming, that’s where BPM is – technology getting closer to the business.
Another trend emerging with BPM is what you call “business technology”. Technology for a long time has always evolved on its own without much interplay with business. However, at the end of the day all these need to result in business outcomes. BPM is clearly the next wave in this evolution, in terms of how we move technology, and how we marry business and technology. So that’s where I see BPM is headed.
We are ahead of the game on this one. We started many years ago when we noticed the trend. Having done that, now it’s time to really capitalise on our early mover advantage in BPM. Globally the BPM market is growing at about 15%, despite the downturn in the economy in the last couple of years.
So it’s really at the tipping point of the Gartner hype curve. If you look at it, by and large BPM is used by early adopters, leading edge companies who push the boundaries of technology and business. Now it’s about to get transformed into a mainstream technology.
Q: As we discussed there is a lot of talk and hype on BPM. Yet certain individuals are skeptical about new technologies such as these. There have been predications like these that have failed in the past. Do you think the BPM will hold up to its expectations?
A: A good question. To answer that, I would like to look back at what the promise of BPM is and the alternatives we have. If you look at by and large, large corporations used to use Enterprise Resource Planning products (ERP) solutions. What is ERP? ERP solutions are a combination of best practices, coded into a solution. Because ERP will bring in best practices from the other companies, it’ll help you to get up to the standard. But if your business is at the leading edge, you need to push beyond ERP.
If you really look at the companies that are using BPM right now, they are the large leading global corporations. And if you look at the BPM providers, most are large companies like Pega and so on. So what does BPM give you? While out-of-the-box solutions give you best practices, your business has to adopt around the system.
But in today’s business context the competition is changing very rapidly; many established paradigms are changing completely overnight. So you need to be able to change you business processes and you need to be very agile as an organisation. When most of your core business processes are digitised, unless the agility required from the competitive point of view cannot be translated into your internal solutions, you have a competitiveness challenge. BPM completely addresses that.
If we’re looking from a business point of view, it’s being able to change with the market, so you make the organisation more agile, more responsive to market, more responsive to competition. Those are fundamental business success drivers. That’s one reason I think BPM is here to stay.
The other is how you look at the business for automation strategy. The alternatives to BPM are the functional view. Focus is on functions it’s your HR, it’s your Finance, it’s your Marketing, etc. Functional view is a siloed view of the organisation. Whereas, BPM looks at the organisation from a core process point of view, processes like lead-to- cash, hire- to-retire, trouble-to-resolve, order-to- cash, etc. are core business processes of an organisation.
That’s the view the organisation is viewed by stakeholders outside. When a customer looks at your organisation they don’t care about you HR and your finance and accounting and so forth. They look at “from my order all the way to delivery” end to end process of fulfilment. Leading edge organisations are now transferring their companies to focus around core business process. When you look at your company the same way the external world looks at it, then your measurements are very different.
Instead of looking at siloed departmental measures you’re looking at end to end process measures. How quickly can you resolve a customer complaint? How quickly can you fulfil an order? How fast can you get a concept to market? What is your total cost per order fulfilment? etc. BPM helps you to completely align your organisation to the external view of your organisation, which is the customers’ view. So that is the second very powerful change it brings.
In summary it’s the agility of your business and your ability to align you organisation to the view of the external world. Those are two things that are very fundamental. So that is why I very strongly feel that BPM is going to transform the way a business uses technology in the future.
Q: On a different note, you just mentioned that BPM is actually the merging point for business management and information technology. So the future BPM engineer would probably have to be savvy in business management as well as in technology. And introducing a technology like that in Sri Lanka we need to build up a developer base, because developers are the core of our business. So what initiatives has Virtusa taken to promote BPM among the developer community?
A: As with anything new and anything emerging, people don’t see the total picture in the beginning. The people who get in to BPM now are the people who are more futuristic and looking way ahead of the curve. I think by and large, a large amount of business professionals will come into this. So anybody who will get into BPM now will have the early mover advantage just like the companies that moved into BPM will have the early mover advantage.
When BPM becomes a lot more mainstream, professionals with, say 10 years experience in BPM, are going to be only a handful. Actually it’s going to be very hot in demand in a global point of view not only in Sri Lanka. Globally, it’s going to be very hard to find professionals that know business and technology well. A lot of the time engineers in the early stages of their careers focus a lot on technology, like Java,.NET, etc.
They generally don’t have a good view about the businesses function, what are the business challenges, what are the business processes, etc. So it is important that we marry business and technology and bring them together. I think that’s key.
To be a successful IT professional, regardless of BPM or not, you need to have a good mix of business and technology. People who get into BPM have an edge over others in that sense. So as a company we have done many things and are doing many things.
First, create awareness among the community about BPM and its potential. We’re working with universities; we’re bringing down lecturers; we’re working on collaborations; we’re trying to do a lot more internally as well. I guess a lot more needs to be done. We hope that in the next year or two we will have BPM as a module that is taught in every university. We’re talking to some of the universities now and trying to make them see the future of this so that as a country we are ready for this. Like Virtusa did.
We got into BPM six years ago when nobody even thought of BPM. That’s why we are the world’s largest BPM service provider today. That’s because we had the foresight about six to seven years ago to get into this. None of this was clear at that time. We saw a glimpse of the promise of BPM. We knew that it’s going to be the next big thing. So, yes, I think there is a lot more that needs to be done. And that’s the way forward.
Q: As you mentioned being a key BPM player in the world, Virtusa should be proud of itself and, lately, there’s been a great wave of recruitment and a higher level of interest within the company on BPM. So what is your vision for the BPM practice within the company?
A: So overall, if you look at our revenue mix for the last two to three years a significant portion comes from BPM. This will continue as the BPM adoption is sky rocketing. Mostly, the financial services companies are the generally early adopters of any enterprise technology. We’ve been working with the word’s best financial services companies and we’ve been working with the world’s leading BPM products like Pega. But if you look at Pega, it’s a high-end sophisticated product which requires a significant investment.
With the increasing worldwide demand to adopt business process based automation, now you can see the next wave of BPM products emerging, such as Savvion, Progress and Microsoft. Everyone is getting on the BPM bandwagon. Most key technology players are offering BPM solutions. With this, BPM is going to be a lot more accessible to another large set of companies. So as a result, the market will explode in the next few years. So that’s why we’ve taken a decision to drive the next level of expansion, just like we took a view seven years ago to really get into BPM.
I see we are at a tipping point of the next big wave of growth. We see that BPM is moving from early adopter stage to mass adoption. We need to gear up, so that’s why we’re really focusing on enhancing our talent base and our ability to respond to that market demand. We are also expanding the offerings. We’re also targeting to do a lot of that out of Sri Lanka. And I’d like to add a little bit more about Sri Lanka and the key things we look at for our Sri Lankan centre strategically.
You know Sri Lanka’s talent market is relatively smaller than India and other parts of the world. Our focus as a country is to be completely niche and completely focused on a few things that we can be globally competitive. So that’s why we looked at BPM as a really mega-focus for Sri Lanka. We want to make sure we really build that competency, and get into a globally competitive centre of excellence out of Sri Lanka. So that’s the drive to hire more Virtusans, get in to more university partnerships, etc.
I believe that in the next three to four years, the demand for BPM will be tremendous. So it’s time for us to really gear up. The push for BPM is based on very sound business drivers, like agility, like end-to-end process focus and so forth. So I think BPM is clearly going to be a large part of our customers IT roadmap and we want to be a part of it.