His premise is that large enterprises have complicated, messy IT systems in need of simpler operation -- something few people would dispute. His proposed solution is the latest buzzword in the ever-changing software industry: "business process management."
Deshpande is the chief technology officer at Metaserver Corp., a Connecticut startup whose product is software that sits on top of existing IT infrastructures. That software then essentially pulls necessary functions and data out of those legacy systems, to allow a company to conduct its normal routines in a more simple, unified manner.
Metaserver is not alone. Within the last year or so, plenty of vendors have explored the business opportunity of bringing simplicity to complexity.
The precise size of the BPM market, as business process management is called, is still unknown. Industry analysts peg the 2001 market at $1 billion, but say that figure includes application and systems integration as well as business process management.
A Jungle Of Enterprise Apps
Regardless of size, industry observers see plenty of need for BPM. Companies installed vast enterprise applications in the late 1990s, only to find that their standard business procedures cut across various application and data types that did not easily interact.
For example, the process of collecting payment on a rental car and delivering it to a customer might jump from an SAP database, to i2 supply-chain software to a Seibel Systems CRM package. "There's a huge dollar amount in efficiency that has yet to be attained," says Eric Austvold, research director at AMR Research.
Darcy Fowkes, an analyst who follows the sector for Aberdeen Research, estimates that the BPM niche will grow at an annual rate of 70% over the next few years. A recent survey of 600 enterprises by the Hurwitz Group showed that most had barely begun examining their business processes and planned to spend more in the future to do so.
That said, corporate executives who now feel burned by ERP implementations from several years ago aren't chomping at the bit to do another software overhaul now. So BPM purchases at the moment are small-dollar deals, allowing customers to get a sense of the savings and efficiencies they might be able to gain.
The typical approach for a BPM vendor is to model the business processes of a potential customer: observe who uses what IT systems to accomplish which tasks. Then the vendor calculates how that process could run more efficiently, and offers a software package to manage that newly efficient process.
"The key is all about mitigating risk...we take it very bite-sized," says Terry Flaherty, head of marketing at BPM vendor Lombardi Software. "It's not a whole process re-engineering."
Deshpande gave the hypothetical of a telecommunications carrier that takes 40 days to provision a T-1 line. Rather than create an elaborate software system to cut that time to three days, he said, Metaserver would create a small package to cut the time to 38 days. If the carrier approves, Metaserver might do another package to trim the process to 35 days.
A typical project might cost $300,000 and last a few months, he said. "We're absolutely a lot smaller."
BPM vendors also often approach non-IT executives to pitch their product. Flaherty said Lombardi Software typically approaches the chief financial officer to demonstrate cost savings; other vendors work with department heads to model what they actually do, rather than talk with the IT department that manages how they do it.
"People understand the processes involved, not really the IT systems behind it," Deshpande said.
Small Vendors Seek Niches
Will the small vendors establish BPM as a growth market and thrive? That's a tall order. Austvold lists several different forces jostling for a piece of the action: niche BPM vendors like Lombardi, Intalio, Fuego and Metaserver; ERP vendors such as PeopleSoft or SAP putting out a business-process component; application server integrators such as Sybase, IBM Websphere and BEA Systems' and then the juggernaut Microsoft, with its BizTalk product.
"They are the 800-pound gorilla," Austvold says of Microsoft. "They're going to be the dominating player."
Microsoft debuted BizTalk at the end of 2000, and racked up more than 800 sales last year to dreamboat clients such as Tyco and Ford Motor Co. The second version of BizTalk was released this spring. In contrast, the 45-person Lombardi has 10 customers, several million in revenues and has yet to turn a profit.
Niche vendors are hoping to gain traction with customers and specific industries such as government, banking and pharmaceuticals before Microsoft, IBM and other giants incorporate BPM offerings into their existing product lines. Industry analysts say that's possible, if the niche vendors perfect their sales channels and the lumbering giants don't commit too many resources to BPM early on.
"They just can't afford to waste their time," Fowkes said of IBM, Microsoft and others. "I'm hearing all the noise from the little guys."
But, Fowkes is quick to say, the powerhouses do have name recognition and money to burn. They could easily go on a buying spree and consolidate the market for BPM vendors into a few powerful hands.
"They're the ones driving the message and probably getting the traction," she says. "The pure-plays don't have a cash cow."
Matt Kelly is a freelance writer based in the Boston area.