Bpm Roi Guide 775

8/11/2019 Bpm Roi Guide 775

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BPM ROI Guide

Terry Schurter

Chief Analyst, Business Process Management Group

Research Director Process, Bloor Research

Published by

BPM GROUPTHE CATALYST FOR CHANGE

www.bpmg.org


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Table of Contents

Bloor Research 2006 Page i

Contents

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The ROI/TCO Matrix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

BPM ROI Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Automation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Automation with Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

TCO and ROI by Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Automation Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Quality Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Compliance Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

Alerts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Managerial Views . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Optimization (Analysis, Cost Reduction & Performance Tuning) . . . . . . . . . . . . . . . .21

Optimization Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Terry Schurter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

About BPM Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

B l o o r R e s e a r c h O v e r v i e w . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 6

Copyright & Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27


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Bloor Research 2006 Page 1

Summary

Te following document is an analysis of the key eturn n nvestment

benefits of usiness rocess anagement what the constitutes in

real terms and considerations that should be taken when determining the probable to be gained from implementing

Tis analysis covers the five main areas of all of which represent real

tangible oth ash low and usiness ssue are addressed


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Bloor Research 2006Page 2

Introduction

vendor claims are glittering promises of buckets filled to overflowing

Tis is common as software product vendors always position their products in the

brightest light possible hat is important for companies considering is tohave a clear understanding of potential benefits and the considerations that

must be undertaken to arrive at real

Tis document is a guide to understanding and evaluating the enterprise against

the potential areas of that represents Tere are five categories of po

tential benefits for consideration by companies interested in Te first

step in evaluating is to review the enterprise in the context of these potential

benefits to determine which benefits have a likelihood of application to the spe

cific needs and situation of the enterprise in question

is typically thought of as the measure of cost reduction or profit increase

directly attributed to the investment taken Tis is one aspect of owever

other needs that do not directly translate into increased positive cash flow can rep

resent real Tese needs are most often centered on business critical activities

required to meet the customer partner or regulatory requirements of doing busi

ness n this case represents the sustaining of the companys business rather

than increased profit or reduced costs

hen reviewing each potential category the first activity should be to de

termine if the sought is a sustaining usiness ssue or a cash flow im

provement or both Tere can be multiple activities each having their own

for each of the categories

dentifying the applicable categories and determining for each which type of

is being sought will provide a clear understanding of the goals sought and the

value to be gained should it be decided to implement a system

igure provides an overview of the five categories of

potential their characteristics and depend

encies

Te factors presented in igure are qualitative and the

specific versus otal ost of wnership case

for individual processes will vary otential values

including the + symbol can result in far in excess

of the norm ote that the utomation nitial ac

tor has both a + and symbol to indicate that initial

can vary widely based on the specifics of each case

has been achieved for all of these categories in multiple cases where has

been implemented

final note on cash flow with much of the cash flow to be gained

by rests on the reduction of workloads for existing staff or these benefits

Figure 1: ROI overview


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to translate into real one of two things must happen either overall staffing

is reduced thereby directly reducing outbound cash flow or staff resources are

directed into other valueadded functions within the organization which in turn

produce

eduction of staff workload in and of itself does not produce tangible


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The ROI/TCO Matrix

Te comparison of and is the basis for determining whether a

system or activity process represents real value lthough there are multi

ple factors involved in the final analysis that the decisions will be based onthe atrix is the first proving pointthe one that determines whether

is likely to be worth consideration

Tis matrix igure consists of quadrants representing

the two primary areas of and the two primary areas

that contribute to

valuation of eployment and ngoing versus ash

low and usiness ssue is the basis for determin

ing the riskreward scenario Tis evaluation when

applied to each category and to individual business

processes yields a clear model for determining and

associated with the instituting of a system

Tis matrix represents quantifiable and measurable

as well as that is not easily quantifiable

or measurable Te degree of balance between these varies

by category and the specifics of the situation under

consideration ssessment of each companys business case against the matrix is

necessary to determine the specifics of the riskreward scenario t should be used

as one of the two primary criteria for making the investment decision the

other being the addressing of one or more critical business issues

Figure 2: ROI vs TCO matrix


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BPM ROI Categories

otential from falls into five primary categories utomation ual

ity ompliance anagement and ptimization cost reductionperformance

improvement ach of these categories should be evaluated separately by eachcompany considering to determine what the potential is for the specif

ics of the case in question

ne important note about automation utomation is both a category and meth

od that can play a role in all categories Te distinction is drawn where automa

tion in and of itself represents specific


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Automation

utomation has the greatest potential for accurate quantifiable and

t has the added benefit that is primarily realized from the act of automa

tion without the need to conduct ongoing management and analysis activities toachieve

n a nutshell automation is the conversion of process

actions from a current operation that requires human

intervention to a new operation that is performed in an

automated manner

t should be obvious why this category of has very

quantifiable and nce the process is defined

and the steps that need to be automated identified it is

purely a matter of converting the nonautomated actions

to automated actions Te clear definition of work to be

done makes calculating a simple matter ecause

the steps to be automated represent the human resources

savings that will be gained is also a straightforward

calculation

Te process of determining if automation benefits exist is very straightforward

y reviewing the business from a macro level it is easy to identify areas where hu

man interaction is extensive and unwieldy where the company struggles to meet

goals and objectives due to excessive management and coordination requirements

ost often the processes in the organization that are prime candidates for

automation are already known

Tere are also automation opportunities that will only be discovered once

the processes of the business are accurately defined and resource usage is tracked

or modeled to determine the degree of resource consumption and conversely

potential gain once these processes are identified assessment of potential

from automation is a straightforward task

ome of the automation benefits that can be derived from come naturally

from the software system and do not need to be carefully nurtured in ongoing op

erations nce the automation is complete it generally requires a limited amount

of maintenance and little or no ongoing management

rom the analysis covered so far it would seem that automation is an abso

lute winneran activity that companies should be leaping at to begin reaping the

benefits thereof ut the view to this point has addressed automation

from the macro level without factoring in considerations that can be very dis

ruptive to the successful completion of process automation and that can severely

impact real

Te most important factor is the type of automation that is being undertaken f

the automation is primarily the conversion of paperbased processes to electronic

Figure 3: BPM Automation ROI


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documents without the requirement of interfacing to multiple software systems

then the analysis stated to this point remains true and will not be subject to issues

where automation must interface to multiple software products

Automation with Applicationsutomation assessment under these circumstances must take into account certain

pitfalls when determining ot all automation scenarios are as simple as they

seem nternal process automation is easier and more manageable because there is

only one application owner the company that the automation impacts hen

automation extends outside the corporation to include partners suppli

ers and others in the value chain of the company project management becomes

much more complicated and dependencies are shared among multiple owners

urther the mix of software applications and application behavior can be daunt

ing at times when what appeared to be a simple and straightforward automation

turns into a convoluted matrix of nonconformity Tere are two issues regarding

automation that when present can challenge the system to retain its poten

tial benefit Tese are as follows

Mapping Incongruityegardless of whether the activity is driven by or any other initiative

focused on software applications exchanging data the mapping of data between

applications can at times be a very difficult challenge Tis stems from the fact that

software applications are designed without any standards regarding the structure

and definition of objects in the software system

o understand this issue the concept of software objects in this reference must beunderstood oftware objects in this case are data records that contain all of the

defined data used to describe and characterize a thing n many cases these records

are thought of as electronic documents even though the record may be describing

a tangible entity such as a product egardless it is indeed valid to consider these

records as documents as the data record relating to the tangible object exists as an

electronic set of data which meets the definition of an electronic document

ll software objects regardless of what they may represent are in essence elec

tronic documents Tis is the least common denominator between software sys

tems owever sometimes this is the only common denominator and as such

this represents a complex challenge in the actual automation of processes between

these applications

o create the mapping necessary to conduct automated transactions requires the

identification of those data points in each system that are required by that system

to satisfy the objects definition otice that it is not stated that the data elements

are all those defined by each software system as this is not the case in the majority

of processes t is highly probable that each software application will have data

elements specific to that application that do not have a corresponding mate in

other applications


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apping is generally referred to as the process of generating the relationships

of the data elements of an object in one application to the data elements of the

corresponding object in another application t a glance mapping appears to be

a straightforward task in many cases it is however several issues can exist that

complicate this mapping

omplications arise when the naming of data elements does not obviously trans

late from one system to the next or the mapping to be correct and the automa

tion to perform its task correctly the mapping cannot have any data elements

that are mapped incorrectly nits of measure must be the same if the value is

numerical and even formatting can cause the automated exchange of information

to fail ometimes system can have data elements that require the corresponding

data elements in system to first go through a mathematical procedure because of

difference in the way the data is stored in the two systems

nother complication is user defined data elements any software systems allow

customer created data elements Tese data elements can literally be anything

with little likelihood of representation in other systems

n addition some software systems have dramatically varying software objects

based on the specifics of how the program has been set up by the customer Tis

can even result in data elements being stored in different locations within the ap

plications database

Te best way to deal with this issue is to determine what processes are appropri

ate for automation and the applications that will be involved hances are that

similar processes have already been successfully mapped and the mapping can be

reused rather than spending the time recreating what already exists vendors

typically have substantial experience with a broad range of mapping scenarios Te vendor is the first source to involve in any complicated mapping activities

in fact this is an issue that should be addressed before selecting a vendor

aking into account mapping requirements will allow an

accurate definition of the implementation cost portion of

ossible affects to the chart are shown

in igure

bviously the higher costs of implementation and deploy

ment increases the investment required to receive the

sought for which does not change with this added

complexity ffect on ongoing is typically negligi

ble as once the automation process is fully operational

no further burden exists over simpler implementation

scenarios

ne factor that the above chart does not take into ac

count is duration change t is highly likely implemen

tation and deployment activities will have a greater duration relative to project

complexity Tis affects when begins to occur which also affects the timing

of positive cash flow benefits

Figure 4: Amended BPM Automation ROI after mapping considerations


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or companies investing the time prior to purchasing software to build a

plan and document the processes and applications that are part of the automation

strategy this becomes a key part of the criteria for vendors to demonstrate

their ability in meeting the companys requirements

Application Response (time)nother area of concern with automated processes in is how the integratedapplications behave in respect to response time ost applications operate asyn

chronously although some may operate synchronously Te important issue at

hand is the response time that can be expected from the applications that will be

involved in the automated processes

Tis response time refers to how applications work with each other when mes

sages or electronic documents are passed between them ynchronous operation

requires the applications to work in lock step with one another hen a synchro

nous operation begins a message is passed from application to application

pplication then waits for the completion response from application before

any additional actions can be taken on the electronic document in question

synchronous operation forgoes the issue of waiting for response allowing the

electronic document to continue to be updated and processed if desired based

on the business rules of the process

Tis difference in operation is rarely dealt with at the level of actual differentia

tion between synchronous and asynchronous behavior ost software systems are

now asynchronous in programming design with response times so fast that for

all practical purposes they appear synchronous owever this is not a universal

condition and some applications have significant lag time in response to certain

types of messages

Tis characteristic stems from the legacy design of applications years ago with

only a fraction of the computing power available now igh volume transactional

software products utilized a design that included batch updates pdating many

related and interconnected records required a substantial amount of the available

processing power Tis was counteracted by building into these software systems

interim staging capability to build a queue of transactions for later processing

conomies of processing power allowed batch updates to complete much quicker

than individual updates and on very large systems batch updating was conducted

on a regular basis at low use periods such as nightly or on weekends

rom the discussion of synchronous and asynchronous operations above the prob

lem associated with batch updating systems should be obvious n a synchronous

operation an electronic document could be held at a particular step in the process

for hours or days until the batch update runs Tis is obviously unacceptable

Tere are ways to deal with this situation including the simplest method which is

to allow the electronic document to wait for the update owever this ungainly

choice impedes progress as corporations strive more and more to become respon

sive agile and adaptive to realtime events


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nother solution is to satisfy the step requirements with an acknowledgement

from the other application that the message was received denoting that the mes

sage was indeed received without errors Tis does not prove that the correct op

eration has been completed but it does provide prompt response with a known

status that the message has been received by the other party n this method it is

common to include another step or generic business rule to check for completedstatus before the document receives a final complete status during or at the end

of the process

Tis is a compromise necessary in scenarios of this nature and although it is a rea

sonable compromise it does have one other potential affect that can be disruptive

to the management and analysis activities of ctive process management

and analysis includes the characteristic of time eviewing workflow to minimize

bottlenecks or proactively respond to problems is only valid if information is avail

able in a timely manner nalysis can become skewed if timestamps are recorded

on batch operations rather than the time the actual work was performed hen

dealing with batch updating or any other system or operation that creates sub

stantial latency in the recording of work activities both management and analysis

tools must be carefully structured to address this inconsistency

Opportunities for Reduced Initial TCOany vendors have encapsulated process and industry specific domain

knowledge into their products resulting in predefined solutions that can dramati

cally reduce initial

Te range of these valueadded capabilities extends from moderate initial

cost reduction to slashing such costs to a fraction of that associated with defining

and developing these processes from scratch umerous case studies exist where

implementation of specific embedded process solutions have enabled modelingand deployment of in less than one month for a given process

Tis reinforces the need for companies interested in to predefine the proc

esses desired for implementation in ncluding this information in the

assessment of products will result in additional quantitative information

about how each product meets the known requirements of the company in terms

of

n all categories of prepackaged or embedded solution content can

result in reduction of initial owever it is important to analyze each proc

ess specific solution as there is wide variation in the degree of reduction

these represent

TCO and ROI by Process

t is best to calculate and for each process under consideration for automa

tion y analyzing these processes separately the natural order of progression in

implementation will be obvious alancing available resources against gain will

yield a plan that will not overtax human resources yet one that will begin produc

ing as soon as the first process is completed and deployed


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Automation Summary

utomation represents the clearest scenario with the benefits of occur

ring early in the process timeline while drops to a minimal level once the

process is deployed and debugged

Te key characteristics of automation are

is quantifiable and measurable

is typically greater than other categories

occurs early in the project timeline

ash low is high

usiness ssue is generally low but can be high if automation addresses

a key business issuesuch as customer satisfaction

nitial is moderate but can be low depending on available prepackaged

solutions

ngoing falls quickly to a low level

Te key issues that must be taken into account when considering automa

tion are

efinition of processes to be automated

uantification of potential by process

nalysis of software applications to be involved in the automation process to

determine what efforts must be made to integrate them in to the automated

processtaking into account mapping and response incongruities

etermination of primarily implement and deploy

omparison of versus balanced against resources

y addressing these key characteristics automation activities have an excel

lent probability of delivering expected at a known without creating

disruption in the organization due to unbalanced resource requirements


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Quality

can add substantial value to quality processes of all kinds ost quality ac

tivities are process based uality processes revolve around absolute adherence to

the quality process a task that requires extensive administration to insure that theprocess is indeed followed throughout the organization

uality processes typically require the collection of data in the form of validation

that actions were taken in the appropriate manner by the appropriate personnel

uality processes sometimes can also include the collection of measured data to

support proof of quality for the product produced

Tese activities have supporting requirements of roles training process enforce

ment exception handling and immediate adoption of changes or updates to the

quality process or subcomponent

omprehensive quality initiatives such as ix igma require the ongoing opera

tion of the quality processes as a pervasive part of corporate behavior and stretch

throughout the entire enterprise

ecause all of these quality activities are processes they can be modeled in the

system with all of the steps and business rules of the quality process repre

sented in the model

enefits of placing quality processes into come from two sources irst there

is the gained by having a system that automatically enforces the rules and

flow of the quality process one that can collect all quality related data from both

the system view and the product specific view as required

pdates to procedures processes and reassignment of roles are handled from

a central application with realtime dispersion making change management a

simple task provides accountability for changes to the quality system that

are easily monitored or reviewed as needed lerts and exception handling can

be added to the model to inform pertinent staff of situations that may require

their attentionboth to resolve immediate issues and to

highlight areas where actions can be taken to improve

the process

y having a single system with a common interface train

ing requirements are dramatically reduced and new pro

cedures are immediately available to all personnel the

changes affect ead and signoff requirements of changes

can easily be incorporated into the quality process model

to maintain full accountability that these changes have

been reviewed as required prior to actions being taken

as positive cash flow will be realized for those

situations where the quality processes implemented in

the system produce a streamlining of the qualityFigure 5: BPM Quality ROI


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process Te most common areas of substantive are in training administration

change management and process adherence validation

nother form of that can be derived from applying to quality processes

is increased accuracy of the data collected both operational and measured prod

uct that result from placing quality processes in a system hen qualityissues arise they are often after the fact Tis requires the company to trace the

problem back through the companys records and may require extensive inter

viewing of personnel to piece together the specifics that caused the anomaly nce

the quality processes are implemented in the system this process is rarely if

ever needed as the system maintains full accountability of the actions taken

in the entire quality process chain

Tis is more difficult to calculate as the exceptions are rarely tracked in their

frequency or in the amount of company resources that are redirected into the

process of tracing down the anomaly owever in those cases where this is a

known occurrence the resource drain is often substantial stimating the resource

drain is a reasonable alternative if information is not available for accurate meas

ure of the impact of these problems

Quality Summary

uality issues typically fall on the business issues side of the fence although

cash flow can also apply Te decision to address quality in is most

often driven by the business issue considerationadopted as a means to improve

the quality of products or processes

Te key characteristics of quality are

is not easily quantifiable but can be measurable

is typically medium to low

occurs later in the project timeline

ash low is low

usiness ssue is generally medium but can be high if quality issues are

a key business issue

nitial is moderate

ngoing falls to a low level

Te key issues that must be taken into account when considering quality

are

efinition of quality goals


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efinition of processes to be automated as meets quality goals

etermination of measurement methodology so that progress towards

goals can be accurately measured

can be a powerful tool in the pursuit of ongoing quality improvementroperly designed and implemented quality processes in can result in both

a marked improvement in measured quality and a behavioral shift towards quality

improvement as an ongoing activity


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Compliance

Te evaluation of versus applied to other benefit areas has a

unique application in the category of compliance ecause compliance is a man

datory function it must be met for business purposes rather than for the potential it represents to the business

Tat said the basic premise of versus still

applies to compliance with the caveat that the motiva

tion is mandatory rather than selective f compliance

requirements are not currently met satisfactorily

is an excellent tool to help businesses achieve full com

pliance or situations where a company is tasked with

meeting compliance requirements where none previously

existed is an even better tool n either case the

focus is on meeting compliance with the lowest

an activity that can even lead to because of reduced

consumption of human resources and in error resolution

supporting the compliance effort

roper evaluation of compliance is therefore focused on

with any gained to be considered a bonus

Tis becomes clear when we reflect on the fact that compliance is entirely driven

by the external requirements of others Tis is not an decision it is a busi

ness requirement and is the determining factor in selecting the product and

method of selectingimplementing in this regard

ommon characteristics of compliance include adherence to a known set of operations and procedures recording of substantiating evidence that such compliance

occurred auditable trails for all compliance requirements and auditable records of

change to the process or operations that could have a potential affect on adherence

to compliance requirements

ecause is specifically designed to model and manage all business processes it is

ideal for achieving compliance for virtually any regulatory or partner requirement Te

process of achieving compliance is simple in terms of configuration although

the task of defining the process or processes that meet the compliance requirements is

often complicated and difficult nce the process or processes is defined modeling

it is simple in software Te system will track and capture the supporting

data necessary to prove compliance requirements have been met t will enforce busi

ness rules and roles as needed without exception

owever if the definition for compliance is inaccurate then the data collected by

the system will also be inaccurate invalidating compliance ecause some

compliance requirements are very complex this can be a substantial issue for com

panies wishing to use to meet their compliance requirements

dentifying compliance requirements is the first step in using to address

these issues ach compliance requirement should be viewed as a separate entity

Figure 6: BPM Compliance ROI


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Te first step in defining each entity is to determine if the requirement is a stand

ards based entity or not tandards based entities exist for specific industries such

as pharmaceuticals radiological and defense while other requirements are more

general in nature such as accounting requirements like arbanesxley any of

these standards based compliance requirements have already been addressed mul

tiple times in any vendors have experience in these areas that theyuse to aide in design guidance or they may provide predeveloped templates with

their offering to reduce the effort required to define the processes

o minimize risk of compliance failure for standards based requirements it is

highly recommended to seek preconfigured solutions Te value is not just the

reduction of time required to define and model the process in the software

but more importantly it is the issue of process accuracy Te potential exposure to

risk from errors in a compliance process is a sleeping giant that can reek financial

and legal havoc on a corporation that has met the compliance only to be found at

some point that their compliance model is erroneous

Compliance Summary

ompliance is primarily a business issue nstead of is the major factor

in assessing for meeting compliance requirements as the compliance re

quirement is not a cost savings but instead a necessary requirement for continued

operation of the business

Te key characteristics of compliance are

is usually quantifiable and measurable

is typically less than other categories

occurs early in the project timeline

ash low is very low

usiness ssue is highand is the primary driver

nitial is moderate

ngoing falls slowly to a low level

Te key issues that must be taken into account when considering compli

ance are

ccuracy of the compliance process model in

onitoring and reporting that clearly demonstrates the compliance


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is ideal for addressing compliance requirements providing accurate enforce

ment of compliance rules without exception once the model has been properly

developedwith full accountability and traceability


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t is also easy to give the manager the flexibility to determine how alerts are deliv

ered or example if the manager has defined an attribute for him or her self that

represents logistical status in office home traveling etc then the alert business

rules can include specific alert actions based on the managers status

Managerial Views

anagerial views must be carefully planned in advance of modeling the system

to ensure the desired views are supported by the data collected in the system n

some cases the system will inherently support all of the data necessary to

generate the desired managerial views while in others additional data points will

need to be defined and respective data collected by the system

Te managerial view will include information that imparts to the manager a clear

understanding of workload and resource usage by managerial area often depart

ment process work type such as orders steps and resources nformational

views that show the current state of this information and that have historical

views for comparison provide insight into operating conditions that is typically

not available in useable accurate form without a system

etermining key metrics for each managers view and including these in the

model can be extremely effective hen the managerial view includes clear repre

sentation of key metrics metric goals and historical results of progression towards

goals managerial becomes tactical and easily measurable as compared

to stopping short with just managerial information views ot only can this be a

galvanizing force in focusing efforts on benefits it also provides clear goals

that managers can direct their efforts towards for achievement

Management Summary

anagement is one of two categories that are the most difficult to determine

prior to implementation what may be gained

Te key characteristics of management are

is difficult to quantify and measure

is typically low although it can be high

occurs late in the project timeline

ash low is low

usiness ssue is medium but can be high if management actions result

in improved responsiveness and management practices

nitial is high


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BPM ROI Guide


ngoing falls slowly to a moderate level

Te key issues that must be taken into account when considering manage

ment are

now the goals and communicate them to managers

evelop the model to support the goals after the goals are defined

oaloriented management practice with when clearly communicated to

those using the system is likely to improve responsiveness and improve overall

management of operations


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Optimization (Analysis, Cost Reduction & Performance Tuning)

o perform enterprise analysis for identifying potential cost reductions and to

tune the enterprise towards peak performance requires that the metrics these

activities are based on be defined prior to building the model Tis step iscritical to successful analysis

ortunately most systems are geared towards

this activity already inherently providing the relation

al structure necessary to collect analysis metrics that

produce meaningful informational views supporting

such analysis

owever data for analysis cannot be generically defined

to the extent that the activity of determining what the

analysis model should contain is eliminated as a prerequi

site task nstead this task is manageable but still requires

that substantial thought and effort must be applied to

ensure that the analytical views present the information

necessary for accurate identification of potential cost re

ductions and enterprise performance tuning

s can be seen in igure the for this activity is substantially greater than

other areas due to the requirements of dealing with the entire enter

prise as a holistic entity is also further out on the timeline as realization of

requires multiple steps

Tese steps include

onducting the analysis after the model is completed and data has begun to

be collected

djustment to the model is typically required to take into account

insufficiencies in the informational views once the system is operational

nce the model is solid analysis will reveal potential areas where cost savings

or optimization can produce real benefits to the company

otential areas of improvement must be analyzed to determine what quan

tifiable exists

Ten a solution must be designed to rectify the situation

nce the solution has been designed the of the solution should be

analyzed against the expected

inally if the versus analysis stands to produce reasonable gain

the solution must be implemented

Figure 8: BPM Optimization ROI


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BPM ROI Guide


bviously this is a significant undertaking although depending on the specifics of

each situation the actually effort required for this process will vary from relatively

minor to that of a major business project

Optimization Summaryptimization nalysis ost eduction erformance uning is the other

category that is the most difficult to predetermine what will actually

be gained

Te key characteristics of optimization are

is very difficult to quantify and measure

is typically low although it can be higheven very high

occurs very late in the project timeline

ash low can range from low to very high

usiness ssue is medium but can be high if optimization results in real

business performance improvement

nitial is very high

ngoing falls slowly to a moderate level

Te key issues that must be taken into account when considering optimization are

Te model must be detailed and accurate in order to collect sufficient

data for meaningful analysis

nformational views must expose the operation of the business in such a way

that analysis can discover quantifiable opportunity

ptimization has by far the greatest potential effect on an organization and can

result in discovery of issues that once addressed represent real and competi

tive advantage


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BPM ROI Guide


Concluding Remarks

n the five categories of covered real both ash low and usiness

ssue can be achieved Te critical factors affecting and are consist

ent across all categories with planning goal setting and process definition havingthe greatest impact on the net results efining and analyzing versus

on a process basis is the most reliable method in determining the net affect from

implementing

Te category of automation is by far the most likely to generate substantial ash

low and will generate earlier than other categories uality and

compliance are primarily driven by usiness ssue and are the next categories

where results have the best chance of being clearly quantifiable

Te categories of management and optimization require the greatest

over the long run with the least quantifiable owever these areas can cre

ate value as both ash low and usiness ssue with the potential to have

a greater impact on the business than all other categories combined Tese are

the two areas where longterm competitive advantage can be gained as tuning

activities conducted do not follow a predefined scenario and as such become

unique to the company implementing them

t is recommended that companies review their business environment in con

text of the categories included in this analysis t is highly likely that most

companies regardless of size or industry can achieve substantial value from the

implementation of or those companies who are not already committed to

implementing the recommendation is that they do so within the context of

specific processes with high nce the system is installed and has beenproven on these best case scenarios companies can expand their strategy as

befits their time and resources

t is further recommended that companies seeking sustainable competitive advan

tage look to the management and optimize categories of ore of a

longterm investment these categories have the potential of identifying areas

where the business can improve its overall cost effectiveness and performance

producing a competitive advantage that is not easily replicated by competitors


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BPM ROI Guide


Terry Schurter

Chief Analyst & CTO, BPM Group

Research DirectorProcess, Bloor Research

erry churter has a long history as analyst engineer and entrepreneur in the

enterprise software space e is cofounder of factory a tier graphical ob

jectmodeling system t the time of release factory was one of the most

sophisticated process modeling systems in the world and included true unlimited

object inheritance erry is also an internationally recognized award winning en

gineer having won both corporate and division eorge estinghouse ignature

of xcellence awards for his innovative work in process management and process

control systems nique in the analyst community erry has handson experi

ence in engineering software integration consulting marketing and enterprise

software development e also contributes frequent articles to publications in

cluding oday aily and ocket agazine


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BPM ROI Guide


About BPM Group

Te usiness rocess anagement roup founded in is a global business

club exchanging ideas and best practice in business process and change manage

ment e have over + members across all business sectors Trough casestudies seminars and research we support our members in improving their or

ganisations work across business processes information technology and people


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Bloor Research Overview

loor esearch has spent the last decade developing what is recognised as uropes

leading independent research organisation ith its core research activities

underpinning a range of services from research and consulting to events and publishing loor esearch is committed to turning knowledge into client value across

all of its products and engagements ur objectives are

ave clients time by providing comparison and analysis that is clear and

succinct

pdate clients expertise enabling them to have a clear understanding of

issues and facts and validate existing technology strategies

ring an independent perspective minimising the inherent risks of product

selection and decisionmaking

ommunicate our visionary perspective of the future of

ounded in loor esearch is one of the worlds leading research analy

sis and consultancy organisationsdistributing research and analysis to user

and vendor organisations throughout the world via online subscriptions tailored

research services and consultancy projects


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Copyright & Disclaimer

Tis document is subject to copyright o part of this publication may be repro

duced by any method whatsoever without the prior consent of loor esearch

ue to the nature of this material numerous hardware and software products

have been mentioned by name n the majority if not all of the cases these

product names are claimed as trademarks by the companies that manufacture the

products t is not loor esearchs intent to claim these names or trademarks as

our own

hilst every care has been taken in the preparation of this document to ensure

that the information is correct the publishers cannot accept responsibility for any

errors or omissions


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uite 4, Town Hall, 86 Watling Street EastOWCESTER N th t hi NN12 6BS U it d Ki d

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Bpm Roi Guide 775