The business value of BPM


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The question of what value BPM provides to an organisation comes up regularly in discussions. Clients, vendors and analysts alike find it difficult to explain and quantify the benefits of BPM. With this is mind, Gary Comerford has kindly supplied the following guest article which was first published on his Process Cafe blog.

It’s the one question the C-suite will always want to have an answer for: “What is the business value of BPM?”

But what are they really asking? The answer is simple. They want to know – at the very lowest level – “If I spend $xm implementing this thing you call BPM – what will it do to my bottom line? Or, more precisely, how will it increase my profits/value/shareholder return?”

It’s an exceedingly simple question. But one which does not have an easy answer.

In the big scheme of things I believe that there are very few organisations in the world who would not benefit from having their processes reviewed – whether this is a simple as documenting what they do so that they know where the problems are, or as complex as redesigning the whole operation to be more customer-centric (or ‘Outside-In’). History has indicated that any organisation which that has been operating for more than a very short time will have process inefficiencies. These will have built up over a period of time as a result of laziness, people taking short-cuts or even changes which were made legitimately to deal with changing market conditions. The business has worked these changes into its day-to-day operations and everything is running admirably.

But it’s very similar to a car. My car is a very reliable, locally built hatchback. It always starts on time, never lets me down and carries me and my things from A to B with no hassle, no complaints and no troubles. It just works. But over the few years that I have had it the tyres have started to wear down, the brake pads are wearing down and – more importantly – the engine is not as finely tuned as it was. I don’t notice this, though, because I drive it everyday and the tiny change in performance etc. are negligible on that basis.

But, being the good car owner that I am, I take the car in to be serviced. The service centre will take all the replaceable bits and replace them. It will put new tyres on them, check the pressures, clean the air filter and – most importantly – tune up the engine. When I get it back it will look like the old car I had (it may even be cleaner as they tend to give it a valet as well), it will feel like the old car I had but it will be completely different. It will run more efficiently, it will brake quicker, it will do more miles to the gallon.

The big question, though, is what is this worth to me as a driver? Will the reduced fuel consumption pay for the cost of the service? Probably not. Is the whole experience worth it? Absolutely! The car becomes a better machine. It does less harm to the environment. It is a safer vehicle all round.

But could I justify this to someone who had to pay for it? Of course I could – but probably not in monetary terms. The return on investment is probably not going to be good. However the other tangibles – and the intangibles – are going to be.

It’s oftentimes the same with BPM projects. The benefit they give to your organisation in terms of improving efficiency and the ability to do the job better are more intangible than tangible.

Of course you can always fudge the figures. I worked for an organisation that justified the huge cost of a project by extrapolating the additional income that would be raised 20 years in the future by getting a product to market 2 years earlier in the patent cycle – blatantly unjustifiable numbers – and yet the project was approved on that basis. But I would encourage you not to fall into that trap. Look at your organisation and determine what you feel the benefit of the project is going to be rather than what you feel the monetary improvement of the project is going to be.

With any well scoped BPM project your ROI is going to be 15% according to Gartner, so take this as a starting point and then add in all the intangibles that relate to it.

It makes sense.

Republished with author's permission from original post.


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