Post on 03-Jun-2018
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BPM ROI Guide
Terry Schurter
Chief Analyst, Business Process Management Group
Research Director Process, Bloor Research
Published by
BPM GROUPTHE CATALYST FOR CHANGE
www.bpmg.org
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Table of Contents
Bloor Research 2006 Page i
Contents
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The ROI/TCO Matrix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
BPM ROI Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Automation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Automation with Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
TCO and ROI by Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Automation Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Quality Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Compliance Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Alerts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Managerial Views . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Optimization (Analysis, Cost Reduction & Performance Tuning) . . . . . . . . . . . . . . . .21
Optimization Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Terry Schurter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
About BPM Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
B l o o r R e s e a r c h O v e r v i e w . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 6
Copyright & Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
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Summary
Te following document is an analysis of the key eturn n nvestment
benefits of usiness rocess anagement what the constitutes in
real terms and considerations that should be taken when determining the probable to be gained from implementing
Tis analysis covers the five main areas of all of which represent real
tangible oth ash low and usiness ssue are addressed
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Introduction
vendor claims are glittering promises of buckets filled to overflowing
Tis is common as software product vendors always position their products in the
brightest light possible hat is important for companies considering is tohave a clear understanding of potential benefits and the considerations that
must be undertaken to arrive at real
Tis document is a guide to understanding and evaluating the enterprise against
the potential areas of that represents Tere are five categories of po
tential benefits for consideration by companies interested in Te first
step in evaluating is to review the enterprise in the context of these potential
benefits to determine which benefits have a likelihood of application to the spe
cific needs and situation of the enterprise in question
is typically thought of as the measure of cost reduction or profit increase
directly attributed to the investment taken Tis is one aspect of owever
other needs that do not directly translate into increased positive cash flow can rep
resent real Tese needs are most often centered on business critical activities
required to meet the customer partner or regulatory requirements of doing busi
ness n this case represents the sustaining of the companys business rather
than increased profit or reduced costs
hen reviewing each potential category the first activity should be to de
termine if the sought is a sustaining usiness ssue or a cash flow im
provement or both Tere can be multiple activities each having their own
for each of the categories
dentifying the applicable categories and determining for each which type of
is being sought will provide a clear understanding of the goals sought and the
value to be gained should it be decided to implement a system
igure provides an overview of the five categories of
potential their characteristics and depend
encies
Te factors presented in igure are qualitative and the
specific versus otal ost of wnership case
for individual processes will vary otential values
including the + symbol can result in far in excess
of the norm ote that the utomation nitial ac
tor has both a + and symbol to indicate that initial
can vary widely based on the specifics of each case
has been achieved for all of these categories in multiple cases where has
been implemented
final note on cash flow with much of the cash flow to be gained
by rests on the reduction of workloads for existing staff or these benefits
Figure 1: ROI overview
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to translate into real one of two things must happen either overall staffing
is reduced thereby directly reducing outbound cash flow or staff resources are
directed into other valueadded functions within the organization which in turn
produce
eduction of staff workload in and of itself does not produce tangible
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The ROI/TCO Matrix
Te comparison of and is the basis for determining whether a
system or activity process represents real value lthough there are multi
ple factors involved in the final analysis that the decisions will be based onthe atrix is the first proving pointthe one that determines whether
is likely to be worth consideration
Tis matrix igure consists of quadrants representing
the two primary areas of and the two primary areas
that contribute to
valuation of eployment and ngoing versus ash
low and usiness ssue is the basis for determin
ing the riskreward scenario Tis evaluation when
applied to each category and to individual business
processes yields a clear model for determining and
associated with the instituting of a system
Tis matrix represents quantifiable and measurable
as well as that is not easily quantifiable
or measurable Te degree of balance between these varies
by category and the specifics of the situation under
consideration ssessment of each companys business case against the matrix is
necessary to determine the specifics of the riskreward scenario t should be used
as one of the two primary criteria for making the investment decision the
other being the addressing of one or more critical business issues
Figure 2: ROI vs TCO matrix
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BPM ROI Categories
otential from falls into five primary categories utomation ual
ity ompliance anagement and ptimization cost reductionperformance
improvement ach of these categories should be evaluated separately by eachcompany considering to determine what the potential is for the specif
ics of the case in question
ne important note about automation utomation is both a category and meth
od that can play a role in all categories Te distinction is drawn where automa
tion in and of itself represents specific
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Automation
utomation has the greatest potential for accurate quantifiable and
t has the added benefit that is primarily realized from the act of automa
tion without the need to conduct ongoing management and analysis activities toachieve
n a nutshell automation is the conversion of process
actions from a current operation that requires human
intervention to a new operation that is performed in an
automated manner
t should be obvious why this category of has very
quantifiable and nce the process is defined
and the steps that need to be automated identified it is
purely a matter of converting the nonautomated actions
to automated actions Te clear definition of work to be
done makes calculating a simple matter ecause
the steps to be automated represent the human resources
savings that will be gained is also a straightforward
calculation
Te process of determining if automation benefits exist is very straightforward
y reviewing the business from a macro level it is easy to identify areas where hu
man interaction is extensive and unwieldy where the company struggles to meet
goals and objectives due to excessive management and coordination requirements
ost often the processes in the organization that are prime candidates for
automation are already known
Tere are also automation opportunities that will only be discovered once
the processes of the business are accurately defined and resource usage is tracked
or modeled to determine the degree of resource consumption and conversely
potential gain once these processes are identified assessment of potential
from automation is a straightforward task
ome of the automation benefits that can be derived from come naturally
from the software system and do not need to be carefully nurtured in ongoing op
erations nce the automation is complete it generally requires a limited amount
of maintenance and little or no ongoing management
rom the analysis covered so far it would seem that automation is an abso
lute winneran activity that companies should be leaping at to begin reaping the
benefits thereof ut the view to this point has addressed automation
from the macro level without factoring in considerations that can be very dis
ruptive to the successful completion of process automation and that can severely
impact real
Te most important factor is the type of automation that is being undertaken f
the automation is primarily the conversion of paperbased processes to electronic
Figure 3: BPM Automation ROI
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documents without the requirement of interfacing to multiple software systems
then the analysis stated to this point remains true and will not be subject to issues
where automation must interface to multiple software products
Automation with Applicationsutomation assessment under these circumstances must take into account certain
pitfalls when determining ot all automation scenarios are as simple as they
seem nternal process automation is easier and more manageable because there is
only one application owner the company that the automation impacts hen
automation extends outside the corporation to include partners suppli
ers and others in the value chain of the company project management becomes
much more complicated and dependencies are shared among multiple owners
urther the mix of software applications and application behavior can be daunt
ing at times when what appeared to be a simple and straightforward automation
turns into a convoluted matrix of nonconformity Tere are two issues regarding
automation that when present can challenge the system to retain its poten
tial benefit Tese are as follows
Mapping Incongruityegardless of whether the activity is driven by or any other initiative
focused on software applications exchanging data the mapping of data between
applications can at times be a very difficult challenge Tis stems from the fact that
software applications are designed without any standards regarding the structure
and definition of objects in the software system
o understand this issue the concept of software objects in this reference must beunderstood oftware objects in this case are data records that contain all of the
defined data used to describe and characterize a thing n many cases these records
are thought of as electronic documents even though the record may be describing
a tangible entity such as a product egardless it is indeed valid to consider these
records as documents as the data record relating to the tangible object exists as an
electronic set of data which meets the definition of an electronic document
ll software objects regardless of what they may represent are in essence elec
tronic documents Tis is the least common denominator between software sys
tems owever sometimes this is the only common denominator and as such
this represents a complex challenge in the actual automation of processes between
these applications
o create the mapping necessary to conduct automated transactions requires the
identification of those data points in each system that are required by that system
to satisfy the objects definition otice that it is not stated that the data elements
are all those defined by each software system as this is not the case in the majority
of processes t is highly probable that each software application will have data
elements specific to that application that do not have a corresponding mate in
other applications
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apping is generally referred to as the process of generating the relationships
of the data elements of an object in one application to the data elements of the
corresponding object in another application t a glance mapping appears to be
a straightforward task in many cases it is however several issues can exist that
complicate this mapping
omplications arise when the naming of data elements does not obviously trans
late from one system to the next or the mapping to be correct and the automa
tion to perform its task correctly the mapping cannot have any data elements
that are mapped incorrectly nits of measure must be the same if the value is
numerical and even formatting can cause the automated exchange of information
to fail ometimes system can have data elements that require the corresponding
data elements in system to first go through a mathematical procedure because of
difference in the way the data is stored in the two systems
nother complication is user defined data elements any software systems allow
customer created data elements Tese data elements can literally be anything
with little likelihood of representation in other systems
n addition some software systems have dramatically varying software objects
based on the specifics of how the program has been set up by the customer Tis
can even result in data elements being stored in different locations within the ap
plications database
Te best way to deal with this issue is to determine what processes are appropri
ate for automation and the applications that will be involved hances are that
similar processes have already been successfully mapped and the mapping can be
reused rather than spending the time recreating what already exists vendors
typically have substantial experience with a broad range of mapping scenarios Te vendor is the first source to involve in any complicated mapping activities
in fact this is an issue that should be addressed before selecting a vendor
aking into account mapping requirements will allow an
accurate definition of the implementation cost portion of
ossible affects to the chart are shown
in igure
bviously the higher costs of implementation and deploy
ment increases the investment required to receive the
sought for which does not change with this added
complexity ffect on ongoing is typically negligi
ble as once the automation process is fully operational
no further burden exists over simpler implementation
scenarios
ne factor that the above chart does not take into ac
count is duration change t is highly likely implemen
tation and deployment activities will have a greater duration relative to project
complexity Tis affects when begins to occur which also affects the timing
of positive cash flow benefits
Figure 4: Amended BPM Automation ROI after mapping considerations
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or companies investing the time prior to purchasing software to build a
plan and document the processes and applications that are part of the automation
strategy this becomes a key part of the criteria for vendors to demonstrate
their ability in meeting the companys requirements
Application Response (time)nother area of concern with automated processes in is how the integratedapplications behave in respect to response time ost applications operate asyn
chronously although some may operate synchronously Te important issue at
hand is the response time that can be expected from the applications that will be
involved in the automated processes
Tis response time refers to how applications work with each other when mes
sages or electronic documents are passed between them ynchronous operation
requires the applications to work in lock step with one another hen a synchro
nous operation begins a message is passed from application to application
pplication then waits for the completion response from application before
any additional actions can be taken on the electronic document in question
synchronous operation forgoes the issue of waiting for response allowing the
electronic document to continue to be updated and processed if desired based
on the business rules of the process
Tis difference in operation is rarely dealt with at the level of actual differentia
tion between synchronous and asynchronous behavior ost software systems are
now asynchronous in programming design with response times so fast that for
all practical purposes they appear synchronous owever this is not a universal
condition and some applications have significant lag time in response to certain
types of messages
Tis characteristic stems from the legacy design of applications years ago with
only a fraction of the computing power available now igh volume transactional
software products utilized a design that included batch updates pdating many
related and interconnected records required a substantial amount of the available
processing power Tis was counteracted by building into these software systems
interim staging capability to build a queue of transactions for later processing
conomies of processing power allowed batch updates to complete much quicker
than individual updates and on very large systems batch updating was conducted
on a regular basis at low use periods such as nightly or on weekends
rom the discussion of synchronous and asynchronous operations above the prob
lem associated with batch updating systems should be obvious n a synchronous
operation an electronic document could be held at a particular step in the process
for hours or days until the batch update runs Tis is obviously unacceptable
Tere are ways to deal with this situation including the simplest method which is
to allow the electronic document to wait for the update owever this ungainly
choice impedes progress as corporations strive more and more to become respon
sive agile and adaptive to realtime events
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nother solution is to satisfy the step requirements with an acknowledgement
from the other application that the message was received denoting that the mes
sage was indeed received without errors Tis does not prove that the correct op
eration has been completed but it does provide prompt response with a known
status that the message has been received by the other party n this method it is
common to include another step or generic business rule to check for completedstatus before the document receives a final complete status during or at the end
of the process
Tis is a compromise necessary in scenarios of this nature and although it is a rea
sonable compromise it does have one other potential affect that can be disruptive
to the management and analysis activities of ctive process management
and analysis includes the characteristic of time eviewing workflow to minimize
bottlenecks or proactively respond to problems is only valid if information is avail
able in a timely manner nalysis can become skewed if timestamps are recorded
on batch operations rather than the time the actual work was performed hen
dealing with batch updating or any other system or operation that creates sub
stantial latency in the recording of work activities both management and analysis
tools must be carefully structured to address this inconsistency
Opportunities for Reduced Initial TCOany vendors have encapsulated process and industry specific domain
knowledge into their products resulting in predefined solutions that can dramati
cally reduce initial
Te range of these valueadded capabilities extends from moderate initial
cost reduction to slashing such costs to a fraction of that associated with defining
and developing these processes from scratch umerous case studies exist where
implementation of specific embedded process solutions have enabled modelingand deployment of in less than one month for a given process
Tis reinforces the need for companies interested in to predefine the proc
esses desired for implementation in ncluding this information in the
assessment of products will result in additional quantitative information
about how each product meets the known requirements of the company in terms
of
n all categories of prepackaged or embedded solution content can
result in reduction of initial owever it is important to analyze each proc
ess specific solution as there is wide variation in the degree of reduction
these represent
TCO and ROI by Process
t is best to calculate and for each process under consideration for automa
tion y analyzing these processes separately the natural order of progression in
implementation will be obvious alancing available resources against gain will
yield a plan that will not overtax human resources yet one that will begin produc
ing as soon as the first process is completed and deployed
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Automation Summary
utomation represents the clearest scenario with the benefits of occur
ring early in the process timeline while drops to a minimal level once the
process is deployed and debugged
Te key characteristics of automation are
is quantifiable and measurable
is typically greater than other categories
occurs early in the project timeline
ash low is high
usiness ssue is generally low but can be high if automation addresses
a key business issuesuch as customer satisfaction
nitial is moderate but can be low depending on available prepackaged
solutions
ngoing falls quickly to a low level
Te key issues that must be taken into account when considering automa
tion are
efinition of processes to be automated
uantification of potential by process
nalysis of software applications to be involved in the automation process to
determine what efforts must be made to integrate them in to the automated
processtaking into account mapping and response incongruities
etermination of primarily implement and deploy
omparison of versus balanced against resources
y addressing these key characteristics automation activities have an excel
lent probability of delivering expected at a known without creating
disruption in the organization due to unbalanced resource requirements
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Quality
can add substantial value to quality processes of all kinds ost quality ac
tivities are process based uality processes revolve around absolute adherence to
the quality process a task that requires extensive administration to insure that theprocess is indeed followed throughout the organization
uality processes typically require the collection of data in the form of validation
that actions were taken in the appropriate manner by the appropriate personnel
uality processes sometimes can also include the collection of measured data to
support proof of quality for the product produced
Tese activities have supporting requirements of roles training process enforce
ment exception handling and immediate adoption of changes or updates to the
quality process or subcomponent
omprehensive quality initiatives such as ix igma require the ongoing opera
tion of the quality processes as a pervasive part of corporate behavior and stretch
throughout the entire enterprise
ecause all of these quality activities are processes they can be modeled in the
system with all of the steps and business rules of the quality process repre
sented in the model
enefits of placing quality processes into come from two sources irst there
is the gained by having a system that automatically enforces the rules and
flow of the quality process one that can collect all quality related data from both
the system view and the product specific view as required
pdates to procedures processes and reassignment of roles are handled from
a central application with realtime dispersion making change management a
simple task provides accountability for changes to the quality system that
are easily monitored or reviewed as needed lerts and exception handling can
be added to the model to inform pertinent staff of situations that may require
their attentionboth to resolve immediate issues and to
highlight areas where actions can be taken to improve
the process
y having a single system with a common interface train
ing requirements are dramatically reduced and new pro
cedures are immediately available to all personnel the
changes affect ead and signoff requirements of changes
can easily be incorporated into the quality process model
to maintain full accountability that these changes have
been reviewed as required prior to actions being taken
as positive cash flow will be realized for those
situations where the quality processes implemented in
the system produce a streamlining of the qualityFigure 5: BPM Quality ROI
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process Te most common areas of substantive are in training administration
change management and process adherence validation
nother form of that can be derived from applying to quality processes
is increased accuracy of the data collected both operational and measured prod
uct that result from placing quality processes in a system hen qualityissues arise they are often after the fact Tis requires the company to trace the
problem back through the companys records and may require extensive inter
viewing of personnel to piece together the specifics that caused the anomaly nce
the quality processes are implemented in the system this process is rarely if
ever needed as the system maintains full accountability of the actions taken
in the entire quality process chain
Tis is more difficult to calculate as the exceptions are rarely tracked in their
frequency or in the amount of company resources that are redirected into the
process of tracing down the anomaly owever in those cases where this is a
known occurrence the resource drain is often substantial stimating the resource
drain is a reasonable alternative if information is not available for accurate meas
ure of the impact of these problems
Quality Summary
uality issues typically fall on the business issues side of the fence although
cash flow can also apply Te decision to address quality in is most
often driven by the business issue considerationadopted as a means to improve
the quality of products or processes
Te key characteristics of quality are
is not easily quantifiable but can be measurable
is typically medium to low
occurs later in the project timeline
ash low is low
usiness ssue is generally medium but can be high if quality issues are
a key business issue
nitial is moderate
ngoing falls to a low level
Te key issues that must be taken into account when considering quality
are
efinition of quality goals
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efinition of processes to be automated as meets quality goals
etermination of measurement methodology so that progress towards
goals can be accurately measured
can be a powerful tool in the pursuit of ongoing quality improvementroperly designed and implemented quality processes in can result in both
a marked improvement in measured quality and a behavioral shift towards quality
improvement as an ongoing activity
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Compliance
Te evaluation of versus applied to other benefit areas has a
unique application in the category of compliance ecause compliance is a man
datory function it must be met for business purposes rather than for the potential it represents to the business
Tat said the basic premise of versus still
applies to compliance with the caveat that the motiva
tion is mandatory rather than selective f compliance
requirements are not currently met satisfactorily
is an excellent tool to help businesses achieve full com
pliance or situations where a company is tasked with
meeting compliance requirements where none previously
existed is an even better tool n either case the
focus is on meeting compliance with the lowest
an activity that can even lead to because of reduced
consumption of human resources and in error resolution
supporting the compliance effort
roper evaluation of compliance is therefore focused on
with any gained to be considered a bonus
Tis becomes clear when we reflect on the fact that compliance is entirely driven
by the external requirements of others Tis is not an decision it is a busi
ness requirement and is the determining factor in selecting the product and
method of selectingimplementing in this regard
ommon characteristics of compliance include adherence to a known set of operations and procedures recording of substantiating evidence that such compliance
occurred auditable trails for all compliance requirements and auditable records of
change to the process or operations that could have a potential affect on adherence
to compliance requirements
ecause is specifically designed to model and manage all business processes it is
ideal for achieving compliance for virtually any regulatory or partner requirement Te
process of achieving compliance is simple in terms of configuration although
the task of defining the process or processes that meet the compliance requirements is
often complicated and difficult nce the process or processes is defined modeling
it is simple in software Te system will track and capture the supporting
data necessary to prove compliance requirements have been met t will enforce busi
ness rules and roles as needed without exception
owever if the definition for compliance is inaccurate then the data collected by
the system will also be inaccurate invalidating compliance ecause some
compliance requirements are very complex this can be a substantial issue for com
panies wishing to use to meet their compliance requirements
dentifying compliance requirements is the first step in using to address
these issues ach compliance requirement should be viewed as a separate entity
Figure 6: BPM Compliance ROI
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Te first step in defining each entity is to determine if the requirement is a stand
ards based entity or not tandards based entities exist for specific industries such
as pharmaceuticals radiological and defense while other requirements are more
general in nature such as accounting requirements like arbanesxley any of
these standards based compliance requirements have already been addressed mul
tiple times in any vendors have experience in these areas that theyuse to aide in design guidance or they may provide predeveloped templates with
their offering to reduce the effort required to define the processes
o minimize risk of compliance failure for standards based requirements it is
highly recommended to seek preconfigured solutions Te value is not just the
reduction of time required to define and model the process in the software
but more importantly it is the issue of process accuracy Te potential exposure to
risk from errors in a compliance process is a sleeping giant that can reek financial
and legal havoc on a corporation that has met the compliance only to be found at
some point that their compliance model is erroneous
Compliance Summary
ompliance is primarily a business issue nstead of is the major factor
in assessing for meeting compliance requirements as the compliance re
quirement is not a cost savings but instead a necessary requirement for continued
operation of the business
Te key characteristics of compliance are
is usually quantifiable and measurable
is typically less than other categories
occurs early in the project timeline
ash low is very low
usiness ssue is highand is the primary driver
nitial is moderate
ngoing falls slowly to a low level
Te key issues that must be taken into account when considering compli
ance are
ccuracy of the compliance process model in
onitoring and reporting that clearly demonstrates the compliance
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is ideal for addressing compliance requirements providing accurate enforce
ment of compliance rules without exception once the model has been properly
developedwith full accountability and traceability
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t is also easy to give the manager the flexibility to determine how alerts are deliv
ered or example if the manager has defined an attribute for him or her self that
represents logistical status in office home traveling etc then the alert business
rules can include specific alert actions based on the managers status
Managerial Views
anagerial views must be carefully planned in advance of modeling the system
to ensure the desired views are supported by the data collected in the system n
some cases the system will inherently support all of the data necessary to
generate the desired managerial views while in others additional data points will
need to be defined and respective data collected by the system
Te managerial view will include information that imparts to the manager a clear
understanding of workload and resource usage by managerial area often depart
ment process work type such as orders steps and resources nformational
views that show the current state of this information and that have historical
views for comparison provide insight into operating conditions that is typically
not available in useable accurate form without a system
etermining key metrics for each managers view and including these in the
model can be extremely effective hen the managerial view includes clear repre
sentation of key metrics metric goals and historical results of progression towards
goals managerial becomes tactical and easily measurable as compared
to stopping short with just managerial information views ot only can this be a
galvanizing force in focusing efforts on benefits it also provides clear goals
that managers can direct their efforts towards for achievement
Management Summary
anagement is one of two categories that are the most difficult to determine
prior to implementation what may be gained
Te key characteristics of management are
is difficult to quantify and measure
is typically low although it can be high
occurs late in the project timeline
ash low is low
usiness ssue is medium but can be high if management actions result
in improved responsiveness and management practices
nitial is high
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ngoing falls slowly to a moderate level
Te key issues that must be taken into account when considering manage
ment are
now the goals and communicate them to managers
evelop the model to support the goals after the goals are defined
oaloriented management practice with when clearly communicated to
those using the system is likely to improve responsiveness and improve overall
management of operations
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Optimization (Analysis, Cost Reduction & Performance Tuning)
o perform enterprise analysis for identifying potential cost reductions and to
tune the enterprise towards peak performance requires that the metrics these
activities are based on be defined prior to building the model Tis step iscritical to successful analysis
ortunately most systems are geared towards
this activity already inherently providing the relation
al structure necessary to collect analysis metrics that
produce meaningful informational views supporting
such analysis
owever data for analysis cannot be generically defined
to the extent that the activity of determining what the
analysis model should contain is eliminated as a prerequi
site task nstead this task is manageable but still requires
that substantial thought and effort must be applied to
ensure that the analytical views present the information
necessary for accurate identification of potential cost re
ductions and enterprise performance tuning
s can be seen in igure the for this activity is substantially greater than
other areas due to the requirements of dealing with the entire enter
prise as a holistic entity is also further out on the timeline as realization of
requires multiple steps
Tese steps include
onducting the analysis after the model is completed and data has begun to
be collected
djustment to the model is typically required to take into account
insufficiencies in the informational views once the system is operational
nce the model is solid analysis will reveal potential areas where cost savings
or optimization can produce real benefits to the company
otential areas of improvement must be analyzed to determine what quan
tifiable exists
Ten a solution must be designed to rectify the situation
nce the solution has been designed the of the solution should be
analyzed against the expected
inally if the versus analysis stands to produce reasonable gain
the solution must be implemented
Figure 8: BPM Optimization ROI
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bviously this is a significant undertaking although depending on the specifics of
each situation the actually effort required for this process will vary from relatively
minor to that of a major business project
Optimization Summaryptimization nalysis ost eduction erformance uning is the other
category that is the most difficult to predetermine what will actually
be gained
Te key characteristics of optimization are
is very difficult to quantify and measure
is typically low although it can be higheven very high
occurs very late in the project timeline
ash low can range from low to very high
usiness ssue is medium but can be high if optimization results in real
business performance improvement
nitial is very high
ngoing falls slowly to a moderate level
Te key issues that must be taken into account when considering optimization are
Te model must be detailed and accurate in order to collect sufficient
data for meaningful analysis
nformational views must expose the operation of the business in such a way
that analysis can discover quantifiable opportunity
ptimization has by far the greatest potential effect on an organization and can
result in discovery of issues that once addressed represent real and competi
tive advantage
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Concluding Remarks
n the five categories of covered real both ash low and usiness
ssue can be achieved Te critical factors affecting and are consist
ent across all categories with planning goal setting and process definition havingthe greatest impact on the net results efining and analyzing versus
on a process basis is the most reliable method in determining the net affect from
implementing
Te category of automation is by far the most likely to generate substantial ash
low and will generate earlier than other categories uality and
compliance are primarily driven by usiness ssue and are the next categories
where results have the best chance of being clearly quantifiable
Te categories of management and optimization require the greatest
over the long run with the least quantifiable owever these areas can cre
ate value as both ash low and usiness ssue with the potential to have
a greater impact on the business than all other categories combined Tese are
the two areas where longterm competitive advantage can be gained as tuning
activities conducted do not follow a predefined scenario and as such become
unique to the company implementing them
t is recommended that companies review their business environment in con
text of the categories included in this analysis t is highly likely that most
companies regardless of size or industry can achieve substantial value from the
implementation of or those companies who are not already committed to
implementing the recommendation is that they do so within the context of
specific processes with high nce the system is installed and has beenproven on these best case scenarios companies can expand their strategy as
befits their time and resources
t is further recommended that companies seeking sustainable competitive advan
tage look to the management and optimize categories of ore of a
longterm investment these categories have the potential of identifying areas
where the business can improve its overall cost effectiveness and performance
producing a competitive advantage that is not easily replicated by competitors
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Terry Schurter
Chief Analyst & CTO, BPM Group
Research DirectorProcess, Bloor Research
erry churter has a long history as analyst engineer and entrepreneur in the
enterprise software space e is cofounder of factory a tier graphical ob
jectmodeling system t the time of release factory was one of the most
sophisticated process modeling systems in the world and included true unlimited
object inheritance erry is also an internationally recognized award winning en
gineer having won both corporate and division eorge estinghouse ignature
of xcellence awards for his innovative work in process management and process
control systems nique in the analyst community erry has handson experi
ence in engineering software integration consulting marketing and enterprise
software development e also contributes frequent articles to publications in
cluding oday aily and ocket agazine
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About BPM Group
Te usiness rocess anagement roup founded in is a global business
club exchanging ideas and best practice in business process and change manage
ment e have over + members across all business sectors Trough casestudies seminars and research we support our members in improving their or
ganisations work across business processes information technology and people
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Bloor Research Overview
loor esearch has spent the last decade developing what is recognised as uropes
leading independent research organisation ith its core research activities
underpinning a range of services from research and consulting to events and publishing loor esearch is committed to turning knowledge into client value across
all of its products and engagements ur objectives are
ave clients time by providing comparison and analysis that is clear and
succinct
pdate clients expertise enabling them to have a clear understanding of
issues and facts and validate existing technology strategies
ring an independent perspective minimising the inherent risks of product
selection and decisionmaking
ommunicate our visionary perspective of the future of
ounded in loor esearch is one of the worlds leading research analy
sis and consultancy organisationsdistributing research and analysis to user
and vendor organisations throughout the world via online subscriptions tailored
research services and consultancy projects
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Copyright & Disclaimer
Tis document is subject to copyright o part of this publication may be repro
duced by any method whatsoever without the prior consent of loor esearch
ue to the nature of this material numerous hardware and software products
have been mentioned by name n the majority if not all of the cases these
product names are claimed as trademarks by the companies that manufacture the
products t is not loor esearchs intent to claim these names or trademarks as
our own
hilst every care has been taken in the preparation of this document to ensure
that the information is correct the publishers cannot accept responsibility for any
errors or omissions
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uite 4, Town Hall, 86 Watling Street EastOWCESTER N th t hi NN12 6BS U it d Ki d