PBO

CEO Agenda

Business Case 1 : With Clear Financial ROI

As intangibles become core elements of business success and tangible elements get relegated to hygiene levels , business environment specially in developing countries like India demands that organizations multiply their efforts to improve the efficiency / effectiveness of their processes that have a positive impact on financial performance.

Organizations looking to grow revenue and decrease costs are increasingly using Business Process Management (PBO) to reach their goals.

  1. Business buyers rave about the ROI and often report 10-times ROI than their counterparts that buy BPM like mundane infrastructure technology-a combination of hardware and software BPM projects are therefore not technology decisions, they are business decisions. "
  2. Increasingly, Business Process Management is seen as a bottom line enterprise application and studies have shown that the ROI on PBO projects has been fantastic, with clients reporting initial ROIs in the range of 100% to 300% and payback timeframes of 6 to 12 months.
  3. Finally according to Gartner - 80% of enterprises using PBO will experience an internal rate of return better than 15 per cent.
  4. Financial ROI
    • Produces lower costs and higher revenues by:
      • Performing faster complete times and shorter processing cycle times.
      • Saving costs from higher productivity and throughput.
      • Reallocating valuable human resources.
      • Creating competitive advantage from market capitalization.
      • Improving responsiveness to market opportunities.
      • Reducing administration time and hand-offs.
      • Eliminating manual errors.
      • Creating more efficient data entry environment.
      • Reducing support costs.
      • Improving ad hoc reporting.
    • Reduces the time spent in satisfying a customer inquiry by continuously improving and monitoring customer service processes.
    • Eliminates revenue losses due to the enforcement of rules and processes relative to strategic planning mandates.
    • Reduces the number of FTEs (full-time employees) needed to perform non-value-added functions within the organization.
    • Cuts the costs of having overtime work by automating and optimizing manual tasks, thereby directly reducing outbound cash flow.
    • Avoids costs of audit fees by providing means to quickly create processes to track compliance efforts.

Return on Investment (%)

(Total Annual Savings) / Initial Investment) x 100.

Payback Period (years)

Initial Investment / Total Annual Savings.

Business Case 2 : With clear improvement in Financial ROI Enablers

These are the so-called "monetisable " benefits of an investment because they get converted into money with a phase lag . These enablers are most often centred on business critical activities required to meet the expectations of stakeholders

  1. Customer – most important , must be central to most interventions
  2. Suppliers , Employees and other Business Partner or
  3. Regulatory requirements of doing business.

In many such cases , ROI means sustaining the business rather than increased profit or reduced cost There are 4 major enablers impacted by our PBO intervention :

  1. Customer as Enabler
    • 1.1 Customer Satisfaction :
      Increases customer retention rate, reputation, market share and revenue by improving customer satisfaction.
    • 1.2 Modify new business rules:
      Dynamically changes the business rules that drive your processes, to achieve your performance goals Produces motivated employees, and happier customers.
    • 1.3 Agility
      Improves business agility and readiness by increasing process efficiency. Reduces the time needed to adjust process to changes on the market.
  2. Process as Enabler
    • 2.1 Compliance
      Provides integration of compliance management capabilities into current business processes to support regulatory compliance.
    • 2.2 Process Performance against Targets
      Monitors the performance of individual processes or aggregates and potentially identifies trends. Saves time by centrally managing all business processes.
    • 2.3 Exception Management
      Provides managers with exception handling capabilities. Without PBO exceptions are lost
    • 2.4 Process Optimisation
      Improves process control, process optimization and rapid change.
  3. People as Enabler
    • 3.1 Reduces the number of tasks done manually and automatically decreases the number of resources needed.
    • 3.2 Increases productivity due to process automation.
    • 3.3 Manages the changes to organizations in terms of structure and roles
    • 3.4 Ensures optimum resource utilizations due to process standardization.
  4. IT as an Enabler
    • 4.1 Promotes collaboration between IT and business users to document and implement the process
    • 4.2 Integrates with existing applications in a meaningful way.

ROI is never calculated in a vacuum. The ROI you project for your PBO Intervention will probably be different to the ROI you ultimately achieve, because there are so many other factors-employee turnover, new competitors' initiatives, vendor changes-that can impact the ROI of the project and were not built into the model

Assignment Highlights