BPM + BPO + Cloud = BPaaS

No business person really cares about technology except insofar as that technology helps get the job done. But there’s one technology that’s different.

Unlike most or all other technologies, BPM software technology directly and explicitly concerns the work of business, and can be therefore directly of concern to business-side executives. Ultimately, business process management software (BPM) is THE technology for getting work done.

Let’s explore this proposition in more detail, and then see why the question of BPM is exciting in the context of cloud technology.

There are many important business-enabling technologies, including technologies “further down the stack” (e.g. “SOA”) or which hard-code business semantics (most “ERP” systems and purpose-built applications).

BPM software technology on the other hand is unique in that business semantics are not hard-coded and there is an expectation that business people will explicitly “model” the work of their business, and have that model immediately executable as new business functionality.

(Please note here that BPM software itself is rapidly becoming more powerful; the scenario I’m describing here is not yet widely adopted, for both technical and cultural reasons. However, the point stands that BPM software is unique in the power it gives to business executives to directly instantiate a vision of how the business should operate.)

The full promise of BPM software is only realized when instantiated for specific domain requirements, for example “field service”, or “cold-storage logistics”, or “healthcare patient intake” etc. etc., and when that BPM software is to be deployed in conjunction with on-going service and support, including support for execution of work.

Now that we’ve defined BPM software as uniquely about business, we can pull together several business trends and see how everything comes together, excitingly, in the cloud.  To do this, first we need to add business process outsourcing to our discussion.

Business process outsourcing (“BPO”) has been around now for almost 20 years in its modern form; BPO can be thought of as entering a 3rd or 4th generation of sector maturation. Casual observers think of BPO as only about “cutting costs” (i.e. labour arbitrage), but however important the exploitation of service cost differences are, the BPO market is not limited to cost cutting. The most exciting frontiers of BPO are in value-added services, and we are seeing for example legal brief reviews outsourced from North America to Sri Lanka.

So, why bring up BPO in a discussion of BPM and cloud? Because BPO is very much about the structured work processes most suited to BPM. BPO providers have been among the most successful users of BPM software, both because of the nature of outsourced work and because BPO firms compete on innovation.

We’ve defined BPM and BPO and their affinity. What about cloud? How do all three business and technology concepts come together?

BPM + BPO + Cloud = BPaaS = Business Value-Added Technology Future

The cloud itself is helpfully analysed in various tiers, including IaaS (infrastructure-as-a-service), PaaS (platform-as-a-service) and SaaS (software-as-a-service). To this we add a new tier, “BPaaS“, which is business-process-as-a-service. BPaaS can be distinguished from SaaS in that a BPaaS provider typically is taking responsibility for process business outcomes and has business-oriented KPIs and SLAs attached. A SaaS provider on the other hand would typically provide only technical SLAs.

BPaaS is an exciting play for three reasons:

1. BPaaS starts with the power of BPM.
2. Insofar as BPaaS will be domain specific, BPaaS providers must provide rich business services, customizable to customer needs, and full outsourcing execution. So the outsourcing-related business drivers for BPO are also in play, including specialization.
3. And still all the usual business case advantages of the cloud apply, including low start-up costs, variable cost structures, low technical overhead etc.

The formula is “BPM + BPO + Cloud = BPaaS”.  There are both technical and business dimensions to this formula which we can explore. We will see a growing number of real examples of the play, including examples that involve not just single process providers and consumers, but entire ecosystems as well.

This posting was originally featured on the cloud-oriented Canadian LinkedIn discussion group Cloudfingr.  Also available on author’s blog at decisionmodels.org.

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