I am back from a hectic round of travel: conferences, BPM Master Classes, client meetings, and vacation. I attended both the SharedInsights BPM conference in Ft. Lauderdale, FL, and the ISSSP conference in Scottsdale, AZ (yes, we evangelists live a tough life!)
At the SharedInsights’ conference, Roger Burlton, the conference chair, opened the proceedings with his keynote, “Business Process and Beyond.” One of his standard slides is his ROI graph. When I saw it a few years ago, I grew enamored with it. I think it is a really neat way to communicate the key drivers of ROI. The traditional MBA approach is to focus on the Y-axis, the money: reducing costs, improving productivity, increasing market channels, product innovation, and so on. For many companies, this is approaching the point of diminishing returns. Roger highlights the X-axis, the time. The competition is now in time-to-market, time-to-profit, and time-in-profit. This is nothing new, of course, expect for the increased focus that BPM brings to the X-axis. BPM’s role in improving the ROI from time, the “Return on Time (ROT)” if you will, is leading to ‘aha’ moments for people when presented this way.
At our BPM Master Classes, I introduce two other levers of profitability: the probability of delivery, and the probability of profit. The first highlights the very high failure rate of projects (60-70%), and the second highlights the challenge with delivering what the customer really wants (and is willing to pay for).
Just when I thought I had finally absorbed Roger’s ROI model, he comes up with another. This one is NICE (of course, it is nice, but that’s the acronym). Picture a 2 X 2 matrix. The X-axis represents ‘Understanding’ of the problem domain (values are: ‘little,’ and ‘lots’). The Y-axis represents ‘Detail’ of information about the problem domain (values are: ‘little,’ and ‘lots’).
When we have little detail and little understanding of the problem domain, our analysis of the problem is going to be ‘Naïve.’ The usual reaction to this is to acquire lots of data, i.e., a data warehouse or data mart project. However, lots of data with little understanding makes the whole problem domain incomprehensible (the 'I' of the model). This is congruent with my own experience, as I covered in my article ‘Re-Energizing BI with BPM’ in Data Management Review, April 2007.
It is possible to gain a understanding from an ocean of data, thus moving into the third cell of Roger’s NICE model. In this cell, the world is a complex (‘C’) entity, demanding tremendous amount of work trying to keep up with change. In my opinion, this is a terrible spot to be in, with data and information overload. More BI (as in the traditional approach) is guaranteed to take you here. The issue isn’t simply more understanding, but more understanding at a reasonable price.
The ROI for understanding comes in cell 4, ‘Elegant.’ Here, only the right information is delivered in a way that is intuitive, actionable, and relevant for solving critical business problems. This is the cell that is the result of applying Occam’s Razor diligently to a Complex model of the problem domain. Since it is impractical to insist that a company always reside in the ‘Elegant’ cell, ideally it should be able to quickly move through the first three steps (Naïve, Incomprehensible, and Complex) to come and rest in an elegant state. Those three phases should be no more than short-term perturbations in the system, while ‘Elegant’ should be the homeostatic condition that a company must aspire to.
The NICE model is the high bar that BPM must vault over to be truly useful.