BPM.today

S03E05 The Benefit of BPM

Being on holiday for a week or three is a wonderful thing (and no, I’m not trying to make my US reader jealous by the way) and it gives you time to really shut down and look back at the last year. It also provides you with an opportunity to look forward and get excited about all of the wonderful topics you can write about or record a podcast on (yes, shameless plug for the podcast I co-host with my friend

Dr. Russell Gomersall

(it’s called the
BPM360Podcast
)). 

Anyway, one of the things I did not get to before my summer holiday was a follow up article on the quantitative benefits of #BPM, triggered by a comment from

Ingo Gansen

and since I try to be a man of my word, I’ll give that go in this episode of my newsletter on everything BPM. 

I know that this is a challenging topic and one that I have attempted already a couple of times throughout my career with various levels of success and one of the reasons for this variation is that the concept of Business Process Management fundamentally does not provide a direct relation to financial benefits. I think I need to explain this. Some technologies (think about process mining or process automation) have the ability to create a direct link between the implementation of this technology and the quantitative improvement that they generate, I call this a direct link to financial benefit. BPM is not a technology, but rather a management approach or philosophy that centers around business processes. 

Just bear with me for a second while I wander off track for a second. Every organisation in the world executes processes, whether they know it or not and the ones that do know this typically also understand that the concept of business processes offer great opportunities to become a more aligned and well-oiled machine that brings better products or services against lower costs. What absolutely freaks me out is that there are still huge amounts of organisations that think that they do not need process management in order to be successful (and I’m talking about mid-size to large companies here). 

Back the to topic at hand. The one thing BPM does it realigns the focus of an organisation to its business processes and it can do that via process documentation, process governance and management of change, however the essence here is that your focus on the business processes enables your organisation to execute their work more efficiently, with less rework.

Just look at the picture above I took during a BPM presentation of the renowned professor

Hajo Reijers

, who is a full time professor in BPM at the
Utrecht University
in The Netherlands and focus on the second bullet point where there was a strong positive statistical relationship discovered between the degree of process orientation and the financial results. Now, to make sure everybody understands this (I’m just putting on my LSS hat for a second): a strong statistical relation means that the degree of process orientation has a high to very high influence on the outcome variable (in this case: the financial results of the company). A positive statistical relation means that if the degree of process orientation goes up, the financial results go up as well. Pretty powerful stuff, right?

So, again, why is not everybody engaged in BPM? It clearly is the biggest open door I’ve ever discovered, then again, I might be slightly biased of course.

Another initiative I was involved in dealt with trying to build a model that, based on verified and signed off financials benefits of BPM, tried to predict what kind of financial benefits a company could reasonably expect when engaging in BPM. We were able to link the benefits back to a small set of high level key financial measures, such as EBITDA, number of staff and personnel costs and revenue. Now, I don’t want to end this article without mentioning any numbers, so for a multi-billion dollar company with 20-30K staff, the potential financial benefits of BPM would run into 50-250M annually, depending on the scope and depth of the implementation of BPM across the company. If you implement BPM only in 1 country and for 1 business unit, the benefits will of course be much lower compared to if you implement across the entire organisation. 

The key takeaway I would like you to remember is that BPM is a fundamental management philosophy that provides a lot of opportunities to make improvements and take away bottlenecks that will, in turn, deliver the financial results. Another thing I would like to stress is that technologies that have a more direct connection to financial benefits are sometimes also part of the BPM toolkit, like process mining and process automation. 

See you next time… ciao. 

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