Transparency, agility and control through next-generation BPM

Next-generation business process management (BPM) capabilities are absolutely essential for financial firms balancing on a three-legged stool of transparency, agility and control. But the BPM solutions of the past, which were often merely cobbled together legacy systems, cannot handle the processing speeds and low latency times that firms demand. Companies need true, enterprise-class transactional control, BPM technology that is user-friendly and high-performance.

Next-generation BPM enables the transparency, agility and control that all major financial services companies need in the current operating environment. A look at the business drivers, market pressures and technological capabilities of next-generation BPM solutions will help you assess whether your firm should take the next steps with next generation BPM.

BPM's business drivers: transparency, agility and control

The call for transparency

From regulators and shareholders to customers and employees, businesses face unprecedented demands for operational transparency. This is especially true for the financial services industry.

Transparency provides the fundamentals for good financial control and enterprise risk management, making regulatory compliance with ever more invasive reporting across geographies, clients, accounting jurisdictions and products easier to deliver on. These days, a firm cannot simply monitor and report on operations. Now, businesses must proactively manage, evolve and predict. This open approach requires process flexibility, innovation and control in order to deliver measurable business value.

For example, the spotlight is being shone on FS firms' balance sheet exposure to multiple counterparties in multiple jurisdictions and across multiple asset classes, especially when transactions involve hard-to-value OTC instruments. This issue is further compounded by disparate regulatory requirements for lending securities originated in different countries and jurisdictions.

Think about the complexity of this picture. More and more attention and resources are being invested in systems and processes - data management, compliance rules, process automation, accounting rules engines, financial data repositories, OTC valuation engines and balance sheet explosion - that support the management of this requirement.

All of the systems and processes mentioned above can be built, delivered, augmented and integrated enterprise-wide using new BPM technologies. Furthermore, the right solution lets companies transform data and processes, implement business rules and calculation engines, securely interact with users and orchestrate, consume or publish SOA services.

Making the business more agile

Agility has emerged as both a business and an IT driver for performance in the FS industry. Following the wave of new technology adoption and integration that took place throughout the 1990s and first decade of the 2000's, businesses need a much greater degree of agility in managing processes and information.

But most BPM solutions are too slow for today's increasingly data intensive environments. Poor performance is exacerbated by the use of a workflow-only architecture rather than one that is data, rules and event-based: most existing BPM solutions can track information from point A to point B but don't have the intelligence to detect and respond to a breakdown in approvals or other parts of the process itself.

In contrast, using a next-generation BPM suite in conjunction with SOA enables organizations to respond faster to changing business requirements. For example, an organization growing through acquisition has the need to integrate diverse applications or process steps into an integrated process. SOA is becoming an important foundation for BPM since it supports the rapid assembly and coordination of process micro-flows and services in to entire business processes.

Using a system like Microgen Aptitude, this company would have SOA orchestration (with the ability to consume and publish), external library and system calls, transactional control, user GUI deployment and strong integration, graphical business rules and process simulation in one suite. This reduces the risk of error in both tracking and reporting liquidity positions, risk associated with transactions and a number of other factors.

Keeping it under control

At the heart of the BPM system is performance: next generation suites need to be capable of managing massive amounts of data at very low latency. But raw performance is not enough; you also need full transactional control. For example, it is not acceptable that a core business system receives a data update but its associated data warehouse does not. Yet many businesses live with this reality, without even realizing the potential risks associated with this inconsistency.

SOA rarely meets the strict criteria for transactional control needed by most organizations today and web services also have performance issues. However, there is no need to restrict SOA to Web services. An enterprise-class BPM suite should be able to utilize service calls through a number of different technologies.

From a regulatory perspective, an enterprise-class BPM suite will enable businesses to enforce policies and procedures and provide a method for organizations to define, manage and audit their critical processes. This can be particularly effective when combined with business rule engines and projects are piloted early to learn through doing and then deliver results quickly.

Mining value from your BPM investment

Another business driver for using enterprise BPM is the need to gain business insight, profitability and value from the enormous data reservoirs within an FS firm. Unlike older systems, next-gen BPM suites can implement transparency, insight, agility and control across the top of existing systems in a strategy of augment rather than replace. In other words, the age of rip-and-replace - with the huge cost and operational disruption that strategy incurred - is over.

Smart businesses operate with a mixture of processes, rules, supporting systems, information flows, policies, organizational structures, assets and resources. Smart BPM systems match this operating environment to deliver measurable value. These software suites also create a foundation for flexibility and the ability to change 'in flight' what was previously embedded in coded applications.

Putting next-gen BPM to work for you

So how do you know whether a new BPM suite will make the difference for your firm? Here are a few questions to test your readiness:

How important is the management and reporting of risk to your organization? Can you "see" the risk associated with every piece of information, down to the transaction event level?

Who owns responsibility for the architecture of process management change - IT or business unit heads - do they have an environment to work together within?

How do you measure process change ROI? Are you getting value and agility from legacy systems change?

Can your existing systems handle the complexity, depth and volume of data you need it to? What transparency and control do you have over the systems' outputs and capabilities?

What do you stand to lose by not considering a next-generation BPM investment?

The business drivers for true enterprise-class business process management are urgent and real. Hardware has stepped up to meet many firms' data intensive processing challenge, but the next stage is intelligent software.

In short, next-generation BPM has to be smart: smart enough to incorporate SOA facilities and transaction process management; smart enough to orchestrate all types of service calls while giving users complete transactional control when they need it. And smart companies are the ones who will know when to adopt and apply next-gen BPM.

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