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A Custom Technology Adoption Profile Commissioned By Kofax

Enterprises Shift To Smart Process Apps To Engage Customers

Executive SummaryHistorically, companies have invested in systems that make the business more efficient — systems like customerrelationship management (CRM) and enterprise resource planning (ERP) that are primarily for internal purposes.These have worked well for well-defined, highly structured processes where volume, scale, and straight-throughprocessing dominate system design. Our study found that IT professionals feel that these apps are poorly integrated,difficult to change, and inadequate to handle emerging mobility, analytic, and information access management needs.These gaps result in people-intensive and highly variable processes that must be maintained in order to supportbusiness activity. In order to address these areas, organizations are looking to bridge the gap between systems thatengage customers, using the latest mobile, social, and analytics technology and systems of record, which are oftenpackaged apps like ERP, CRM, or proprietary legacy systems. Within the next five years, a new generation of “smartprocess apps” will augment — and, in some cases, replace — the heavy packaged apps designed from the inside out thatdrive customer interaction today.

Forrester Consulting


Industry-Specific Processes Are On A Par With Packaged Apps As Investment Priority . . .Forrester’s data shows that ERP, industry-specific apps, and CRM continue to be investment priorities. Investing incollaboration, business intelligence (BI), and finance and accounting software have similar priority levels; together,these are the strongest planned investments within the next 12 months (see Figure 1). However, our data shows that acompany’s investments in industry-specific apps are roughly equal to the investment in its top packaged app.Enterprises will balance investment in packaged apps with more focused solutions that address specific business needs.However, the highest response category regarding application investments over the next 12 months was “don’t know”(22%). Uncertainty may result from enterprises holding back investment in these systems as they strive to meet thehigher customer experience goals that have resulted from the explosion in consumer technology.

Figure 1Application Investment

Base: 1,631 IT Decision-makers

(percentages do not total 100 because of rounding)

Source: Forrsights Software Survey, Q4 2012, Forrester Research, Inc.



. . . Yet Firms Also Look To Internal Development To Meet Business NeedsDespite historic investment in ERP and CRM systems and other systems of record, enterprises are motivated to developtheir own software applications or purchase best-of-breed solutions from niche vendors to fill in gaps in packaged apps(see Figure 2). The top motivator for internal development within enterprises is the inability of packaged apps to meetcore business needs, followed by the need to protect their intellectual property and develop stronger customerexperiences. Enterprises feel that they can improve customer experiences and their competitive position throughinternal development. Mobile support, a top concern for all businesses today, is last on the list, indicating thatenterprises are not looking to packaged apps to help meet mobile requirements — at least for now. This is due to twofactors: mobile support is still developing for these platforms, and the core function of these platforms is more internalrecord-keeping than customer engagement.

Figure 2Gaps In Packaged Apps Drive Internal Development

Base: 871 IT decision-makers at firms with 20 or more employees that are using custom business applications

(multiple responses accepted)

Source: Forrsights Software Survey, Q4 2012, Forrester Research, Inc.



Gaps In Packaged Apps Start With Integration ChallengesEnterprise apps are great at recording what has happened or driving straight-through processes to conclusion, but theyoften do a poor job of connecting with the customer or business goals due to integration challenges and inflexibility (seeFigure 3). In short, the ERP system does not directly support the customers’ problems, becoming an expensive trackingand history system. According to respondents, the reasons ERP systems do not meet process goals are that:

Integration with critical systems is not supporting the complete customer journey. Integration challenges arethe top obstacle to getting the full value from ERP. Proprietary packages, legacy systems, and “untamedprocesses” are part of many business processes.1 Many ERP integrations are still handled through point-to-pointbatch processes. Improved ERP vendor integration tools, web services, and service-oriented architecture (SOA)design approaches are making integration easier, but major IT challenges remain. Integration becomes critical inthe age of the customer: the current goal is to create an integrated and consistent experience across channels,function, and geography to support the complete customer journey.2

ERP collects information well, but it’s difficult to make changes. ERP systems are great at being the system ofrecord that a company can depend on. They absorb and manage structured content efficiently, but haven’t done agood job of making it available generally. Respondents cite the lack of flexibility and the difficulty of makingchanges as a barrier. As a result, process tools such as business process management (BPM) suites, business rules,and dynamic case management (DCM) are gaining favor. These tools keep process changes like workflow, rules,templates, and data associations outside of the core systems and add agility to the underlying systems.

Multiple ERP packages and vendors create impenetrable silos. Multiple ERP systems result from divisionalautonomy, poor IT services management, and acquisitions. Even when a common vendor is used, multipleinstallations are common, and software versions vary. One of the largest European pharmaceutical companieshas 70 different ERP installations across 10 vendors and more than 30 unique versions. While multiple ERPsystems may be necessary to meet the varying needs of operating units, it then becomes more difficult to sharedata — in particular unstructured content — and coordinate processes across departments.



Figure 3Limitations Of Packaged Applications

Base: 55 decision-makers responsible for packaged application strategy at firms with more than 1,000 employees that use packaged apps

Source: A commissioned study conducted by Forrester Consulting on behalf of Kofax, July 2013

Enterprises Want Smarter Processes“Smart process solutions” provide industry-specific capture, analytics, process management, and information accessthat are highly tailored to customer-facing business processes. Forrester calls this new category “smart process apps”(SPAs).3 These are industry-specific apps that are easy for people to use, aiding effective collaboration, yet can adapt tothe rapid pace of change required by today’s dynamic business demands. They do this by automating both structuredand unstructured work activities (untamed processes) in support of collaborative processes. Forrester foresees a largeand growing market for SPAs (see Figure 4).

Enterprises clearly see value in SPAs for closing gaps in reporting, data access, and overall process visibility and pointedto deficiencies in core systems that give rise to this need (see Figure 5). Visibility — in particular, metrics-basedperformance management for the complete or end-to-end process — is a much-desired attribute of SPAs. Enterpriseshave report difficulty correlating information across packaged apps or legacy systems aligned with functions ordepartments. For example, enterprises want to understand the number of successfully delivered orders for a product orservice as opposed to specific metrics aligned with taking the order, using the warehouse fulfillment system, orsuccessfully posting the order to the financial system.

The second-highest ranked benefit was the opportunity to provide a more intimate customer relationship. SPAs canhelp free workers from mundane tasks to provide more “quality time” to build or recapture the human connection.Forrester believes that, after years or relentless automation and self-service, leading companies will strive to provide amore human and personal experience, doing business the way the customer wants rather than the way organizationsrequire.



Our market forecasts agree. Forrester projects that the existing $10.7 billion market will grow to $21 billion by 2016.Forrester projects a 15% compound annual growth rate for existing smart process apps between 2010 and 2015 due tocompanies increasingly automating their core transactional business processes. Organizations look to smartapplications to help them decrease the number of often very manual and low-value “nontransactional” processes thatfill the gaps left by older applications and bulky packaged apps. New and/or unidentified smart process apps will likelysee an even higher growth rate than those currently being implemented.

Figure 4Smart Process Applications

Source: “Smart Process Applications Fill A Big Business Gap,” Forrester Research Inc., August 8, 2012



Figure 5The Value Of Smart Process Solutions


(percentages do not total 100 because of rounding)




SPAs Will Target Common Business ProcessesWe asked respondents to select which business processes will most benefit from smart process solutions from a list ofwork processes that are used in every industry (see Figure 6). Enterprises selected financial processes as having thehighest potential benefit, with financial reporting and contract management taking the top spots. Forrester believes thatadvancing analytics, particularly BI, is a key reason that enterprises see opportunity in financial reporting. However,customer onboarding — a pain point at many companies Forrester speaks with — had the most No. 1 selections.Claims and service requests, invoice processing, and compliance processes also scored well and are ripe for emergingprocess solutions that target difficult and expensive exceptions, where the majority of costs and service issues reside.

Figure 6Benefits To Business Processes Of Smart Process Solutions





Key FindingsAll firms require a single consolidated version of the truth and will continue to rely on structured processes,transactional systems, and packaged apps to record customer and business information. But over time, these systemshave developed inflexible architectures and have become aligned with silos built around business functions that nowpresent a serious barrier to many fast-moving companies. While the underlying transaction processes may beautomated, there are still a lot of manual workarounds that make it difficult to link business capabilities acrossdepartments, leading to poor customer experiences, unmet business goals, and untamed processes. The result is ahigher cost of doing business, a trend that will only accelerate as consumer technologies expand the “engagement gap”that already exists between businesses and their customers. In the future, companies will address process andapplication gaps not by customizing on-premises software, but by linking best-of-breed SPAs using accessible andadaptable processes built on top of DCM or BPM suites.

Today’s customer experience requires front- and back-office integration. The customer journey extends acrossfunctional, channel, and geographic boundaries. Enterprises are challenged to provide a seamless and completeexperience and cite poor integration of front- and back-office systems as a leading culprit. Poor integration also isa barrier to more automated transactions and extending customer self-service options. An “outside-in” orcustomer perspective, followed by new solutions that help integrate internal systems, is a strong direction forsurveyed customers.

Attention is shifting away from core systems to SPAs that engage customers. In short, organizations willrequire new processes that will support an emerging workforce and newly empowered customers. Many of ourrespondents are looking to smart processes, supported by smart process solutions. to provide better capture,analytics, process management, and information access that are highly tailored to the business service on anindustry basis.

Enterprises look to agile processes to support the empowered customer. Emerging technology will allowcustomer-facing employees to operate fluidly and make greater contributions by giving them the ability tounderstand customer context and leverage mobile solutions. Companies enabling workers and customers withadvanced process support will provide a greater level of customer experience. In short, most enterprises wesurveyed desire process agility, giving the ability to handle exceptions in more capable ways by having expertguidance, quick communication with experts, and the ability to start new processes.



Appendix A: MethodologyThis Technology Adoption Profile was commissioned by Kofax. To create this profile, Forrester leveraged its ForrsightsSoftware Survey, Q4 2012. Forrester Consulting supplemented this data with custom survey questions asked of 55 USbusiness decision-makers responsible for packaged application strategy at firms with 1,000 or more employees. In thisMay 2013 survey, respondents were asked about their view of packaged applications and of smart process solutions.The survey was double-blind, conducted in English, and respondents were given a small incentive for participation. Formore information on Forrester’s data panel and tech industry consulting services, visit www.forrester.com.

Endnotes

1 Often, processes not tackled through packaged apps get approached in tactically haphazard ways. Source:“Untamed Business Processes: When Even The Best Of Intentions Go Awry,” Forrester Research, Inc., August 21,2009.

2 Source: “Application Delivery Must Enter The Age Of The Customer,” Forrester Research, Inc., August 25, 2011.

3 Forrester has forecast that smart process apps with BPM will become a $34 billion market by 2015. Source: “SmartProcess Applications Fill A Big Business Gap,” Forrester Research, Inc., November 5, 2012.

About Forrester ConsultingForrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging inscope from a short strategy session to custom projects, Forrester’s Consulting services connect you directly with research analysts who applyexpert insight to your specific business challenges. For more information, visit www.forrester.com/consulting.

© 2013, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources.Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and TotalEconomic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additionalinformation, go to www.forrester.com. [1-M6ERBN]

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