Peter: Hello there this is Peter Schooff, Managing Editor at BPM.com and today I have the great pleasure of speaking to Tom Koulopoulos, Chairman of the Boston based innovation think tank, Delphi Group. Tom is also an Executive in Residence at Bentley University and basically can be considered one of the founding fathers of BPM.
Today we are going to discuss the internet of everything, which is also the closing Monday Keynote that Tom will be giving at the iBPMS Expo which is coming very soon this October 14th – 17th in Chicago.
So first of Tom thanks so much for joining me on this pod cast.
Tom: Thank you Peter, my pleasure.
Peter: Great so as one of the industries founding fathers, you’ve seen process management change over the last two decades. Can you give us an overview of what you have seen from your perspective?
Tom: It’s been an amazing journey, and it has been at least two decades long. It really goes back further than that but I think the big change Peter over the last two decades are really how main stream the notion of business process management has become. A lot of people are doing it without calling it BPM necessarily, and I think that is the hallmark of any great technology or any great revolution, when you finally stop and do it without necessarily putting a name to it because it’s just part of what you have to do to run a business, then it truly has succeeded.
It’s also the irony, because a lot of folks who grew up with the religion of BPM want to impose that name on everything and the reality is that BPM is now a very big tent and a lot of different things are included under that tent. Some of them are called BPM by name, other are not.
I think generally the notion of trying to manage all these connected people and devices we have has made business process management an essential ingredient of every business in every industry. It’s just not everyone calls it that anymore. But I see that as a huge success, it has gone main stream.
Peter: Definitely, I would agree. So one of your perspectives is the internet of everything, what does that mean to process management.
Tom: Yea, clearly it means a lot of things to a lot of people but to sort of confine our conversation to process management specifically what it means more than anything else is that we’re dealing with more and more of these things. If you talk about how much we will be connected through the internet and intra-connected, it’s not just connected to the internet but devices that can connect to each other and you look at how that projectory is going to increase and accelerate over the next eight to ten years, I think the numbers are beyond comprehension here.
When I wrote my last book “Cloud Surfing” I speculated based on my research that we would have about 100 billion intra-connected devices, machines and people by year 2020. I was doing some work with AT&T just recently and I’ll talk about this in the keynote at IPBS. AT&T’s number is over one trillion, that’s with a T not a billion, one trillion inter-connected devices by 2020. And every one of these devices will talk to every one of these other devices.
When you talk about managing a process, the complexity and sheer scale of these processes, the global nature of these processes will be such that it will be virtually impossible to imagine any kind of any reasonably significant effort or reasonably sized company surviving without some mechanism by which they can in fact manage the flow, the sequencing, the reporting, the metrics on these processes.
So it only increases the need for BPM, although we are 20 years into it as you just said, I think we are still just scratching the surface in terms of what we will be applying BPM too. So I think the best, brightest, most interesting base of BPM still lie ahead of us.
Peter: Definitely, now from your perspective do you see companies with BPM looking to cut cost more so or expand capacity?
Tom: You know that is a great question, because I think we always come back to this numerator vs. denominator question. There is three ways you can grow a business, you can cut costs, you can increase sales or you can innovate.
I think BPM most definitely has been used initially to help cut costs, to streamline, to increase efficiency, which was sort of the first generation of BPM.
The second generation was helping to increase revenue, helping to increase the opportunity to partner and to grow a business from the top line, not just shrink the costs that lead to a better bottom line, but that is still second generation.
The third generation is innovation and ultimately every industry, and every business within every industry is going to survive because they can grow and innovate. If they can’t do that they simply won’t survive, that is the nature of any free market. So unless you’re in a protected monopoly of some sort and even in that case, we see that in governments and in a lot of industries where monopoly tend to be a protected space, still have to innovate simply because they have to satisfy their consumer, the don’t want revolt. They want their customers, their consumers to be happy.
I think the third generation of BPM, which is the one we were just talking about in this hyper connected world is one that focuses on innovation so I would go beyond gen one which is cost cutting, which is still very much in play, beyond gen two which is developing the top line, still very much in play to a third generation which is how do we take BPM and innovate, create new services, create new products, integrate the customer into the BPM experience in such a way that it is a more pleasant experience. One that engages them to a higher level and finally how do we create more sophisticated partnerships so we can bring product to market faster, innovate in a shorter cycle.
So that’s kind of the way I rationalize the cost vs. revenue vs. innovation question. It really is three generations of successive development and evolution of BPM.
Peter: Right, what role can BPM really play in innovation?
Tom: Yeah, the biggest role, and this is the one we often discount the most unfortunately, I think this is going to change, but the biggest role I see it playing in innovation is to help do two things, one to increase the speed in which we can collaborate so we have the ability to track the flow of ideas as they develop, the life cycle of innovation as it evolves, so we can track the flow of that. We can use metrics to understand where it might be bottlenecked, where it might otherwise be stymied and ultimately help us speed up the overall process.
Innovation today is not about protecting what you know or protecting intellectual property but it it’s about getting stuff to market fast. I mean end of story, the better you can do that the more innovative you will be, because a lot of what you bring to market will fail. Some of it will succeed wildly, I’ve talked to a lot of CEO’s over the course of the last few weeks in manufacturing and they tell me that in manufacturing, very process driven discipline, so much of how they are looking at the future, they are allowed to place big bets with small parts of their portfolio, big bets that they can quickly bring to market, and if they’re not going to work then they will cut loose those big bets and move on to the next one.
If they will work then they will double down and invest heavily so they can speed the innovation along. The reality is that the market is going to respond instantaneously today to new products and services and if you can respond in kind in real time, which is what BPM allows you to do, then you’ll be much more innovative as an organization.
I think that’s ultimately the contribution of BPM, increase that speed, but the second piece of it, as important but slightly less priority, is can you partner? Without BPM you cannot partner as effectively, I need transparency to the process. I need to see what my partners are doing, they need to see what I’m doing, without that transparency that BPM brings to the picture it’s very difficult to partner in an effective way.
Now I say that is a second priority because ultimately if you partner well, it will increase your speed, so it all comes back to how quickly can you get that product to market, how quickly can you incorporate the market’s response to the next generation of that product or service and all those innovations will determine how innovative you are and how successful you are ultimately.
Peter: Definitely, now do you see basically those looking from the outside, does this just lead to universal standardization and is that a problem?
Tom: That has been talked about a lot, and I’ve got a little different take on that. I don’t think it is BPM that leads to standardization, I think it is scale that leads to standardization. So when you scale anything, I don’t care what it is, it could be scaling a business, it could be scaling a product, it could be scaling a partnership globally, whenever you scale you need standardization. It’s an inevitability, it’s a part of the natural order of things, to avoid the inotrope that enters the organization you have to be more careful you do things, and that means standardizing what you do.
Now to that extent BPM supports scale, so if you are scaling, you need standardization, BPM will assist in that. What I think we make the mistake is we actually believe that BPM in of itself leads to standardization. It does not need to, BPM can be very flexible, it can deal with flows and processes that are quite volatile, and it can be very effective and valuable to an organization.
So we got to be careful in terms of what the effect and what the cause is. The effective scale is always going to be standardization, the cause is not always BPM. BPM can live very well in environments that that relatively little standardization and requires a lot of flexibility. So I always add that note of caution. BPM supports scale but it doesn’t lead it scale in of itself.
Peter: Excellent breakdown, now here is a bit of a wild card question. Do you see adaptive smart robots participating seamlessly in a process in the future, basically in the internet of everything?
Tom: How can we avoid it Peter? I mean I think you just said it in the internet of everything how can we avoid having those smart robots? To me it’s like, we are going to be crushed by the burden of the internet of everything if we don’t apply some greater intelligence through process automation, so yes. To your question I absolutely see more smart robots, adaptive entities that works automatically on their one. We don’t think to breathe as human beings, business should not think about its processes, it should just be part of what it does in the ongoing execution of its business of delivering its products and services.
I don’t see how in the internet of everything we will be unable to survive without a great deal of technology which operates on it’s on, sometimes even innovates on its own.
I’ll talk about it at the Keynote, I do think the great revolution going forward in process based business and in process across all industries will be this notion of mass innovation, processes that can actually innovate on their own without us even telling them that they have to innovate.
Peter: Excellent, sitting and looking forward at this point, it really just seems to be an exciting time to be part of BPM. I am really looking forward to seeing your keynote at the iBPMS Expo.
Tom: Peter, thank you, I’m looking forward to it bring it, you’re right it is a time for great optimism and I think we are going to see tremendous advances, not just in BPM but in the way BPM supports growth, evolution and prosperity long term.
Peter: Definitely, I agree completely. This is Peter Schooff of BPM.com speaking with Thomas Koulopoulos of the Delphi Group. Thank you so much Tom.
Tom: Thank you Peter.