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What is the Difference between ERP and BPM?

January 8, 2008

ERP literally means Enterprise Resource Planning and BPM means Business Process Management. These are two different overlapping concepts that point to a more general fogginess around applications versus process.

If you have an ERP vendor, it does not mean you have a good enough process capability. If you have a BPM vendor, it does not mean you want to build ERP functionality with it.

If you have a platform vendor, it does not mean you have good enough process management nor would you necessarily want to build ERP functionality with it. Organizations might want a core ERP application that you extend with excellent process function. Organizations might also want to build on a standard platform and live with its process deficiencies. Organizations might also want to blend the best of both worlds.

There is confusion about packaged applications and process management. Application vendors are now claiming that they are BPM players. Platform vendors claim that they have significant intellectual property built on their platforms, so they can support the sequencing of application components/services.

The independent BPMS vendors claim that they can easily cross platforms, provide a growing number of jump-start processes around vertical and/or horizontal processes, and support application services plus intense human process activities.

Long term, they are headed in a similar general direction, but there are important issues in the details around focus, timing, lock-in, and best practices that differentiate these three classes of vendors. In reality, most organizations need all three types even though their area of overlap will continue to grow, but not converge entirely.

The ERP/Packaged Application View: There is Process in my Application.

Applications are transactions that can be embedded in differentiating and agile processes. Letís examine the level of best practice here. Process vendors give a powerful process platform that affords great agility and functionality, particularly around case management, content management and collaboration, but organizations have little best practices out of the box.

The exception to the rule are BPMS vendors that provide jump start processes and/or can access the service directories of the application vendors and leverage a great deal of the standard transactions available from application vendors plus wrapped legacy. For organizations that believe that excellent processes out-deliver the best transactions, process vendors will be appealing.

BPM vendors will continue to out deliver application vendors in supporting the human intensive knowledge workers and the process workers and I do not expect to see this gap narrowed soon. The scramble will be to build intellectual property and/or attract enough partners who will build on the new process platforms.

Bottom Line:

The race is on to see which vendor class can be the best process platform with the largest inventory of best practice business functionality, polices/rules and content. Organizations can expect BPM vendors to link to multiple directories and leverage legacy from multiple platforms going forward.

The challenge for these vendors will be to build best practice process templates and patterns faster than application vendors can change their platform and convert/wrap their existing best practice transactions, components and composite applications.


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