Big Data And The Role Of Business Process Management

Business Process Management

Today’s explosion of ‘big data’, from social networks and mobile applications to RFID tags and digital sensors, will enable businesses to be run in new and yet to be imagined ways. If one accepts the view that ‘you can’t manage what you can’t measure’, it is essential that organisations fully utilise their data.

The insights that can be gained from this big data will open a myriad new business opportunities and challenges. In order to address this effectively, organisations need to embrace a best-practice Business Process Management approach, based on the integration of big data and real-time event analysis.

The ‘Big Data’ Phenomenon

Businesses generate a huge amount of data about customers and their buying patterns. The rise in the volume of data being generated globally by this open-ended supply chain is phenomenal. Social networks alone create hundreds of billions of pieces of content per month: in industry, smart grids increase the data handled by power providers by 700 per cent: and mobile payments in banking are forecast to reach more than $1 trillion in the next two years, generating auditable data for each transaction.

Every new mobile user adds to this and there are currently 5.9 billion subscribers globally. IDC predicts that 1.8 zettabytes of data (a zettabyte is a trillion gigabytes) will be generated in 2012, a nine-fold increase in just five years. It also predicts 35 zettabytes by 2020, with the available disk storage lagging far behind at 15 zettabytes.

However, according to Forrester, organisations effectively use less than five per cent of their available data today. The business opportunities available through managing, analysing and rapidly reacting to the remaining 95 per cent are immense: continuously-improved business processes and initiatives, identifying operational bottlenecks or roadblocks before they occur, improved customer information and their integration in new product development.

In addition, enterprises need to be able to react to rapidly-changing regulations and new market players, as well as changing consumer demands. This means managing big data in real-time and integrating the resulting information in automated and flexible business processes.

Real-Time Data, Real-Time Information, Real-Time Business Processes

Business process management is playing an increasing role in enabling innovation in all industries. However, one of the most important and significant sectors is that of banking.

The banking industry continues to experience turbulent times. On-going industry consolidation, Basel III compliance, the emergence of the mobile-payments business model and the pressing need for more sophisticated market surveillance systems are just some of the many and varied pressures on the industry.

One common thread runs through these different issues: in all cases, changes must occur in the business processes of banks, brokers, exchanges and regulators. And these processes must cut across the boundaries of individual departments, companies and institutions.

According to the Basel Committee on Banking Supervision, hundreds of billions of Euros will need to be raised by banks to meet the new equity rules. A recent report by KPMG highlighted that the impact on banks’ profitability and liquidity as a result of regulatory pressures worldwide will amount to a ‘systemic reduction’ if business models do not change.

These changes must provide real-time transparency in all transactions, allowing the consolidated business exposure to be immediately reflected in new capital requirements. The changed models must also allow business misconduct to be detected and addressed when it happens.

The emergence of mobile payments, forecast to reach more than $1 trillion in the next two years, will also put pressure on the industry. Each mobile payment will generate auditable data that must at least be stored, but ideally analysed in real-time, to identify new business opportunities. It has been described as a ‘game-changing opportunity’ for telecommunications operators to displace credit-card companies and banks.

Furthermore, consumers show little interest in paying any additional fees for these mobile services. Or, as the Yankee Group succinctly puts it: “Every silver lining comes with a big, dark cloud.” Generating revenue from mobile transactions will require new, creative business models from banks, mobile operators and retailers – business models that can be implemented quickly and monitored and optimised continuously.

Conclusion

To successfully manage and benefit fully from the business insights hidden in big data, enterprises need to adopt BPM practices. This is a medium to long-term project: identifying, modelling and optimising processes, focusing the corporate culture on data-driven decision-making, introducing collaborative working practices and building an extremely flexible and adaptable IT infrastructure.

The bottom line is this: the enterprise with the most flexible processes – that is, the one that can make the quickest, most cost effective changes – will come out on top. From a technology viewpoint, the enterprise that implements a software-based, flexible process layer extending across company departments, partners, regulators and customers, the BPM layer, will get there first.

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Karl-Heinz Streibich has been Chief Executive Officer of Software AG since September 2003. Throughout his career, Karl-Heinz Streibich held various management positions in Information and Communication Technology. Among others he was Head of Marketing Operations of ITT Europe in the UK, General Manager of ITT’s German PC Division, Member of the Board of debis Systemhaus, as well as deputy Chairman of T-Systems where he was responsible for the merger of debis Systemhaus IT activities with Deutsche Telekom.