Bank Systems & Technology
May 26, 2008
If anyone knows about the benefits of business process management (BPM), it's Steven Liles, manager of integration services at Winston-Salem, N.C.-based BB&T Corp. In October 2006, BB&T went live with a BPM-powered online account opening process. The results speak for themselves.
Before the implementation, it took as long as two weeks to open a customer account online, according to Liles. The process now can be completed in mere minutes, he says. Before, the bank had 20 full-time employees in place to support the online account opening process, Liles adds. Now it needs just three. Meanwhile, the number of accounts opened online has risen steadily, to more than 100,000 in 2007.
But that's just the tip of the BPM iceberg. Like many banks around the world, BB&T is turning to BPM as a means to achieve a more transparent and disciplined organizational model.
BPM enables banks to link their IT systems into their processes, allowing them to automate, streamline and monitor key processes, such as account opening, compliance and payments. The impact that a successful BPM implementation can have -- on everything from application development to customer service to channel performance -- can be astounding. According to an August 2007 report from Forrester Research (Cambridge, Mass.), the market for BPM software is projected to grow from $1.6 billion in 2006 to $6.3 billion by 2011.
One of the greatest promises of BPM is transparency into processes. Transparency, in terms of BPM, is the ability to view all the steps in a process and where a certain transaction or case resides in the flow of that process.
According to Liles, he has been able to make several improvements to BB&T's ($136.4 billion in assets) online account opening process based on reporting from Cambridge, Mass.-based Pegasystems' SmartBPM Suite. In BB&T's online account opening system, every customer is treated as a separate case, he relates. The Pegasystems BPM solution is able to produce reports on individual cases, as well as larger trends and patterns, Liles notes.
The SmartBPM Suite includes dashboards available to analysts in the bank's online channels that allow them to spot patterns in customer behavior, Liles explains, adding that employees in the bank's call center have access to customized dashboards to handle exceptions in the process. The ability to see exactly where and when in the process customers drop out, he continues, has allowed BB&T to make improvements to the process quickly.
"We routinely look at bottlenecks," Liles says. "Early on, people would drop out at the funding stage."
Liles notes that the SmartBPM Suite's case management system also allows for greater channel integration. "BB&T's branch channel is now using the same BPM backbone," creating more-seamless visibility into customers' interactions with the bank across channels, he relates.
That type of end-to-end process visibility brings IT and the business closer together, according to Kiran Garimella, VP for BPM solutions at Darmstadt, Germany-based Software AG. "You see process in a very live sense," says Garimella, who has written several books on BPM.
In addition to process improvement, BPM also can help financial institutions streamline regulatory compliance. Because BPM solutions automate processes based on complex rules engines, compliance functions can be easily integrated into the workflows. Vendors even are building compliance frameworks into their BPM suites.
Supporting Fraud Investigations
Atlanta-based SunTrust Bank ($175.1 billion in assets) plans to use Pegasystems' SmartBPM solution to help prevent money laundering, support fraud investigations, and manage compliance with the Bank Secrecy Act, USA Patriot Act and other regulations. According to Kevin A. Poe, the bank's SVP of enterprise business process services, SunTrust's goal is to simplify compliance by consolidating its multiple systems for suspicious activity reports (SARs).
SunTrust's newly optimized fraud investigation process will be rolled out in several iterations, Poe relates. The project, which will be released in four phases beginning this September and ending in the third quarter of 2009, will span seven business units, he says, explaining that the ability to use the SmartBPM Suite to collaborate across multiples lines of business and disparate application areas was a major reason for its selection.
In fact, SunTrust already is using the Pegasystems BPM suite in another area of the bank, Poe reports. Like BB&T, SunTrust first targeted online account opening for process improvement, rolling out an enhanced sales application March 12, 2008.
"The idea was first [to address] generation of account opening through the online channel," recalls Christian Caspersen, VP, business process lead, for SunTrust. "The goals were a 15-minute interaction and everything done on a real-time basis."
According to Caspersen, "We've seen great results." Even though the bank is not yet marketing the service, it has seen "three or four times the volume" compared to the numbers prior to the BPM implementation, he says. A large reason for this, Caspersen suggests, is that online account-opening customers are not dropping out of the process nearly as often. As a result, "The online channel is opening more accounts than any branch," he adds.
This ability to reuse the BPM suite throughout the bank sets Pegasystems' solution apart from other tools that the bank has used, notes SunTrust SVP Donald Marks. "We're looking to leverage the processes and lessons" learned from the initial deployment of the SmartBPM Suite, he says, crediting the vendor with helping SunTrust plan future deployments. "They talked about alternative tracks and the best way to deploy the tool" across the enterprise, Marks relates.
Pegasystems also facilitated discussions between SunTrust and peer banks via user groups, notes Trace Fooshee, a process consultant at SunTrust. In these user groups, banks offered advice on how to best structure a BPM deployment, he explains. "Peers have a lot of experience with optimal reusability," Fooshee says.Application Development: Go Speed Racer
That reusability extends beyond the BPM application itself to the processes that it optimizes. Similar to a service-oriented architecture (SOA), BPM speeds application development through process reuse and improves an organization's overall agility.
Pointing to the philosophical similarities and synergies between SOA and BPM, BB&T's Liles advises other banks to "try to coordinate BPM activities with SOA activities." "This was very powerful for us and led to real automation," he says, adding that BB&T has reused BPM-optimized processes for several initiatives. "We've already used it for several other projects: fraud management workflow, marketing lead lifecycle management and payroll services onboarding," Liles relates.
As with SOA, the rapid pace of change in the industry is a major driver of banks' BPM implementations, says Stessa Cohen, research director at Gartner (Stamford, Conn.). "One of the key benefits [of BPM] is around agility," she adds, defining agility as "the ability of an organization to sense change and adapt to it efficiently and effectively."
By enabling the reuse of processes, BPM helps banks adapt to whatever the marketplace requires -- new channels, new devices, new products -- in the shortest amount of time, Cohen continues. "Are you going to re-create the wheel every time [you need to adjust or create a process]?" she asks.
Gene Rawls, VP of continuous development, information services, for Wells Fargo Financial (Des Moines, Iowa) -- a unit of San Francisco-based Wells Fargo & Co. ($575 billion in assets) that provides real estate-secured lending, auto financing, consumer and private-label credit cards, and commercial services to consumers and businesses -- says the bank's businesses initially didn't believe how quickly applications could be built leveraging Austin, Texas-based Lombardi's Teamworks BPM solution. Rawls relates a time when a stunned line-of-business manager turned to him and said, "I didn't think you'd be back so soon," when Rawls delivered Wells Fargo Financial's ($73 billion in assets) first BPM-powered implementation in early 2007.
According to Rawls, there were numerous benefits of that first deployment -- which involved automating dealer setup -- starting with an automated workflow. Now dealer applications are routed automatically from person to person, rather than requiring the pushing of paper files. Rawls says the streamlined workflow has led to increased employee productivity.
"Another benefit is the tracking of work," Rawls adds. Prior to automating and defining the process of dealer setup, a dealer would call to check on the status of his or her application, and a Wells Fargo representative would have to physically find on whomever's desk the application was sitting at the time, without knowing where to start looking, he explains.
"Now there is visibility," Rawls says. Bank employees can just log in and check at which point in the process the dealer's application resides. "It helps the relationship with the dealer and with staffing," he notes.
Application turnaround for dealers used to take an average of seven to 10 days, Rawls continues. With the Lombardi BPM solution, it's down to two to three days, with a one-day turnaround possible if the dealer enters all of his or her information up front, he says.
Further, managers used to spend hours every month generating reports from spreadsheets, Rawls points out. Now the BPM system automatically generates reports for them, collectively saving them an average of 100 hours every month, he asserts.
Then there's the cost savings. While Rawls doesn't have any hard ROI numbers, he says the bank saved $750,000 in 2007 from two new BPM implementations that were rolled out in the middle of last year.
Noting that Wells Fargo Financial currently has nine BPM deployments in production and another four projects in the works, Rawls stresses that not having to reinvent the wheel saves him months of development work for each of his deployments. Project turnaround time from the initial go-ahead for a BPM project to its actual deployment, he says, is just three months.
Despite such impressive results, adopting BPM and a process-centric ideology is not an automatic ticket to success. There are several important best practices and challenges associated with any BPM project, according to experts.
"One challenge is making sure you understand your processes going into this," says Laura Mooney, senior director of corporate communications at Metastorm. Baltimore-based Metastorm offers BPM software as well as software for enterprise architecture and business process analysis. Mooney advises banks to define the scope of their BPM implementation up front, develop a business case and design an implementation with regular milestones.
"An enterprise strategy with local projects is the key to [a BPM] implementation," adds Gartner's Cohen. "It can be a challenge, but breaking it down into small pieces is a way to make it manageable," she says.
Software AG's Garimella warns banks to keep their expectations in check. "We always advise people that BPM is not a way to try to get rid of your assets right away -- it's not a rip and replace," he says. In addition, Garimella cautions, "Don't get bogged down in enterprise process modeling initiatives. ... Don't map processes just for the sake of mapping."
And, as with any major organizational change, there may be some resistance from longtime staff. For example, software developers may resist BPM initiatives because the process reuse removes much of the back-end coding from the application development process, says BB&T's Liles.
A BPM Center of Excellence
One of the best ways to ensure the success of BPM initiatives, experts agree, is to establish a BPM center of excellence to leverage investments in BPM technology. A BPM center of excellence, however, goes beyond the typical project management office (PMO).
SunTrust's Marks reports that the bank's PMO is not currently set up to deal with the BPM model of deployment, which is "iterative and agile," he says. To keep the project moving forward, Marks notes, he and his team, with support from CIO Tim Sullivan, had to educate the PMO on the basics of BPM deployments. "It helps that we had success from our first implementation," Marks says, adding that the bank currently is creating a specific BPM project management track.
According to Metastorm's Mooney, BPM centers of excellence are prevalent among large organizations, which tend to have more BPM initiatives in place than do smaller organizations. She estimates that about 10 percent to 20 percent of all organizations have created BPM centers of excellence, noting that the formation of BPM centers of excellence is driven by companies' desire to make sure there is a strong business case in place for BPM initiatives.
Those organizations that have established BPM centers of excellence experience greater success with their BPM initiatives, Forrester reports. According to the research firm's February BPM study, "The EA View: BPM Has Become Mainstream," almost half of all organizations that reported "clear and measurable benefits from their BPM efforts" had established a BPM center of excellence. In contrast, only 4 percent of those reporting "no BPM success" had a center of excellence in place. Forrester defines a center of excellence as "a formally appointed and documented body of knowledge and experience on a particular subject area with the goals of providing expertise, managing governance practices and supporting projects associated with the subject area."
According to BB&T's Liles, the bank has a small BPM center of excellence, but it's "not formal right now." All the members of the group, he says, are from the IT organization's integration services group. They typically evaluate projects at the initial stages, Liles explains.
Likewise, SunTrust's BPM center of excellence consists purely of IT staff, the bank's Marks says.
But, Forrester stresses, a BPM center of excellence should include representatives from the business as well as IT. The group also should include a process visionary, a BPM project manager, a BPM tool expert, domain project experts and an enterprise architect, Forrester says.
The result of all this governance is sustainable, long-term BPM success. Metastorm's Mooney notes that the core of BPM has shifted from a workflow focus to a focus on analytics and corporate governance. "There's more emphasis now on putting metrics in place and drilling out reporting," she explains.
BPM delivers the ability to measure results in detail, adds Gartner's Cohen. The real benefits of BPM, she says, include results that banks can benchmark and then tie to ROI. This allows banks to quickly build business cases for future projects, which tend to be shorter and more measurable.
"Success feeds additional successes," Metastorm's Mooney says. "It's a snowball effect."