Contents:

Overview 1 Catalyst 1 Summary 1 Key Messages 2 BPM supports business processes and drives competitive differentiation 2 The pace of business dynamics and application platform inflexibility is propelling demand 2 The BPM market presents considerable growth opportunity over the next five years 2 More could benefit from BPM but complexity remains the biggest obstacle to adoption 2 While convergence with adjacent technologies continues, new delivery modes are tested 2 Scale will matter, but there will be some scope for specialist vendors to compete 2 The diversity of deployment scenarios calls for a complex go-to-market strategy 3 4 Table of tables 5 Market Opportunity 6 Business process is the basic unit of enterprise activity 6 Globalization and regulation of the markets are driving the business need for BPM 6 The emergence of BPM indicates the evolution of packaged enterprise application suites 7 ERP remains widely adopted but fails to provide a unified business process platform 7 Customers application portfolios are rarely homogenous 7 Enterprise applications are only addressing commoditized business processes 7 BPM can align IT with the business 8 The focus on alignment reflects both the maturity of IT and the changing business environment 8 The relationship between IT and business needs to be rethought 9 BPM represents a considerable growth opportunity 10 Middleware is currently the least adopted mainstream enterprise technology 10 Organizations with over 5,000 employees are the primary beneficiaries of BPM 10 Those that have already deployed BPM are twice as likely to invest in the future 11 Enterprises with fewer than 5,000 employees are more likely to be investing in greenfield solutions 12 Datamonitor predicts that the market for BPMS software will exceed $3 billion by year end 2013 13 Traditional bastions of BPM spending will persist, although several industries will close the gap 14 Technology Evolution 15 Having evolved through the convergence of several technologies, BPM remains diverse 15 BPMS has evolved from workflow and EAI technologies 15 Convergence with business intelligence, enterprise architecture and social computing will continue 15 Process-oriented composite applications can be assembled on BPMS platforms 15 The boundary between BPM and SOA is becoming blurred 16 SOA is merely another EAI pattern, hence SOA and BPM should remain independent 16 SOA and BPM form a single stack with BPM as the business face of SOA 16 BPM can act as a service-aggregator resolving the problem of service granularity 16 Both BPM and SOA are at their best when loosely coupled 17 BPM is deployed more widely than SOA, albeit by a narrow margin 17 Enterprises are more likely to deploy BPM without SOA, than SOA without BPM 18 BPM can serve as a roadmap to SOA 18 BPM corresponds to the logic tier of a three-tier enterprise stack 19 Modeling, execution, monitoring and presentation are the core BPMS modules 19 Activity monitoring and repositories are increasingly important BPMS modules 20 The acquisition of iLog signals the end of independent BRMS 21 Business rules engines will play a crucial role in injecting analytics directly into business processes 21 Standards for process modeling, execution and exchange are maturing 21 BPMN and BPEL are universally accepted process notation and process execution standards 22 BPMN and BPEL round-tripping remains a concern 22 Serialization of BPMN would boost interoperability 22 Since XPDL cannot reproduce semantics, an extensible meta-model serialization is required 23 BPMN 2.0 discussion revolves around the serialization mechanism 23 BPMN and BPDM will converge and BPEL interfaces will improve 24 Complexity remains the primary obstacle to BPM adoption 24 Unified design environments are required to connect process discovery, modeling and execution 24 New delivery models should lower barriers to BPM adoption 25 On-demand collaborative process discovery and modeling makes the initial steps to adoption easier 25 An on-demand model removes the management overhead associated with deploying BPMS on-site 25 Customer Impact 27 The centrality of business processes renders BPM relevant to many organizations 27 Enterprise applications standardize business processes by sacrificing flexibility 27 User resistance to application rollouts is not mere Luddism but process orientation 27 Lack of process flexibility is the biggest customer pain point removed by BPM 27 BPM automates, executes and governs a wide variety of processes 28 Automation combines functionality and content to enable straight-through processing 28 Content-driven processes channel the flow of information 28 Governance, risk and compliance (GRC) are predicated on process visibility and control 28 Process-oriented composite applications satisfy the long tail of application requirements 28 Process-orientation increases productivity, enables effectiveness and supports innovation 29 Productivity: establish, automate, enable 29 Effectiveness: control, manage, optimize 29 Innovation: transforming the business process 29 IT and business departments could operate more effectively using BPM 30 The concept of a responsive IT infrastructure strategically aligned to the business is resonating with CIOs 30 IT professionals are becoming more business savvy and open to BPM 30 Ease of deployment and poor adoption within the organization remain the principal obstacles 31 Business consulting and business services go hand in hand with BPM 31 BPM success depends on the blend of external consulting and internal capacity building 31 Evaluating the degree of process commoditization is the key to establishing BPM readiness 32 One enterprises stock process is another enterprises source of competitive advantage 32 Competitive Landscape 33 The competitive landscape is diverse 33 Principal vendor groups include middleware conglomerates, application vendors and BPM specialists 34 BPM specialists offer BPM suites or best-of-breed BPM modules 34 Middleware conglomerates combine BPM with other enterprise infrastructure technologies 35 Application conglomerates perceive BPM as an important orchestration layer in their stacks 35 Scale matters but other compelling differentiators exist 36 Scale captures market share and caters for the diversity of competitive scenarios 36 Middleware conglomerates have excellent solutions and capture synergies with adjacent technologies 36 BPM specialists can either pursue vertical strategies or seek further process excellence 36 Middleware conglomerates and BPM specialists have a head start against application conglomerates 36 The competitive landscape will be shaped by innovation and acquisitions 37 Consolidation will continue both with fill-in acquisitions and big-ticket mergers 37 Independent middleware vendors may be both acquirers and acquisition targets 37 Microsoft may choose to accelerate the Oslo roadmap through acquisitions 38 There is plenty of scope for innovation in the BPM market 38 Consolidated vendors can innovate by pursuing convergence with adjacent areas 38 BPM specialists can deliver new models of deployment and licensing, and improve BPM standards 38 Go to Market 39 The nature of BPM amplifies the significance of a sophisticated go-to-market strategy 39 CIOs and CEOs still hold sway, but BPM vendors should target CFOs and COOs 39 The role of SOA in a BPM go-to-market approach needs to be considered with care 40 The BPM/SOA deployment and investment matrix should inform SOA up-sell and cross-sell strategy 40 IT/business alignment is steadily growing in importance and could be central to a go-to-market strategy 41 Larger organizations are more receptive to IT/business alignment messaging 41 The right approach to SMEs can satisfy the long tail of demand lower down the market 42 Resellers, ease of deployment and composite applications are the key to SMEs 42 VARs and ISVs are the most apposite BPM channel partners 43 Vendors could help channel partners by lowering the total cost of ownership of BPMS 43 A vertical approach requires industry specialization and the support of business expert communities 44 SAPs BPX is the most successful example of community building 44 Recommendations 45 Remember the B in BPM 45 Connect BPM to dominant business dynamics 45 Adopt a pragmatic SOA strategy 45 Start with process discovery 45 Tap into the long tail of demand in under-served segments of the market 45 Find and exploit competitive differentiation 45 APPENDIX 46 Definitions 46 Methodology 46 Further reading 47 Ask the analyst 47 Datamonitor consulting 47 Disclaimer 47 List of Tables Table 1: Which of the following technologies do you currently have or use, and which would you prioritize for investment in the next six months? Two years? BPM/workflow 11 Table 2: Which of the following technologies would you prioritize for investment in the next six months? Two years? BPM/workflow by enterprise size 12 Table 3: Which of the following technologies do you currently have or use, and which would you prioritize for investment in the next six months? two years? BPM/workflow and SOA 17 Table 4: Principal process modeling, execution and exchange standards 21 List of Figures Figure 1: IT alignment has been consistently rated as the top priority IT spending objective 8 Figure 2: Middleware technologies achieve the lowest rate of adoption 10 Figure 3: BPM will continue to be more widely adopted among enterprises with more than 5,000 employees 11 Figure 4: The bulk of investments are made by enterprises that have already deployed BPM 12 Figure 5: The BPMS software license market is set to expand, growing by a CAGR of 14.5% by 2013 13 Figure 6: Telecommunications and financial services will remain the principal foci of spending 14 Figure 7: SOA service granularity can be resolved with a BPM composition layer 16 Figure 8: Formal business process modeling can provide roadmap for SOA roll-out 18 Figure 9: The BPM layer sits between infrastructure integration and presentation tiers 19 Figure 10: BPMS stack reference architecture 20 Figure 11: Current schema of the standard interactions in process modeling and execution 23 Figure 12: IT decision makers are increasingly aware of the need to align IT with the business 30 Figure 13: BPMS is most suitable for highly dynamic / highly differentiated processes 32 Figure 14: Vendors have entered BPM market from a variety of directions (n.b. legacy brands included) 33 Figure 15: BPM competitive landscape vendor segmentation 34 Figure 16: CIOs and CEOs remain the most influential, but both CFOs and COOs have some influence 39 Figure 17: Suggested C-suite engagement model 40 Figure 18: Aligning IT with business goals is a growing concern for CIOs 41 Figure 19: The larger the enterprise, the higher the priority IT/business alignment becomes 42 Figure 20: Channel partners spheres of influence overlap, but each market segment has a clear preference 43