Will the Market for Packaged Process Automation Apps Ever Take Off?

For years the intelligent process automation (i.e. BPM software) vendors have dreamed of building out-of-the-box process applications. They have envisioned suites for a wide range of functional applications (e.g. invoice processing, on-boarding, expense reporting, and travel requests) and compliance software that appeals to all industry sectors. They’ve also envisioned a deep vertical dive into apps for process-intensive industries such as insurance, banking, government, and pharmaceuticals. If you had talked with these vendors a few years ago, they would have rattled on about providing: 1) starter applications and templates for building apps, 2) process frameworks for vertical markets, and 3) specific process apps that were 50-80% out-of-the-box – leading you to believe that packaged process apps were just around the corner.

Most of the process automation vendors are still having that same business applications conversation with prospects and customers. With the exception of Pega, and to a certain extent Appian, they are no further along on delivering packaged solutions than they were three to five years ago. Why this long fascination with out-of-the-box process applications? It’s because an application sale is much quicker, easier, and potentially more lucrative than a platform sale, which takes much longer to close and involves selling to multiple stakeholders. Selling business applications also gives the process automation vendor much greater competitive differentiation in its target markets.

But why this failure to deliver? It’s because developing true packaged applications built on process automation platforms is hard to deliver, typically extending well beyond the process vendor’s wheelhouse. Many vendors leave business applications to their large integrators or smaller partners that are highly focused on line-of-business applications.

While the scene for truly packaged process-based apps hasn’t changed much, it is now faster and easier for customers to build process-based apps that involve both business and technical developers. This new reality is due to: 1) pre-built adapters to a wide number of enterprise applications (e.g. ERP, CRM), 2) pre-built connectors to other software such as content, capture, customer communication, chatbot, facial recognition and RPA solutions, and 3) low-code components for business/IT developers such as data-driven configuration, process fragments, entity modeling, common U/Is, process models based on patterns, visual configuration tools, advanced drag-and-drop tooling, pre-built forms, quick-start templates, and pre-built dashboards–to name only a few. With this type of tooling, customers can now build and deploy process apps with greater speed and agility. This low-code approach is how the majority of process automation customers implement BPM software today, albeit often with help from a services provider.

Over the years, vendors have settled into different strategies and tactics for pursing the business applications markets, to varying degrees of success. Here are the go-to-market models most frequently encountered today and the vendors that best illustrate each model. Keep in mind that many vendors have embarked on an application solutions path, only to redirect their efforts and focus on the platform instead. The examples below are provided in ascending order, starting with little/no application solutions from the process automation vendor to a deep focus on business apps by the vendor.

o Stick to the basics. These vendors recognize that process-based solutions are important to buyers, but their business model is to sell platforms and they can’t or won’t divert attention or resources away from keeping the platform competitive. Instead, they arm themselves with partners that provide solutions through services engagements relying on quick-start templates, low-code expertise, deep domain knowledge and repeatable engagements. The platform vendor may concentrate on use cases that have surfaced in its customer base, but in general, they haven’t and don’t intend to develop out-of-the-box solutions based on those use cases. Instead, they see use cases as a great way to showcase their platforms to prospective buyers. Alfresco is a good example of this type of vendor. Its strategy is to focus intensely on the market for process automation platforms. [1]

o Promote packaged applications from partners. These vendors recognize the importance of business applications to buyers, but they also know their own limitations. Instead of building out solutions using their own R&D resources, they recruit partners in specific verticals that then develop repeatable process solutions. This is a clever strategy because it positions the vendor to reap the rewards from applications (by creating demand for the platform) but keeps scarce R&D resources from chasing business applications which would divert its attention. A good example is Appian’s approach, with partners PS Health and Bits in Glass, which focus on innovative health care applications. Until last year, Appian followed this partner strategy exclusively but has since branched out to offer its own solution in addition to partner apps. (See comments below about Appian’s new strategy for developing apps).

o Develop applications in addition to the platform. These vendors want to have it both ways: sell business apps while maintaining a strong platform business. This strategy requires a dedicated team of developers (preferably in a dedicated business group) to build applications. If these developers are still in R&D, it becomes tempting to pull them into working on the next software version or fixing an important customer’s technical issues. This dual-path applications strategy requires both the C-suite’s commitment and the developers’ deep domain expertise, which is hard to come by if revenues derive almost exclusively on platform sales and maintenance.

OpenText is a good example of a vendor trying to develop this model, but its future success in building process-based business apps is open to debate. Why? Because OpenText is trying to develop a handful of process-based apps using highly constrained R&D resources. Because the company has not doubled-down on building apps, it has a lower chance of success than a vendor like Appian, which created a new business unit to build apps. Appian debuted Intelligent Contact Center for CRM and customer engagement last year and plans to roll out more in the future. This product is not a completely baked app. Instead, it is a collection of pre-built modules, created by dedicated development resources and sold by a dedicated sales team. Vendors pursuing this packaged application strategy need to incubate and fund the apps business separately from the platform and obtain extensive vertical knowledge (potentially through a professional services acquisition.)

o Build starter-applications based on deep domain experience. This strategy is very hard for process automation vendors to execute because the business’ attention, resources and mindshare are usually centered almost exclusively on the platform product. One company that has successfully followed this starter applications approach is Ultimus, which has extensive business domain experience derived from a long history in the process automation market. Ultimus is one of the very first workflow, case management, and BPM software vendors in the market. It has thousands of customers in specific verticals, many of which are developing process applications with similar patterns and functionality. Ultimus can successfully pull off developing starter applications because of its rich domain experience. Yet, Ultimus is not selling 100% out-of-the-box, fully-baked process applications. Instead, it sells domain-specific process templates that provide 80-95% of what is needed. This approach is a successful model to pursue if the vendor truly has sufficient domain expertise.

o Create and sell vertical/functional applications. Some process automation companies have gathered deep expertise in a specific domain through acquisitions or a multi-year, laser-focused effort to build a suite of business apps richly-infused with BPM capabilities. A great example of this model is BPM Online, which is really a CRM company for marketing, sales and service, with a solution built using BPM software. Seeing a demo of this company’s product is more like looking at CRM software than generic process automation. BPM Online focuses like a laser beam on CRM and its software reflects that reality.

Another notable example is Pegasystems. Pega has diligently pursued next-generation CRM and customer engagement through acquisitions and by doubling down on sales to this specific market for many years. Its focus on CRM and end-to-end customer-centric business processes has paid off, and Pega could just as easily be considered next generation CRM vendor, as well as a process automation vendor for operational excellence. Pega’s apps include: Pega Marketing, Pega Customer Service, Pega Sales Automation, and Pega Customer Decision Hub. These applications have their own SKUs and release dates. Pega and BPM Online are highly successful at this approach because they have a deep, strategic focus on building a true packaged application business based on a process automation platform.

Key Takeaways

Prospective buyers should keep these points in mind when evaluating process automation vendors:

1. Approach any claims of packaged process-based business applications with legitimate skepticism. With few exceptions (e.g. Pegasystems and BPM Online), process automation vendors have incomplete solutions that need more work before deploying. To a certain extent, this incompleteness is a consequence of the very nature of business processes—they are always changing, and the software is never completely done. That is the value proposition for process platforms; the business can quickly change its applications as the business morphs and processes change. However, many vendors claim to have solutions that are near 100% done—don’t believe them.

2. Consider vendors that are pursuing an application-driven strategy from two perspectives: 1) do they really have dedicated resources for both an application development program and a platform development program? 2) where are they getting their domain expertise? If it is a from a small handful of customers, that just isn’t sufficient domain knowledge because each customer is different.

3. If looking for CRM, sales and marketing or customer engagement software, recognize that there are BPM-driven CRM products—notably from Pegasystems and BPM Online (plus a pre-built starter application from Appian). Salesforce.com has also added process automation to its solutions but is behind the other process automation vendors in leveraging its process automation functionality.

4. Look closely at partners, given this is the preferred route of many platform vendors. Vet the partner’s length of time working with the platform vendor, the business domain extent of its solutions, and the number, size, and location of customer implementations.

5. Don’t dismiss a process automation platform vendor because it lacks pre-packaged applications. Instead, look at the depth and range of the platform vendor’s partner program and whether a partner offers the type of solution you seek.

[1] For more information about Alfresco, see Alfresco Software: Flying High in the Back Office and An interview with Bernadette Nixon the CEO of Alfresco Part 1

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