The Best Process Wins: Measuring the Value of Business Process Management
Is BPM Nirvana or Not?
Business process management (BPM) and the software that supports it are capturing the attention of organizations around the world at an increasingly rapid pace. Why? Because the value that can be derived from automating and controlling core business processes—those that are most strategic to your business—is significant. Greater efficiency, better visibility and control and more fluid agility are sought after by every business executive in the world. Yet most organizations are plagued with inefficiency, poor human communication, inaccurate paperwork and "swivel chair integration" in some of the most critical areas of their business. Business process management software holds the power to fix these problems, while also delivering the most coveted prize of all—greater competitive advantage.
Unlike applications of the past—ERP, CRM, SCM—business process management software is architected to allow modeling and automation of unique processes and delivers the flexibility to make real-time process changes. In implementation, these characteristics translate into greater efficiency, control and agility.
As any business trend grows in popularity, there emerge both advocates and skeptics, and BPM is no exception. The biggest advocates, of course, are the software vendors who provide BPM software, and, as you may expect, the press are the biggest skeptics. The skepticism is not unfounded; after years of technologies that failed to deliver on promised expectations, there is reason for caution. However, more and more organizations are proving that BPM software not only solves critical process problems, but also delivers a fast return on investment and helps them get more out of the assets they already have. So how can you do the same for your organization?
Getting Started
Before you can measure the value of a business process management solution you must first choose a solution and then apply it to high-value areas of your business (previous articles that address these topics are available upon request). Once you have done that, you have the foundation in place to measure value.
But keep in mind that value is relative, meaning that you can only capture metrics on how much you have improved if you know where you started in the first place. It is always a good idea to document a baseline before automating a new process. How long does the process take now? How clear is your visibility into the process? How fast is your response time (people not system)? What are your key performance indicators? To focus the effort, it may help you to categorize the areas that you want to measure and then track key indicators for each of those categories.
The diagram on the left features one model to get you started. This model focuses on measuring results across three categories—efficiency, control and agility—and outlines key measurements for each.
As you define a program for your organization, keep the following tips in mind:
Capture your starting point. When you implement a process in a BPM software application, you should start by assigning a baseline value to each of the key measurements you identify. Where are you today? Knowing the answer to this question will ensure that you accurately measure the improvement achieved from your business process management initiatives.
Assign key performance indicators (KPIs). To take advantage of the real-time information that BPM software provides it is helpful to define key performance indicators for critical aspects of the process. These KPIs represent measurement thresholds that are of importance to your organization or to specific participants in the process—such as call response time, service level requirements or product design errors. Define these KPIs in a central repository, as you would with other core business rules. This makes it easier to update KPI values as your business changes, and allows you to easily leverage common performance indicators across multiple processes. You can then monitor these key indicators through management dashboards or real-time alerts to e-mail or wireless devices and take corrective process action as needed—enabling you to avoid potential problems and ensure you meet your desired objectives.
Focus on mission-critical processes. If you truly want to maximize the value of your BPM initiatives, focus on core processes. It may be scary to apply a new technology to a critical process, but this is where you will get the most value. Refer to the "real results" examples cited in this article—these organizations did not limit themselves to a vacation tracking process! Remember, unlike previous enterprise software applications, BPM software is flexible and adaptable. This means that you can easily make changes to the process—even on a real-time basis—to make sure you get it right. This lessens the risk while allowing you to realize significant financial and strategic value.
Every process is different. Another key point to note is that the above methodology should be applied to each core process that you want to measure. Capturing results across multiple processes allows you to continuously increase your return on investment and justify further application of business process management in your organization. Remember—one of the greatest values of BPM software is the ability to apply it to multiple business problems and generate recurring return on investment. Do not settle for just one successful process.
Putting Analysis to Good Use
Tracking the value that business process management is delivering will give you insight into not only the successes, but also the areas that need further improvement. You can use these measurements—both good and bad—to further champion process initiatives.
The good. Often the cost savings and return on investment achieved from greater efficiency alone is enough to justify further applications of business process management and the rollout of the software for additional processes. It is the early successes from the first process—in the form of financial gain and productivity improvements—that lead organizations to take BPM to the next level, making it an enterprise standard across many mission-critical areas of the business. In addition to cost savings and efficiency, value is gained from greater visibility and control, allowing you to support audits, lower overall risk and meet regulatory compliance deadlines. Proving you have control over core processes will keep auditors at bay and free up your resources to focus on running a successful business. Finally, your measurements are likely to show that you are becoming more agile as an organization—either in the form of greater throughput or in your ability to adapt processes to changing market conditions.
The bad. Not all of your data will be good or meet your targets right from the beginning. But the fact that you can now analyze this is in itself a benefit of BPM. It is the ability to effectively monitor and measure the data captured by your BPM solution that allows you to make process improvements and ultimately gain competitive advantage. By identifying areas for improvement and adjusting your processes to perform better, you will become faster, more agile and ultimately more profitable. Knowing where you stand in relation to key performance indicators in the areas of efficiency, control and agility will ensure you stay on course to achieving business process excellence—and ultimately strategic advantage.
Leveraging the Value of BPM
Business process management software provides the right formula for delivering value—a low up-front investment, a fast implementation, low maintenance requirements and a flexible framework that allows you to leverage the solution across multiple business processes. And organizations are proving that BPM delivers. A recent study by a leading analyst firm cites the average return on investment from a BPM solution at 15%, with results as high as 300%. And 80% of respondents indicated they are achieving a competitive advantage from the software—a competitive advantage that is enabled because they finally have a solution that addresses the unique, human-based processes that drive their core operations.
BPM gives you the power to deliver value across your most mission-critical processes. Are you realizing that value or are you sitting on the sidelines? The best process wins—don't get left behind.
Real Processes—Real Results
While the processes being implemented and the areas of improvement being measured vary, one thing is consistent—across industries and across processes, the value of business process management is real. It is tangible, it is measurable and it is resulting in a significant return on investment.
To give you a feel for the magnitude of this return, here are some real-world examples. These organizations are all using Metastorm's BPM software, and they are all experiencing numerous benefits from business process management. When asked to highlight one significant result achieved from BPM, they cite the following:
Industry: Manufacturing
Process: Product design changes
Result: 80% reduction in design change review cycle; 50% faster time to market
Industry: Federal government
Process: Procurement
Result: $400,000 saved in one transaction
Industry: Financial services
Process: Customer processing and management across 68 branches worldwide
Result: Basel II and U.S. Patriot Act compliance achieved
Industry: Distribution and logistics
Process: Procurement and management of contract labor
Result: $600,000 per year savings in contract labor costs
Industry: Legal
Process: New client matter intake
Result: Lowered risk of conflicts to avoid liabilities of $15M and greater
As the leading provider of business process management software for modeling, automating, and controlling processes, Metastorm delivers a complete solution for roundtrip process improvement and is the only company helping organizations achieve Enterprise Process Advantage®—a heightened level of business performance resulting from increased process efficiency, control, and agility. With a focus on complex, human-centric processes that are unique to their organizations, Metastorm's 700+ global client base in manufacturing, financial services, business services, healthcare and government are achieving rapid ROI and unique process advantage in customer service, supply chain operations, risk management, and internal operations. For more information visit Metastorm.