The Long Tail of Process Automation

The phrase The Long Tail was first coined by Chris Anderson in an October 2004 Wired magazine article to describe certain business and economic models such as or Netflix. Businesses with distribution power can sell a greater volume of otherwise hard to find items at small volumes than of popular items at large volumes. The term long tail is also generally used in statistics often applied in relation to wealth distributions or vocabulary use.

The long tail theory can also be applied to process automation and process management. Organizations have thousands of interconnected business processes. This patchwork of process and logic includes human tasks as well as computerized activities that access and update enterprise systems and applications. While all of these processes work collectively to support the goals and strategies of the organization, enterprise software has typically been targeted toward high demand process that are roughly similar across the organization (CRM, ERP, HCM, sales force automation, etc.) For each process automated in one of these enterprise software applications ther are hundreds of highly customized, unique organizational processes that are nota dequately addressed by these systems. These processes are often being managed through e-mail, MS Excel, faxes and telephone calls or handled by custom coded software written by external consultant or internal IT organizations.

The Internet reduced inventory and distribution costs making selling niche products profitable. Similarly, BPM (business process modeling) helps meet niche requirements in areas where historically, enterprise software has fallen short, making the automation of all types of processes more affordable and cost-effective.

Commoditized processes such as order fulfillment and invoicing commonly lack variance and often they are the staple of rigid, off the shelf software such as traditional ERP (enterprise resource planning) software.

Typical processes that are roughly similar activities that differ across organizations are require some customization such as capital planning and IT provisioning due to minor variances, they may be streamlined by pure-play BPM software products.

Unique processes require highly specific activities that are organization-specific and often create sustainable competitive advantage, such as strategic sourcing, customer engagement management, have a higher cost of customization, and therefore require specialized knowledge and tools.

A recent MIT Sloan Management Review article, titled “From Niches to Riches: Anatomy of the Long Tail,” examines the Long Tail from both the supply side and the demand side and identifies several key drivers. On the supply side, the authors point out how e-tailers’ expanded, centralized warehousing allows for more offerings, thus making it possible for them to cater to more varied tastes.

The Long Tail may threaten established businesses. Before a Long Tail works, only the most popular products are generally offered. When the cost of inventory storage and distribution fall, a wide range of products become available. This can, in turn, have the effect of reducing demand for the most popular products.

For example, Web content businesses with broad coverage like Yahoo! or CNET may be threatened by the rise of smaller Web sites that focus on niches of content, and cover that content better than the larger sites. The competitive threat from these niche sites is reduced by the cost of establishing and maintaining them and the bother required for readers to track multiple small Web sites. These factors have been transformed by easy and cheap Web site software and the spread of RSS.

No World Borders BPO / BPM team can help you determine which processes, tools and team members will help optimize your value stream projects. Whether you are optimizing your loss mitigation process in a mortgage servicing company or improving your Internet marketing and lead development plan, we have lived through these projects before and we can add immediate value.

Michael F. Arrigo

Michael is Managing Partner & CEO of No World Borders, a leading healthcare management and IT consulting firm. He serves as an expert witness in Federal and State Court and was recently ruled as an expert by a 9th Circuit Federal Judge. He serves as a patent expert witness on intellectual property disputes, both as a Technical Expert and a Damages expert. He leads a team that provides Cybersecurity best practices for healthcare clients, ICD-10 Consulting, Meaningful Use of Electronic Health Records. He advises legal teams as an expert witness in HIPAA Privacy and Security, medical coding and billing and usual and customary cost of care, the Affordable Care Act and benefits enrollment, white collar crime, False Claims Act, Anti-Kickback, Stark Law, Insurance Fraud, payor-provider disputes, and consults to venture capital and private equity firms on mHealth, Cloud Computing in Healthcare, and Software as a Service. He advises self-insured employers on cost of care and regulations. Arrigo was recently retained by the U.S. Department of Justice (DOJ) regarding a significant false claims act investigation. He has provided opinions on over $1 billion in health care claims and due diligence on over $8 billion in healthcare mergers and acquisitions. Education: UC Irvine - Economics and Computer Science, University of Southern California - Business, studies at Stanford Medical School - Biomedical Informatics, studies at Harvard Medical School - Bioethics. Trained in over 10 medical specialties in medical billing and coding. Trained by U.S. Patent and Trademark Office (USPTO) and PTAB Judges on patent statutes, rules and case law (as a non-attorney to better advise clients on Technical and Damages aspects of patent construction and claims). Mr. Arrigo has been quoted in the Wall Street Journal, New York Times, and National Public Radio.

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