Sustainable growth via Business Process Management
Mr. Peter Gérard is the new CEO of IDS Scheer, the leader of global BPM (Business Process Management). In his first visit to China, I interviewed him in mid-April, 2009 in their Beijing office. Mr. Peter Gérard introduced IDS Scheer and the latest development of its BPM solutions. Dr. Hong Zhong, the President of IDS Scheer China, and Ms. Xu Ping, the Marketing Manager, also took part in the interview.
Pei Huang: What’s your feeling about China at this first trip to China?
Peter Gérard: Generally speaking, the situation in China is much better than Europe and the United States. For example, the automobile industry in Europe and the United States have taken heavy damage, but in China it still maintains a sustained growth. However, the integrated global economy today makes national economies highly mutually dependent. There is no doubt that China's exports have been impacted greatly, but I think, on the whole, China's economy is still healthy.
Peter Gérard: Generally speaking, the situation in China is much better than Europe and the United States. For example, the automobile industry in Europe and the United States have taken heavy damage, but in China it still maintains a sustained growth. However, the integrated global economy today makes national economies highly mutually dependent. There is no doubt that China's exports have been impacted greatly, but I think, on the whole, China's economy is still healthy.
Pei: In your opinion, what is the meaning of business process management for enterprise to deal with market risk?
Peter: Process management is the core of the enterprise. The business is driven by processes, and does not rely on the rule of man. In BPM, the information technology is the carrier of business processes, but its essence is the process. Only with an effective management process, enterprises can effectively control, change, improve efficiency, improve performance, identify and resist market risk.
Nowadays managers bear enormous pressures, especially in the listed companies. As the requirements become increasingly stringent, managers must manage the problems and take on more responsibilities. Managers must be able to win the trust of shareholders, to create greater value for them, that requires the company's operations by managers in line with the various laws and regulations. To meet these requirements, it is necessary to effectively manage the enterprise business processes. Many enterprises simply model the process, but can not really achieve the management of process. The importance of process management is to allow enterprises to know and effectively control the changes of business processes. For example, the Landesbank in Berlin, Germany, identified more than 4000 business processes. They compared the business processes in January, 2008 and November, 2008. It was found that 2283 business processes had changed in just over 11 months. These changes were due to industry rules, laws, regulations, company's business and dynamic markets. Therefore, enterprises need to integrate business processes into an ESR (Enterprise Service Repository), in order to identify and control business processes.
In the past, enterprises valued data information on management very much, but it only records the history of the past data. If enterprises want to accurately predict the future, they must sort out and control the business processes. In the enterprise’s operational processes, mergers and acquisitions happen often, restructuring and extension of the supply chain occur and, for example, a number of retail enterprises have issued credit card business, and this gradually shifts the profitability. When that happens, companies must break the past value chain, clear the business processes, adjust and reconstruct business processes, in order to effectively support business operations after the change.
The market is dynamic and changing for enterprises, whether the economy is booming or in the recession, if they want to really predict and control the future, they should preserve the business processes in a unified ESR (Enterprise Service Repository) to monitor the processes effectively. If an enterprise says it can carry out risk management, but it does not manage the processes, then the enterprise must be lying. At present, we can say that 98% enterprises in the world could not be able to do this, it is only a hypothesis for the future for these enterprises, and they are actually blind. In short, the application of business process management for enterprises, especially for entrepreneurs, is of the utmost importance.
Peter: Process management is the core of the enterprise. The business is driven by processes, and does not rely on the rule of man. In BPM, the information technology is the carrier of business processes, but its essence is the process. Only with an effective management process, enterprises can effectively control, change, improve efficiency, improve performance, identify and resist market risk.
Nowadays managers bear enormous pressures, especially in the listed companies. As the requirements become increasingly stringent, managers must manage the problems and take on more responsibilities. Managers must be able to win the trust of shareholders, to create greater value for them, that requires the company's operations by managers in line with the various laws and regulations. To meet these requirements, it is necessary to effectively manage the enterprise business processes. Many enterprises simply model the process, but can not really achieve the management of process. The importance of process management is to allow enterprises to know and effectively control the changes of business processes. For example, the Landesbank in Berlin, Germany, identified more than 4000 business processes. They compared the business processes in January, 2008 and November, 2008. It was found that 2283 business processes had changed in just over 11 months. These changes were due to industry rules, laws, regulations, company's business and dynamic markets. Therefore, enterprises need to integrate business processes into an ESR (Enterprise Service Repository), in order to identify and control business processes.
In the past, enterprises valued data information on management very much, but it only records the history of the past data. If enterprises want to accurately predict the future, they must sort out and control the business processes. In the enterprise’s operational processes, mergers and acquisitions happen often, restructuring and extension of the supply chain occur and, for example, a number of retail enterprises have issued credit card business, and this gradually shifts the profitability. When that happens, companies must break the past value chain, clear the business processes, adjust and reconstruct business processes, in order to effectively support business operations after the change.
The market is dynamic and changing for enterprises, whether the economy is booming or in the recession, if they want to really predict and control the future, they should preserve the business processes in a unified ESR (Enterprise Service Repository) to monitor the processes effectively. If an enterprise says it can carry out risk management, but it does not manage the processes, then the enterprise must be lying. At present, we can say that 98% enterprises in the world could not be able to do this, it is only a hypothesis for the future for these enterprises, and they are actually blind. In short, the application of business process management for enterprises, especially for entrepreneurs, is of the utmost importance.
Pei: Since you believe that business process management (BPM) is so important, how do you predict the BPM market?
Peter: I believe that the market of BPM will explode. One of the important reasons is that there are a variety of enterprise applications, software systems and procedures, and there are a lot of businesses done manually. Any software such as SAP, only covers the IT part and thus the execution layer of BPM and not the entire end-to-end business processes. Therefore, it is necessary to use BPM software to create a dedicated ESR (Enterprise Service Repository), to control all enterprise business processes.
Pei: What are the specific IDS Scheer solutions for enterprises to strengthen internal management?
Peter: IDS Scheer solutions can help enterprises to establish a unified ESR (Enterprise Service Repository), and on this basis, to achieve the analysis of process performance to identify the KPI which is related to business processes, and then to manage IT systems and data. In this way, it can support the application of GRC (Governance, Risk & Compliance Management) to help enterprises strengthen internal control systems, and through the application of EA (Enterprise Architect) to effectively manage the enterprises IT assets.
Peter: IDS Scheer solutions can help enterprises to establish a unified ESR (Enterprise Service Repository), and on this basis, to achieve the analysis of process performance to identify the KPI which is related to business processes, and then to manage IT systems and data. In this way, it can support the application of GRC (Governance, Risk & Compliance Management) to help enterprises strengthen internal control systems, and through the application of EA (Enterprise Architect) to effectively manage the enterprises IT assets.
Pei: What is the new development on business process management software of IDS Scheer?
Peter: As a global BPM leader, IDS Scheer has been committed to constant innovation, in the third quarter of this year, we will release:
1) ARIS governance engine;
2) ARIS Express, this is free software with a very friendly and simple interface, it can make enterprises quickly grasp and apply ARIS;
3) A processes search engine, which can search related business processes based on events, rules and other parameters;
4) Graphical user interface.
In future, IDS Scheer will also release an ARIS Platform based on SAAS.
Pei: How to improve the performance and ROI of enterprise application information system under the application of BPM technology?
Peter: To manage the implementation of SAP as an example, if the enterprise applies ARIS to drive the implementation of SAP software, it can significantly shorten the implementation cycle, improve the results and standardize the implementation documents.
Peter: To manage the implementation of SAP as an example, if the enterprise applies ARIS to drive the implementation of SAP software, it can significantly shorten the implementation cycle, improve the results and standardize the implementation documents.
Pei: What are the types of IDS Scheer’s partners? What are the values for IDS Scheer’s customers under the cooperation with these partners? How does IDS Scheer achieve sustainable development?
Peter: One kind is technical partners, such as SAP, ORACLE, TIBCO, BMC and so on, they integrate their software products into ARIS Platform, so users can export business processes from software to ARIS, which makes a more convenient understanding of business processes in the software platform. For example, SAP has a two-way integration with the ARIS platform through its Netweaver BPM components (called Galaxy). The other kind is consulting services, from companies such as Accenture and so on. These advisory services always make full use of their knowledge and experience to apply ARIS to create a business model when they are implementing ERP and other information systems. However, in the implementation process, customers may change the implementation companies because of the high costs. If it is replaced by Deloitte, and Deloitte told the customers they did not have ARIS, so that the original work was in vain, and it is hard to re-start. The customer is certainly not happy to see such a situation. But if Deloitte also has ARIS, there will be no such problem. Therefore, we try to convince all well-known advisory service providers to use ARIS as a process platform to support their implementations. Using deep-level cooperation with software vendors and consulting services, ARIS is becoming the actual standard of business process management, and this can bring greater value to customers.
Currently, IDS Scheer has 7500 customers in the worldwide, but SAP has 40,000 customers, so the development of ARIS in the future still has much room. Accenture uses ARIS when they are implementing ERP for their clients. Some other consulting firms are still using other enterprise modeling tools, however, objectively, the functions of these tools are very limited. It’s hard for them to show the comprehensive and multi-level business model, and they can not carry out processes simulation and optimization. As a result, I believe, there will be more and more consulting firms using ARIS to do the implementation of ERP software. With the increasing number of IDS Scheer partners, there will be more and more business opportunities to achieve sustainable development.
Peter: One kind is technical partners, such as SAP, ORACLE, TIBCO, BMC and so on, they integrate their software products into ARIS Platform, so users can export business processes from software to ARIS, which makes a more convenient understanding of business processes in the software platform. For example, SAP has a two-way integration with the ARIS platform through its Netweaver BPM components (called Galaxy). The other kind is consulting services, from companies such as Accenture and so on. These advisory services always make full use of their knowledge and experience to apply ARIS to create a business model when they are implementing ERP and other information systems. However, in the implementation process, customers may change the implementation companies because of the high costs. If it is replaced by Deloitte, and Deloitte told the customers they did not have ARIS, so that the original work was in vain, and it is hard to re-start. The customer is certainly not happy to see such a situation. But if Deloitte also has ARIS, there will be no such problem. Therefore, we try to convince all well-known advisory service providers to use ARIS as a process platform to support their implementations. Using deep-level cooperation with software vendors and consulting services, ARIS is becoming the actual standard of business process management, and this can bring greater value to customers.
Currently, IDS Scheer has 7500 customers in the worldwide, but SAP has 40,000 customers, so the development of ARIS in the future still has much room. Accenture uses ARIS when they are implementing ERP for their clients. Some other consulting firms are still using other enterprise modeling tools, however, objectively, the functions of these tools are very limited. It’s hard for them to show the comprehensive and multi-level business model, and they can not carry out processes simulation and optimization. As a result, I believe, there will be more and more consulting firms using ARIS to do the implementation of ERP software. With the increasing number of IDS Scheer partners, there will be more and more business opportunities to achieve sustainable development.
Pei: In the strategies for IDS Scheer’s development in the future, whether it will increasingly focus on BPM products promotion and advisory services, but not SAP consulting services business?
Peter: Our business model is not just software sales, all sales of the ARIS Platform have been associated with training and implementation services, to help customers design the completed business processes. In fact, many enterprises have not yet created the role of Business Process Owner (a person who is responsible on the implementation of business processes). Consequently, we also need to help enterprises build management systems based on business process. There is no doubt that from a long-term strategic point of view, IDS Scheer's business will be increasingly focused on BPM, and it is IDS Scheer's core competitiveness. However, IDS Scheer will not be out of SAP advisory service business, but we will engage in SAP software implementation services driven by ARIS, which is our competitive advantage compared with other consulting service providers. At present, the demand of SAP consulting services is very strong, so we will gradually guide customers to apply ARIS to support the implementation and application of SAP.
Peter: Our business model is not just software sales, all sales of the ARIS Platform have been associated with training and implementation services, to help customers design the completed business processes. In fact, many enterprises have not yet created the role of Business Process Owner (a person who is responsible on the implementation of business processes). Consequently, we also need to help enterprises build management systems based on business process. There is no doubt that from a long-term strategic point of view, IDS Scheer's business will be increasingly focused on BPM, and it is IDS Scheer's core competitiveness. However, IDS Scheer will not be out of SAP advisory service business, but we will engage in SAP software implementation services driven by ARIS, which is our competitive advantage compared with other consulting service providers. At present, the demand of SAP consulting services is very strong, so we will gradually guide customers to apply ARIS to support the implementation and application of SAP.
Peter is introducing the importance of BPM for enterprise development
Pei: In addition to serving as CEO of IDS Scheer, but you are also in charge of the Asia-Pacific business. What is your opinion about IDS Scheer's business in China?
Peter: I came to China this time to listen and learn. Because, to make the right decision, you should not only understand your own business in all countries, but also understand the countries’ cultural, economic environment, business demands, as well as state-owned business and private business and so on, it is very complex.
China's economy is developing very rapidly, and it is almost the only one economy which is still growing currently, while the West is experiencing tremendous economic setbacks. Therefore, I do not think that as a company from the West can teach Chinese enterprises how to manage. We can contribute our past experience to help customers identify their own problems, the opportunities they are facing, how to achieve development targets and how to avoid risks effectively, but I do not think that we can help them to solve all the management problems. Chinese enterprises should explore a unique path of development in practice.
Through research, I found that the operating mode of Chinese enterprises is very different from the West, such as the payment process. In the West, after the delivery of products, it is paid immediately. But in China, after the sales of software, there is a quality margin, to be paid after a certain period of time of software application, which is a new thing for me, so in the past few days I often discussed this with Dr Hong, president of IDS Scheer China, to explore these differences.
The challenge for IDS Scheer in China is the country is so big, while our business in China is still relatively small and we should consider how to cover all the regions of the Chinese market effectively. Another challenge is how to meet the needs of so many industries, including energy, manufacturing, utilities, government agencies, and financial institutions, etc. Therefore, we not only need to share experience in related industries, but also introduce experts from abroad who are familiar with the needs of the specific industries, to expand our business in China.
Peter: I came to China this time to listen and learn. Because, to make the right decision, you should not only understand your own business in all countries, but also understand the countries’ cultural, economic environment, business demands, as well as state-owned business and private business and so on, it is very complex.
China's economy is developing very rapidly, and it is almost the only one economy which is still growing currently, while the West is experiencing tremendous economic setbacks. Therefore, I do not think that as a company from the West can teach Chinese enterprises how to manage. We can contribute our past experience to help customers identify their own problems, the opportunities they are facing, how to achieve development targets and how to avoid risks effectively, but I do not think that we can help them to solve all the management problems. Chinese enterprises should explore a unique path of development in practice.
Through research, I found that the operating mode of Chinese enterprises is very different from the West, such as the payment process. In the West, after the delivery of products, it is paid immediately. But in China, after the sales of software, there is a quality margin, to be paid after a certain period of time of software application, which is a new thing for me, so in the past few days I often discussed this with Dr Hong, president of IDS Scheer China, to explore these differences.
The challenge for IDS Scheer in China is the country is so big, while our business in China is still relatively small and we should consider how to cover all the regions of the Chinese market effectively. Another challenge is how to meet the needs of so many industries, including energy, manufacturing, utilities, government agencies, and financial institutions, etc. Therefore, we not only need to share experience in related industries, but also introduce experts from abroad who are familiar with the needs of the specific industries, to expand our business in China.
Pei: How does the global economic downturn affect IDS Scheer?
Peter: Instead of being a negative, the global economic downturn has brought tremendous opportunities to the growth of IDS Scheer. Gartner set BPM top in the schedule of global enterprises applications for the first time. For example, for data backup centers, if there is no fire, people are hardly aware of the importance of it. If a company has a data backup center, but there is no fire in fifteen years, then it is difficult to calculate the ROI of the data backup center. However, if a fire happens, and the enterprise was greatly affected because there was no installation of a data backup center at this time, the ROI of it will be highlighted. BPM is similar to data backup center, its functions may not be so obvious in the booming economy time, but when the enterprises are in crisis, the significance of BPM will be showed up.
To identify clear business processes is an important responsibility of managers, because only they can effectively manage their business processes. Mangaing these processes means enterprises will be able to significantly resist risks, adapt to the changing market environment, and then achieve the governance, finally, to achieve customer value and create value for shareholders. Like me, as a professional manager who wants to convince the shareholders, we need more and more to implement business process management, otherwise, it is hard to predict the effects on the enterprises after the change of business model or management model and whether the risk is too large for enterprises to survive.
Peter: Instead of being a negative, the global economic downturn has brought tremendous opportunities to the growth of IDS Scheer. Gartner set BPM top in the schedule of global enterprises applications for the first time. For example, for data backup centers, if there is no fire, people are hardly aware of the importance of it. If a company has a data backup center, but there is no fire in fifteen years, then it is difficult to calculate the ROI of the data backup center. However, if a fire happens, and the enterprise was greatly affected because there was no installation of a data backup center at this time, the ROI of it will be highlighted. BPM is similar to data backup center, its functions may not be so obvious in the booming economy time, but when the enterprises are in crisis, the significance of BPM will be showed up.
To identify clear business processes is an important responsibility of managers, because only they can effectively manage their business processes. Mangaing these processes means enterprises will be able to significantly resist risks, adapt to the changing market environment, and then achieve the governance, finally, to achieve customer value and create value for shareholders. Like me, as a professional manager who wants to convince the shareholders, we need more and more to implement business process management, otherwise, it is hard to predict the effects on the enterprises after the change of business model or management model and whether the risk is too large for enterprises to survive.
Pei: Since business process management is so important, then, do you think whether it will become a MBA or EMBA program to be learnt?
Peter: Absolutely. Not only that, but I think mechanical engineering, electrical engineering, and even pharmaceutical and other courses should offer business process management course. For example, in the pharmaceutical industry, the research and development of new drugs needs several steps, the processes are very complicated, and it needs to consider how to pass FDA certification. Accordingly, enterprises need to use BPM to support such a complex development process of new drugs. For this reason, in the next five to ten years, IDS Scheer will face enormous development opportunities.
Peter: Absolutely. Not only that, but I think mechanical engineering, electrical engineering, and even pharmaceutical and other courses should offer business process management course. For example, in the pharmaceutical industry, the research and development of new drugs needs several steps, the processes are very complicated, and it needs to consider how to pass FDA certification. Accordingly, enterprises need to use BPM to support such a complex development process of new drugs. For this reason, in the next five to ten years, IDS Scheer will face enormous development opportunities.
Pei: What areas of ARIS platform do you think will be continually improved in the future?
Peter: In my opinion, there will be more software systems that can be migrated to the ARIS platform, for example, the processes built by Microsoft VISIO will be able to be transferred to the ARIS platform. We will provide customers with increasing number of interfaces to support the compliance management of various regulations, at the same time we will continue to improve ARIS supporting services. In the future, the innovation of ARIS will be more focused on the solutions. It will analyze key performance indicators of business processes, to help enterprises achieve the management of process life cycle.
Peter: In my opinion, there will be more software systems that can be migrated to the ARIS platform, for example, the processes built by Microsoft VISIO will be able to be transferred to the ARIS platform. We will provide customers with increasing number of interfaces to support the compliance management of various regulations, at the same time we will continue to improve ARIS supporting services. In the future, the innovation of ARIS will be more focused on the solutions. It will analyze key performance indicators of business processes, to help enterprises achieve the management of process life cycle.
Postscript:
Mr. Peter Gérard is a typical German entrepreneur, precise, straightforward, and logical. He said frankly that he can not be Inventor and Saxophonist in one, as Professor Scheer is. As a CEO, he said working is not only his duty, but also his passion. As an experienced manager, Peter has to lead IDS Scheer to achieve sustainable development in the global economy crisis. Chinese enterprises indeed need business process management to improve their management level, to deal with the changing economic environment, and easily control future development. And this means there is a huge opportunity in the crisis for Peter and IDS Scheer.
Mr. Peter Gérard is a typical German entrepreneur, precise, straightforward, and logical. He said frankly that he can not be Inventor and Saxophonist in one, as Professor Scheer is. As a CEO, he said working is not only his duty, but also his passion. As an experienced manager, Peter has to lead IDS Scheer to achieve sustainable development in the global economy crisis. Chinese enterprises indeed need business process management to improve their management level, to deal with the changing economic environment, and easily control future development. And this means there is a huge opportunity in the crisis for Peter and IDS Scheer.
Mr. Peter Gérard and Dr. Huang Pei
Recorder&Editor: Sophie Shi ss@e-works.net.cn
