Sign in   |   Register

BPM Booms in Bad Economy

  |     |   Bookmark    
                      
Posted June 19, 2012 By Ann All     Feedback

A Capgemini study found 96 percent of companies that tried to measure ROI from BPM investments reported a positive return, with 55 percent obtaining a return of at least twice their initial investment. So why don't more companies capture ROI metrics for their BPM spending?

Business process management (BPM) is the rare enterprise application that may attract more investment during challenging economic times than in times of plenty.

A recent Capgemini report found that 96 percent of those who had tried to measure a return on investment (ROI) from BPM spending reported a positive return, with 55 percent attaining a return of at least twice their initial investment. So it’s not surprising that 68 percent of organizations surveyed by Capgemini said that tougher than expected business conditions would result in their organization placing greater emphasis on BPM.

While those are impressive numbers, 61 percent of respondents told Capgemini they either did not capture ROI metrics or didn’t know if their organization had done so.

Mystery of Missing BPM ROI

Nicholas Kitson, Head of Financial Services for BPM at Capgemini, said a lack of ROI measurement may be due to organizations’ conviction that BPM’s benefits are so obvious that creating a business case is a “superfluous” exercise.  Because BPM implementations are often quicker and less expensive than other software projects, the need to justify the spend may be less than compelling, he added.

“A current client I am working with is simply raising a change request against their current year’s budget to allow us to complete a project without a business case using these very same justifications,” Kitson said.

Souvik Bonnerjee, from Capgemini’s BPM team in India, said many organizations fail to align the incentives of their key stakeholders with ROI targets for BPM initiatives. Thus, he said, “If there is no clear reward, where is the encouragement or incentive to measure BPM ROI?” The methods used to define ROI targets are often “haphazard and unstructured,” Bonnerjee added, which results in target numbers being either too easy to hit or unattainable.

To help align incentives with ROI targets, Bonnerjee said organizations should consider engaging employees with interactive elements such as gamification and prediction markets. “Crowdsourcing strategies could also help in involving more stakeholders in a creative way; for instance in setting more realistic ROI targets,” he said.

Dollars and cents factored into survey responses about BPM’s benefits. Nearly 56 percent of respondents mentioned maximizing cost efficiency, while about 39 percent said BPM would have the biggest impact on optimizing time-to-market and about 30 percent said facilitating customer self-service.

While just 20 percent of respondents said BPM was an important agenda item at management level and at least one strategic BPM initiative was already under way, only about 10 percent said BPM was of no interest to their organizations. Forty-five percent predicted that organizational interest in BPM would grow in the next 12 months.

BPM Challenges

Capgemini identified several major challenges to implementing BPM:

  • A functional silo culture, mentioned by 55 percent of respondents
  • Perception of BPM as an “IT concern,” mentioned by 48 percent of respondents
  • A lack of change readiness or willingness, mentioned by 46 percent of respondents
  • Resistance from staff responsible for maintaining existing systems, mentioned by 44 percent of respondents

The BPM budget is often spread across several business functions, the report noted, and a significant number of respondents (21 percent) did not know which business function controlled BPM spending. 

Not only that, but there was little consensus as to which business function should assume responsibility for process optimization. Senior business management was named by the largest number of respondents, about 18 percent. But three other business areas – IT, operations and individual business units -- were each mentioned by about 13 percent of respondents, and about 15 percent didn’t know which function had primary responsibility for BPM.

Building Effective BPM

Nearly all of these challenges highlight the importance of making BPM a cross-organizational effort, which Capgemini said is required to maximize its benefits. Bonnerjee stressed the importance of clearly defining BPM roles and responsibilities upfront and of recruiting a C-level executive to sponsor the initiative. The report acknowledges it can be difficult to find executives who truly understand BPM and suggests that building a strong business case, complete with a roadmap with delivery milestones, can help.

In addition, organizations should appoint a BPM “champion” to assist with day-to-day governance, Bonnerjee said. “These BPM champions would be empowered to ensure alignment between cross-functional teams and help them arrive at the best possible decisions to facilitate the success of BPM initiatives. This would thus enable the C-level sponsor to purely focus on setting the enterprise’s BPM strategy.”

Another suggestion, said Kitson, is creating a business architecture group, which should provide a forum for cross-functional groups to discuss and establish a consensus about what’s good for the overall organization rather than individual business units.  “It’s important to have forums like this to constructively debate and mediate between competing viewpoints,” he said.

Providers of BPM software have tended to shy away from selling their products for cross-functional use because it was generally simpler to sell to individual functions, Bonnerjee said. However, he thinks that is changing. “With large enterprise players entering the space, we are witnessing BPM being increasingly being pitched as a key component of enterprise stacks and a critical element in cross-organizational transformation initiatives.”

For BPM’s momentum to continue, Bonnerjee said BPM vendors should strive to do a better job of selling the cross-organizational benefits of BPM to C-level sponsors and also should offer clearer pricing plans.

Kitson said departmental BPM projects can be a good way to win buy-in for cross-organizational initiatives. it is often easier to undertake BPM projects at the individual business unit level – albeit keeping an overall organizational strategy in mind. “Larger projects invite all sorts of organizational politics which will impede or even stop projects in their tracks. It is far easier for vendors to sell short, sharp engagements with clearly defined ROI, which then enables them to declare success and win the next phase. “

Ann All is the editor of Enterprise Apps Today. Follow Enterprise Apps Today on Twitter @EntApps2Day.

 

 

 

Submit a Comment

Loading Comments...

 
 
Thanks for your registration, follow us on our social networks to keep up-to-date