Policy and Process – Part 1 in a Continuing Series on Public Policy and BPM Software

As Appian’s CTO, I strongly believe in the value of BPM software for improving how government agencies function. I believe just as strongly that federal agencies – and BPM vendors – have a responsibility to focus first on good policy. In my opinion, dubious logic, poor assumptions, fuzzy math, and inexperience with federal government business processes are causing some technology vendors to push agencies to put process before policy.

The drive to improve efficiency should always take place within a greater policy context. Ill-conceived technology modernization projects are sometimes the result of well-meaning attempts to trim budgets and find cost savings without due regard for policy.

Take the example of the improper payments. OMB estimates $125 billion in improper payments by the federal government in fiscal 2010. President Obama has set a public goal of cutting $50 billion from that figure by 2012. I know because I read about it in FedTech, Government Executive, Washington Technology (“the online authority for government contractors”) and pretty much every other federal technology news, blog, tweet, and web site.

With deficit reduction high on everyone’s priority list, it is not surprising to see so many vendors pitching their products as ideal tools for improper payment recovery. Technology firms are gambling last summer’s Improper Payments Elimination and Recovery Act will be just the push federal agencies need to justify major technology purchases.

Yes, little gets technology firms quite so excited as the prospect of legislatively-mandated government purchase orders. But before your federal agency spends millions modernizing acquisition, eligibility, and enrollment business processes to eliminate improper payments, I would ask, is this good policy?

I was reading one such deeply flawed process solution pitch for the federal WIC program today. A commercial BPM technology vendor is proposing their business rules technology should be used to automate eligibility and enrollment decisions for WIC, the USDA’s supplemental nutrition program for Women, Infants, and Children living below the poverty line.

Does this company’s BPM proposal put process before policy? The administration’s total budget request for WIC is about $7.6 billion to serve more than 9 million women and children. That works out to about $41 per month in nutrition assistance per recipient. Past audits revealed about seven thousand cases a year of WIC recipient fraud.

Doing the math, that’s about $287,000 a year USDA might expect to save using BPM software to keep those offenders out of the system. That would get the federal government about .0000057% towards the 2012 $50 billion improper payment recovery goal. Of course, we haven’t even considered the cost of implementing such a system. That’s a BPM proposal that puts process before policy.

Consider instead that a single instance of WIC vendor fraud uncovered in Pennsylvania recently resulted in about $375,000 in improper payments. It’s obvious that WIC vendor fraud is a much more serious policy problem than handing out baby formula to a few extra recipients. There are only a few thousand WIC vendors.  But the BPM vendor in question knows they can sell 10x the software licenses and services if they can convince federal agencies to focus on millions of citizens rather than a small number of contractors and vendors.

Of course, this particular BPM proposal was dead on arrival since the USDA doesn’t even handle eligibility and enrollment for WIC. Instead, it hands out grants to the states and localities that actually administer the program. So what kinds of business processes would best serve the administration’s policy goals for improper payments recovery?

Rather than scrutinizing pregnant women, infants, and small payouts to individuals in general, a far better policy for improper payments recovery targets the highest value business processes. The current DoD budget request, for example, is closer to $550 billion. Much of that money flows in large payouts to a small number of contractors.

One critical part of the Improper Payments Elimination and Recovery Act called for the creation of a ‘Do Not Pay’ list of debarred, suspended, or otherwise ineligible contractors. Trouble is, the acquisition business processes of federal agencies are not yet connected to the list. Inflexible, proprietary or ERP-based procurement processes do not adapt well to change without expensive customization.

There is an answer. Here at Appian we make business process management software and solutions, including BPM-based federal acquisition solutions. Agencies interested in preventing mistakes or catching fraud before they become improper payments do not have to rip and replace their existing procurement and ERP systems.  Appian BPM can link existing systems to the Do Not Pay list and provide transparency and accountability across the entire end-to-end acquisition process.

BPM software like Appian is a proven tool for streamlining government bureaucracy. Moving policies and procedures from inflexible ERP systems and custom code into BPM’s agile, visual models enables acquisition, eligibility, and enrollment systems to achieve dramatic gains in accuracy and accountability. And Appian’s cloud BPM, mobile BPM, and social BPM capabilities mean federal agencies can tackle improper payments recovery at 10x lower cost with 10x greater return on investment than ERP or custom code.

To cut $50 billion in improper payments this year, the answer is clear. Target the largest improper payouts in the smallest number of transactions, the billions mistakenly flowing to contractors and vendors through federal acquisition systems by linking them via BPM to the Do Not Pay list. Let policy lead process. And please, my fellow BPM vendors, leave the kids alone.

-Michael Beckley, Chief Technology Officer