It is always exciting to see successful BPM deployments. Recently, I heard of a substantive BPM project that went live within five weeks, with tangible ROIs! That is unheard of when compared to traditional “Java” or “.NET” based development approaches. One of the main reasons BPM is fast becoming mainstream is precisely because of the tangible ROI one can achieve through a well designed and thought through BPM solution. BPM is known to yield considerable ROI in the majority of projects. Where do the benefits and the returns on investment stem from?
It is always exciting to see successful BPM deployments. Recently, I heard of a substantive BPM project that went live within five weeks, with tangible ROIs! That is unheard of when compared to traditional “Java” or “.NET” based development approaches. One of the main reasons BPM is fast becoming mainstream is precisely because of the tangible ROI one can achieve through a well designed and thought through BPM solution. BPM is known to yield considerable ROI in the majority of projects. Where do the benefits and the returns on investment stem from? There are actually three communities that benefit from Business Process Management: IT/Developers, the Business Users/Stakeholders, and the regular operators or users in the front, middle, or back office. BPM brings benefits to each of these communities. The combination of the benefits for all these three communities makes BPM one of the most compelling paradigms to endorse and deploy within an organization.
Let’s first examine IT and Development. It is interesting to note that sometimes IT is reluctant to delve into BPM, precisely because it entails a shift – yes, a paradigm shift – in the way developers are used to construct software. In order to benefit from this shift, IT has to realize Java or .NET programming models are passé. We can view this new paradigm as one of the steps in the evolution of programming, which started with machine and assembly languages in the 1950s. We soon evolved to a higher level and structured programming in the 1960s and 1970s. Starting in the 1980s, we saw the emergence of object-oriented programming. Java is one example of an object-oriented language. Most of the concepts of object orientation had been around for quite a while in languages such as Simula or Smalltalk. More recent additions include C++, Java, and C#.
Enter BPM. Now, we are witnessing the emergence of BPM as a programming paradigm that provides tremendous productivity advantages. The transition from assembly to high level programming and then from high level languages to object orientation enabled us to achieve huge productivity gains. These achievements pale in comparison to the productivity gains one could realize when developing with BPM. Each paradigm introduces its own set of assumptions and approaches in solving problems. For example, when you develop applications with a high level or structured language, you think and program through procedures or functions. With object orientation, you focus on classifications (class hierarchies and relationships) and object interactions. With BPM, the focus is on business procedures and policies: that is process flows and the business rules that drive them.
There is another benefit for IT that is less quantifiable, but nevertheless significant. Often, the implementations are not what business had expected and the stakeholders are not satisfied with the end result. There are multiple reasons why IT has had a bad wrap in delivering solutions that meet expectations and a large part of it stems from the lack of precise communication between business stakeholders and IT. In traditional development paradigms, IT is thinking, focusing, and using tools that are tailored for structured or object oriented programming. BPM uses business constructs. With BPM, you have an opportunity to bring the two communities together in the parlance of processes and business rules. The alignment that BPM achieves between business and IT is not a marketing gimmick. It becomes a reality when IT and businesses together use process flows and business rule models to capture, communicate, and implement the requirements as directly as possible.
These are just two of the benefits that BPM provides for IT. There are many more. Here is a third one. Most of the effort in IT organizations is spent on maintaining existing “legacy” applications. When I visit various organizations, I am often asked how can one transform or move from legacy applications to a BPM solution. The good news is that you can incrementally leverage your legacy investment and at the same time provide a BPM layer in and around your legacy applications. In other words, you focus on new process flows and rules as extensions of your legacy applications implemented in the BPM layer, while integrating with and accessing legacy functions when needed. Eventually, the BPM solutions will outpace the legacy, creating a smooth transition to a solution that is much easier to maintain, change, and specialize.
How does BPM benefit the business? Well, here also there are several benefits of which perhaps the most significant is the immediate real-time measurements and reports that provide direct visibility to the performance of BPM solutions. In fact, a business stakeholder can analyze the performance of specific BPM applications, specific departments, or even specific participants. You can, for instance, determine how much time is spent in satisfying a customer inquiry, or procuring a product, or handling a payment exception, or processing a claim. You can view the performance of individual processes or aggregates, potentially identifying trends. You can also compare the performance of your employees, or service providers. More importantly, the manager has the benefit of causing modifications or changes to executing processes by, for example, reassigning tasks to better performing participants. You can dynamically change the business rules that drive your processes, to achieve your performance goals. This direct linking of enterprise performance measures to executing processes, and the ability to make changes to influence this performance is one of the most significant benefits of BPM for the business user.
Since processes and business rules are the parlance of the business, they can potentially be delegated to the business users to make the appropriate changes. Examples of business rules include the assessment of a risk, or a decision on a write-off, or the calculation of a discount. Business knows best its rules. These rules guide and control the process flows. Through delegating the rules and even the flowcharts to the business users to make changes, you are actually empowering them and allowing changes to get into effect very quickly. This requires close collaboration between the business and IT (especially for access control) but the potential benefits are tremendous.
Vast majority of BPM projects involve human participants. You are automating processes and rules that have tasks assigned to various types of human participants, either internal or external to the organization. Now, one of the challenges is to assign the right task to the appropriately qualified participants. The qualification can be determined through understanding the skills of the participants as well as their availability and workload. Here also the BPM can capture the skill levels, the availability, as well as the workload and assign the task automatically to the most qualifying participants. This frees up the business manager from “chasing” and determining the most qualifying user to do a job.
This brings us to the final, and perhaps the most important, community – the end user. Here again BPM provides several benefits. To appreciate the benefit to this community consider a simple example:
Assume an operator in an insurance company receives a request for a new insurance policy.
- She/he forwards this to an underwriter to gather customer information.
- The underwriter searches and fills potentially missing customer data.
- Then, potentially the same or different underwriter calculates the predictive insurance score.
- This is, then, used to assign a risk to the policy for this particular customer.
- There is a decision made to accept or reject granting the policy. This too is manual.
- Then, if the policy is approved, the premiums are calculated and a notification is sent to the customer.
This process involves several manual steps and several business rules from its start to finish. With a fully automated BPM solution, you can streamline many (if not most) of these steps. More specifically, all the information about the customer can be obtained automatically through connecting and retrieving from one or more CRM or DBMS systems. The consolidation of the information can also be achieved by the BPM. The predictive or insurance score could be calculated through an expression rule that is defined in the BPM solution. Similarly, the decision on the risk can be captured in a business rule (for instance a decision table that then drives the decision to accept or reject the policy for the specific customer). Finally, the premium calculation is also achieved through an expression rule and the customer is notified automatically via e-mail. This shows how a process involving multiple manual steps can virtually be automated. Additional steps to review and/or refine the process may be needed, but the key point is that because of automation you have accelerated the policy processing for the customer. For example, it is estimated that on the average employees spend 25 percent of their time searching for information. BPM can automate a substantial percentage of the searches. Furthermore, automation helps you avoid errors or pitfalls. If the user is presented with the most appropriate interface for the task at hand and the business rules are used to drive the expressions and decisioning, the potential for errors can be reduced substantially.
In conclusion, the majority of projects that have deployed BPM have been successful. There are many reasons for this. BPM offers substantive ROI benefits to three essential communities: the IT/Developer community; the business stakeholder; and the end user. If you combine the ROI effects for these three communities, you can easily get improvement ranging from low double digit benefits (10% and more) to well into the triple digits. This, of course depends on the project and type of application or deployment. But the key message remains that BPM ROI is real and can substantially improve the productivity of IT, the performance visibility as well as performance control for the business owners, and the efficiency of the end user through streamlining tasks and reducing potential errors.
