But a closer inspection of Guidewire, made possible through their IPO regulatory filings, shows their solutions are novel only in comparison to the ancient IT systems and paper-based processes used extensively by P&C insurers today.  Guidewire is a big advance over those, but only a few steps in the BPM direction.

First, let me share my congratulations to the Guidewire team.  They created software that’s leaps and bounds ahead of what is in use at most insurers.  They have 103 of the more than 7,000 P&C insurers around the globe using their products and solving real problems.  Well done!

Guidewire’s products address some of the most significant pains insurers have today.  Here’s an example.  Inadequate data capture and ineffective process controls in legacy systems lead to real costs such as “claims leakage.”  Claims leakage is where the amount paid on a claim exceeds the amount to which a claimant is entitled.  It is a prevalent problem, accounting for 4-6% of claim payments.  That’s $50 billion lost annually across the industry.  Claims leakage is entirely preventable.  If fixed, it would improve insurance carriers’ operating incomes by the same 4-6% as claim amounts paid improperly would otherwise drop to the bottom line.

Going after big expense gaps like claims leakage is very enticing, but only if a solution can be put in place quickly, cost effectively, and without disrupting operations.  Here’s where the bloom starts to come off Guidewire’s rose, as evidenced by facts and statements within their IPO filing.

Guidewire promotes that they have an “innovative modern software platform” that allows business rules, workflows, and user interfaces to be configured “without modification of the underlying code base, allowing customers to easily make changes in response to specific, evolving business needs.”

If I were a leader at an insurance company, that message would strike home and I’d be ready to sign up.  I’d want easily configurable software operating in all core functions across my enterprise as quickly as possible.  But the reality behind that vision is not so pretty.

Here are some important things prospective Guidewire clients should know that come straight out of their IPO document:

• “We sometimes commit to include specific functions in our base product offering at the request of a customer or group(s) of customers…. providing this additional functionality may be time consuming.” Sounds like you’re still beholden to a software vendor’s roadmap to get functionality you want.  Not everything can be configured by you to fit your business.
•  “Implementation and testing of our products by our customers lasts 6 to 24 months… depending upon the nature and complexity of our customers’ systems the implementation and testing of our products may take significantly longer than 24 months.”  This is definitely not off-the-shelf software.  Any value realized will be delayed a long time… and cost lots as you pay for consultants to do the implementation.
• “We have designed our applications based on our in-depth understanding of the P&C insurance industry.”  Guidewire’s products reflect the vendor’s understanding of your business, not your own.  Whatever they develop, and whatever specialization you request that ends up back in their product, becomes available to all your competitors.  Commoditization is becoming rampant in insurance.  The only way to be consistently profitable is to have unique capabilities and processes that you run your entire business upon.  It’s hard to be unique when you’re working with software designed for all insurance companies and in use by your competitors.
• “[Our] licenses are priced based on the amount of direct written premiums that will be managed by our solutions.”  So the more you use them, the more you pay.  Combine that with long implementations and you’re looking at expensive solutions that lack natural economies of scale.

The pains in P&C insurance that Guidewire addresses are clear and acute.  Their solution is definitely an improvement, but follows the old model of enterprise software requiring large “rip and replace” transformations of systems which are highly risky.  The IPO document notes that most customers have only deployed Guidewire for claims which mean the rest of their systems are still siloed and full of legacy code.  It also means full transformations will take a long time.  It’s not uncommon to find insurers 3-4 years into a full transformation and only at the half-way mark.

What insurers need is a faster way to get the same benefits Guidewire promotes, but with less risk, less time delay, and much less cost.  They need a platform upon which they can create whatever applications they want, built entirely around their unique processes and preserving their competitive advantages.  That platform needs to be able to “wrap and extend” existing applications to avoid highly risky wholesale replacement.  It also needs to have a licensing model that provides economies of scale making subsequent development and deployment less expensive, not linearly additive.  It also needs to provide an environment where users can access all enterprise applications, whether written in the platform or not, and from any desktop or mobile platform.

Any insurers interested in the value Guidewire targets need to recognize their solutions are only a few steps down the path that business process management (BPM) has already traveled.  Appian is seeing great adoption in BPM for insurance because we offer the most modern BPM platform that allows for rapid, iterative development of applications, a complete social BPM environment to foster communication and action, and mobile BPM so that any process can also be a mobile process.

Before you embark on a transformation that could be years-long and leave your operations exposed, consider the old saying, “the only things you find in the middle of the road are yellow streaks and dead skunks.”  Take a close look at how adopting BPM for insurance could get you the same benefits in less time with fewer risks and a lower price tag, keeping you from being exposed in the middle of crossing the road.

To learn more, please download my whitepaper titled “BPM for Insurance:  Four Paths to Outdistancing Your Competition” and join us for a webinar on February 16^th titled “Fueling Insurance Provider Success with BPM” featuring Ellen Carney from Forrester Research.

Evan McDonnell

Vice President of Solutions

The story behind the numbers is testament to how enterprise mobility, social collaboration and cloud computing are reshaping the IT landscape. Appian’s Mobile BPM, Cloud BPM and Social BPM address the broken state of enterprise software today.

The mobile and social revolutions are driving the “consumerization” of IT. In their wake, traditional enterprise software is no longer solving business problems. Increasingly, it is the problem.

It requires too much time, and is much too costly, to modernize these systems to deliver the type of mobile experience customers are demanding. Even if you push through that arduous ordeal, these systems remain stove-piped across business functions. Plus, you now have new levels of platform/OS discrepancies and security issues to deal with. All of this contributes to the increasingly fractured nature of an organization. On the social side, customer expectations about how they interact with a company are changing. Employee needs for how they interact with each other are changing. The nature of work is increasingly collaborative, and that is what social technology supports uniquely well.

Given that something north of 80% of an IT department’s budget is allocated just for the care and feeding needed to keep the lights on, there is precious little room in the current system for the focus on innovation required by these evolving needs.

That’s why 2011 was such a great year for Appian. Business leaders and IT executives are increasingly turning to us as their engine for innovation. Our BPM platform meets the requirements of the mobile revolution. Through “design once – deploy everywhere” we instantly enable comprehensive mobility that overcomes platform fracturing. We feature highly secure mobile processing. We deliver rapid mobile enablement of applications. The Appian BPM Suite also addresses the social revolution by masking extreme power behind an intuitive activity stream interface.  We seamlessly merge structured actions with unstructured events, and deliver collaboration that is firmly rooted in business events and outcomes.

But there’s no rest for the weary. Come to Appian World 2012 in April to get a sneak peak at Appian 7, and see how we will continue to push the envelope on modern BPM software capabilities.

- Ben Farrell, Director, Corporate Communications

Economic strength means business growth, which demands scalable business processes and invites innovation. That’s why Appian already has an impressive roster of customers in the region – customers that are expanding BPM projects into enterprise-wide BPM programs – and it’s why we expect continued growth in the area. Dedicated Appian sales and professional services staff in-country will help us capitalize on the opportunity, and will ensure the success of our customers in the region.

In Dr. Rosemann’s interview, he states that Australia’s BPM community of practice is “one of the largest communities of BPM professionals in the world.” He attributes this partly to the country’s government having a very sophisticated focus on process management approaches, with this focus trickling through to the commercial sector. But he also makes the point that Australia’s commercial organizations, facing the competitive pressures of global commercial markets, are increasingly focused on process innovation.

He also echoes a sentiment we are already seeing in our established ANZ customer base; namely, the maturation from single projects to strategic programs. He says, “When BPM became popular [5-10 years ago], it was a lot of one-off projects, often not initiated by senior executives…It started somewhere in unexpected corners of the organization. I believe we now have
consolidated our capabilities much better. We see a higher attention toward enterprise-wide BPM, and we see more mature, technical BPM implementations.”

Speaking of Appian’s ANZ customer base, it echoes our global roster with marquee clients across government and commercial sectors, including strong penetration in financial services and insurance. For example, if President Obama needs to file a claim with Territory Insurance Office (TIO) on that crocodile insurance policy he received on his trip to Australia (Heaven forbid, of course), TIO would process it through their Appian-based claims management system.

-Ben Farrell, Director, Corporate Communications

Don’t be fooled by look-alikes. All Mobile BPM is NOT created equal. Delivering Mobile BPM over the web rather than through a native mobile experience is a terrible mistake – for your internal users, for your customers and for your IT shop. The reasons boil down to user experience and cost.

One of the most powerful benefits of Mobile BPM is that it extends participation in process beyond a narrow set of predetermined users. The ubiquity of mobile devices means everyone, at all levels of your organization, across your supply chain and out to your customers, can (as we say) “Be Part of the Process.” But that’s only if the user experience on those devices is up to par with what the mobile generation expects: simple, modern, engaging and effective.

A “mobilized” web experience is none of those things. It is slow. It is clunky. It creates inconsistencies. For example, iOS and Blackberry users will have very different experiences. This sub-par experience will not drive the usage that will make process a pervasive and effective component of efficient operations and a stellar customer experience.

Building mobile enterprise applications is a cost center with a high price tag. Estimates range from $50K to $150K per application. And that’s only for one mobile platform. Once you do it for iPad, you have to do it all over again for Android. And again for Blackberry. In addition, mobile UI design is a specialized skill that not all traditional developers possess, and each mobile platform has different limitations and form-factors that must be considered. So you need dedicated developers across the mobile devices you want to support.

Appian’s native Mobile BPM eliminates this additional development cost. Any application built in Appian can become a native mobile app simply through a series of check-boxes. Data inputs, forms and actions are then automatically rendered natively across the iOS, Blackberry and Android operating systems. Taking a mobilized web app approach loses that significant development cost advantage. It requires a developer and specialized tools/training to build a special, separate mobile interface every time a new mobile app is created.

There are many reasons why a BPM vendor would choose the inherently limited mobilized web application route. Desperation to bring a mobile offering to market as cheaply as possible is one. Inability to deliver a unified native mobile app across their set of inconsistent architectures resulting from years of technology acquisitions is another. (It takes a well-integrated and consistent architecture to achieve what Appian has done with native mobility).

Whatever the reason for the choice, one thing is clear: Mobile BPM over the web is a losing proposition for a BPM vendor’s customers.

-Ben Farrell, Director, Corporate Communications

The words this person used were powerful and telling.  But I got more from their body language which showed the excitement I had generated ended up bringing back painful memories.  I knew right then and there that they wouldn’t even bring this to their IT department leader and a chance for their company to gain a competitive advantage was lost.

I wonder what this person’s CEO would have thought if they had been a fly on the wall for this conversation.  How did we get here?

I recognized that I suddenly had a front row seat in the battle for “business and IT alignment.”  Achieving that alignment is a nearly perennial topic.  It’s been around long enough that it has its own acronym – “BITA.”  Every business has a mission and all groups within the company should be working to support it.  Working towards the same goal should foster natural BITA.  But it so often doesn’t happen as my story above illustrates.  The reasons why this happens are many, which I’ll save for a future post.  Right now I want to cut to the chase and outline what I see as the best solution.  It rests with one simple key.  Let’s abolish the phrase “information technology department.”  Every company should rename it the “business technology group.”  In short, “IT” should now be “BT.”

Radical?  Not really.  When IT is its own department with a special name, the group develops a life of its own.  IT begins to think about what’s best for itself, not necessarily what’s best for the business.  The rapid death of enthusiasm I witnessed after my presentation stems from that.  Business leaders have to have their technology staffs totally focused on the innovation they can drive and how fast they can make it happen.  Let’s marry them back up with their business counterparts and remind them of their purpose, highlighted with the new name.

Here’s just one example of what can happen when we empower business leaders to more directly control how they make technology work for them.  It’s a tweet from Connie Moore, a noted business process management (BPM) analyst at Forrester Research.

Connie relays how Appian’s BPM software allowed a business leader at Starbucks to bypass an IT bottleneck.  Not only does this attest to the power of Appian’s software, it shows how we can be a point of transformation.  Because of this experience there are now people at Starbucks who think differently and ask what’s possible with business technology (BT) instead of assuming that information technology (IT) challenges will prevent their innovations from happening.

Is this a threat to existing IT departments?  Actually, it’s just the opposite.  IT departments are threatened now.  Delays in delivering new systems and mounting frustrations from the rest of the business only raise the threat level.  Traditional coding continues to move off-shore.  But if we move to BT, information technology people get the chance to tie themselves closer to the business and get a seat at the table where they can craft strategy, drive innovation and agility, and help improve their company’s ability to compete.  With a “BT” perspective, IT leaders should gain the courage to pull the plug on troubled projects that aren’t likely to deliver results.  In an “IT” world, that’s a visible failure, but in a “BT” world, that’s a tough, but smart decision.

So no more “IT”, it’s time for “BT.”  That’s what I’m going to be telling every CEO I know.  This is a seemingly minor change, but one that can have huge impact.  The status quo is literally taking energy out of some of our most driven, creative, and committed employees.  Let’s clear this roadblock and watch what they can do for our businesses.  And just imagine what those driven and creative employees can do with Appian’s mobile BPM and social BPM capabilities.

Evan McDonnell

Vice President of Solutions

If you like consumer frustration stories, read on and you’ll be entertained.  If you are in the insurance business, you definitely want to read my tale of woe as I also lay out how to easily delight customers and earn superior profits.

Life insurance is a very competitive market, thanks to the internet.  I started my search for a new policy on an insurance website that gave me quotes from multiple brokers.  The quotes included the insurance company name, their financial rating, and the annual premium I’d need to pay for the policy.  Like many others, I am now skeptical of financial rating companies as they appear to be at the heart of the whole sub-prime lending debacle.  That means I put little weight on financial ratings to help me make a safer purchase.  With no information other than price left to help me choose, I picked the lowest cost option after weeding out truly low rated companies.

Competing on price only works if you’re the low cost provider, so it is generally not a good path to profits.  Look no further than Apple for proof.  They didn’t amass a cash hoard of $76B by competing on price.  Apple uses their products, stores, and Genius Bar service to differentiate the entire customer experience.  This makes price comparison secondary… and arguably impossible.  If only an insurance company would think this way.

Here’s why I hate my new insurance company, in a nutshell.

• The “3-4 week” process I was told to expect took more than twice as long
• Everything was done in hand on paper forms; there were no options for electronic entry
• I was asked to submit the same information by different people on more than one occasion
• On my many calls to check on status, I was always told, “we’re just about done!“

Given their performance to date, I’m certainly not going to recommend this company to anyone.  I’m also keeping EVERY piece of documentation to prove my coverage because, should my family ever need to claim the proceeds (heaven forbid), I predict an equal if not greater debacle.  The only thing that keeps me from switching is that I have no indication other insurance companies are any better.

There.  I feel better for getting that all out.  Now here’s a vision for how I could come out of this process absolutely delighted, happily paying a price premium, and eagerly recommending my new insurance company to everyone.

• My quote comes with a link to start an on-line application process
• I can upload required documents during the application process and verify they have been received
• If additional information is ever required, I’m contacted via the method I request (no more voice mail tag!)
• I can check on the status of my application at any time and see clearly what steps are left and if anything is required from me
• I’m shown a graph that compares the time it’s taking to complete my application to the average for people like me so I have an indication if something might be wrong
• What’s promised to take 3-4 weeks takes that, if not less

What I’m describing can’t just be window dressing.  It has to be an external view of a well-run internal process.  Not only would it delight me, allowing me to feel happy paying a price premium, it would lead to lower costs.  (For example, the company wouldn’t need to hire that extra person to call me for the same information the last person called me about.)  That’s two ways to increase profits in a price competitive business.

For anyone about to embark on a similar insurance quest, there’s some hope.  The new Information Week 500 list just came out.   This is a list of the 500 most innovative business information technology organizations.  There are 42 insurance companies on the list.  The CIOs of these businesses focus on using IT to improve the customer experience, not just back office operations.  In fact, in 30% of the companies on the list, the CIO has formal responsibility for innovation, a number that’s grown substantially in the past few years.

To CIOs, both those on and off the IW500 list, I want you to know that Appian’s ready to support your drive for innovation and improving the customer experience.  My “dream” insurance scenario above could be enabled quickly through Appian’s BPM software, including social collaboration and mobile process participation for even greater speed and customer delight.  Many insurance companies are already realizing this.  Our base of insurance clients is growing rapidly and we’re proud to count Crawford & Company, a member of the IW 500 list, as a client.

So, to insurance companies everywhere, I ask which one of you is ready to let Appian enhance your processes, give you a source of competitive advantage, and help you start piling up profits?  You’ll even delight me in the process.

Evan McDonnell

Vice President of Solutions

There is no question that the AKO criticism is coming from parties that stand to gain financially if the Army spends hundreds of millions of dollars to substitute this system with inferior technology. The fighting men and women in the battlefields of Afghanistan and Iraq, and state-side service personnel, have too much hanging in the balance to be subjected to these sorts of self-interested machinations.

For what it’s worth, the truth is this: the AKO discussion is an issue regarding a program for enterprise email for the Army and DoD. It is not an issue related to AKO’s other functions, or Appian’s BPM software. Mike Krieger, the Army’s deputy CIO, made this clear when he told the Army Times that Army has no plans to shutter AKO. “AKO’s not going away,” he said. “What we’re trying to do is go to one managed enterprise service for email and take down email everywhere else it’s been redundant.”

AKO is a program managed and primed by Northrop Grumman that encapsulates many different technologies (Appian BPM, Automony Search, SUN Email, video conferencing, and more). There are commercial organizations that have tried to turn the current discussion into an attack on Appian’s scalability and security, and that is simply a fabrication with no bearing in fact.

The current AKO stats prove the point:

• 2.45 million active users
• 3,128 process models
• 460,524 active processes
• Approximately 20,000 daily tasks completed
• 15.95 million documents
• 21 terabytes of data
• 268,090 published pages
• 1.6 million forum posts
• Back in 2008, AKO surpassed 1 Billion logins

Appian additionally supports a few hundred thousand users on AKO’s SIPRNET (Secret Network) and handles all of the complex security requirements around that. AKO demonstrates our ability to scale far beyond the range of our competitors. Over the 10 years we’ve been running at AKO, literally millions of people have used our software as part of their daily business. We’ve navigated several major system upgrades, and we’ve met the Defense Department’s requirements for security, disaster recovery, and availability at every step.

We’ve fed the lessons learned from all this experience back into our product and professional services, so that even though most of our customers have absolutely no connection to AKO or the DoD, they still benefit.

Additionally, we have many other government and commercial reference accounts demonstrating industry-leading scalability and security. We have more than 30 government agencies, plus major customers in financial services, insurance, manufacturing, telecommunications and other industries, supporting tens of thousands of users on single deployments. There is not a single other BPM vendor in the world with experience or references running BPM in these types of environments with these security and scalability requirements.

As for those commercial organizations that are confused (or are trying to create confusion) about the real issues at AKO: they could be forgiven, as they have no customer presence or experience in the U.S. government.

-Ben Farrell, Director, Corporate Communications

These are exciting times for the BPM industry, and for Appian in particular. Gartner has announced a very encouraging prediction about BPM spending this year. Vendor market shake-out continues to crystalize customer options between BPM innovation and mish-mashed, bolt-on approaches. Awareness of BPM software is at an all-time high. With the advent of Mobile BPM and Social BPM, active use of BPM software is poised to explode. And that, as Matt said, will herald a transformation in business.

He wasn’t talking about optimizing some percentage of the thousands of individual processes and process fragments that create an enterprise. He was talking about the unified management and orchestration of all of those processes through a new business system. He was talking about using that business system to extend process beyond the corporate walls, to involve everyone, whoever and where ever they are. He was talking about the next evolution of the Mobile Process Enterprise – a new system for business control that is sensitive, dynamic and intuitive.

In this new business system, process presents a single and holistic view of the enterprise in real-time. Executives can see it, make decisions and take action on a mobile device. All siloed applications and data sources will be simply “surfaced” where and when needed by the meta layer. Process will act as the glue that links employees, customers and partners to the organization.

Appian has been driving towards that vision for more than 10 years. With each product release, and with each customer “ah-ha” moment when the real potential of BPM software is glimpsed, we get closer. That’s what our new Tempo interface is all about. As Matt says, “Tempo is not a new means to an old end. It is a new end unto itself.”

Exciting times, indeed.

-Ben Farrell, Director, Corporate Communications

Mr. Hughes discussed how Appian allows financial firms to deliver innovative capabilities cost-effectively to any desktop or mobile device, and why FSIs should consider new BPM delivery methods.

In the video, Mr. Hughes describes BPM as one of the most dynamic and fastest-growing sectors in all of enterprise software. Proof of BPM’s maturity comes in its focus on the three areas that are re-defining IT: cloud delivery, enterprise mobility and social collaboration.

Mr. Hughes echoed analyst predictions that cloud will become the dominant platform for application delivery in the next 5-10 years. For FSIs, he said, the reduced total cost of ownership and continued enhancements to cloud platforms is driving a move to the cloud for mission-critical applications.

As regards enterprise mobility within financial services,  Mr. Hughes cited increasing pressure from employees and customers to move business application functionality to mobile devices. Industries such as financial services that have a broad and distributed field force are among the first to understand the service delivery and operational effectiveness benefits of mobile BPM.

While he made the point that mobility and social collaboration are different, the two can be linked. Social technologies can unlock the hidden intelligence in an FSI, generating more agility and innovative solutions to customer and operations issues. But the Facebook-style exchanges we are all used to only take on business value when they are anchored in business events and outcomes. Social BPM ties underlying business processes and applications to a collaborative interface. Putting that interface on a mobile device means new ways to run processes, handle cases, access real-time data, and respond to market changes.

Mr. Hughes also shared a few BPM best practices for FSIs. Remember, he said, that BPM is a transformational technology, so effective change management is a must to ensure adoption, use and success. When starting out, looking for the right type of first project: one that is strategic enough to deliver real value, but that can be rolled out rapidly enough to maintain executive attention and sponsorship.

Watch the video to hear more.

-Ben Farrell, Director, Corporate Communications

Throughout my career, I’ve always had an interest in understanding why organizations fail to leverage the promised power of software and whether the fault lies with the software maker, the company using the software, or limitations of technology.  It is often a complicated mix of all three.

Case in point.  A company I worked for several years ago made a six-figure investment in an accounting software package.  It was good, but lacked a few capabilities required for our business.  We asked the software vendor to add those features but they declined stating they had other requests on their product roadmap with broader applicability first.  But for an additional fee, their services team could write custom code to adapt their application to our needs.  We wrote a big check and several months later got our customizations.

Life was good, for about a year.  That was when the software vendor’s next major release came out with new features we wanted.  We learned that we couldn’t upgrade without rewriting our customizations.  Unless we paid to redo the customizations (again and again), our product capabilities would be frozen in time.

We considered custom development as an alternative, but the cost estimates were multiples of what we had already spent.  The programming team also required that we write out detailed specifications for our current as well as future needs.  We didn’t think we could predict future needs and custom developed updates would be cost prohibitive anyway.  Budget limitations forced us to stick with our customized off-the-shelf application version and forgo upgrades, relying on manual human processes to address the software’s limitations.  We became a text book example of a company unable to leverage the promised power of software.

Three laws governing software development at the time prevented us from getting an application designed just for our needs:

• Software is written only by developers in a language only computers understand
• Detailed specifications must be completely written out before any development can begin
• Changes or enhancements are costly and take a lot of time to deliver

Fortunately, these laws are no longer valid.  Appian’s Business Process Management software has helped turn these laws on their head.  The “coding” of applications in Appian is done visually by dragging and dropping components from a library by those who own the process rather than a separate IT group.  Development proceeds rapidly and changes take a fraction of the time and effort they used to.  With Appian, process owners can let their applications “evolve” and skip writing detailed requirements.  Documentation is also no problem.  Our BPMS suite automatically produces and updates full application documentation (which also nicely serves as full process documentation).

Appian clients who have taken advantage of this approach include Lehigh Hanson for an order-to-cash process and Enterprise Rent-A-Car for a purchase-to-pay process.  Development with Appian is actually giving them a way to gain competitive advantage.

Back to Homer, Scarlett, and BPM.  How do I tie these three together? Here’s a hint.  One of Homer’s common phrases and the title of one of Scarlett’s biggest movies are frequently heard in traditional in-house software development groups and would likely not be heard if they adopted BPM.  For the full answer, you’ll need to read my new white paper, “Don’t License Another Software Application Until You Read This!”

The old rules have fallen.  We are in a new era where application development has become dramatically easier and the rigid nature of traditional software development has given way to a world of “application customization.”

Evan McDonnell

Vice President, Solutions