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Justifying BPM Efforts
By Jim Sinur | April 23, 2008
It’s not easy to justify any kind of capital budget item, especially in light of some of the recent economic challenges. However, BPM is rich with opportunity and documenting benefits is easier than anything else I have had to justify in my career.
It is not my intention to provide you with a formula, but to list opportunities that you can turn into a business case. In fact, the kind of benefits might change depending on your driver(s). If you are trying to do more with less, hard benefits will appeal. If you are looking for better client retention, the softer benefits will appeal.
Hard Benefits:
Benefits in this category are easier to convert into real economic numbers. Time and cost savings can be calculated without a lot of effort unless you want real time and motion studies.
With a little imagination, one can calculate the probability and frequency of a compliance event linked with probable costs. Once this is calculated, one can take a fraction of the financial impact and make the case for BPM. This category can even put a smile on the face of your dower accounting types.
- Cost Savings
- Reduced Elapsed Time
- Resource Optimization
- Automation of Human Tasks
- Manage End to End Processes
- Fewer Errors
- Ensure Compliance
- Smart Processes
- Goal Driven Processes
- Adjudicate Conflicting Goals
- Business Scenario Driven Processes
- Business Dynamics Guided
- Leveraged Labor Pools
Soft Benefits:
This is the mushy side of your justification effort. Equating this list of benefits to hard costs requires a special person. What is the value of a reputation? What is shared knowledge worth?
It takes a visionary business professional to convince top management of the economic value of any item on this list. Most folks will come up with enough on the hard benefits side and add these benefits for flavor to add some spice to your business case. Feel free to leverage these going forward.
- Higher Customer Satisfaction
- Visible Processes
- Shared Knowledge
- Identify Overlapping Processes
- Higher Employee Satisfaction
- Rule Driven
- Constituent Differentiation
- Departmental Harmony
- Lower Risk of Lawsuits
- Real Time Agile Business Behavior
- Policy Driven
- Competitive Advantage
- Process Focused Culture
- Company Image
Rule of Thumb for BPM Budgets:
Any justification requires the cost side of the equation, so I would like to provide some guidance for you. I promised that I was not going to provide you with any kind of formula, but I think I might be able to get closer to something that seems to fit logic on the cost side.
Start with the cost of the software (hopefully you have not sliced this cost to a ridiculously low level to invalidate this approach). Take this amount and multiply it by a factor of 2 for simple efforts and up to 4 for large scoped processes (for pilots this can be lower). This will give you the outside services costs. Double this amount for the amount of internal labor you are likely to expend.
Fortunately there is no cash flow with internal resources beyond the sunk costs you are already absorbing with salaries and benefits. You can adjust this up or down depending on complexity factors, such as difficult people to work with and technology pioneering. This is where your judgment comes into play.
Bottom Line:
Justifying BPM efforts is an art; not a science, but there are many opportunities on the benefit side of your home grown equation. Hopefully I have given you some fodder for your justification efforts. Additional reading for you is available in a few of my previous blog postings (Process is Free) & (BPM Yields Steady Returns in Good times and Bad).
Topics: BPM |
April 24th, 2008 at 9:05 am
[…] jilly@10yetis.co.uk (Andy) wrote an interesting post today onHere’s a quick excerptIt is not my intention to provide you with a formula, but to list opportunities that you can turn into a business case. In fact, the kind of benefits might change depending on your driver(s). If you are trying to do more with less, … […]
May 7th, 2008 at 1:05 pm
One of the things we consistently hear from BPM customers is that they have processes which are critical to their continued business, but really only known to a few individuals in the organization, mostly senior people. The process descriptions that exist are documented with words and perhaps a few charts or excel rule sheets. By formalizing the process, and running that process from its formal description, you create a self-documenting system that can be understood and updated by different people involved in the process. Ideally, the complex process rules are external, and can be updated and reviewed by various levels of operations. So a major justification for BPM is that you can gain control of the knowledge base and rules that are imbedded into an existing process and in the heads of just a few individuals. From there, anything is possible, and of course as pointed out in this article, measurement and improvement can occur.
May 8th, 2008 at 9:47 am
It seems that only in the process discovery mode, do these proceses see the light of day. There are many enlighted folks, once the processes come out of the shadows