Posts by DavidKelly

BPM adoption continues to spread across all industries, as we hit the
halfway mark of 2005. No longer limited to obvious verticals like financial
services and manufacturing, BPM’s broad appeal is spreading to any company
with processes that require a workflow involving information, people, and
systems. Today, BPM solutions can be found in such diverse markets as
pharmaceutical, government, transportation, and healthcare. In our most
recent informal market survey, Upside Research saw the continuation of
previous patterns for adoption and implementation of BPM solutions, as well
as some interesting trends that highlight BPM’s impact on the greater
enterprise software solutions market. The following results indicate that
BPM is becoming an effective solution for many enterprises.
Sales growth continues but pace is more moderate. After several years of off-the-charts growth for many BPM pure-plays as they quickly ramped up their efforts and started signing marquees customers, the most recent check of revenues for BPM vendors indicates the growth has become more moderate.The average growth from the survey respondents between Q4 2004 and Q1 2005 was 20%, with many vendors adding between 10-20 new enterprise customers. A few vendors actually had no growth in the first quarter because of extended sales cycles, but have seen that business close in the second quarter.
EMEA seeing greatest increase. The majority of BPM sales continue to occur in North America, but there has been a significant increase in sales to Europe, the Middle East, and Africa (EMEA). This can be attributed to the efforts on the part of the vendor community and industry-driven organizations to educate global enterprises about BPM’s role in business strategy. Similarly, as many early adopters roll out enterprise-scale process automation, BPM is showing up in all corners of the world, sparking the global interest.
Adoption rates hampered by market confusion. While general awareness of BPM as a technology by the end user population has risen over the past several quarters, there still exists a significant level of market confusion. Because a variety of technologies are calling themselves “BPM, including Enterprise Application Integration, ERP, and Content Management, end users are confused by what constitutes a business process management solution and what components are necessary to solve specific business problems. Vendors are seeing more awareness of BPM, but are challenged by the market confusion, which is leading to longer sales cycles in some cases.
Technology synergies are emerging. As with any technology market, as the market progresses, complimentary technologies emerge as important areas of overlap. BPM is no exception, and the market has seen a growing interest over the past six months in several synergistic technologies. The greatest interest has been in business rules engines, either providing the ability to integrate with an organization’s existing rules engine or providing an OEMed rules engine to customers. Two other technologies, process modeling and simulation capabilities, have found themselves increasingly a part of the core BPM offering from vendors.
The Upside Uptake
The most recent survey results continue the trend that Upside Research has been following for more than two years: Business Process Management is a noteworthy solution for many enterprises. As the most recent survey results indicate, BPM continues to gain ground and grow from a trendy technology into a viable, enterprise-strength solution. The slower pace of growth indicates some of the bumps that BPM is hitting as it moves along the road toward mainstream technology solution. Enterprises are kicking the tires of BPM, but once they determine it can help solve some of their process issues, they are buying in a big way.
The continuation of development in emerging markets for BPM is also encouraging for BPM’s longevity. As the global market for BPM expands, so will the best practices and understanding of how to best leverage the technology. Upside Research expects this to continue, and for organizations to continue to find unique ways to apply BPM to their business problems. Because of the market confusion, Upside Research believes it is important for the BPM market to consolidate around several important pillars of functionality in order to firmly establish itself as an easily recognized class of technology solution. This consolidation should take place over the next 12 to 18 months and continue to sharpen the core focus of Business Process Management.
To read more about Upside Research’s analysis of its latest State of the BPM
Market survey, look for our upcoming report.

Details on the Deal
On March 14, 2005, IBM announced a definitive agreement to acquire Ascential Software, in deal valued at $1.1B and expected to close in the 2nd quarter of 2005. Once acquired, Ascential Software will report to Janet Perna, the GM for IBM’s Information Management solutions and is expected to be integrated into IBM’s WebSphere Information Integrator set of products. Ascential has partnered closely with IBM over the past few years on everything from joint engineering to joint sales to joint customer support. Originally an offshoot of the database company Informix, Ascential has leveraged its core ETL product as an engine for growth. Since 2001, the company has acquired numerous data integration-oriented technologies and companies, including Torrent Systems in 2001, for its parallel processing capabilities for managing large volumes of data, Vality for data quality capabilities, Mercator for transactional data transformation capabilities, and numerous other companies. Ascential and IBM share over 550 joint customers worldwide.
From IBM’s perspective, this acquisition completed IBM’s information integration offerings and rounds out their capabilities to cover both real-time, event-driven, access-in-place data movement and integration as well as high-speed, high-volume, parallel data movement, transformation, and data quality capabilities.
Key Success Factors
In order to make this acquisition a success, IBM will need to deliver on a few key success factors:
Maintain and strengthen its partner play, for both existing IBM partners and Ascential’s partners, as Upside Research believes that both will continue to play a key role in delivering information integration solutions to market.
Create a practical roadmap for Ascential’s products and how they will be rationalized against existing IBM information integration products. Build upon key integration points which already link IBM and Ascential products.
Outline how Ascential’s technologies and solutions will be integrated with the rest of IBM’s WebSphere software products, specifically in the areas of enterprise application integration and process integration, which are key focus areas for many organizations.
Help customers and prospects understand how to pick and choose which IBM/Ascential products to use when, and what the limitations are. Since Ascential has already acquired numerous companies over the years, IBM isn’t necessarily acquiring a complete product set that has a single, completely unified architecture, and thus it will need to move to help customers understand how the Ascential products it carries forward will mesh with both IBM’s products and the customer’s specific needs. Of course, Ascential has previously announced unified architecture initiatives (Hawk, Rhapsody) aimed at product unification with a common UI and integrated metadata repository, expected to be available in late 2005 and beyond. This unified architecture was one of the key factors for IBM in making the decision to acquire Ascential, and it will be important for IBM to re-affirm these initiatives and provide any additional details on changes that might occur in from leveraging parts of the IBM stack.
Upside Uptake
Upside Research believes this is a great acquisition for IBM, as well as for Ascential Software customers. For years, IBM has had a hole in its integration product offering in the high speed ETL area. With this acquisition, IBM has one of the broadest, if not the broadest, offerings in the data and information integration arena, with comprehensive capabilities for real time and historical information analysis. The acquisition compliments IBM’s existing WebSphere Information Integrator product line and we expect Ascential’s technologies to play a key role in future business integration offerings from IBM.
This acquisition is especially important for IBM because organizations are continuing to struggle with the integration challenges across their organizations. Even with existing data, application, and process integration technologies, organizations continue struggling to gain enterprise-wide views of the critical data, such as customer or product data. Solutions, such as Ascential Software’s Master Data Management solution which provide the capability to rationalize customer data across an enterprise through the use of repository, data transformation, and data access capabilities, are continuing to grow more critical as a result of this need for 360-degree views of customer or product data.
From the Upside Research perspective, Ascential Software compliment’s IBM existing offerings, specifically in the area of data placement, data transformation, and in delivering a robust infrastructure for meta data management. Its parallel engine and common meta data infrastructure provides a very scalable architecture for IBM and customers to use for high volume data movement, transformation and data quality management. In addition, some organizations have been struggling with the increasingly blurry line between different integration functions and software architectures, as EAI, ETL, and EII have all started adding complimentary capabilities to their core functionality and focus that blur the distinctions between competing products. As we’ve seen across the broader technology landscape, organizations are looking to consolidate their IT architectures, reduce the number of products and vendors, and work toward more integrated and strategic solutions. By acquiring Ascential, IBM positions itself well to address this increasing important market need and offer its customers a very scalable and comprehensive information integration architecture that spans from real time to high-volume mass data transformation and movement.
This acquisition will also put some competitors, such as Microsoft and Oracle, on the defensive in the area of information integration. In particular, Oracle has been developing robust data and information integration capabilities, as seen in their business integration products such as its Customer Data Hub and Product Data Hub, two solid products that enabled heterogeneous, enterprise-wide views and analysis of data.
Overall, Upside Research believes this is a strong acquisition for IBM, and although it will take some work for IBM to rationalize and integrate Ascential’s products with their broader integration and software product families, and that IBM, its customers, and Ascential’s customers will benefit from this purchase. By acquiring Ascential, IBM has the foundation for a universal information integration platform and one of the broadest integration offerings that the market has seen.

The applications of Business Process Management cross industries both vertically and horizontally. Opportunities to improve processes that run the business exist in all pockets of an organization, from back-office functions to customer-facing processes. Upside Research continues in its efforts to discover how companies are leveraging BPM for business advantages, and this Update takes a closer look at a company who is using BPM to continue its rapid business expansion plans.
If you’ve ever needed an affordable, quality haircut, than you’ve most likely heard of (or perhaps visited) Great Clips. With more than 2,300 salons across the United States and Canada, Minnesota-based Great Clips is the largest franchiser in the nation’s $50 billion hair care industry. With over 200 employees and more than 1,000 franchisees, Great Clips spends a significant amount of time establishing new franchises and managing its existing franchisee base.
Because expansion is such an integral part of Great Clips’ business goals, finding ways to better manage the many challenges that arise through adding new locations has been a key focus of the company in recent years. Like almost any franchise, there are hundreds of business processes associated with the establishment and launching a new store or a new franchise. Reducing the time required to open a store or to get a new franchisee up and running translates directly into additional revenue, for both Great Clips and the franchisee.
The Vice President of IT at Great Clips undertook a methodical approach to determining the best way to improve the current business processes at the company. He enlisted the help of a local consulting firm to assess the current environment and analyze current business processes, determining the best type of solution that would fit. The company considered building their BPM solution, but after looking at what needed to be accomplished, it quickly realized that building would exceed project budget and time constraints.
After an extensive evaluation process, Great Clips chose Metastorm’s BPM solution to assist in bringing efficiencies to its business processes. Great Clips liked the combination of a process environment with an application solution and the fact that Metastorm could integrate easily with the document management solutions the company was evaluating for purchase in the next year.
Upside Uptake
The “homework” that Great Clips accomplished prior to making its product selection is an important best practice that Upside Research believes others should study. By understanding exactly what the existing environment was doing and how it could be improved, Great Clips was able to move very quickly into production with its new BPM applications once it selected Metastorm. One of the biggest challenges that organizations have told Upside Research they face when embarking on a new BPM project is the discovery process, where they uncover processes and business rules that they hadn’t realized existed and must first take the time to understand them and incorporate them into the project plans. This causes unnecessary delays in BPM projects and can bring frustration on the part of team members as well as impatience by management looking for faster results.
Because of its thorough approach, Great Clips was able to get started with the Metastorm product the day the contract was signed, and is well on its way to meeting its eighteen-month project goal of automating almost 75 processes. Upside Research encourages other organizations to apply some of Great Clips’ best practices to achieve similar success with BPM projects.

After a promising start to the year, BPM has continued to gain visibility through the final quarters of 2004. A recent informal market survey that Upside Research conducted with both BPM vendors as well as BPM corporate adopters indicates that interest in BPM remains strong, and enterprises are trying to fit BPM into their larger strategic IT initiatives as they continue to understand the potential this process-oriented technology offers.
Among the highlights of the recent survey are the following encouraging results:
Overall sales continue to grow. Nearly a dozen vendors responded to this question, and the average increase from Q2 to Q3 2004 was 21%. While this is a bit slower than the first quarter (averaging 44% over Q4 2003), it still pulls the overall average above the 15-20% growth rate that the BPM Market saw in all of 2003.
Vertical focus drives product differentiation. As mentioned in the last market survey (May 2004), several key verticals have responded well to BPM solutions. Among them are financial services and healthcare, with an increased interest in retail and manufacturing as well. Among the vendors that have introduced vertical-specific product modules are Metastorm, with its retail module, Fuego’s Sarbanes-Oxley offering, and Commerce Quest’s vertical templates.
North America continues to be sweet spot. By far, the majority of enterprise BPM sales are taking place within North America (averaging 60% of total sales), although other areas around the globe are seeing an up tick in interest, as BPM vendors expand their global sales presence in key countries. Latin America is seeing considerable growth for certain vendors, and in Europe (average 21% of sales), England is at the forefront for adoption. The Asia Pacific Rim has been slower to adopt BPM, but in 2004 some vendors have been successful selling into that market.
IT/business sharing BPM ownership. One of the most difficult challenges of BPM’s adoption has been the determination as to where the ownership of BPM lies, with IT or with Business. Upside asked vendors how they’ve seen this issue change over the past six months, and they have indicated that the most successful implementations are those companies that understand the need to align both IT and business closely. While there are differences between where the budget for purchasing BPM lies, in almost all cases IT is involved for final sign-off, even though increasingly business is the side bringing the technology to the attention of senior management.
The Upside Uptake
Upside Research believes that the results from its recent survey continue to be encouraging for BPM. From the steady increase in both interested buyers as well as actual sales and implementations, BPM continues to gain solid ground. Upside Research believes that 2004 will finish out ahead of 2003 in terms of overall growth, up to 25-40% over 2003 levels.
This should position BPM to perform even more strongly in 2005, as continued business pressures such as compliance, competition, and regulation drive adoption of BPM. Global expansion will be key to hitting these projected growth rates, and they are attainable if BPM vendors continue to strategically build out their direct and indirect sales forces to build presence in the emerging world markets. Upside Research will be releasing its 2005 predictions shortly, covering in more detail the areas where it believes the greatest BPM impact will occur. For more detailed information on the results of our informal market survey, look for our upcoming “State of the BPM Market” report.

Building applications and automated IT processes that are more responsive to business change is a key goal of business process management (BPM) software and new IT technologies like Web services and service-oriented architectures (SOAs). They enable organizations to create modular components and services with new or existing application logic or data and then assemble those components/services in a way that addresses specific business needs.
As organizations create more flexible and dynamic service-oriented infrastructures built around business process services, the types of applications that can be developed and deployed efficiently will increase dramatically. In addition to the “standard” applications that organizations are using today, we believe that there will be new classes of more dynamic, collaborative applications that will result from these new services-based infrastructures. With these new applications will come new application infrastructure requirements, a good example of which is the idea of identity rights management.
While the issue of permissions-where someone (or something) can or can’t do something (or have access to something)-has been an important part of business applications and IT infrastructure strategy for years, it will become even more critical in these new, process-centric and services-oriented applications. Yet there is more to it than just providing the ability for certain people to access (or not access) certain data. Think of it as a step beyond traditional identity management. It’s service-oriented identity rights management and it can be used to control not only who has access to what application or data, but also what group of people have access to what applications or data and, more importantly, what applications (or application components) have access to what other applications and data.
In effect, identity rights management is the management of information and service rights between identities, where identities are responsible for defining the data and service ownership. In other words, the owners of the data (or applications) define the specific access parameters that are appropriate for their data (or applications), with permissions tied to granular data elements with explicit control parameters such as expiration data, access times, and distribution channels. Instead of having to hand-code access for individual applications, developers can use a ubiquitous access rights layer across all applications.
The idea of managing data exchange and application access through the concept of groups is particularly powerful when the groups have membership that spans multiple organizations, for instance, as you might find when individuals in different government agencies have common interests and shared objectives (like monitoring security issues) and need to share information across those traditional agency or corporate boundaries while still maintaining security. Identity rights management extends that idea to help manage not just individual identities, but the relationship of those identities to specific applications or data sources, across application, corporate, and geographic boundaries.
A good example of an identity rights management solution is Epok, Inc.’s TDX 4.0 platform, a web services framework for providing secure and controlled data exchange across networks (public or private). Epok is a founding member of OASIS (the standards organization) and also driving the adoption of the OASIS XRI standard. TDX 4.0 enables permissions-independent exchange and synchronization of information or services across different trust domains (for example, multiple companies or even countries, in the case of government applications) and is designed for applications that require complete (and granular) control of data that’s distributed over multiple trust boundaries. What’s important is that TDX is a horizontal platform for the data owners to assign and manage granular data access control. As a result, business users (or the data owners) can define and manage access to important data, rather than be limited by the application design or requiring application developers to do it through customized code.
Upside Uptake
Service oriented architectures are giving organizations more flexible, adaptable, and ultimately, more manageable ways to create business logic and applications that can be used to address changing business needs. A service oriented design for identity rights management-an intermediary service that controls and manages who has access to what data as well as one that provides virtual, real-time updating of reference data-enables a range of applications and services that would be difficult to create and manage using traditional approaches.
By providing a way to explicitly model the relationships of the data requestors (be they applications or individual users) to the actual data, an identity rights management system can enable more efficient and effective development of applications in areas where large numbers of casual, temporary, or dynamic relationships exist and need to be managed.
We believe that there will be a move towards infrastructure components and tools that help organizations rationally and efficiently define, manage, and monitor very fine-grained access to data and application components in a decentralized fashion. Enabling dynamic and granular access (for both internal and external needs) to data sources and applications will be an important part of many company’s IT strategies, and will complement BPM-enabled solutions.