Making The Business Case For BPM

Given its potential positive impact, it’s hard for BPM not to sound attractive to most companies. But how do you take the next step and begin to build a business case for making an investment (in time, resources and money) in a BPM solution?

• Outline the current and potential problems that exist in the process environment.
• Estimate the initial and ongoing costs for a BPM solution.
• Identify and categorize the tangible business benefits resulting from a BPM Implementation.

Potential Business Costs / Risks

One of the first steps to making the business case for a BPM project is to categorize the potential business problems and actual costs that an organization faces if they continue with their current business practices.


Problem Potential Costs or Impact on Business Inefficient Processes

While the euphuism “time is money” is often over-used, it is very germane to this topic, because in business, for each additional hour it takes to complete a manual business process, there is a hard cost associated with employee time as well as soft costs associated with losing business or lowered productivity. Another area where time comes into play is in opportunity costs. There are risks associated with business processes that are too long and inefficient, and this can mean lost business opportunity or lost savings associated with internal productivity. Therefore, organizations need to start to measure some of these areas where inefficient processes can have a negative business impact.

Potential Inefficient Process Costs Include:

• Not completing processes on time
• Loss of employee productivity/time for value-add work
• Lost revenue opportunities/opportunity costs

Slow Response to Business Change

In today’s business environment, being responsive to change is often the greatest possible differentiator that a company can have. The agility to respond to changing market conditions can mean getting new business that other company cannot. Therefore, if an organization is mired in business processes that are inefficient and cannot easily change them to reflect changes in the market, than they will be the company that loses out on potential business opportunity. For companies that rely on partner or supplier networks, failing to respond quickly to changes can mean losing existing business as well.

Potential Response Costs Include:

• Loss of existing business
• Loss of new business opportunities
• Failure to keep pace with competitors

Costly Business Errors

Since business processes are at the heart of the organization, anytime a process breaks down or results in errors, the business suffers. Many business processes have manual components that are not value-added, and the potential for human error puts those processes at risk for costing the business significantly.

Potential Business Error Costs:

• Loss of existing business
• Costs to fix errors
• Negative impact on reputation

No services based development

SOA is an emerging paradigm in enterprises looking to maximize the return on their application developments. Organizations that are still using traditional methods for application development face significant costs and risks by not creating reusable components. This is especially true with process automation, since many of the same elements are used in multiple processes across the enterprise. Without SOA and BPM, there are considerable opportunities that organizations may be missing.

Potential Costs Include:

• Increased cost of development
• Lack of responsiveness, agility
• Lost business opportunities

Once all of the potential problems and their associated costs have been identified, categorized, and quantified whenever possible, the next step in making the business case for BPM is to identify and understand the various components that comprise an investment in business process management.

The Investment in BPM

An investment in BPM is multi-faceted, and it is important to understand the various components of business process management to appreciate the breadth and depth that a good solution will provide. This section takes a closer look at the categories of investment required for most BPM solutions.

Tangible Business Benefits of BPM

Now that both the risks and costs associated with maintaining existing inefficient processes have been laid out, and we’ve identified the components of an investment in a business process management solution, we can turn our attention to the business benefits that may be gained from implementing BPM. Once the benefits have been identified and quantified, an organization can make a compelling business case for BPM.

To identify the value of potential benefits, we recommend that organizations use the following categories as a starting point, selecting the benefits that are most salient to their specific scenarios and estimate or quantify potential benefits (either in time, money or resource units) based on their situation. For example, an organization might determine that the most valuable benefit for their BPM implementation would be a reduction of business errors, the value of which can be estimated by identifying the number of errors currently occurring, the costs associated with rectifying them, and the lost opportunity costs.


Category of Benefits Details

Efficient Processes

Using BPM, organizations can streamline their business processes, eliminating wasteful steps and cutting costs. Valuable employee time can be re-allocated to more useful purposes, and businesses can become more competitive. The opportunities for additional business and the ability to complete processes faster are also benefits of using BPM to improve business existing business processes and automate those processes that were completely manual. The list of benefits from more efficient processes includes:

• Faster complete times
• Cost savings from higher productivity
• Reallocation of valuable human resources
• More competitive organization
• New business opportunities

Faster Response to Business Change

By implementing BPM, organizations can become proactive when it comes to a change in the business climate. Instead of struggling to catch up to changes in the market, businesses can use BPM to improve their agility and respond quickly to changes, in some cases even anticipating new opportunities. The benefits include:

• Revenue gains from new business
• Competitive advantage from market capitalization
• Improved customer satisfaction

Reduced Business Errors

With automated processes that replace error-prone manual processes, organizations will find a number of hard benefits, including cost savings from errors, as well as soft benefits including better business standing and customer satisfaction. In addition, staff is no longer burdened with fixing errors, and can focus on value-added functions instead. Among the benefits from using BPM to reduce business errors are:

• Lower costs from automated processes
• Increased productivity
• Higher reputation and customer standing

Connected Organization

Having the right information at the right time to make business decisions is critical to success. Using BPM, organizations can remove silos and unify the company around critical information such as customer records, order information, and history. The benefits from connecting the organization through BPM include:

• Unified record and customer views
• Increased responsiveness and agility
• Improved customer service

Heightened Visibility

The ability to respond to opportunities comes from an increased level of visibility into business operations.

• Faster responsiveness to market opportunities
• Increased revenues
• Upper management satisfaction

Compliance

Using BPM, organizations can efficiently meet compliance requirements without wasting precious resources or time. Benefits include:

• Meet corporate deadline for compliance
• Meet upper management requirements

Summary

Agile enterprises can adapt to change, market trends and evolving standards and regulatory requirements at a greatly reduced expense and time to market through the adoption of business process management solutions. Indeed underlying every business is a set of processes that define how that business operates, how it generates revenue, and how it supports its customers, suppliers, and the like. How a business differentiates itself from its competitors is built into its unique business processes. Hence business processes become a strategic and critical asset for the company. The Talisen Business Process Management Team combines experience and discipline in applying proven process engineering and process automation methodology to deliver successful results in obtaining positive ROI of enterprise BPM Projects.