A Prominent factor of international business today is its strategic direction. Global firms are competing with a wider variety of business and operational strategies and with more complex operational strategies today compare to 12 years before.
This makes more challenging for global operation to deploy same model for its internal business where economic and market conditions are different. This can resolved by providing a unique national strategy and dedicated modification of key activities for each major country; this facilitates customizing the business around each countries market.
A global business and operational strategy world is considered as signal market where corporate goals are common. This brings international operations to tough spot of performing as stand-alone entity.
Under global operational strategy to concentrate geographically located activities in a way that captures most of the available economies of scale and factor cost advantages.
BPM considers processes to be strategic assets of an organization that must be understood, managed, and improved to deliver value added products and services to clients. The need of optimization and streamline the operational activities for global companies are historical.
Here are some of the facts:
Determining ROI & NPV for BPM : Tracking direct benefits in terms of cost saving for short term (1 Year) and long term (5 year) period.
Tracking In-direct Benefits in terms of cost saving
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Saving on Activities due to .. | Approximate Saving (+/- 20% ROE) | |||
%/Month 1 | Equiv of Staff/Yrs 2 |
$ Approx 3 | ||
End -2 End Documentation | 10% | 0.2 | 16000 | |
Efficiency on GAP Remediation | 15% | 0.3 | 24000 | |
Process Automation | 20% | 0.4 | 32000 | |
Smooth Handovers (Reduced rework) | 10% | 0.2 | 16000 | |
Reporting Automation | 10% | 0.2 | 16000 | |
Billing Automation | 15% | 0.3 | 24000 | |
Work Flow Events Automation | 20% | 0.4 | 32000 | |
Regulatory Fines/Expenses | 15% | 0.3 | 24000 | |
Project Management | 20% | 0.4 | 32000 | |
Overall Improvement | 135% | 2.7 | 216000 |
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Saving on Activities due to .. | Approximate Saving (+/- 20% ROE) | |||
%/Month 1 | Equiv of Staff/Yrs 2 |
$ Approx 3 | ||
Standardized approach & Procedures | 10% | 0.2 | 16000 | |
Standard error codes | 5% | 0.1 | 8000 | |
Streamline Alerts & Notifications | 10% | 0.2 | 16000 | |
Ease of Change management | 15% | 0.3 | 24000 | |
IT Interaction and Modification | 15% | 0.3 | 24000 | |
SLA & Audit support | 10% | 0.2 | 16000 | |
Employee Satisfactions | 10% | 0.2 | 16000 | |
Reduction in External BPM SME | 30% | 0.4 | 32000 | |
Overall Improvement | 105% | 1.9 | 152000 | |
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Years | BPM Investment($) 4 |
Approx Exp. ($) | Direct Impact Savings |
Net Benefits (Excl. indirect Benefit) $ | |
Licenses | FTE (Consult)5 | (4K + FTE*85K) | |||
1 | 4000 | 2 | 164000 | 216000 | 52000 |
2 | 4000 | 0.75 | 64000 | 216000 | 152000 |
3 | 4000 | 0.5 | 44000 | 216000 | 172000 |
4 | 4000 | 0.1 | 12000 | 216000 | 204000 |
5 | 4000 | 0.1 | 12000 | 216000 | 204000 |
Total Invest | 296000 | Total Saving | 784000 |
Total Investment= 296000 (Over 5 years)Total Saving (Excluding in-direct savings) = 784000IRR (Companies rate of return) = 6% (Usually between 6 % - 8%)
Gain or Loss on Investment ($) = 488,000 Term =5
Based on above case study, this example presents a comprehensive view of rate of return on investment by incorporating BPM with business and operation. Here it clearly shows that “Direct Impact or saving” are greater in time and more strategic to incorporate BPM in addition to “in – direct benefits”. The overall approval for any company/ department can be quantified / justified based on above calculation by plugging in their numbers.
Its always advisable to incorporate BPM for detail analysis and integration of operation - technology is to take “incremental approach” at enterprise level.
Biggest obstacle for adopting BPM are “Culture, resources, funding” because for larger organization where multiple division need to coordinate for initial roll-out.
This is being found very beneficial for financial organization to adopt BPM strategies from most troublesome, complex or distributed business area to start with smaller approach to see the impact. Because BPM modeling provides very quick and direct visual perspective of gaps and Issue areas of larger financial processes. This helps managing business planning, reporting , integration and activities associated through closed loop.
* ROE: Rate of Error* 1 – % saving in terms of HRS converted to approximate per month distribution.* 2 – Saved Time per Year approximate resource saving (Considering standard 40 -50 Hrs/week)* 3 – 1 FTE – Approx salary nearly 80K /Year * 4 - BPM Licenses( Multiple) approx 4 K (Enterprise level could be cheaper)* 5 – BPM FTE Cost from vendor for installation and training (Approx 30 -40 Hrs/Week)* IRR - Normally its 6 % - 8 %* Used google.com - Web Search for secondary information
Vinod Jain, is VP - Transformation strategist and responsible for handling Business & operational strategies, optimization and transformation projects.
Vinod holds M.B.A in Finance and Marketing from Fordham University, NY, M.S in Computer Sc. From FDU. NJ, PMP and other awards. He recognized by "Omicron Delta Epsilon" (American & International Honor society in economics) and Who's Who among American Universities. Please note these are my personal opinions and does reflect the views of my employer.
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Future with BPM: Cost Vs Benefits & Strategies
This is very useful. Could you provide ROI's formula?
Tks