Monday, 20 June 2011

Building the Business Case for BPM

Over the past few decades, globalization has become more pervasive.  The recent financial crisis has shown just how interconnected the world economy is.  Today’s organization has to be able to compete in this global economy with both small and large players around the globe as the barriers to entry in many markets get lower.  The ability to compete successfully requires success on many fronts:

·         Operational efficiency
·         Customer intimacy
·         Product and Service Innovation

And how they are solved, the ROI/value produced by addressing the problem, and the benefits for using BPM solutions.

BPM can provide the agility needed in today’s rapidly changing business environment.  Process automation is one way that BPM can help an organization become more nimble.  Business processes organized within a BPM framework are well-documented with clearly-defined steps. 
Moreover, there is a clear understanding of the underlying systems and data supporting each process step.  Changes to existing processes can be made quickly within a BPM framework because the downstream affects on people, systems, and data are already known and factored. 
Automated processes within a BPM framework also help in providing speed to compliance as well as transparency and consistency in the execution of the business processes.  Speed to market is yet another key driver for more agile business processes.  To remain competitive in today’s business environment, companies need to be able to exploit new market opportunities much faster than their competitors to survive. 

In this fast paced world, executives need information in real time. Without automated processes, it is very difficult to gain real time insight into the execution of business processes.  BPM technology not only provides the ability to automate the processes but also provides the ability to monitor the performance of the processes in a real-time manner.  This capability allows management access to fast and accurate reporting so that they can make informed decisions about the business.  This information can be rendered via portals so that decision-makers can have the information they need in one place. This level of visibility is also a key for compliance.

BPM can bring tremendous cost savings and cost avoidance to an organization.   Optimizing and automating business processes can lead to a reduction in redundancies.  Most manual tasks can be eliminated and thus considerably decreasing the risk of errors and rework in the process.  Gartner claims that by simply “making the current-state handoffs, timing and responsibilities explicit”, productivity improvements of more than 12 percent are typically realized.

While BPM can help with several of these challenges, the biggest impact can come from streamlining the end-to-end utility processes by integrating the underlying applications.  This will result in improved service and a reduction in cost.

Financial Services
The Banking and Capital Markets industries have some overlapping challenges as well as some unique challenges.  The continued consolidation requires robust best-in-class back-office systems to enable business flexibility.  Continually increasing regulatory requirements are forcing organizations to adopt a centralized approach to managing risk and achieving compliance.  The escalation of fraud from unauthorized insider access, ID theft, phishing, etc is resulting from non-integrated systems.  BPM can help evolve the enterprise architecture to more of a processdriven architecture to help mitigate risk and increase compliance in the processes.

Industrial Manufacturing
Concurrent pressures of profitability, time-to-market, and design complexity exist in this industry.  Product commoditization forces companies to seek alternate ways to generate revenue.  Complex distribution and sales -- resellers, retailers, direct, online, etc. make it very difficult to forecast demand accurately.   One of the ways to help with some of these challenges is to focus on customer-centric processes and to synchronize the demand-driven supply chain.  BPM can be the glue that brings customer-centric processes to life.

Public Sector
The public sector space is comprised of several slightly different sub sectors, i.e. Defense, Justice, Public Safety, National and Local Government.   They each have slightly different challenges, but the common theme for these different sub sectors is the need for efficiency and transparency.   There is a strong need to increase efficiency and transparency in the following areas; Financial Management, Human Capital Management, Sourcing and Procurement.  These process areas are ideal candidates for BPM to help with efficiency and visibility.

Why build a business case for BPM?
The need to deliver more business value from IT Today’s IT budget is spent mostly on “keeping the lights on”, in fact roughly 70% of the budget is spent on sustaining and running existing capability while only 30% is spent on providing new capabilities to the business.  The business, together with IT, needs to find ways to increase the value created by the existing and new investments in IT.  The ideal allocation of the IT budget would be to spend roughly 55% on existing capability and 45% on new capabilities that create value for the business.
More value without a corresponding increase in cost, one of the ways that BPM can provide more value to the business is by improving and innovating business processes.  Improving business processes is nothing new to most organizations, but by using the BPM technology to improve and innovate business processes, one can expect a higher level of success.  BPM technology can be used to rapidly integrate and automate processes that are manual and/or span multiple application systems.  

BPM is a strategy and technology that delivers value to the organization by impacting both the top and bottom lines of an organization.   However, this value has to be quantified for the organization to show the specific impact that will be delivered.   This technology will not only bring quantifiable value to the organization but will do so without a corresponding increase in investment.  
A compelling business case is needed to provide the motivation and prioritization for BPM projects in the organization.  The approach to such a business case involves assessing the current business process and its performance, designing the future process and the solution footprint to support it, identifying the benefit drivers and finally calculating the ROI, many companies have already started to see substantial returns from their BPM projects.

Thank you for reading and please feel free to leave a comment!

All information presented here is © copyright Carkean Solutions Ltd., 2010 - Not to be used without our permission - The views expressed here are the views of an individual not the corporation

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