A CNET WHITE PAPER
Oracle’s Unique Strategy Towards Exceptional Agility and Business Process Efficiencies
2-Layer BPM
S. E. Slack 3/31/2008
A CNET white paper exploring the unique concept of 2-layer Business Process Management (BPM) supported by Oracle’s Service-Oriented Architecture (SOA) offering and its successful implementation at ABN AMRO, a global financial services company.
Executive Summary
Business process management (BPM) has long been touted as the best way to efficiently align organizational products and services. When those business processes are properly aligned, services and products can be provided in a timely manner to best meet customers’ needs and desires. Service-oriented architecture (SOA) is a method for linking business and IT resources on demand so that desired services can be provided for customers. When SOA is properly implemented, businesses can respond relatively quickly and cost-effectively to changing market conditions. To keep customers purchasing services and products, continuous improvement of processes must be an ever-evolving strategy for most organizations. The more configurable business processes are, the more agile an organization can be in responding to market demands and customer needs. Fifteen years ago, BPM focused on the simple identification and grouping of processes. Useful information, certainly, but not necessarily a method that supported easily configurable processes able to change on customer demand. Today, a new approach to BPM — the use of BPM and SOA together in a layering strategy — offers built-in smartness and high configurability. This dynamic approach to business process management is based on context and content. It offers agility throughout an organization, and it can dramatically increase productivity and time-to-market. ABN AMRO, a European holding company with subsidiaries in commercial and investment banking as well as other financial activities, was keen to find a method for providing personalized banking services to millions of clients. High flexibility and superior customer service were key goals for the company; it wanted to add new services and communication channels on demand, as well as be able to respond instantly to customer needs. Working with Oracle, ABN AMRO developed and currently rolling out a 2-layer BPM process that allows the company to achieve the highest levels of agility, productivity, and customer service. The solution leverages the Oracle Fusion Middleware using a combination of Oracle Business Process What Are Oracle Real SOA Suite. The layeringApplication Clusters? Analysis (BPA) Suite and Oracle approach integrates business-process Regardless of business model, every following: organization has challenges when it comes to activities in a manner that does the offering multiple products and services through multiple channels to a large customer base. Improves collaboration between new approaches in business process results More and more organizations are turning tobusiness and IT for optimum business management to solve these challenges. Links enterprise strategy to business resources for greater agility Increases responsiveness through the use of insight-driven processes If your organization needs the ability to quickly start something new, wants to deploy activities in multiple locations, and expects to achieve business goals rapidly, a BPM + SOA layered BPM approach could well be the option you've been seeking. This paper explores the concept of combining BPM layers and SOA to contribute to a boost in business agility.
This paper is for information purposes only, CNET MAKES NO WARRANTIES EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published March 2008.
Challenges in the 21st Century
Rare is the organization that sells just one product these days. Instead, businesses tend to diversify and expand product lines as needed to meet customer demands. And, particularly because of the swiftness of the Internet, customers expect more — and they expect it now. Offering multiple products and services is the only way to satisfy ever-changing consumer demands. As a result, multiple-channel business models are the norm rather than the exception. Direct sales, ecommerce, face-to-face sales, collection of fees for various rights and services — these are just a few examples of the multiple channels used in business today. Toss into the mix a typically large customer base for most organizations, and it becomes obvious: Today's business environments are constantly churning to meet all the needs and expectations of customers. High levels of competition in every industry are forcing organizations of all sizes to find new ways to respond quickly and effectively to customer demands. The solution? Built-in business agility. If your company sells lipstick online one day, and determines a need to cross-sell nail polish the next, only the agile organization will be able to make the immediate change required to offer lipstick and nail polish as a bundle. Organizations can no longer be controlled by the length of time it takes a programmer to create code and enter changes into business processes. Instead, business analysts must be able to recognize a market need, configure the change internally, and set in motion the required new processes. That's built-in business agility. It's achievable through a combination of business process management (BPM) tactics, service-oriented architecture (SOA), and a layering strategy that provides more freedom to change business processes whenever and wherever required.
BPM: Streamlining for Efficiency
Business process management is one of those nebulous terms that every organization defines a little differently. In general terms, BPM entails identification of activities involved in the management of a business. Some activities are actual business operations (e.g., purchasing, manufacturing, marketing, sales), whereas others (e.g., human resources, accounting, information technology) exist only to support those business operations. For the most part, any primary business process (e.g., sales) can be broken down into numerous subprocesses that eventually translate into very specific activities that must be completed. For example, the larger sales process might consist of smaller, individual activities such as prospecting, contacting, and relationship-building. Successful BPM strategies combine those numerous large and small activities into a streamlined approach that makes the most efficient use of an organization's time and resources. BPM tightly ties together all aspects of the organization, with few, if any, gaps that would interfere with execution of organizational goals. BPM monitors activities, applies business rules, and places a substantial emphasis
This paper is for information purposes only, CNET MAKES NO WARRANTIES EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published March 2008.
on knowledge-worker empowerment. This streamlined approach is ideally designed to help an organization remain agile enough to meet changing customer needs. When business processes fall short, it's typically because the processes are not well designed and well integrated with one another and workers are not empowered to make needed changes. Individual processes might work well, but if they don't connect well with one another, then the demand chain won’t get what it needs from the supply chain in a timely manner. The process is as strong as the weakest link. When that happens, all portions of the organization are at risk. Customers move on to organizations that can better meet their demands, and the bottom line begins to fail. For any organization, adoption of BPM should facilitate the following:1 • • • • • • • • Application composition from a business point-of-view (reuse, speed) Higher focus on cross-functional value chains (efficiency) Increased awareness of customer needs (efficiency, relevance) Better business intelligence (change anticipation) Better business/IT communication (speed) “Declarative modeling” of business flows (change handling) Clearer process “end points” (change impact assessment) Clearer options of essential policy enforcements (accuracy)
SOA: Modernizing Applications for Flexibility
As with BPM, there are many ways to define service-oriented architecture. In the 2-layer BPM context, the term refers to the concept of integrating and reusing modular business services, or software components. SOA is a piece of an organization's overall enterprise architecture and has key implications for the business processes that are integral to the organization. The SOA approach is highly responsive because it focuses organizational efforts on the use of fewer, reusable applications rather than on multiple, legacy applications. This focus helps to standardize changing processes quickly, integrate disparate applications, and assemble services rapidly into new, composite applications. In short, when business processes change, the application architecture can change right alongside them. In comparison, legacy applications have typically become massive nightmares that are difficult to adapt in changing business environments. Their focus is traditionally on user interface requirements rather than on reuse and integration of the application throughout the organization. When changes are
1
SOA, BPM, and Business Agility", Manas Deb, Richard Kolkhuis-Tanke and Maneesh Joshi, Oracle OpenWorld 2007, Session S292036
This paper is for information purposes only, CNET MAKES NO WARRANTIES EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published March 2008.
required, extensive resources and time must be applied to update the legacy application. Even the smallest fix can require weeks of work. Plus, many legacy applications duplicate the efforts of others in an organization, resulting in a waste of time and resources.
Source: Bringing SOA Value Patterns to Life, Oracle, June 2006
Through reuse and integration of applications, assets can be created from existing services rather than by building from the ground up every time a change is needed. In industries that involve constant change, consolidation, multiple business channels, and a need for customization, SOA can add substantial business value just in savings of time, money, and resources. When an organization adopts SOA, it can make possible the following:2 • • • • • Separation of concern (change ownership) Standardization of architecture and technology (efficiency) Loose coupling between consumers and providers (resilience) Standardized models of business/IT functionality (communication) Service repositories/catalogs (development ease/speed, reuse/lower cost)
2
SOA, BPM, and Business Agility", Manas Deb, Richard Kolkhuis-Tanke, and Maneesh Joshi, Oracle OpenWorld 2007, Session S292036
This paper is for information purposes only, CNET MAKES NO WARRANTIES EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published March 2008.
• • •
Incremental and iterative build-up of applications (agile development) Virtual “end point” connections (change resilience) Continual refactoring of service implementation (efficiency)
Perhaps the best way to think of SOA is as a method for bringing business and IT together in a sort of neutral zone to create business-aligned IT services that can flexibly fulfill business processes and goals.
Agility: Does Your Organization Walk the Walk?
To be a truly agile business, an organization must be able to see opportunities as they arise. If there are too many problems in process or architecture, the opportunities simply won’t be visible and are ultimately lost to competitors. In business, the ability to handle competitive and consumer changes rapidly and effectively is the foundation for agility. The idea here is that there should be a planned, structured ability to handle change without requiring a lot of planning.3 Can an organization boost innovation and operational efficiency, effectively manage anticipated and unanticipated changes (both internal and external), and successfully work with accuracy and resource constraints in a matter of hours or days? If so, then the organization is fairly agile.
In business, typical constraints include money, people, skills, technologies, regulations, and industry trends.
However, if an organization takes weeks, months, or even years to respond to change, then it's time to take a look at how to improve organizational agility. Organizations sometimes fool themselves into thinking that they are agile by referencing "routine" performance improvements, such as hardware upgrades. In actuality, these are not good indicators of true business agility. They should be accepted for what they are: required improvements to maintain the status quo, not innovative changes that boost sustained competitive advantages. To effectively assess business agility, organizations must evaluate whether key flexibility conditions exist internally. Before any changes are made, ask the following questions: Pre-conditions Does the organization have sensing mechanisms in place? Does the organization support a fast decision-making culture? Are clear communication channels in place?
3
“Oracle BPM – 2-Layers Providing Built-In Agility", Manas Deb, Gartner BPM Summit 2008, Las Vegas
This paper is for information purposes only, CNET MAKES NO WARRANTIES EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published March 2008.
Post-conditions Can fast organizational learning be applied? Are learning-leveraged changes part of the culture? And, certainly, a flexible IT environment is essential. The ability to anticipate change and remain agile enough to adapt to it quickly should be core features in the organization's IT department.
What's required to achieve true business agility? The systematic support of organizational discipline, technology infrastructure, and all aspects of extended enterprise architectures.
- Manas Deb, Ph.D., MBA, Senior Director, FMW/SOA Suite, Strategic Engagements for Oracle
BPM + SOA: The Agility Boost Every Organization Needs
Think of BPM as an enclosed box. Activities happen within the box, and activities happen outside it. At the same time, activities move in and out of the box to touch other things. In other words, business processes are constantly churning throughout an organization, in response to customer and market demands.
When SOA is in place alongside BPM, an unusual phenomenon appears: synergy. Although BPM and SOA have separate strengths, their simultaneous, joint actions when combined tend to have a greater total effect that either could have on its own. This is the agility boost that organizations cannot get by using BPM over SOA or vice-versa. For example, in the 2-layer approach, processes can become services and services can contain processes. Business, IT logic, and metadata can be shared, providing complementary benefits. And, as business process models change, services can absorb the impact of the change. The business benefits of using both BPM and SOA together include the following: Increased organizational control over business agility Stronger business performance overall An enhanced competitive edge Potentially higher return on investments To achieve this kind of synergistic agility, a twist on the standard layered architectural strategy (presentation, business logic, and data layers) must be used. The following illustration shows a standard three-tier architecture.
This paper is for information purposes only, CNET MAKES NO WARRANTIES EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published March 2008.
Tier 1 (Presentation user interfaces)
Tier 2 (Business logic, business rules, and workflows involving information exchange)
Tier 3 (Applications and data repositories feeding services)
Source: SOA,
BPM, and Business Agility", Manas Deb, Richard Kolkhuis-Tanke and Maneesh Joshi, Oracle OpenWorld 2007, Session S292036
In this traditional approach, the business-logic layer models business objects, determines how those objects should interact with one another, and enforces the ways in which that interaction occurs. Business processes and services occur outside this type of architecture. In the next illustration, however, BPM + SOA is added into the business-logic layer. By including both in the architecture itself, higher levels of freedom between tiers 1 and 3 occur. This increased freedom is what provides increased agility to an organization.
Tier 1 (Presentation user interfaces)
Tier 2 (Business processes and services are incorporated into the business-logic layer)
Tier 3 (Applications and data repositories feeding services)
Source: SOA,
BPM, and Business Agility", Manas Deb, Richard Kolkhuis-Tanke and Maneesh Joshi, Oracle OpenWorld 2007, Session S292036
The primary benefits added by the inclusion of the BPM + SOA layers into the business-logic layer include the following: Large numbers of explicit business processes are substantially reduced Business analysts can swiftly configure business processes The number and variety of decision points are increased Changes can quickly be handled within business flows A simplification of end-to-end business flow visualization occurs Development-to-test-to-production cycle time is reduced
This paper is for information purposes only, CNET MAKES NO WARRANTIES EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published March 2008.
In theory, the design works. But does it work in practice? ABN AMRO, a European holding company with subsidiaries in commercial and investment banking as well as other financial activities, is a firm believer that it does.
ABN AMRO: Achieving Agility by Design
ABN AMRO Global ranks as the 8th largest financial institution in Europe, with more than 4,500 branches in 53 countries and a staff of more than 107,000. Alongside the global entity, ABN AMRO Netherlands has more than 4.5 million customers who use multiple distribution channels: bank branches, ATMs, call centers, electronic banking, and the Internet.
ABN-AMRO Global conducts business in the banking, fund management, and insurance industries. It ranks 8th in Europe and 13th in the world based on total assets and boasts more than 4,500 branches in 53 countries. Total assets are more than EUR 1.1 billion, managed by a staff of more than 107,000. In June 2007, the organization was taken over by the banking consortium of Royal Bank of Scotland, Fortis, and Santander, which focuses on improving service and delivering value for shareholders.
Both sides of the organization wanted to implement customer intimacy for a mass-retail base by using a multi-channel offering of products and services, with a focus on customer self-service and assisted self-service. But to meet organizational standards, the same superior customer service was required across all channels. In addition, the entire organization needed the ability to swiftly introduce new channels, services, and products — and the ability to switch channels during any given process without expecting the customer to re-enter information. A tall order, to be sure. The organization turned to Oracle for help. In a joint development project, the two companies focused on ABN AMRO's goals of high configuration and top-notch business agility. Using the out-of-the-box layered architecture of Oracle BPA Suite and Oracle SOA Suite based on Oracle Fusion Middleware 11g open standards–based components, ABN AMRO is now able to do the following: Quickly introduce existing products into new channels Simultaneously introduce new product features into all distribution channels Seamlessly handle mid-process channel changes by customers Integrate process design with process execution Decrease maintenance costs Use real-time information during client processes
This paper is for information purposes only, CNET MAKES NO WARRANTIES EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published March 2008.
2-Layer BPM as Used at ABN AMRO
The following illustration shows how 2-layer BPM was applied at ABN AMRO. Two separate BPM layers are supported by the SOA layer; hence the term "2-layer BPM."
Source: SOA,
BPM, and Business Agility", Manas Deb, Richard Kolkhuis-Tanke and Maneesh Joshi, Oracle OpenWorld 2007, Session S292036
This layering approach integrates business process activities in a manner that does the following: Improves collaboration between ABN AMRO's business and IT streams for optimum business results Links ABN AMRO's enterprise strategy to its business resources for greater agility Increases ABN AMRO's customer responsiveness through the use of insight-driven processes
BPM First-Layer Specifics
In the first BPM layer (the orange layer in the previous figure), ABN AMRO's end-to-end process management is independent of channel, product, or client segment. A pre-defined framework is used to support the global standards of the organization, and processes are integrated with operational riskmanagement activities. In this layer, new channels and processes are easily configurable.
This paper is for information purposes only, CNET MAKES NO WARRANTIES EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published March 2008.
Technical details: Oracle BPA Suite Includes Oracle ARIS toolset for the business process analyst Includes modeling of all processes with the goal of a complete repository Offers Oracle Business Process Analysis (BPA) integration with Business Process Execution Language (BPEL) engine for insight into all implemented business processes Oracle SOA Suite A toolset that o has in-built support for the 2-layer architecture (both at design-time and runtime) o Supports loose coupling, virtual endpoint abstraction via Oracle Enterprise Service Bus (ESB) o supports large amounts of statically developed business processes o supports business rules driven, isolated decision points o doesn't require redeployment of modified processes because of isolation of decision points o optimizes the reuse of existing assets Represents the Common Process Framework
BPM Second-Layer Specifics
In the second BPM layer (the green layer), ABN AMRO's end-to-end process management is dependent on channel, product, and client segment. This dependency makes reuse of functionality possible when similar process phases are used across channels, products, or client segments. This layer's processes are independent although limited in scope and ability to change. This particular layer generally involves some IT development or implementation procedures to effect change but overall, the BPM within this layer is added to the first-layer repository for a full overview of all defined business processes.
SOA Layer Specifics
In ABN AMRO's service layer (the blue layer), reusable business and IT assets form the services that support the business processes in both the first and second process layers. A repository for both business and IT services that the two BPM layers can draw upon.
The Right Choice for Built-in Smartness and High Configurability
BPM and SOA separately are smart business tools in any organization. A useful BPM strategy employs business rules, business activity monitoring, and exception management, along with appropriate process layering and granular views of business activities. The most effective BPM strategies also plays a substantial emphasis on knowledge-worker empowerment.
This paper is for information purposes only, CNET MAKES NO WARRANTIES EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published March 2008.
A practical SOA approach focuses organizational efforts on the use of fewer reusable applications to quickly standardize changing processes, integration of disparate applications, and rapid assembly of services into new, composite applications. Join the two together as part of a 2-layer BPM approach and you've got built-in smartness and high configurability in your organization. By using BPM and SOA together in a layering strategy, BPM is based on both context and content. There is no other method available today that offers this kind of extreme synergy and agility throughout an organization. As a result, companies who apply this strategy can expect dramatic increases in productivity and time-to-market. As ABN AMRO discovered, the smart solution is to use Oracle BPA + SOA Suites. The out-of-the-box functionalities, along with Oracle's superior support, make this solution the only one on the market that can deliver on its promises of high configurability and built-in agility.
For More Information
To learn more about Oracle’s 2-layer BPM strategy and how Oracle BPA + SOA Suites can help your organization obtain high configurability and built-in agility in a business process management solution, visit www.oracle.com/technologies/bpm/index.html or call 1.800.ORACLE1.
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This paper is for information purposes only, CNET MAKES NO WARRANTIES EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published March 2008.