Part I – How BPM platforms help enterprises to capitalise on the cloud
If you believe that cloud equals cost cutting and that’s all, then you can skip this post.
If you’re looking for ways to leverage the cloud for innovation at affordable cost, here’s my view on how smart manufacturing principles can now be applied in IT, thanks to a wealth of services that can be consumed from the cloud.
The question is how to capitalise on this? The (short & simple) answer is: apply a BPM platform as your “cloud service assembly line”.
I believe that we are going through a radical shift in our industry and it strikes me that there are a lot of similarities with how the manufacturing industry has evolved over time.
Many people view the cloud as a means of just reducing the cost of IT and, while that’s definitely an important factor, there’s a far more fundamental pattern that revolves around consuming IT services and applications from the cloud, tailored to the needs of customers and end-users at affordable cost.
One could say that cloud services and applications are “democratizing” IT and fostering innovation by combining various services at (relatively) low cost into tailored and personalised solutions that drive productivity and engagement through personalized experience of customers, partners and employees. In the manufacturing world this concept is called Mass Customisation, as first described by Joseph Pine 20 years ago.
It’s all about postponing differentiation until as late as possible in the production process combined with lowest possible unit cost.
Enterprises should take advantage of this concept and apply it in IT by:
- Embracing the cloud for consuming services on different XaaS levels where and whenever possible. (BTW: I have an appreciation for the fact that some systems may be kept on premise) and
- Making sure that they use an “assembly line” to integrate, aggregate and orchestrate these services. In my view, a BPM platform is an ideal “assembly line” as it can perfectly handle the initial provisioning, the “stitching” of the services, and the orchestration of running aggregated services. If you’re smart you’ll use BPM “as a service”.
I say “should” take advantage because this opportunity of leveraging cloud and applying mass customisation will turn into a threat if ignored. I am seeing companies adopt this approach and driving innovation at a cost level that is substantially lower and at a pace that is significantly higher than the alternative of doing it on premise.
As this is a pretty fundamental concept, let me share some background on the concept of Mass Customisation with you, so that you really get what I am referring to.
As you may know the Cordys core team has its roots in the ERP space, working for Baan Company, one of the four players that actually shaped the ERP market in the nineties. We were particularly strong in the discrete manufacturing vertical with best of breed functionality to support multiple manufacturing principles varying from make-to-stock, engineer-to-order and assemble-to-order.
Make-to-stock production is typically for commodity goods where mass production allows for lowest possible price per unit. On the contrary, engineer-to-order is typically suitable for capital-intense industrial goods like high-end machinery that is built uniquely or in small series.
In between the two extremes is the assemble-to-order concept which allows companies to assemble a product with unique characteristics but built up from standard modules and assemblies that, in turn, could be make-to-stock, or produced on demand based on pre-defined specs. Assemble-to-order combines elements of make-to-stock and engineer-to-order to produce larger series at affordable cost.
A smart form of mixing these concepts is the manufacturing principle called Mass Customisation. It’s described as “effectively postponing the task of differentiating a product for a specific customer until the latest possible point in the supply network. It combines the low unit costs of mass production processes with the flexibility of individual customisation”.
It’s interesting that complete industries such as car manufacturing have gone through cycles when it comes to applying these manufacturing principles during their lifetime. A century ago cars were pretty much engineered-to-order. Then Henry Ford revolutionised the industry with the introduction of the Model T that could be ordered in “any colour, as long as it was black”. In the last decades car manufacturing companies have driven lean and assemble-to-order manufacturing principles to perfection, including the support of Mass Customisation more recently.
One of the best examples is how BMW has turned the Mini Cooper into a personal and affordable style icon. It says that out of 100,000 new Minis only 5(!) will be exactly alike.
So what does it take to apply Mass Customisation principles? In a nutshell:
- First of all, you need the right set of standard components, assemblies and modules as building blocks, along with the definition and routing of the operations to be performed to get the final product.
- Secondly you need the production / assembly line to perform the assembly tasks and operations.
- Last but not least the customer needs the tooling to actually configure the product within the applicable rules and constraints.
You may be thinking, “This is all very nice, but how does this work for IT”?
In IT, like the cycles that the car manufacturing industry went through, we started off with engineer-to-order systems and applications as the predominant model. Then the model of “commercial-off-the-shelf” software or “packaged” applications came along, a market boosted by the availability of client–server systems. The rise of the internet, followed by Web 2.0 based on the worldwide web standards, and the availability of bandwidth infrastructure has propelled the proliferation of IaaS, PaaS and SaaS offerings for both consumers and business at a pace absolutely unseen in the history of technological innovation.
So we now have the building blocks on various levels of the “stack” and various levels of granularity. Think about network, storage, virtual servers, and a myriad of applications for CRM, ERP, SCM, BI, office productivity, mobile apps etc. They’re all available as services from the cloud, and the standards (Rest & SOAP) for “plug & play” integration of the services are there.
The last piece that we need is the “assembly line” to create, aggregate and orchestrate the right bundles of integrated services that are tailored to the needs of the end users.
A BPM platform, assuming that it’s supported by solid integration and application development capabilities, is the perfect assembly line for leveraging the Mass Customisation principle using cloud services. Let me give you an example to illustrate my point.
We have replaced a Siebel CRM system at one of the leading emergency centres in The Netherlands with a BPM / Case Management application that combines core application logic built as per customer specification (engineer-to-order) with a set of standard public- and private cloud services which allow this company to handle road assistance support calls very efficiently and effectively. BPM is essentially used as the mechanism to steer the application (assemble-to-order). We mix dynamic workflow to support the call handlers with straight-through workflows calling and generating the right mix of services to coordinate all stakeholders in the value chain.
One of the ways which we apply mass customisation is that, by integrating Google Maps with the application to plot salvage companies, hotels etc. in the neighborhood of an incident on the map, the call handler gets visual support for selecting the right services for the client in trouble. Similar services are called for number plate checks, insurance policy checks etc.
There’s no way that we could build an equivalently rich solution at an affordable cost level that would be so tailored to the needs of the customer without leveraging these public- and private cloud services.
In the case above we leverage pretty simple and straightforward cloud services. In another example, one of our strategic partners has built a full blown solution for “a 360° view on the customer” with an integrated portfolio of cloud applications for web content management (Drupal), marketing automation (Eloqua), sales-force automation (SFDC) and analytics (Adobe). This portfolio is offered as a single solution to the customer, connected to on premise systems like ERP and managed by the partner under a specific Service Level Agreement.
In both enterprise customer examples, the BPM platform acts as the decoupling layer between different types of services, supports the aggregation on multiple levels of granularity, and introduces a level of flexibility to influence (Business Rules), change and replace these services at an unparalleled level of productivity.
If this approach gets industrialised with “service configurators” on the front end and an assembly line that takes and personalises the right mix of services, we’ll see the birth for Mass Customisation in IT.
In my next blog I’ll address how the principles of Mass Customisation are applied in the next generation of business application where we’re seeing ISVs adopt this approach with great results when it comes to productivity and application lifecycle management cost.
The post Cloud: the catalyst for innovation through mass customisation in IT appeared first on Business Process Innovation - Cordys Blog.