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Kofax Claims Agility SPA

Continuing with breakout sessions at Kofax Transform is a presentation on the Claims Agility smart process application that Kofax is creating for US healthcare claims processing, based on the KTA platform. They have built in a lot of the forms and rules for compliance with US healthcare regulations; I suspect that this means that the SPA would not be of much value for non-US organizations.

Claims Agility is still in development, but we were able to get an early look at a demo. The capture workflow is pretty simple: scan, classify and extract data fields from a form, then pass it on to a claims worker for their activities, presenting both the scanned document and the data fields. This is a pretty standard scanned document workflow application, but has the advantage of having a lot of knowledge of the US healthcare forms, data validation, rules and processes built in so that little setup and system training would be required for the standard forms and workflows. Incomplete or incorrect forms can be held, allowing the validated forms in the same batch to be completed. The final step in the predefined workflow performs the EDI transactions.

They will do updates for some components of the system, such as the CMS codes that drive the validation; they haven’t finalized the hot update capabilities, and it’s not clear that they will be able to do much more than update code tables.

We looked at the customizability of the processes and rules: customers can modify the standard processes using the graphical process designer, including building their own processes. Since the out of the box process is really simple — four steps — there’s no real issue of upgradability of the process at this point, but it’s likely that any processes provided should be considered templates rather than productized frameworks. Configuration for data extraction and validation is provided as part of the core package, but again, the customer can override the defaults. I was going to ask the question about the separation of base product from customizations with respect to product upgrades but a customer in the audience beat me to it; there are separate areas for custom versus core code, as well as versioning, so it appears that they have thought through some of this but it will be interesting to see how this plays out after the product is being used at customer sites through a couple of upgrade cycles.

There will be an initial release in June or July this year, and Kofax is looking for early adopters now; full release will be near the year end. Claims Agility is the fifth SPA that Kofax is offering on the KTA platform, and they’re learning more about how to do these right with each implementation, plus how to integrate the new technologies such as e-signature.

TotalAgility Product Update At KofaxTransform

In a breakout session at Kofax Transform, Dermot McCauley gave us an update on the TotalAgility product vision and strategy. He described five vital communities impacted by their product innovation: information all-stars who ensure that the right information is seen by the right people at the right time, performance improvers focused on operational excellence, customer obsessives who focus on customer satisfaction, visionary leaders who challenge the status quo, and change agents using technology thought-leadership to drive business value. I think that this a great way to think about product vision, and Dermot stated that he spends his time thinking about how to serve these five communities and help them to achieve their goals.

TotalAgility is positioned to be the link between systems of engagement and systems of record, making that first mile of customer engagement faster, simpler, more efficient, and customer-friendly. It includes four key components: multichannel capture and output, adaptive process management, embedded actionable analytics, and collaboration. Note that some of this represents product vision rather than released product, but this gives you an idea of where they are and what they’re planning.

Multichannel capture and output includes scanning in all forms, plus capture from electronic formats including documents, forms and even social media, with a goal to be able to ingest information in any type and any format. On the processing and output side, their recent acquisitions fill in the gaps with e-signature and signature verfication, and outbound correspondence management.

Adaptive process management includes pre-defined routine workflows and ad hoc collaboration, plus goal-based and analytics-driven adaptive processes. These can be automated intelligent processes, or richer context used when presenting tasks to a knowledge worker.

Embedded actionable analytics are focused on the process at hand, driving next-best-action decisions or recommendations, and detecting and predicting patterns within processes.

Collaboration includes identifying suitable and available collaborators, and supporting unanticipated participants.

The goal is to provide a platform for building smart process applications (SPAs), both for Kofax with their Mortgage Agility and other SPAs, and for partners to create their own vertical solutions. McCauley walked through how Kofax AP Agility uses the TotalAgility platform for AP processing with ERP integration, procurement, invoice capture and actionable analytics; then Mortgage Agility that brings in newer capabilities of the platform such as e-signature and customer correspondence management with a focus on customer engagement as well as internal efficiencies.

He walked through deployment options of on-premise (including multi-tenancy on-premise for a BPO or shared service center) and Microsoft Azure public cloud (multi-tenant or own instance), and touched on the integration into and usage of Kapow and e-signatures in the TotalAgility platform. They’re also working on bringing more of the analytics into TotalAgility to allow for predictions, pattern detection, recommendations and other analytics-based processing.

Going forward, they have four main innovation themes:

Platform optimization for better performance
Portfolio product integrations for a harmonized design time and runtime
Pervasive mobility
Context-aware analytics

He showed some specific examples that could be developed in the future as part of the core platform, including real-time information extraction during document capture on a mobile device, and process improvement analytics for lightweight process mining; the audience favorite (from a show of hands) was the real-time extraction during mobile capture.

KofaxTransform 2015: Day 2 Customer Keynotes

I had a chance to hear Tom Knapp from Waterstone Mortgage speak yesterday at the analyst briefing here at Kofax Transform, and we have him to kick off this morning’s keynote. They started their journey with Kofax a year ago, and participated in the Kofax sales kickoff in January of this year to show their use of Kofax Mortgage Agility. It will be going beta this month in a couple of their branches, and rolling out across all branches later this year. They are looking to improve the loan process pipeline, which goes from loan application to initial processing to underwriting to approval to closing; they started their improvement process by examining what data and documentation is required at what step in the process, and the challenges in collecting those documents, such as replacing illegible documents and clarifying the applicant’s cash flow. Given that time to correct documentation errors can be from 2 days to 4 weeks, this can cause problems because there is typically a fixed closing date that needs to be met for funding. He expects the market to shift so that millennials will dominate household formation, and therefore the mortgage market, and that smartphones are a key way for those potential customers to perform their financial transactions. There are also some changing mortgage regulations in the US that deal with costs and fee disclosure, and getting better information earlier in the process helps Waterstone to make those disclosures as required.

They expect four major classes of benefits from implementing Mortgage Agility:

Market: improved borrower experience, and a consistent borrower portal for life of loan
Technology: leveraging mobile capture, e-disclosure and e-signatures
Loan process flow: lifting data from documents to populate application, eliminating paper where possible, use intelligence and automation in the process to assist underwriter and other knowledge workers
Compliance: support new regulatory and compliance requirements

Waterstone has not implemented Mortgage Agility yet, so we will have to wait until next year to hear about their success.

Next up was Tim Dewey from Safe-Guard Products, talking about their journey in transforming claims processing for today’s connected customer. They sell automotive-related insurance, including such products as wear-and-tear during a lease, and wheel insurance. (As a non-car-owner, I didn’t even realize that these things existed.) They wanted to improve the claims process by reducing service “friction”, particularly in handoffs, touchpoints, and requesting information from the customer; and in improving the customer experience. To address the service friction, they created a new adjudication process using Kofax TotalAgility, with new job roles to match the claims process and reduce handoffs and touches, plus automation of the content management. For customer engagement, they created a self-service capability for all stakeholders, allowing both document uploads and status checks, plus automated milestone notifications to the customer; as an aside, this also improves back-office efficiency by reducing status calls and paper handling.

They measured performance before and after, so can tell how well this is working: significant improvements in claim touches and adjudication cycle time, and reduced customer calls. They are working to improve this further through more back-office automation and additional transparency and self-service. A great success story.

We finished the keynote with a panel moderated by Anthony Macciola, Kofax CTO, including Knapp and Dewey, plus Craig LeClair from Forrester and Dave Caldeira, Kofax Product Marketing. Some discussions on disruption in business — again, supposedly “millennial”-related — and the value proposition of improving the first mile of business that Kofax is addressing. Macciola gave a shorter version of the product capability briefing that we heard in the analyst session yesterday, which you can read about at that post, then had Knapp and Dewey share their experiences in digital transaction management.

I’ll be sticking around for the rest of the day and will be blogging from some of the breakout sessions; looks like there’s a great lineup.

As an aside, the “us versus them” discussions about the millennials is getting a bit tired. We really need to stop this characterization, because everything that Knapp, Dewey and Macciola said about millennials is also true for me and many other Boomer/Gen Xers that I know — smartphone use (I am live-blogging from my phone and tablet right now), self-service (faster and more accurate if I do it myself), preferred modes of customer service (online and asynchronous so that I can get service even if I’m travelling and in other time zones), social media participation (did I mention that I’m blogging from my phone?) and more — and I’m 25+ years too old to hit the millennial demographic. I’ve written about this before, but can we stop having customers and vendors stand up at conferences and talk in a slightly bemused and condescending tone about how their adult kids use their smartphones? It’s really a split between those who embrace new technology and those who are dragging their feet (even senior executives in technology companies, who should be setting an example rather than resisting new technology and the ways of business that it enables), and although there is some degree of age correlation, it’s not so simple as just birth year. </rant>

Kofax Altosoft For Operational Intelligence

Wayne Chambliss and Rich Rabin of Kofax Altosoft gave a presentation at Kofax Transform, most of which was a demo, on becoming an operational intelligence guru. This is my first real look at the Altosoft analytics product, acquired by Kofax about two years ago, since that’s not my main focus unless it’s particularly tied to process in some way.

Rabin used their graphical design tool to define the location of the metrics datamart, the data source (a variety of databases, or a file drop location), then define metrics by mapping the data fields, and applying aggregations and formatting. Although there is inherent complexity in understanding the use of the underlying data, the tool seems to make it pretty easy and fast to define the data and metrics, then load the data into the datamart and calculating the initial metrics. Once that was done, he created a graphical dashboard related to the defined metrics, and could preview and run it directly. No SQL, no coding. If you want to get more complex, there’s a full expression editor, but everything is still done graphically within the same tool. You can directly examine the underlying generated SQL if you really want to.

It’s also possible to create a record to use as a data source, which is a similar abstraction concept to a database view, but with the addition functionality of heterogeneous data sources, derived fields, mappings and even field renaming. This allows someone to create metrics and dashboards based on records, without having to understand the underlying data sources.

Lots of other functionality here, including setting user authentications and access rights, scheduled loading of data sources into the metrics mart, dynamic filtering on dashboards and pivoting charts, much of which is available directly to the end users on the dashboard.

He wrapped up with a very brief process intelligence demo, where it’s possible to specify metrics directly based on a Kofax document capture process.

Tablets And Digital Signatures At AIA Life

Just to maximize confusion, we have a second AIA at the Kofax Transform conference: this morning, Aia referred to the customer communications management company recently acquired by Kofax; this afternoon, AIA is the pan-Asian life insurance company, with their director of distribution platforms Steffen Schade talking about their experience with capturing digital signatures on an iPad for life insurance applications. Since they have a captive sales force, the iPad app is used by their advisors, not by the customers directly; it really becomes their sales kit, from financial needs analysis to quotation to application to written signature to payment. It appears that they were a Softpro (since acquired by Kofax) customer when their e-signature project started, but not otherwise using Kofax products.

Adoption has been great: they went from 1800 advisors in 4 countries using it in 2012, to 30k advisors in 11 countries by the end of 2014. Productivity has increased by 34% per advisor, allowing them to see more customers in a day while providing a better customer experience because of immediate access to information and faster turnaround, in addition to the efficiency gains in the back office for processing the applications. The project cycle was driven by the needs of the field sales force, and done on a per-country basis to allow adjustments to be made for regional variances as well as incorporating improvements discovered in previous deployments. Feedback from the advisors is very positive, and even technically unsophisticated customers have few problems using the advisor’s iPad to view and sign their applications.

Their next goal is a complete mobile office for advisors, providing more functionality such as lead management and productivity metrics; the only Kofax component is the e-signature, but this is a good example of using Kofax products as embedded components in an existing application rather than a complete solution. They need to have something to integrate the different components that they are already using in both the sales e-signature application and the more complete mobile office, but it’s not clear that they are looking at Kofax for that. Lots of interested questions from the audience about mobile capture, including mobile device management, limiting screen snapshots and more.

Kofax Analyst Briefing And Portfolio Update

Following the Kofax Transform day 1 keynotes, we had a separate session for financial and industry analysts to be briefed on the products and financials.

After a brief introduction from Reynolds Bish, we had a detailed briefing on the Kofax product portfolio from Anthony Macciola, the CTO, focusing on the themes of digital transaction management and the first mile of business. The first mile is driven by customer expectations, allowing business transactions to become conversations. Customer demands, however, are exceeding the capabilities of many organizations, in terms of business culture as well as systems of record. Interactions need to be simple, easy, quick and informative, and companies need to be able to reach out and collaborate with a customer as part of the process. This brought him to a discussion of the Softpro and Aia acquisitions, which provide e-signatures and outbound customer communications management, respectively. These both have the ability to be rebranded and can be fully integrated into Kofax TotalAgility (KTA) applications, meaning that they can be used to create touchpoints with customers that are seamless, personalized, and contain closed loop identifiers for efficient processing of paper correspondence.

Outbound customer communications management provides a way to create outbound correspondence to customers by marrying configurable templates with customer-specific data fields — think of it as a super-sophisticated MS-Word mail merge. Macciola showed the Aia designer and how it is used to create reusable library assets such as headers, footers and body text using MS-Word for user familiarity and easy import from existing documents, then assemble those assets into templates. These can include closed loop identifiers such as bar code versions of customer and case IDs for rendering as printed documents that can be auto-rendezvoused with the case on their return, but it’s more interesting to look at the case of publishing as electronic documents with e-signature requirements embedded, including identifying and authenticating reviewers and signers, and orchestrating the “signing ceremony” process. These are pretty important additions to the Kofax portfolio for managing the first mile of customer engagement, where a customer needs to sign and return documents related to an account or transaction: the customer can choose to print and sign the document (or receive a printed document in the first place), then return it for scanning and rendezvous, or they can choose to sign it electronically in a secure environment that creates a PDF file that includes the signature plus audit trail information. Electronic signatures can be done as a written signature using a tablet (with finger or stylus), or with the customer keying in their name or other phrase in place of their signature, once authenticated.

Macciola referred to their platform as BPM — I always have a bit of trouble categorizing it, and tagged my earlier post with both ACM and capture — but also is using the “digital transaction management” terminology that we heard from Bish in this morning’s keynote, which includes inbound content processing (mobile, web, multi-channel, transformation), process orchestration (dynamic case management), process intelligence, information integration, and outbound customer communications management (content creation, e-signature and signature verification).

This was followed by a presentation by Thomas Knapp, SVP/CIO of Waterstone Mortgage, on how they are planning to use Kofax Mortgage Agility integrated with their Ellie Mae mortgage origination system, providing both the branch employee and customer experience. There are a lot of challenges with mortgage origination, in terms of data completeness and quality, customer experience and time sensitivity due to purchase closing deadlines. In the US, due to the involvement of mortgage-based securities in the financial meltdown a few years ago, there are a lot of new compliance rules that Waterstone needs to enforce along the way. They are also dealing with the rise of millennials in the generation of borrowers and their familiarity with technology (although there are many of us who are a lot older who also want an online, paperless experience), and need to have a consistent online experience for the entire mortgage lifecycle, not just origination. They are a “lighthouse” (early/beta) client for Mortgage Agility, and are just launching a beta version of their application this month, with a full rollout later in 2015; they are seeing challenges with the branch employees and their comfort with the technology as well as the technology itself. However, they expect this to be a true game changer for them, increasing operational efficiencies, saving time, boosting productivity, minimizing costs, and identifying opportunities for improvements and increased revenues. He summarized their expected benefits in terms of market, technology, loan process flow and compliance, with a great deal of automation as well as improving the customer experience. Good plans, although it will be critical to see the success of their rollout as it occurs.

We finished up the analyst briefing with a panel of Kofax executives: Reynolds Bish (CEO), Jamie Arnold (CFO), Howard Dratler (EVP sales) and Grant Johnson (CMO). From the Q&A, it’s clear that TotalAgility is still in the early stages of rollout to actual production environments with customers and partners, and their license deal for KTA discussed in this morning’s keynote is a way to nudge customers towards it. This will be a factor in Kofax’s success, since long-term support of the legacy products will eventually become a drag on technology resources and impact revenue and productivity. There was quite a bit of discussion about new sales teams and partner programs to better sell KTA as well as sales of some of the acquired products that are still offered on a standalone basis; as with other vendors, they are always looking to shorten the sales cycle as well as grow the sales pipeline based on the enhanced product portfolio. They are also actively working to expand their customer base beyond financial services, which has been their mainstay, although they continue to focus on banking as a key vertical with lots of opportunities for expansion within current customers with their mobile, e-signature and customer communication management products. Netflix is one of their high-profile customers in a new market segment, although it appears that they are relying primarily on their partner channel for approaching other verticals. In response to a question about cloud strategy, Bish stated that they see limited demand for (public) cloud because of the nature of the data being transmitted, which delayed the first cloud version of KTA to less than a year ago; although they have a bit of cloud exposure through their Kapow acquisition, they’ve been slow to market on this. They are seeing some demand from smaller companies that can’t afford the on-premise infrastructure, plus some incremental (rather than replacement) use cases within their existing large customer base for rolling out solutions more quickly than can be done internally.

We break for lunch now, and I have some spare time to hit a couple of the regular breakout sessions (or the pool) before a CEO roundtable later this afternoon.

Kicking off KofaxTransform 2015: Day 1 Keynotes

I’m in Vegas for a couple of days for the Kofax Transform conference. Kofax has built their business beyond their original scanning and capture capabilities (although many customers still use them for just that): they have made a play in the past couple of years in the smart process application space to extend that “first mile” capability further into the customer journey, and recently acquired Aia, a customer communications management software company, to help round out their ability to support the entire cycle.

The morning keynote on the first day kicked off with introductions from Howard Dratler, EVP of Field Operations, then on to the CEO, Reynolds Bish, for a company update and vision. He’s been with Kofax since 2007, and led them through getting rid of their hardware business and building a more modern software organization including a number of acquisitions, and a public listing on NASDAQ. A key part of this was repositioning in the smart process application (SPA) area with their TotalAgility platform and the vertical solutions that they and their partners build on that. I suspect that there are still a lot of partners (and customers) with solutions built on the older technology; as other software vendors have found, it’s often difficult to get people to refactor onto a new platform when the old one is currently meeting their needs. Their core capture license revenue is still almost 60% of their revenue, but the new and acquired products have increased from zero in 2011 to over 40% They’ve increased their R&D spending significantly, as well as spending on acquisitions, and sales and marketing activities; given their strong cash position, they’ve been able to fund all of these expenditures using cash generated from operations. Overall, a good financial position and good repositioning from their traditional capture business to a broader part of their customers’ business processes, particularly in the systems of engagement.

Bish talked about the “first mile challenge” of getting from the systems of engagement to the systems of record, and how SPAs created with their TotalAgility platform can fill that gap, providing a range of capabilities including mobility, capture, transformation, collaboration, e-signature (via their recent acquisition of Softpro SignDoc) integration and analytics. Although they present TotalAgility primarily as a platform for partners and customers to build SPAs, they also offer vertical applications where they have experience: Kofax Mortgage Agility and Claims Agility. He went into more detail on how the Softpro SignDoc and Aia customer communications acquisitions provide new capabilities for handling signed digital communications with customers, allowing legally-binding transactions to be completed within applications built on TotalAgility: what he called digital transaction management. He also talked about their new mobile capture platform, available as an off-the-shelf capability as well as an SDK for embedding withing other mobile apps.

They’re really pushing to shift people onto the new TotalAgility platform, offering some good deals for customers to switch their KC/KTM licenses for TotalAgility licenses at a reasonable price point, but the effort required to refactor existing applications will still likely impede these migration efforts. There is no doubt that TotalAgility is a superior platform that offers new functionality, better flexibility, and faster development and deployment: the issue is that many customers find their current KC/KTM functionality to be adequate, and moving onto the new platform is a sufficiently large development project that they may consider looking at competitive solutions. I see this same challenge with other vendors, and it’s going to be a lot slower and less successful than Kofax likely imagines.

He summed up by stating that their short-term growth strategy is incremental rather than transformative. There’s also some sessions later today for the analysts to meet with Bish, so I’ll likely be able to expand on this further in later posts.

Next up was Guy Kawasaki, currently at Canva but well-known for his past gigs as an Apple evangelist and his other high-profile engagement gigs. His presentation was on customer enchantment: like engagement, but better. He laid out 10 rules for enchanting customers:

Achieve likability, by being genuine, accepting and positive
Achieve trustworthiness, by trusting others
Perfect your product, because it is easier to engage people with good stuff than with crap
Launch your product, by telling a story containing salient points, and planting the seeds of that story with many social channels
Overcome resistance, using social proof or data to change people’s minds, and understanding who the true influencers are
Endure, by enabling dedicated supporters and building an ecosystem
Present, and become a great presenter by customizing the introduction to the audience, selling the dream of how your product changes people’s lives, and using the 10 slides/20 minutes/30 point font rule
Use technology, removing the speed bumps to engagement and providing value in the form of information, insights and assistance
Enchant up (that is, enchant the boss), by dropping everything else, prototyping fast and delivering bad news early
Enchant down (that is, the people who work for you), by providing mastery and autonomy towards a higher purpose, and being willing to do the dirty jobs

He wrapped up with the three pillars of enchantment: be likable, trustworthy and competent. Great words to live by.

Kawasaki’s a very engaging and funny speaker, with some funny cracks at Apple and Microsoft alike, and good examples from a number of industries. Great talk.

There’s an analysts session for the rest of the morning, looking forward to hearing more about Kofax’s plans for the future.

Software AG Analyst Day: The Enterprise Gets Digital

After the DST Advance conference in Phoenix two weeks ago, I headed north for a few days vacation at the Grand Canyon. Yes, there was snow, but it was lovely.

Back at work, I spent a day last week in Boston for the first-ever North American Software AG analyst event, attended by a collection of industry and financial analysts. It was a long-ish half day followed by lunch and opportunities for one-on-one meetings with executives: worth the short trip, especially considering that I managed to fly in and out between the snow storms that have been plaguing Boston this year. I didn’t live-blog this since there was a lot of material spread over the day, so had a chance to see some of the other analysts’ coverage published after the event, such as this summary from Peter Krensky of Aberdeen Group.

The focus of the event was squarely on the digital enterprise, a trend that I’m seeing at many other vendors but not so many customers yet. Software AG’s CEO, Karl-Heinz Streibich kicked off the day talking about how everywhere you turn, you hear about the digital enterprise: not just using digital technology, but having enough real-time data and devices integrated into our work and lives that they can be said to be truly digital. Streibich feels that companies with a basis in integration middleware – like Software AG with webMethods and other products – are in a good position to enable digital enterprises by integrating data, devices and systems of all types.

Although Software AG is not a household consumer name, its software is in 70% of the Fortune 1000, with a community of over 2M developers; it’s fair to say that you will likely interact with a company that uses Software AG products at least once per day: banks, airports and airlines, manufacturing, telecommunications, energy and more. Their revenues are split fairly evenly between Europe and the Americas, with a small amount in Asia Pacific. License revenues are 32% of the total, with maintenance and consulting splitting the remainder; this relatively low proportion of license revenue is an indicator of a mature software company, and not unexpected from a company more than 40 years old. I found a different representation of their revenues more interesting: they had 66% of their business in the “digital business” segment in 2014, expected to climb to 75% this year, which includes their portfolio minus the legacy ADABAS/NATURAL mainframe development tools. Impressive, considering that it was about a 50:50 split in 2010. Part of this increase is likely due to their several acquisitions over that period, but also because they are repositioning their portfolio as the Digital Business Platform, a necessary shift towards the systems of engagement where more of the customer spend is happening. Based on the marketecture diagram, this platform forms a cut-out layer between back office core operational systems and front office customer engagement systems. Middleware, by any other name; but according to Streibich, more business logic is moving to the middleware layer, although this is what middleware vendors have been telling us for decades.

There’s definitely a lot of capable products in the portfolio that form this “development platform for digital business” – webMethods (integration and BPM), ARIS (BPA), Terracotta (in memory big data), Longjump (application PaaS), Metaquark (mobility), Alfabet, Apama, JackBe and more – but the key will be to see how well they can make them all work together to be a true platform rather than just a collection of Software AG-branded tools.

We had an in-depth presentation on their Digital Business Platform from Wolfram Jost, Software AG’s CTO; you can read the long version on their site, so I’ll just hit the high points. He started with some industry quotes, such as “every company will become a software company”, and one analyst firm’s laughable brainstorm for 2014, “Big Change”, but moved on to define digital business as having the following characteristics:

Blurring the digital and physical world
More influence of customers (on business direction as well as external perceptions)
Combining people, business and physical things
Agility, speed, scale, responsiveness
“Supermaneuverable” business processes
Disrupting existing business models

The problem with this shift in business models is that conventional business applications don’t support the way that the new breed of business applications are designed, developed, used and operated. Current applications and development techniques are still valuable, but are being pushed behind the scenes as core operational systems and packaged applications.

Software AG’s Digital Business Platform, then, is based on the premise that few packaged applications are useful in the face of business transformation and the required agility. We need tools to create adaptive applications – built to change, not to last – especially in front office customer engagement applications, replacing or augmenting packaged CRM and other applications. This is not fundamentally different from the message about any agile/adaptive/mashup/model-driven application development environment over the past few years, including BPMS; it’s interesting to see how a large vendor such as Software AG positions their entire portfolio around that message. In fact, one of their slides refers to the adaptive application platform as iBPMS, since the definition of iBPMS has expanded to include everything related to model-driven application development.

The core capabilities of their platform include intelligent business operations (webMethods Operational Intelligence, Apama Streaming Analytics); agile processes (webMethods BPM and AgileApps); integration (webMethods Integration and API Management); in-memory data fabric (Terracotta); and business and IT transformation (ARIS BPA and GRC, Alfabet IT Portfolio Management and EA Management). In a detailed slide overlaying their products, they also added a transaction processing capability to allow the inclusion of ADABAS-NATURAL, as well as the cloud offerings that they’ve released over the past year.

Jost dug further in to definitions of business application layers and architectural requirements. They provide the structure and linkages for event routing and event persistence frameworks, using relatively loose event-based coupling between their own products to allow them to be deployed selectively, but also (I imagine) to reduce the amount of refactoring of the products that would be required for tighter coupling. Their cloud IoT offering plays an interesting role by ingesting events from smart devices – developed via co-innovation with device companies such as Bosch and Siemens – for integration with on-premise business applications.

We then heard two shorter presentations, each followed by a panel. First was Eric Duffaut, the Chief Customer Officer, presenting their go-to-market strategy then moderating a panel with two partners, Audi Lucas of Wipro and Chris Brinton of Mosaic Data Science. Their GTM plan was fairly standard for a large enterprise software vendor, although they are improving effectiveness by having a single marketing team across all products as well as improving the sales productivity processes. Their partners are critical for scalability in this plan, and provide the necessary industry experience and solutions; both of the partner panelists talked about co-innovation with Software AG, rather than just providing resources trained on the products.

The second presentation and panel was led by John Bates, CMO and head of industry solutions; he was joined by a customer panel including Bryan Zigler of Boeing, Mark DuBrock of Standard&Poor, and Greg James of Outerwall. Bates discussed the role of industry solutions and solution accelerators, built by Software AG and/or partners, that provide a pre-built, customizable and adaptive application for fast deployment. They’re not using the Smart Process Application terminology that other vendors adopted from the Forrester trend from a couple of years ago, but it’s a very similar concept, and Bates announced the solution marketplace that they are launching to allow these to be easily discovered and purchased by customers.

My issue with solution accelerators and industry solutions in general is that many of these solutions are tied to a specific version of the underlying technology, and are templates rather than frameworks in that you change the solution itself during implementation: upgrades to platform may not be easily performed, and upgrades to the actual solution likely requires re-customizing for each deployed instance. I didn’t get a chance to ask Bates how SAG helps partners and customers to create and deploy more upgradable solutions, e.g., recommended technology guardrails; this is a sticky problem that every technology vendor needs to deal with.

Bates also discussed the patterns of digital disruption that can be seen in the marketplace, and how these are manifesting in three specific areas that they can help to address with their Digital Business Platform:

Connected customers, providing opportunities for location-based marketing and offers, automated concierge service, customer location tracking, demographic marketing
Internet of Things/Machine-to-Machine (IoT/M2M), with real-time monitoring and diagnostics, and predictive maintenance
Proactive risk and compliance, including proactive financial trade surveillance for unusual/rogue behavior

After a wrapup by Streibich, we received copies of his latest book, The Digital Enterprise, plus Thingalytics by Bates; ironically, these were paper rather than digital copies. Winking smile

Disclosure: Software AG paid my airfare and hotel to attend this event, plus gave me a nice lunch and two books, but did not otherwise compensate me for my time nor for anything that I have written here.

This week, I’m in Las Vegas for Kofax Transform, although just as an attendee this year rather than a speaker; expect to see a few notes from here over the two days of the conference.

Capital Raising Through Crowdfunding

Nicholas Doyle of DST gave a presentation on crowdfunding: an interesting topic to cover at a conference attended primarily by old-school financial services companies, who are the ones most likely to be radically disrupted by crowdfunding, but likely don’t see it coming. He started with a video from CraftFund — crowdsourced capital investment focused on the craft beer and food industry — then talked about the state of the market, the different business models, and the US securities regulations that apply to private securities that include crowdfunding. He also included a good timeline of crowdfunding from the 1983 startup of Grameen Bank‘s microfinancing operations, plus some of the regulations that govern microlending and microequity in the US:

I covered a bit about crowdfunding at the 2012 Technicity event, including the UK crowdfunding platform CrowdCube and a discussion on the legality of equity crowdfunding in Ontario (where I live). Equity crowdfunding really only started in the US in 2011 with MicroVentures, and the recently passed JOBS Act includes a number of regulations that apply to crowdfunding and other small-scale equity investments, including who can participate and how it can be promoted and sold. In particular, Title III of the JOBS Act applies to crowdfunding; it’s not finalized yet but Doyle was able to give us a review of what is expected there, as well as some of the state regulations that will impact crowdfunding.

The landscape positions the crowdfunding platforms between issuers and investors; that platform needs to include compliance, distribution, reporting and enabling technologies. Crowdfunding is only 0.6% of the world’s capital markets, but that’s still $1.6B and the industry has grown 1000% in the last five years, and will undoubtedly continue to grow. Debt financing is growing at a much higher rate than equity investing, in part due to the limits placed by the applicable titles of the JOBS Act. Donation models are also growing, and the biggest growth is in reward models, which are typical on sites such as Kickstarter. There are obvious challenges to work out with crowdfunding, such as secondary market liquidity and investor accreditation, but it’s safe to say that it’s here to stay and will continue to grow.

DST does not currently offer any products in this area, but it’s interesting to see that they are keeping a close eye on it to see how they can fit in the market, whether as a recordkeeper, clearinghouse or other role.

The sun is high and I’m all done with my presentation and videography commitments, so this will be the end of my blogging from DST ADVANCE 2015 as I head out to enjoy a bit of the Phoenix weather.

AXA And The Digital Enterprise

Day 2 at DST ADVANCE 2015, and I’m attending a panel of three people from AXA on how their journey to becoming a digital insurance business. They define digital business as new ways of engaging with their customers: customers that are increasingly more demanding with respect to online and mobile modes of interaction. This is also driven by their need to reduce and simplify paper requirements, internally in their opertions and field sales force, and with their customers. The mandate for their digital enterprise transformation came from top management as an initiative both for better customer engagement and operational efficiencies.

There was a big cultural and change management component here to encourage their field agents and advisor channel to take advantage of the new digital tools, which in turn improves back office effectiveness by, for example, reducing NIGO rates because of rules-driven application forms. In their operations center, this resulted in shifts in resources, and changes to the type of people that they needed to hire and train: less heads-down data entry, and more tech-savvy knowledge workers. They also needed to effect internal cultural changes to become more flexible, and to have closer collaboration between business and IT.

Becoming a digital insurance business has changed a lot in how AXA’s products are created and rolled out, and also in their IT operations: they introduced the role of chief data scientist, and shifted from a waterfall software development methodology to Agile development and integrated business-technical SCRUM teams. Like many insurance and financial services, they have a lot of legacy systems that run their business, and a big challenge ahead of them is to upgrade those to more agile platforms such as their upcoming migration to AWD 10. They’re using Salesforce in some areas, and want to be able to leverage that further in order to reduce the reliance on internal legacy CRM, as well as introducing emerging technologies such as speech analytics that are piloted successfully in a regional center before being rolled out across the broader enterprise. Within IT, they are changing their methods to more of a DevOps model, with a particular focus on quality engineering. They have created some entirely new teams, such as mobile testing, to accommodate emerging technologies, and be proactive with external forces such as mobile OS upgrades.

One area where they have seen success is in offering incentives to drive adoption by the advisors, such as competitions between regions on adoption levels; some of the incentives for adoption and suggesting new digital enterprise ideas include financial and travel benefits. New advisors are required to use the digital services, and existing advisors are becoming sold on the benefits of using the new tools; in the future, they are considering a negative financial incentive for continuing to use paper in order to further drive adoption. In rolling out a new version of an advisor portal, they included a feedback option, then gave priority to implementing the feedback suggested by the advisors; when the advisors realized that they were directly impacting the development of their day-to-day tools, their participation increased even more.

Audience members in the insurance industry also talked about a shift to digital enterprise causing an increase in top-line revenue by expanding markets, not just retaining existing customers and reducing costs. The AXA team echoed this, and the need to envision and evangelize completely new business models rather than just working on incremental improvement.

Key success factors that AXA identified include the merging of business and IT, and engaging the field sales force in defining and developing the digital services in order to create the right things at the right time. It took about a year from the point of their first rollout to widespread adoption, but now the new capabilities and tools are adopted more quickly since the advisors know that this is going to help them sell more and reduce problems in the sales and policy issue cycle.