BPM and the Jobless Recovery

ON LABOR DAY 2010, 14.8 million Americans were out of work and looking for jobs, for an unemployment rate of 9.6%. It’s gotten worse since then. The United States economy has lost more jobs than it has added since the recovery began over a year ago. The government takes over failing businesses, turning them into zombie competitors for companies that were more prudent. To pay for that it plans to raise taxes on the most successful earners of income, who are also the investors who finance economic expansion. Businesses are growing as fast as they can without taking chances by hiring workers. But the large proportion of industries that have switched from fast growth to steady decline suggests that overinvestment in some industries during the 1990s may further suppressing job growth. To keep overstretched businesses running, new management strategies promote lean staffing as part of a broader drive to reduce costs and increase efficiency. Many of these employers have also initiated operational changes, such as PROCESSES for just-in-time delivery and OUTSOURCING. The much famed increase in productivity is not per worker, but just on the number of workers needed per revenue. Performance-based executive compensation has enhanced managers’ incentives to adopt more efficient staffing. Families also are naturally cautious. Having seen their home equity evaporate, they need more savings to feel secure, even if they have jobs. They won’t go out and spend, keeping other people out of a job as well. No wonder we have a jobless recovery.

 

The Jobless Recovery

 

After the last recession ended in June 2009 employment in the United States fell at a faster pace than after earlier recessions. Europe does not see the effects of a jobless recovery, and while the recession and job loss never was as deep, the recovery and jobs are aligned.  Austria has for example the lowest unemployment in the EU and it is much lower than before the recession started. One of the main reasons being that EU companies did not go into such a cost-cutting, staff reducing frenzy when the recession started, which in the US actually deepened the recession further.

What has all that to do with BPM?

Well, I propose that it is the efficiency and cost-cutting mindset also employed in BPMS justifications that is a major cause of the ongoing lack of jobs in the US. BPM implementations focused on automating work with flowcharted processes (and excuse me,  the majority are!!!) are only usable for a subset of work – those repeatable, low value, high-volume admin processes that ERP can’t handle. The ROI justification is virtually always about less people needed per revenue!

A BPM approach that focuses however on effectiveness and real-time decision-making by creating business capabilities and transparency is a good thing. It makes however no sense to even think about doing this without considering empowering the process performers with IT to define their authority, goals and means. Which simply means that current day BPMS systems never simply got the idea behind process management and as long as they use flowcharts that won’t change. I also doubt that only documenting processes without technology empowerment for people is the way into the future.

I have said this often enough before: I SERIOUSLY question the ROI calculations that justify those BPMS implementations. NO ONE verifies long-term ROI honestly. Gartner Group’s Jim Sinur wrote a post in which he predicts a possible skill shortage for BPM implementations and he lists process designers, facilitators, workbench designers, process optimizers, policy and rule managers, sub-process integrators and legacy wrappers as those skills needed. Yes, I totally agree with Jim’s assessment of the complexity and substantial people effort need to get BPMS implemented. Some of the cost is also not process related, but caused by the technology stack being used and the resulting INTEGRATION work. Therefore I propose a consolidated platform rather than integration with others. Businesses who try to integrate existing ECM, BPM, CRM, BRM, E20 and BI suites will never achieve a truly dynamic, adaptive and financially sound BPM.

A recent study that ISIS Papyrus sponsored at Forrester Research found that maintaining a set of BPM processes is potentially TWICE THE COST PER YEAR than it was to implement the processes originally! With the above skills required is anyone surprised? The study also showed that a majority of process implementations and maintenance requires IT to perform or at least support the effort, slowing it down and making it a lot more expensive again. The short-term cost savings of BPM automation/standardization CAN THUS NOT TRANSLATE into long-term cost benefits.

No one properly considers the negative sideeffects of BPMS implementations on a firm’s resilience to deal with change. In the next wave of structural change, caused by either economic cycles or technology advance, all those rigid processes will simply be a straightjacket for the business. If you need this huge amount of technical skill – and therefore bureaucracy to coordinate – to change them, then the widely promised BPM AGILITY IS A LIE.

Because the BPMS skills are expensive and rare they are mostly provided by outside consultants. In effect that means that once the processes are implemented the people who know and understand them move on, leaving the business with unskilled workers and killing the ability to improve or innovate. This is the worst possible business proposition I can think of.

What are the consequences of the above?

  1. BPMS do not empower the business performers.
  2. BPMS are too complex to implement what is needed.
  3. Standardization enforces reuse of good-enough rather than best-fit processes.
  4. Therefore a governance bureaucracy has to liaise betwen IT and business.
  5. Rare BPMS skills increase the cost of staff and projects.
  6. IT involvement lengthens the time needed for change.
  7. The cost of process adaptation, innovation is higher than implementation.
  8. Direct automation savings do not justify long-term ROI.
  9. Complexity and bureaucracy reduce business agility and resilience.
  10. BPMS implementations reduce the number of skilled people.

 

Each Innovation has to cycle the BPM bureaucracy

 

Jim also feels that BPM is in a self-fueling cycle of adoption because it is so effective.  Self-fueling? A cost-cutting management style might fuel it. I rather see a huge advertizing machinery at work producing all the hype about BPM that lacks factual foundation.  Let’s find who invented this ‘Do more with less!’ nonsense and automate HIS job! ;-) I still miss those INDEPENDENT studies that verify long-term feasibility and benefits of BPMS implementations. And what about those other processes that require human knowledge and skills? They can’t be analyzed and automated anyway. Flowcharted BPMS (or all that need IT to define a process) are of limited use, simply because implementation/adaptation is too complex to reduce total cost of ownership. I used the above slide in my presentation at the Forrester Forum in Washington last week and to my surprise it was well received. Social BPM might improve communication and reduce the bureaucracy, but it still does not empower the business person to create his own process and put it to use.

I propose that businesses should focus on being EFFECTIVE first, before looking at cost. Effective not in terms of a theoretical flow, but in they eyes of an individual customer. CIOs need to push for a more people-focused IT and influence business strategy to provide EMPOWERMENT TECHNOLOGY, rather than supporting cost-cutting with BPM processes. Empowerment is not about social networking, but about authority, goals and means by means of IT (such as ACM). Effectiveness is achieved by linking up customers and process performers in the process context and providing business transparency. Socializing that is not tightly linked into the context of a business process does NOT produce business value! Why? Because E20 does not follow process goals that are aligned with targets and objectives.

I hope that Jim is wrong with BPMS adoptions speeding up and that we are rather on the verge of enough people realizing that BPM as a concept that turns people in to process monkeys is a failure.  In the worst case, it won’t just be the ‘jobless recovery’ that is going to crash on top of us, but it will be the inhumane, fully automated, mass-produced, market-segmented, analytically predicted process nonsense that will make even those customers walk away that still have a job.

References:
BARRONS: Sept. 4, 2010 The "Jobless Recovery" By Thomas G. Donlan
Kahn, McConnell, and Perez-Quiros (2002) Technological improvements in inventory management.
Davis, Steven, John Haltiwanger, and Scott Schuh. (1996) Job Creation and Destruction.
Schreft, Stacy L., and Aarti Singh. (2003) A Closer Look at Jobless Recoveries.

I am the founder and Chief Technology Officer of ISIS Papyrus Software, a medium size software company specializing in communications and process management. I wrote several books and hold a number of patents. My quest is to bring common sense to IT, mostly by focusing in human quality issues rather than cost saving, outsourcing and automation. I am also Chief Architect at VIPorbit software which provides mobile relationship management.

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Posted in BPM, Business Strategy, Economy, Executives
3 comments on “BPM and the Jobless Recovery
  1. […] BPM Skills – Max J. Pucher Because the BPMS skills are expensive and rare they are mostly provided by […]

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  2. […] J. Pucher always writes interesting copy on his blog.  And one of his latest, on BPM and the Jobless Recovery, is no exception: Well, I propose that it is the efficiency and cost-cutting mindset also employed […]

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Max J. Pucher
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