In 2006 and 2007, Business Process Management (BPM) ascended to become a key priority for many organizations. A survey involving more than 1,400 CIOs revealed that their primary business priority was improving their business processes.
There are several options for achieving this goal, ranging from complete process reengineering to the adoption of new process management methodologies, such as Lean Six Sigma, or supplementing existing systems with new capabilities. Coupling an investment in BPM software with new project implementation approaches empowers companies to establish a lasting business process improvement program.
This article aims to help those advocating for an investment in BPM to drive process improvement. It provides an overview of the potential areas of benefit that organizations can anticipate from implementing BPM, backed up by concrete examples of value. This piece also compares the use of BPM against alternative methods of driving process improvement. Finally, it offers an introductory exploration of the costs associated with a BPM initiative.
The Benefits of BPM
Better processes lead to lower costs, higher revenues, engaged employees, and satisfied customers. The most dramatic instances of economic value generated through process improvement come from companies that have spearheaded the adoption of Six Sigma (and Lean Six Sigma) methodology — notably, General Electric (GE). Mikel Harry, one of the Six Sigma methodology's founders, has extensively documented the economic impact of focusing on process improvement.
Using the primary measure of his methodology — Sigma — Dr. Harry provides a tangible example of how companies like GE have reaped the benefits of a dedicated commitment to process improvement:
- With just a one-sigma shift, companies will experience a 20 percent margin improvement, a 12 to 18 percent increase in capacity, a 12 percent reduction in the number of employees, as well as a 10 to 30 percent capital reduction.
The benefits witnessed by GE, which achieved multiple Sigma shifts on their core markets, illustrate why they have emerged as a top contender in any market they enter. Their costs are lower and their quality is superior, primarily attributable to their unwavering commitment to process improvement.
The Costs of BPM
The costs of implementing a BPM initiative can vary depending on the size and complexity of the organization, as well as the specific goals of the initiative. However, in general, the costs can be broken down into three main categories:
- Software and licensing costs: The cost of BPM software can vary depending on the vendor and the features offered. However, in general, BPM software is a significant investment.
- Implementation costs: The cost of implementing a BPM initiative can also be significant. This includes the cost of hiring consultants, training employees, and modifying existing systems.
- Ongoing maintenance costs: Once a BPM initiative is implemented, there will be ongoing costs associated with maintaining the system and ensuring that it is aligned with the organization's changing needs.
Making the Business Case for BPM
Making a compelling business case for BPM rests on a detailed understanding of its strategic value. As evidenced by corporations like GE, investments in process improvement initiatives like BPM can yield substantial returns, ranging from improved financial performance to enhanced operational efficiency and employee satisfaction. By taking into account the potential benefits, as well as the costs, organizations can make informed decisions about adopting BPM as a strategic tool for driving long-term business success.
BPM is a powerful tool that can help organizations improve their processes and achieve their strategic goals. However, it is important to carefully consider the costs and benefits of BPM before making a decision about whether or not to implement it. By doing so, organizations can ensure that they are making a sound investment that will deliver a positive return on their investment.