There’s perhaps no three words that are sweeter to a business person’s ears than ‘Return on investment’ or ROI.
Many entrepreneurs get into business with high hopes of climbing that money tree, shaking it until they make their profits and then watering and nurturing it until it’s time to harvest those profits all over again.
In your pursuit of that magical ROI however, you may have neglected the cow of Business Process Management in favour of the magic beans that may come from chasing the more lucrative option. And sure, who doesn’t like the sound of a magic beanstalk growing in their business backyard? However, I would humbly suggest that you can have the magic beans, the cow and milk it too.
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In pursuing ROI, the process approach should be your focus. This is because ensuring that your business processes are adding value to your company and helping you gain ROI will also aid you while you’re climbing that magic beanstalk or chasing the pot of gold at the end of the rainbow.
It’s not exactly ‘business sexy’, but things that benefit your business rarely will be.
After reading this article, I also suggest that you take a look at:
Let’s start with an overview of how the process approach can help your ROI.
A process approach effectively targets each process in your organisation and then proceeds to measure it based on factors such as time, money and effort spent on that process. Then, by also measuring the returns, you’ll be able to see if that process is offering you the best ROI.
All the processes in your company are effectively a series of ‘Inputs’ and ‘Outputs’. The sooner you start analysing them that way and measuring the ‘cost’ of each business process, the sooner you can begin to improve them and achieve a better ROI.
If you are going to jump into the giant BPM pool, just remember that everyone’s going to have to learn to swim a different way. What this means is that there is no single formula or model that will map BPM related ROI. That’s because not only are the benefits multi-dimensional, but calculating ROI is also dependent on a case-by-case, business-by-business basis where judgement plays a big part.
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Why Business Process Management is crucial
The other factor to consider is the size of your business and which Business Process Management solution is for you. Some software solutions will be out of the price range of small businesses and therefore price of BPM will be your major consideration.
Don’t be deterred. There are software solutions out there that could fit your company like a thrift shop glove and if you’re looking for ROI, why not look at an area that is in your control – I’m talking about BPM if you hadn’t realised.
Customer actions and reactions to your brand, advertising and marketing can be manipulated but it can’t be controlled. You know what can be controlled? The processes within your organisation. This is a major reason that BPM is crucial for an increase in ROI.
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If you’re going to try and estimate ROI, then you’ll need to focus on calculating both the direct and indirect versions. The benefits are as follows:
- Improvement of organisational structure
- Reduction in failed or malfunctioning systems
- A more productive workforce
- Cost savings
- Increases in profit
- Increase in efficiency
- Regulatory and compliance benefits
- One location for your documents and procedures
- Reducing risk and avoiding quality failure
- Quality improvement
Since we have already written an excellent article on calculating ROI for BPM, there is little reason for me to go in-depth into the ‘how’ of calculating direct and indirect ROI. I would recommend reading this article as it is lays out how to cost a BPM project, determining cost savings and profit, and some of the difficulties involved with calculating direct and indirect ROI.
Now if you are struggling to convince the higher-ups at your business that Business Process Management is worth their time and money, you should run a calculation for potential cost savings.
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Some benefits to ROI from BPM that you may not have thought of are:
- Reduction in auditing costs
An easy way to justify spending on a BPM system right off the bat is in the reduction of auditing costs. Skanska UK is one of our customers and they have saved £40K in annual audit fees since 2012 just from their ISO assessment.
Then we come to the undervalued but highly important returns that quality bring to your business. A lot of businesses see quality as a needless cost but there is no substitute for being seen as a brand that produces quality products and services. This trust of you by customers is hard to achieve and can be lost in an instant; that’s why it’s so important to run quality processes.
Efficiency is also a key, direct result of BPM and will help you save. Analysing your processes and making them more efficient is all about cutting out the waste, driving down cost and by extension, increasing your ROI.
Achieving regulatory compliance for your industry is extremely important. Customers want to do business with companies that are viewed as safe, trustworthy and are producers of quality products/services. The moment you fail to achieve regulatory compliance is the moment you will fail to attract new customers and find it difficult to keep your existing ones.
Hopefully this has helped you understand the importance of a Business Process management system in going after ROI. At Triaster, we have been helping our customers achieve their ROI goals for years but not only that, we have helped them reach levels of excellence in quality, efficiency and cost savings.
If you would like to know more about how we can help your organisation increase its ROI, then why not sign up for our webinar below or contact us directly for more information, we’d be happy to help.