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How Do You Build Solid ROI For a Company's First BPM Project?

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How Do You Build Solid ROI For a Company's First BPM Project?

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  • Sometimes it is difficult ot build a really solid ROI for a first time project, especially if you are spending money on a different process tool ie Not Visio or Powerpoint.

    So pick a project with high buy-in and impact rather than the largest ROI - so "on-boarding new staff" rather than "quote-to-cash". There are often enough examples of other clients to help build that ROI.

    Watching a recent Harry Potter film got me thinking of the challenges of ROI for the film industry... and the lastest film "Harry Potter and the Leap of Faith" http://wp.me/pLuvX-21

  • There has been much talk about BPM and ROI – there have been reports of dramatic returns of 200% or even up to 300%. While these dramatic numbers have put a question on the way ROI itself is calculated, it is however indisputable that BPM investment can have returns that are significant enough for CEOs to sit up and take a good long look.

    That said, BPM initiatives are often a journey involving automation of multiple processes and so analyzing returns from only the first project may be misleading.

    Much depends on the objective and benefits identified and defined at the outset and this may differ from process to process and here I agree with Ian. It helps to identify high impact low risk processes to get a few quick wins initially.

    In the end though, success in a BPM initiative is influenced by many factors – optimal goal setting, organizational culture, business participation, IT collaboration, and so on. An organization must remember that BPM initiatives are a lot like a carriage drawn by more than one horse – and the top management participation is very critical and helps those horses deliver. Here is a link to a post I had made earlier on this topic. It includes many gems from Jim Sinur, Scott Francis and Anatoly Belychook with links to their thoughts on the topic of BPM RoI.

  • (1) Pick a process with positive economic value for the organization. Often there are gems among the support processes that can yield big benefits - managing delinquent debt, for example.
    (2) Don't get stuck in analysis paralysis. Architects and modelers have a tendency to fall in love with their craft and get bogged down in the details of their method, rather than what's beneficial to the organization.
    (3) Define measures of success. It's hard to claim ROI if you have no way of measuring it.
    (4) In a first step assess what you can achieve by applying simple organizational changes, only then consider applying technology to improve the process.
    (5) Build capabilities in the organization to replicate first successes.

  • Building a solid ROI is not hard if you pick the right process to start with, as Ian says. Typically a business leader has his or her eye on a specific process up front, because it is causing pain, or is distracting employees from their many other tasks. Following the gut for selecting a process in this way is not a bad approach, although as Michael suggests above, measuring success is essential if you are going to learn whether your gut was correct.

    An approach that I have taken with organizations is to allow them to follow their instincts for selecting a process, then providing them simple tools for measuring the process 'as-is', to identify where the actual problems lie within that process. This provides a quick check that the process selection made actually does offer the opportunity for ROI.

    Finally, I use the most appropriate technology to fix the problems and re-measure the result. There is nothing like a business leader seeing the results for themselves to start trying the next process down the list.

    My way of helping organizations select processes for measuring ROI is a simple seven-step procedure: http://consected.com/7steps

    I use this myself to ensure that there is a baseline before starting to really fix the process.

    Phil Ayres

  • The difficulty I've observed with businesses attempting to build an ROI statement for first (and follow-on) BPM projects is that they lack an understanding of the cost and definitions of the underlying processes.

    It's impossible to accurately report a return-on-investment if you don't understand the investment in the first place. Being able to report ROI is contingent upon using BPM best practices from the start - that means keeping track of every process you automate, understanding which lines of business control the respective phases of a process and identifying the tangible goal you intend to achieve through each and every process.

    Once you know what you're supposed to be seeing as a result of a BPM project, you'll be able to accurately reflect on success or failure. BPM isn't about throwing a bunch of things against a wall and seeing what sticks. It's about aiming for a specific target using a single automated arrow.

    Of course once the ROI is calculated all the prior labor inefficiencies that were included in the calculation based on the improvement need to be realized, and then applied to improving the next process, and so on, for continuous progress.

  • Your first BPM project is a high-stakes gamble. You have only enough bankroll for one bet, so you must win in order to be able to ante up for the next round. So how do you win at gambling? You cheat.

    You stack the deck, load the dice, count the shoe, put little magnets . . . in . . . strange . . . little . . . places. You do whatever it takes to minimize chance, control variables, and bend the odds in your favor. Of course, you can't just walk into a casino and muck with the equipment--that is, unless you own the casino. You can do whatever you want in your own "house" so play the BPM game on home turf.

    Rather than tackling a big, front-line business problem like order-to-cash, cut your teeth on a small IT process, such as account recertification, hardware provisioning, or project approvals. IT addressing an IT process challenge gives IT control of the variables, which improves the odds of success. This gives you access to the deck. Now stack it.

    This is an ROI question, so you need to know the payoff *before* making the bet. You can't eliminate chance altogether, so base your take on the safe bet. Choose the outcome with the best odds, determine your ante, calculate the payout, then stack the deck to play that hand. (Win with two face cards rather than hitting 21. Automate a key segment of a process rather than re-engineering the whole thing.) Then deal 'em and steal 'em.

    The point is, keep the first BPM project simple. Calculate the expected return up front and choose a problem domain and implementation strategy that can all but guarantee a win. There's no ROI if you don't win the bet, so avoid the long odds at all costs.

  • Start small, think BIG. Whether it’s a single process or a handful at a departmental level, the best way to build the ROI case for BPM is by gaining traction with your stakeholders and users quickly. A good way to do this is by first documenting how the process is being managed today. Next, identify what costs are associated with each step in the process, including labor (how long is someone spending getting their tasks fulfilled) and any hard costs in order to perform tasks. Identify how process improvements can be made at each point in the process with the capabilities of BPM (i.e. time savings performing tasks, reduced development time associated with adding new processes into the mix, costs associated to taking phone calls to field requests, users unsure of where to submit a request and so on).

    It depends on what the process is of course but documentation, associating costs to tasks and identifying cost savings with BPM (through either eliminating inefficient steps in a process, reducing time spent developing custom solutions or fees associated with hardware maintenance – there are BPM in a Cloud options) . Also, pick a few processes that are easily documented and well understood. People will see success with something they are familiar with and then you can move on to more complex processes that may involve significant organizational or operational changes. The ROI for these types of processes is much greater and your users will likely have more patience, interest and experience to help implement something that may have seemed overwhelming without the initial success.

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