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Companies Embrace Promise of BPM To Drive Innovation

But remain in early stages of deployment maturity, with limited benefits to date

Westborough, MA – March 26th, 2008 – While many companies are investing in business process management (BPM) solutions as a way to spur innovation and boost competitiveness, they lack the best practices, vision and executive sponsorship necessary to realize the full benefits of their BPM investments, according to a new survey by PRTM and Virtusa Corporation.

The survey found that while companies often have basic elements of BPM in place—including systems for collaboration, workflow and business rules—most of these elements are in early stages of deployment and are not yet optimized. Information sources are often scattered across the organization, and workflow and collaboration systems cannot keep pace with a company’s changing business processes. In addition, companies generally use few metrics or data standards to support measurement of performance improvement.

Key findings include:

  • 47% of respondents are interested in deploying BPM for new product development—an emerging innovation area for BPM applications
  • Only 12% of participants use a defined roadmap for business process improvements, while more than half have no formal BPM roadmap at all
  • Over 40% of respondents have no clear decision-makers in place to manage BPM programs
  • While some 72% of study participants have IT-enabled collaboration capabilities, further investigation revealed the systems work poorly

“While many of the survey respondents have made some investments in BPM solutions, few have put in place clear objectives or roadmaps to support these initiatives,” said Kevin Nguyen, PRTM Principal. “The lack of a clear vision and strategy is often compounded by inadequate executive sponsorship, governance and resources to support BPM projects, placing these investments at risk.”

The survey found that, despite immature current practices, many companies look to BPM as a way to drive innovation. For example, the survey revealed a stronger-than-expected desire on the part of respondents to use BPM to support product innovation—an emerging area for BPM applications.

To gain insight into how companies are using BPM to drive innovation, PRTM and Virtusa surveyed 125 product and service companies, including those in the manufacturing, communications/technology, banking, financial services and media/information industries, and conducted follow-up telephone interviews to further explore respondents’ current BPM and innovation initiatives.

Target Areas of BPM Deployment
The survey found that target areas of BPM deployment span the entire enterprise. “While we expected respondents to list conventional areas for BPM, such as product and service platform management, customer relationship management and internal operations, many participants expressed strong interest in areas related to product innovation,” added Nguyen. “These include new product development, idea management, and product portfolio management—all emerging areas for BPM applications. These surprising findings validate our hypothesis that BPM is becoming a powerful tool for enhancing innovation agility in enterprises today.”

Target Areas of BPM Deployment
While more than half of the companies participating in the survey said they use or plan to use BPM, those that do,lack a clear plan for deploying BPM. Only 15% of the companies reported having a vision for BPM with stated goals and objectives. The survey also revealed that only 12% of participants use a defined roadmap for business process improvements, while more than half have no formal BPM roadmap at all. Also, while most companies reported a defined IT strategy and architecture in place, there are few plans in place to optimize the architecture.

“In our experience, to get the most value out of a major new initiative like BPM, companies need to integrate clear business improvement goals into a multi-year roadmap,” said Marc Hebert, chief marketing officer for Virtusa. “This roadmap should set formal targets for technology and business capabilities, such as increased revenue from new products or improved design collaboration with external partners. Without it, companies are hard pressed to define and measure success…”

Most BPM initiatives lack proper sponsorship, governance or resources
Many of those interviewed indicated they are investing in BPM initiatives. However, those projects typically lack senior executive sponsorship. Only 24% of respondents reported having a VP or a senior executive in charge of BPM. BPM projects, surprisingly, are also found to lack strong governance controls, with over 40% of respondents saying there is no clear decision-maker in place to manage BPM programs.

IT-enabled collaboration is not optimized
Companies realize that collaboration, both internal and external, is essential for effective innovation. About 72% of study participants have in place some form of IT-enabled collaboration capability. However, follow-up interviews showed that few of these solutions work well. Most were knowledge-management or file-sharing systems that are poorly structured, have inadequate version control, and are disconnected from relevant processes. Best practice companies use collaboration solutions that are aligned with business processes and well-integrated with workflow and the document lifecycle. Many BPM solutions provide such capabilities.

There is no clear winner in the BPM vendor marketplace
Over half of the respondents deploy BPM solutions to facilitate innovation agility. A variety of software vendors were named without any clear winner, with IBM having a slight lead over Savvion, Pegasystems, and Oracle.

In summary, the survey suggests that companies recognize the growing value of BPM and its ability to drive innovation throughout the enterprise. While there are some industry leaders that have achieved innovation agility through BPM, most companies are only beginning, and have not yet optimized their BPM initiatives. Most companies have not adopted strong practices in program governance, business process definition, ownership and data management.

PRTM and Virtusa are continuing to track trends in BPM adoption and its impact on innovation agility. If you are interested in participating in the next round of the study, please go to: http://www.surveymonkey.com/s.aspx?sm=3nrAd0RJ_2b1uHSi_2fe0XzXDQ_3d_3d. Participants receive detailed benchmark data based on aggregate survey responses.

About PRTM Management Consultants

Since 1976, PRTM has created a competitive advantage for its clients by changing the way companies operate. PRTM management consultants work with senior executives to develop and implement innovative operational strategies that deliver breakthrough results. The firm is a leader in operational strategy, supply chain, product development, and customer value management. PRTM has 16 offices worldwide and serves major industry and global public sectors. For more information, visit www.prtm.com.

About Virtusa

Virtusa Corporation (NASDAQ: VRTU) is a global information technology (IT) services provider for BPM solutions. Using its enhanced global delivery model, innovative platforming approach and industry expertise, the company provides cost-effective services that enable clients to use IT to accelerate time-to-market, increase productivity and improve customer service.

Virtusa serves Global 2000 enterprises and the leading software vendors in communications & technology; banking, financial services & insurance; and media & information industries.

Founded in 1996 and headquartered in Massachusetts, the company has offices and technology centers throughout the U.S., U.K. and Asia. Visit www.Virtusa.com

For more information contact:

Virtusa:
Brian Ruby, ICR, 203-682-8200, bruby@icrinc.com
Susan Hartzell, ICR, 203-682-8200, shartzell@icrinc.com

PRTM:
Kevin Nguyen, PRTM, 781-434-1220, KNguyen@prtm.com

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