Saturday, August 29, 2009

BPM Commodization Process- Part 1: The How, Why and When

         Business Process Management (BPM) software holds the promise of increased productivity, top-line growth as well as cost-savings via IT enablement for enterprises. BPM is emerging as one of the fastest growing segments within IT and is on the radar of C-level executives. In other words, BPM is on the verge of crossing the chasm. In part one of the two part series, I would like to explain the commoditization theory and how it impacts BPM industry. Part two of the series will explain what strategies companies can adopt as a response to this changing landscape.

The impact of Open Source:

          It is a well known fact that many enterprises have started adopting open-source architectures in droves. In my current position, I come across several applications architectures being discussed, alternatives dissected and solutions recommended by the capable IT team. However, what has changed in the past years – and is especially true in the recessionary time- is that most IT decisions also come with a mandate – “cut costs wherever possible”.

          However, more than cost cutting, the flexibility and the “openness” (ability to change with relative ease) of open-source gives IT adopters the necessary muscle to wield open-source. A seminal article by Forrester covers the open-source adoption in enterprises and can be found here. In the BPM industry, the emergence of jBPM, Intallio and other open-source products is very likely to impact the industry in a big way.

The impact of Standards:

Standards play a big role in any industry – more so in the IT industry. Industry watchers who grew with the 80 and 90s IT adoption can recollect how Novell used to rule the LAN market with its IPX/SPX technology during early 90s and how they subsequently lost it in no time because of TCP/IP adoption? Closer home, who can forget the adoption of MP3 or the DVD as the industry standards in a record setting pace? Like a tornado sweeping through the plains, these standards backed technologies swept through older technologies thus positioning themselves as the mainstay.

Similarly, the growth of Java in stature and the proliferation of Internet can be argued to be the result of standards and openness. That every single IT vendor today will have to pay attention to emerging standards cannot be disputed. In the BPM industry, the emergence of BPEL as the orchestration language, BPMN as the process notation standard etc are being keenly watched upon. It is BPEL of all things that the BPM industry seems to be rallying around.

Overshooting of Technology – The 3rd ingredient of Commoditization:

The choice of open-source and standards alone will NOT commoditize a software or technology. There is one other important aspect for commoditization – which is, overshooting of the technology. This is an important phenomenon illustrated by Christensen in his seminal book titled, “The Innovator’s Dilemma”.

In short, what this model says is that, when new technology emanates, it falls short of what is required by the market. However, as innovation catches up, there will come a point when the new innovation will overtake what is needed by the market. It is exactly at this juncture that commoditization starts. Once several attributes of a certain product overshoots the market consumption pattern, there is very little room to differentiate – because any further differentiation will not have a market for!!  The result is a slew of offerings which are good enough for everyone. Commoditization results.

Christensen’s Disruptive Innovation Model

Commoditization of the BPM Software:

      Currently, the BPM technology is a few years away from becoming a commodity. Standards such as BPEL, BPMN etc have just gotten adoption. The open-source platforms such as jBPM and Intallio etc are a far cry from the leading vendors such as Lombardi or Pegasystems. The functionality offered by these products are inferior compared to the leading vendors. For example, while model-driven architecture and zero-code environment, or integration with rules engine or EIA are taken clear benefits of the leading vendors, the open-source platforms are playing catch up right now.

      However, as each component within BPM matures, the commoditization process will also kick in. For example, while orchestrating the process, almost all vendors support a native definition language which are not inter-operable. Thus, processes defined in jBPM is not transferable to AcquaLogic or vice-versa. However, as BPMN stencil becomes the industry standard (if it does become the standard), users will become immensely benefited by such an adoption. Thus, vendors will not have any differentiation with respect to this. Similarly, one could argue the same with Business Rules, Process Choreography and other important facets of the BPM suite.

Predicting the Timing:

Lastly, I want to draw the attention towards the next obvious question which is when commoditization? Again, I would like to take the help of another important theory popularized by Gartner – known as the Hype Cycle. This model shows how interested industry pundits (especially IT buyers such as CIOs and VPs) are and how the buzz is around in the industry. For a definition of Hype Cycle and its implications, readers are referred to an article here.

Gartner’s Hype Cycle - 2008

As technology evolves, the expectations and affiliations change rapidly. Usually, the promise and over promise of any new technology will bring excitement and disenchantment – which is depicted by the 5 phases in the diagram below. The key to note is that it is in the slope of enlightenment (4th phase) that any technology will start its rapid adoption. Interestingly, the hype cycle also discusses how long will it take to get there. For BPM, Gartener’s hype cycle predicts 2-3 years. Thus, for the technology to become mainstream and for the process of commoditization to happen, it will take 2-3 years from now (around 2012).


          This article sets the rational for why technology and software becomes commoditized. It argues why or how the BPM industry is likely to become commoditized in the near future. It uses two of the popular management models, namely the disruptive model by Christensen and the hype-cycle by Gartner. Using those theories, this article postulates how BPEL, BPMN and Business Rules will evolve as standards. Finally, this article predicts that by 2012 BPM industry is likely to enter mainstream and that is the point when commoditization will set in.

                In the next article, I will attempt what strategies should BPM vendors adopt to avoid being swept away by the commodization process.