BPM adoption tends to be a very subjective thing and everybody has a different view of how much value is delivered and how long it takes to achieve a tangible ROI.
AIIM have released their annual report on the state of the BPM industry which is based on the experiences of over 450 BPM users within the AIIM community, this report details how long the payback period might be and the likely return on investment (ROI) across a number of potential process types. The study also covers the biggest project issues and critical factors for success. Users explained where they prefer to buy their BPM tools and what features and functions they have found to be most useful.
It also goes on to reiterrate the point that most practitioners of BPM and Enterprise Architecture have known for many years and I have seen with most customers I have worked with over the years.
"Business Process Management (BPM) is not widely recognized as a single software product or even as a suite of related software tools. It is, more accurately, a business management practice which might utilize a number of dedicated software mechanisms.
...BPM takes on both broader and deeper aspects. Broader in the sense of integrating with other enterprise applications, taking in electronic forms and edocuments, populating transactional databases and providing a single point of interface for users. Deeper features include process modelling and simulation, reusable process modules, and process monitoring and optimization.
By its nature, BPM is an intrusive technology. It has an excellent track record of investment return largely achieved by changing and re-shaping business processes for higher performance. As an agent of such change, the implementation of BPM presents many challenges, particularly when a process crosses departmental boundaries, or when the proponents of the BPM project are not from within the Line of Business affected."
Key findings from this BPM report include:
- 63% of responding organizations consider the importance of BPM to be significant or imperative.
- Hard-dollar savings from "Improving process throughput" and "Reducing process steps" are the two biggest drivers for BPM, followed by "Improving accuracy and repeatability".
- 49% of organizations achieved payback of their investment in BPM tools within 18 months and a further 23% within two years. Additional projects are taking around 8 months on average to complete.
- 62% of those polled consider they have only addressed 1/5th of the potentially profitable BPM projects.
- Accounts payable and accounts receivable processes showed the strongest success factors, followed by customer support cases, proposals and contracts, and claims processing.
- In a third of organizations, BPM projects are likely to be initiated by Line of Business managers, whilst in another third, IT take the lead.
- Integration with other systems is the biggest technical challenge faced by our respondents.
- The strongest indicator for successful BPM processes is the presence of an existing process owner.
- 35% report that they have applied BPM to scanning all incoming mail.
- 6% are currently extending managed processes across the supply chain, but 19% have plans to do so.
- Just 4% of organizations are currently outsourcing BPM-enabled processes but this is set to rise to 18% in the future.
- In this sample, organizations are most likely to use BPM functions within DM/ECM systems (26%), followed by those using specific BPM functions in enterprise suites. Third is custom development and middleware, ahead of dedicated BPM suites (13%).
- 11% of organizations currently use BPM functions in SharePoint, and this is set to treble to 34% in the future, largely from new BPM users, and particularly in mid-sized organizations.
- Spending on BPM licenses looks set for a net increase over the next 12 months, with spending on BPM services and consultancy set to increase significantly.
- 36% look to buy their BPM tools from their existing ECM supplier, with 25% buying best-of-breed tools, and 23% preferring dedicated BPM suites.
Findings on BPM ROI:
"With the current economic pressures, investment projects that show near-term payback are likely to be favoured. BPM scores very well, with 49% showing return in 18 months or less, and 72% within 2 years. These returns are most likely to be from a first project, with additional projects likely to show an even faster return. As is common when we ask specific ROI questions, many organizations do not measure improvements (31%), limiting their ability to justify future projects."
As a practitioner, I work with various customers in various industries and have found that in most cases the potential for the benefits from adopting BPM are huge. Realising the potential however is something that is dependant on many variables that differ greatly based on customer, industry, size and scope of initiative, BPM adoption and cultural maturity to mention a few.
Please let me know your thoughts on your experiences and if they reflect the findings in the report.
The 2009 report can be downloaded from the AIIM site (© AIIM 2009, www.aiim.org).
Good note, would have been very useful if the 450 BPM users from whom the information was gathered, were categorized per industry(like Banking, Insurance, etc.)
Raghu,
If you download the report, you will find the BPM survey participant demographics in the appendix. I have extracted some in answer to comment and summarised below:
Not-for-Profit: 3%
Media:3%
Finance, Banking,Insurance: 19%
Government & Public Services - Local: 17%
Government & Public Service: 12%
Educaion: 6%
Healthcare: 6%
Engineering & Construcon: 5%
Manufacturing: 5%
Retail, Transport, Real Estate: 5%
IT & High Tech: 4%
Professional and Legal: 4%
Pharmaceutical:2%
Enjoy!
Ian,
Just wondering, with the exception on FileNet, most of the BPM suites from ECM vendors do not suit to extend the processes across the organization. They are not great in execution. Then why do they still do it that way? Any thoughts?
Hi Shanakr,
I think you have touched on an aspect of the Software Development Industry that creates a challenge for most vendors. One they probably have to face with each sale i.e. balancing revenue vs product suitability to meet a specific business need.
Software products are developed with set specific features and functions to solve specific business problems. They therefore have to position their products in a similar way but this often creates a situation that lets potential customers think that the product can do more than it is designed for.
Existing/potential customers are also partly to blame if they do not do their own due diligence during product selection. In my experience this is normally as a result of not always understanding exactly what problem they wish to solve or trusting the vendor/external advisor knows what their requirement is.
At the risk of a generalisation, I would say that in the case of DMS/ECM systems, they tend to have a specific focus on inter-departmental content/document management and therefore their strength is dealing with various types of content across an organisation while acting as a 'information source of record for the organisation'.
The level of process automation required for this therefore naturally tends to be simple (in most cases) compared to human/collaborative process automation or high volume STP processing. The most common type of process for ECM/DMS is probably document approval and reviews to take an example.
Generic pure play BPMS (purpose build) products, have a lot more flexibility and functional diversity that enables them integrate with other systems in the organisation i.e. ECM/DMS. They therefore can solve various other types of requirements a business may have e.g. Insurance Policy Administration, Claims Management, Call Centres, Financial processing, Self Service Portal for Customers/Brokers.
In summary, choose the correct tool for the the job. Just because and ECM/DMS tool has 'workflow' capabilities, do not assume it is extensible as a 'BPM' or BPMS tool that will meet all the enterprise wide process automation needs an organisation has.
Analysis of the BPMS market shows that even pure play BPMS products tend to have a bias towards either Human to Human and System to System type requirements based on their functional design. Read more about it at:
http://bpmfundamentals.wordpress.com/2009/02/20/gartner-publish-bpms-magic-quadrant-for-2009/
http://bpmfundamentals.wordpress.com/2009/12/04/aiim-bpm-industry-watch-2009-report-released/