Justifying Your BPM Expenditures

Your BPM project must justify its price either by cutting costs or increasing revenue. This is about your return on investment [ROI].  If the ROI isn’t there, then you won’t get funding for another project.

Cutting Costs

On any large project, it is extremely important to define success. Management needs to be able to finish this sentence – I would be happy if…

  • They could remove non value-add activities
  • They could automate some activities – let the computer perform mundane activities
  • They could outsource infrequently needed activities
  • And so on…

You might accomplish all of these if you set them up as key performance indicators [KPI]. However, if you are successful at accomplishing these, you should be able to identify cost savings attributed to your actions.

KPI versus $ metrics

A KPI is a subjective measurement. Cost savings provides an objective measurement to these activities.  It is a bad idea to let it be subjective – people come and people go.  A management person that will evaluate whether the KPI’s have been met may not have liked the project to begin with.  Objective measurements [metrics] are not debatable.  Meeting those KPI’s should provide a measureable cost reduction.  You just need to come up with the metrics to prove that.

Increasing Revenues

If you can bring your product or service to the market before your competitor, you will be able to generate sales before your competitor has an offering. This will bring extra income to your company.

As an example, let’s look at US auto companies. At the turn of the century, it was taking them an average of 5 years to bring a new car to market.  Japanese auto makers were taking less than 3 years.  This allowed them to get ahead of the US auto makers and greatly increase their market share.  Since that time, the US auto makers have shortened their time to market to better compete.

My Advice

Success is good for you and it is good for your company. Objective metrics showing positive results are critical to get funding for other projects.

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