Business Process Management Suites (BPMS) Will Be Among the Fastest Growing Software Markets through 2011, Says Gartner

In 2007, BPMS market will exceed total software revenues of $1 Billion

Egham, UK, March 27, 2007 � According to Gartner, the worldwide market for business process management suites (BPMS) will exceed $1 billion in 2007 in total software revenues and will reach $2.6 billion by 2011 as globalisation, the increasing importance of the consumer and the rise of the Internet change the dynamics of business. This will lead to a renewed interest in the management of business process and BPMS in particular as enterprises are looking to use software to better coordinate their entire processes. BPMS will be among the fastest-growing software markets through 2011, exhibiting a compound annual growth rate (CAGR) of 24 percent in the period from 2006 to 2011.

Gartner analysts assessed best practices and opportunities presented by business process management (BPM) at the Gartner BPM Summit, which is being held in London from 26 March � 28 March.

BPM has evolved from former process management theories and practices, such as total quality management (TQM) and business process re-engineering (BPR), to become a management discipline that views business processes as assets that can be designed, re-used and exploited in order to improve business agility and operational performance. �The focus on operational excellence is accelerating,� said Janelle Hill, research vice-president at Gartner. A survey conducted in the third quarter of 2006 by Gartner and Forbes showed that 45 percent of business executives have an expectation that Chief Information Officers (CIOs) will take more responsibility for managing business process change over the next five years.

�BPM wins the �triple crown� of saving money, saving time and adding value. BPM is delivering both short-term return on investment (ROI) and long-term value. One example is an insurance company that was able to reduce its claims processing cost by more than 20 percent. We are currently seeing uptake in BPM use and benefits in government, banking, healthcare, transportation and travel industries,� added Ms Hill.

Today�s more collaborative and iterative style of software development requires a unified environment, provided by BPMS*. Market requirements are shifting from pure-play business process management products that address human-to-human or system-to-system workflow to BPMS that support process management practices in a more consistent, adjustable and unified manner across the entire process life cycle. �The technology helps business leaders to work together more collaboratively and seamlessly by sharing common tools and artefacts,� said Ms Hill.

The emergence of BPMS market

�2005 was the year the BPMS market was born and, at the same time, a critical mass of BPM vendor�s offerings met the criteria of a BPMS,� said Michelle Cantara, research vice-president at Gartner. �The emergence of the BPMS market represents major challenges for existing BPM pure-play vendors.�

�This market continues to attract new participants, both small and large, with the major middleware and infrastructure vendors recently entering. Furthermore, the barriers to entry will continue to get higher, as buyers expect strong capabilities to support their business process platform (BPP) model,� added Ms Cantara. In previous years, smaller BPM pure-play vendors could succeed purely based on their human workflow capabilities and other unique features and how effectively these addressed specific vertical industry business practices. As larger vendors with greater resources enter, it will be increasingly difficult for newer and smaller entrants.

�Software vendors that do not already meet the criteria for offering BPMS products should not attempt to become a BPMS vendor organically. The barriers to entry are too high and vendors should fill gaps in their BPMS functionality through acquisition or original equipment manufacturer (OEM) relationships,� said Ms Cantara. �Out of 50 BPM vendors that Gartner was tracking in 2003, only 25 met the criteria to become a BPMS vendor in 2006.�

Gartner expects demand for BPMS to accelerate sharply through 2007 as companies combine spending on service oriented architecture (SOA) initiatives with BPM programmes. A Gartner survey conducted through 2006 showed that companies expected to spend 22 percent of their 2007 IT budgets on SOA, Web Services and Web 2.0 initiatives. �Because BPM is a major reason for turning to SOA, companies are likely to target some of their SOA software spending to BPMS,� Ms Cantara added. Gartner estimates that the market will reach its peak in 2008, with an increase of 26 percent from 2007.

North America and Western Europe remained the largest regional markets for BPMS in 2006, with 50 percent and 32 percent of the market respectively. Although the Asia/Pacific region represented only seven percent of the market in 2006, the region will record the highest growth rates over the next six years, reaching its growth peak in 2008 with a nearly 35 percent increase from 2007.

Vendors� landscape

By 2009, Gartner predicts that four or more BPMS vendors will be acquired by platform or application vendors and will cease to be players in the BPMS market. �2007 represents a turning point in terms of growth acceleration in the market for BPMS. We will see some vendors, such as IBM, SAP and Oracle making their intentions very clear and aggressively trying to mature their BPMS offerings. Others, such as Microsoft and CA, will lag behind pursuing the BPMS market as a complementary market to their middleware offerings, particularly in the context of SOA initiatives,� concluded Janelle Hill.

Gartner recommendations to end users

Top three best practices:

  • Business-driven projects: Appoint a business process analyst to work on each major business process and be aware that not a single approach or offering from a single vendor will be sufficient
  • A strong partnership with IT: Recognise IT is an enabler of BPM, not a leader
  • Create a BPM center of excellence: Select an experienced person to head the BPM center of excellence.

Top three pitfalls:

  • Lack of executive support and limited skills of people involved
  • Unclear scope of processes
  • Lack of robust governance framework

Gartner recommendations to vendors

  • Don’t fixate on being in the BPMS market
  • Evaluate:
    • Your core competencies
    • Barriers to entry
    • Threat from competitors in adjacent markets
    • Your ability to anchor or participate in an ecosystem
  • Identify your most appropriate evolutionary path
    • BPMS as a platform
    • BPM-enabling tools
    • Process-based applications

The reports discussed in this release are available to subscribers of Gartner Dataquest Software Infrastructure Market Insights Service and of Gartner for IT leaders.

BPMS will enable companies to improve their process life cycle in six valuable ways:

  1. between workers, systems and information to create shared understanding about how business results can be optimised
  2. Consistently execute the optimal process
  3. Coordinate and manage the handoffs of work across boundaries
  4. Provide real-time feedback to line managers about work in progress (WIP) to support inline process adjustments
  5. Monitor process outcomes to performance targets and continuously refine and adjust process flows and rules
  6. Collaborate with IT professionals throughout the process life cycle

About Gartner

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