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Lombardi held an analyst conference call last week in advance of today’s press releases — a relatively new format for them — to discuss their executive reorganization against the backdrop of their 2007 results and 2008 strategy. Rod Favaron, CEO (and, until last week, President) and Phil Gilbert, President (formerly CTO) gave us the update. The press releases are here and here.

In 2007, Lombardi had a revenue growth of over 60%, which is actually a drop from their previous growth of over 100%, but still pretty healthy; in 2008 they expect it to stay around 60%. Given the current climate of impending recession in the US, I’d be surprised if they achieve that, but I expect that they’ll still continue show strong growth based on their now-established track record of 7-figure sales. In fact, they think that hard economic times can actually drive sales of BPM.

They’re starting to expand internationally: 35% of their sales were outside North America, mostly Europe, likely helped along by the European office that they’ve expanded to assist their direct sales and resellers in the region. Not having to fly people back and forth from the US all the time would definitely be a big help both in terms of reducing the cost of sale and providing local support, and this marks a significant milestone for any growing US software company that is selling internationally or dealing with multi-national companies. Alan Godfrey, formerly EVP of Marketing, has moved to London to scale up the European operations, and their former European sales head has moved on to build out the Australian and southeast Asian market.

They claim that they started 2007 competing against the pure-plays (e.g., Savvion, Appian), and ended it competing against the stack vendors, with most of their competition now from IBM, Oracle/BEA, TIBCO and Pegasystems.

From a product and services standpoint, they’ve combined platforms (Teamworks and Blueprint), solutions and professional services all under Phil Gilbert as a Global Business Solutions group that builds product and packages combinations of product and services (such as process analysts and mentors) into solutions. Their major upgrade to Teamworks in 2007 included some new SLA and KPI monitoring to allow business people to understand the process in business terms, not technical terms, and the release of Teamworks for SharePoint to allow collaboration in SharePoint within the context of a structured Teamworks process.

They’ve had a good uptake with Blueprint, their SaaS process modeling tool. They expect to end 2008 with the best business-facing process modeler in the industry, by which I think that they mean Blueprint. A major update to Blueprint is due in April, and mid-year they’ll merge the Blueprint and Teamworks repositories, which I think is a significant step forward. A major release to Teamworks is due in the second half of the year; a pre-release version is already available to some customers, which bodes well for them actually making their release dates.

In April, they’ll be offering some joint product/services packaged offerings, including a focus on modeling, optimization and helping customers to establish an internal BPM center of excellence. Productizing a package of services is a logical step for Lombardi, but puts them in direct competition with their partners in regions where they sell through partners. Even if they’re using the partners as subcontractors in these packages, I’ve seen first-hand in the past with other BPM vendors how this can alienate the partner channel, which in turn impacts growth.

What is great to see is that Lombardi is promoting a lot from within: a few people who I know (in addition to Phil) have been moved up in the ranks to take on more responsibility, and all are well deserving. Nothing better for company morale than promoting someone who’s capable and well-liked rather than hiring in a big gun from outside.

I’m guessing that taking over as president is going to give Phil even less time to blog, but maybe that will encourage him to embrace Creative Commons and publish his book on there as a serial.

Fujitsu‘s been in the BPM market for quite a while, but in the past has focused on OEM relationships with their BPM embedded within another vendor’s product. They’ve made more of a push lately on their North American marketing, and part of that is a series of seminars that they’re conducting in a few cities across Canada: Toronto and Ottawa this week, and some western locations likely to follow. I attended the Toronto seminar this week, which was given by Carl Hillier, a former colleague from my long-past days at FileNet. Carl’s been with Fujitsu for over a year, and is now part of Fujitsu’s push to market their name as a BPM vendor. What I like about attending a presentation with Carl (besides the obvious heckling) is that he always has some good material that I can borrow for my own future presentations. 🙂

The 2-hour presentation had 3 sections: BPM 101, quantifying BPM ROI, and a quick look at Fujitsu’s Interstage BPM product. The product part at the end was really brief, about 15 minutes, and the rest was pretty generic and could apply to any BPM product. Except for one in-the-weeds section about the specific technology of Interstage, this was appropriate for both business and technology attendees, and the audience was split about 50:50.

He started with some interesting messaging about BPM: BPM is not necessarily visible, it may be customized to look like other applications, or may be implemented “below the waterline” within other environments. Although this has definitely been the case for Fujitsu in the past with their OEM tendencies, I’m not sure that this is true for most other BPM vendors, many of whom prefer to have at least some degree of out-of-the-box implementations where their product is highly visible. That being said, I am starting to see a lot of BPM tucked into portal interfaces, where it is less visible.

He had the usual high-level definition of BPM — automation + integration + optimization — and went on to list drivers for BPM:

• Dynamic business environment
• Lack of process visibility
• Regulatory compliance issues
• Inter-corporate collaboration
• Cost reduction
• Inability to sustain growth
• Complex process logic (i.e., you can’t freeze a complex process once created, it still needs to remain agile)
• Re-use best practices in processes

As he points out, the first deployment of a BPM project is just the beginning of the lifecycle: if your process will never change, then you may as well just code it in Java, but we use BPMS exactly because the process will change and we need greater agility. He also recommends (and I concur) against spending too much time analyzing the as-is business processes; remember that if those processes were so good, then you wouldn’t be looking to automate or replace them. The idea of any BPM project is to liberate the process from the application code, separating the process from the services and underlying enterprise applications. It’s not all about automating process steps; automation can be used effectively to reduce process latency and improve route determination between manual steps, as well as automate some steps.

He also discussed business rules, and showed a changeability spectrum with coded applications being the least changeable, processes more changeable, and rules the most agile of all — a view that I’ve been discussing in the crossover between BPM and business rules lately. He added an interesting distinction between auditing and logging when it comes to BPM: process auditing includes the data upon which decisions were made in order to later justify that decision for compliance purposes, whereas logging may just be recording the decision that was made.

He finished the BPM 101 section with a great slide on how to tell when you don’t need BPM: it starts with “your processes are really simple” and “your processes never change” (okay, I’ve heard these reasons before), then goes on to “you don’t care what your customers think” and through a series of other giggle-inducing reasons, ending with “you want a clumsy, complicated architecture”.

Keeping the light tone, Carl opened the section on quantifying BPM ROI by stating that “ROI is king…and not just in French”, a bilingual pun that I’m sure went over better when he presented in Ottawa later in the week. 🙂 He did present an interesting list of the five E’s of BPM ROI (paraphrased here as I was jotting down notes as he spoke):

• Elevate business logic: reduce change management overhead, and minimize the requirement for users to know everything about a process by having the system enforce the business logic where possible.
• Eliminate process latency: reduce cycle time, increase productivity, and meet SLA/compliance targets.
• Enforce process integrity: disallow rule bending, ensure and demonstrate compliance, and allow rapid deployment of changes
• Enhance process execution: parallel processing, workload balancing, and location independence.
• Ease task execution: eliminate process errors, and eliminate what can be automated.

This is definitely a good starting list when you’re looking for the ROI in your BPM initiatives. He also explicitly talked about the ROI of integration between BPM and other applications: eliminating redundant data entry and increasing accuracy are the two big ones, but there’s also value in having the staff focus on adding value rather than re-entering data between systems.

He finished the seminar with a brief demo of Interstage: mostly a few screen snapshots and some slides about functionality, then a brief view of the simulation screens. Like several other BPM vendors, Fujitsu has a free download of their BPM Studio modeller (not sure if there are restrictions on the free version) as well as having a Process Designer applet that runs in a browser. Interstage, likely because it’s been used as an OEM product, seems to have a good balance of built-in functionality as well as the ability to easily integrate with third-party products that provide more robust functionality, whether it’s for content management or business rules. I haven’t looked at Interstage for almost a year (which I belatedly reviewed in June), but I’m sure that I’ll have a chance to see them next week in Las Vegas at the Gartner BPM show — an event where what happens in Vegas does not stay in Vegas.

Carl mentioned an Interstage case study at the end, and although it’s great when US companies try to show their support of the Canadian market, an Edmonton power utility company is a long way from the financial district of Toronto, both geographically and culturally. Even Google Maps knows that the shortest distance between the two is through the US.

In mid-2007, Forrester released their Wave for Human-Centric BPM, but with a twist: it only covered Java Platforms. As much as I disagree with this separation of products based on platform (since most customers that I see have both Java and Microsoft in their environment, and this is a meaningless distinction to business people who are involved in vendor product selection), at least they’ve finally come out with the complementary report, Human-Centric BPM for Microsoft. It’s also complimentary 🙂 on the Global 360 website (registration required).

Keep in mind that Forrester also publishes Wave reports on integration-centric BPMS (last issued in December 2006, so expect a new version in the coming months) and BPM for document processes.

Here’s the vendors covered in each of the Forrester reports:

Some of the larger vendors appear in multiple categories: BEA, Software AG and TIBCO all have human-centric (Java) and integration-centric offerings; Global 360 has both human-centric (MS) and document BPM; and IBM appears in all of human-centric (Java), integration-centric and document BPM.

Contrast this with Gartner’s approach, which is to have a single Magic Quadrant for all BPMS types, and covers the following vendors:

Adobe Appian Ascentn AuraPortal BEA Captaris EMC Fujitsu Global 360 IBM Intalio

Lombardi Metastorm Microgen Oracle Pegasystems Savvion Singularity Software AG SunGard TIBCO Ultimus

Personally, I like the Gartner all-in-one approach, although I take issue with some of the vendors that they choose to include. As I mentioned previously, most of the companies that I work with support both Java and Microsoft platforms, from necessity, and have BPMS needs that span across human-centric, document and integration-centric: often within related processes. Except for the large vendors who appear in multiple reports, Forrester can make it hard to compare BPM products for heterogeneous environments.

Interesting that this news article hit today, proclaiming Savvion as a BPM “company to watch” — Savvion laid off a chunk of their workforce last week, including contractors, most of their marketing team and some salespeople (which will make it interesting to see who pulls booth duty at the Gartner BPM conference in February). This is part of a reorganization that has Shawn Price move from CEO to Chairman, and Dr. Ketabchi move back to his previous role of CEO.

Appian went through a similar-sized layoff in September, which indicates a bit of a shakeup in the BPMS marketplace amongst the former pure-play vendors. Both of these vendors are in the leaders quadrant of the recent Gartner Magic Quadrant for BPMS, and Savvion was also in the leaders category in the 2006 BPMS MQ while Appian placed in the visionary category that year.

It doesn’t appear that either layoff affected the product development teams, which makes me wonder if these companies are restructuring for cost savings and future growth, or positioning themselves to be acquired on the considerable strength of their respective technologies.