Few technology sectors offer a clearer and more visible potential return on investment (ROI) than business process management. Who says so? Almost every specialist BPM analyst, all the suppliers and a good number of satisfied customers.
The economic benefits of BPM come from a variety of sources, including shorter cycle times, lower total cost of ownership, improved productivity, cost avoidance and better exceptions handling.
This last feature is particularly important. Analysts at the Aberdeen Group predict that 75% of all transactions will ultimately lead to ‘exceptions’ to the normal way of doing things. Rigid processes will be unable to cope and changing them without BPM is time-consuming and expensive. Savings made in human activity are always high, and can be passed on to customers or redirected into generating value elsewhere in the organisation. "It is all about helping [our] customers be more efficient by identifying best practices and automating those. That way, businesses can drive out costs, improve relationships with users and customers and deliver goods and services more effectively," says Lee Roberts, CEO of BPM and workflow supplier FileNet.
Another big area of possible savings comes in the cost of integrating and maintaining applications. For example, about 70% of the IT budget traditionally is spent on keeping older legacy systems running. BPM means that more value can be extracted from these existing systems; in many cases, the functions that these legacy systems carry out will be integrated into the overall process layer via a standards-based interface (such as web services) or a third party adaptor. After that, process changes will not, usually, require application level programming.
Despite the many benefits, these are still relatively early days for the BPM. More work needs to be done by suppliers to convince potential customers of the economic benefits of the technology, according to analysts at the Delphi Group, an IT consultancy. Only then will more project sponsors come forward.
A recent Delphi report, based on the findings of a survey into BPM deployments, says: "The single greatest factor suppressing market expansion today is the lack of a clearly defined business case. Combined with the lack of sponsors – a closely related issue – the need to make the case for BPM investments has held back more than 60% of firms who have not yet invested in BPM. This illustrates the education challenge facing the supply side of the BPM market. It is of greater importance today than price or functionality." This is one reason Staffware, for example, has a programme to encourage more customers to speak publicly. The BPM software company maintains that its customers’ experiences are overwhelmingly positive.
The Delphi survey found some evidence that a greater number of large-scale deals are being signed off than before. That is another sign of market maturity and points to the fact that pilot projects are increasingly leading to major investments.
Among those BPM suppliers who reported an increased deal size in 2003 are Staffware, Intalio, Savvion and Metastorm, with Staffware, now operating at a corporate platform level as well as a tactical application level, winning the largest deals.
Shawn Price, CEO of Savvion, says that typically small deals lead to repeat business: "We earn the right for more business through successful deployment."
Delphi reports that, in its 2003 survey, nine out of ten customers said their BPM investments either generated profits or netted out with expenses.
In one sense, BPM is no different from any other technology investment. When the project is planned properly, and is driven forward by the right people, it will succeed, says FileNet’s Roberts. "You need clear goals, clear ROI expectations and a team with the appropriate senior level support. When all those three come together the ROI is unbelievable."