BPM Return on Investment

Many companies are required to create a return on investment [ROI] analysis for purchases over some dollar amount.  I have put together many ROI analyses for BPM projects.  Each time, the payback was achieved in less than a year.

The basis for an ROI analysis is Savings less costs equals the return on investment.

The Costs

The costs of a BPM project include: The Software, The Services and [if you are to be accurate] The Time that ‘your people’ put into the project. 

The Savings 

There are 2 kinds of savings – hard costs and soft costs.  Hard costs are savings that can actually be counted.  Soft costs are savings that might happen or cannot be measured with any certainty.

Automation

How much money will you save by automating non-value added tasks?  Many process improvements allow computer software to perform a task or tasks.  You should be able to measure these savings.

Efficiency

Your re-engineered process may have reduced the steps in your process or eliminated an activity entirely.  This requires that you measure the ‘as-is’ process and estimate the measure from the ‘to-be’ process.

Compliance

If you are required to be compliant with some standard, there is a cost associated with that activity.  Can your re-engineered process reduce the cost of compliance?

Quality Improvements

Re-engineering your processes gives you the opportunity to either improve an activity or add a step that that will improve the quality of your product or service.  What would a 10% improvement mean to your company in dollars?  What impact will improved quality have on your customer base?

The ROI

Once you have identified the costs and the savings, you can easily generate the payback time, the net present value, the internal rate of return, etc.  Many companies will have their own format for ROI analyses – emphasize what is important to your company.

Managing your business processes more efficiently will increase revenues, lower costs and improve customer relationships.  It can differentiate you from your competitors.  It can be the key that allows your company to break out as the market leader.

Your Thoughts…

What steps has your company taken to be a market leader?

Keeping it Real!

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