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The ROI of BPM: A Realistic Approach

Jun 22, 2010 11:00:00 AM

If you search for “ROI of BPM” in Google, you’ll find a host of ROI calculators and links that will “MAXIMIZE” your BPM ROI. The query results are no surprise. ROI matters most in BPM – it’s the bottom line.

There’s little doubt that most BPM initiatives generate a positive ROI. A recent Gartner study found that 80 percent of enterprises conducting BPM projects will experience an internal rate of return (IRR) better than 15 percent. The study took responses from 20 companies that had completed 154 BPM projects, and 95 percent of the companies experienced more than a 90 percent success rate among their BPM projects.

Successful BPM projects use process automation to make the business more efficient – allowing it to quickly respond to changing market conditions. That efficiency yields savings. The more savings there are, the higher the ROI – and the higher the ROI, the happier the stakeholders.

The problem with ROI, however, is that it doesn’t benefit the entire enterprise at once. Most successful BPM projects involve multiple tangents of the enterprise: IT, Sales, Legal Matters, Marketing. Each department has their own processes, and therefore their own BPM solutions. While the BPM automation software being leveraged by Legal Matters may improve efficiency by 30 percent in its first week, Sales may not see improvement until the beginning of the next sales cycle. BPM success occurs on a case-by-case basis.

The truth is, large-scale investments are sensitive projects. If you’re putting a large sum of cash into a solution, you expect success – and may feel anxious or sensitive until you have tangible results to ease your nerves. If another department experiences immediate results after deployment, it will be difficult to maintain your confidence in your own solution. The discomfort is only natural.

That discomfort, however, shouldn’t distract anyone from the facts of the matter. The facts remain that BPM impacts individual processes differently. The variables are these:

  • Complexity of the process. Some processes have two steps, some have 20.
  • Complexity of the solution. Tailoring a solution to fit perfectly takes time.
  • Employee buy-in. A solution only works if people use it…
  • Training/understanding and adoption rates. Most people are creatures of habit, and naturally opposed to change. Teaching people how to use new software eases nerves and builds confidence, increasing adoption rates.
  • Technological integration. Ensuring that multiple systems agree with one another can be a tedious process.
  • Sales climate. The less business, the less active processes. Success rates and savings figures may correlate with overall revenue in a fast-changing market.
  • The process itself. Some processes are done hourly, some monthly. You can guess which one will produce results and savings more quickly.

Additionally, it’s sometimes difficult to see ROI in the shadows of the BPM project’s cost. The business will be searching for financial fruit as soon as solutions have been planted, but the savings may not offset the cost for a year or more in some cases. A $200,000 project that yields $100,000 in savings annually won’t hit the black for two years – but will yield $300,000 in five years’ time.

The ROI of BPM, therefore, is very subjective. In the end, a successful BPM implementation will yield savings to the entire organization, department by department, year by year – offering more agile solutions than simply maximizing productivity.

Patience, perseverance, and perspective ensure success…

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