Is cost cutting the new BPM mantra?

It is a sad fact of life that some organisations pay an amount of 'lip-service' to BPM and the capability of process management. This is usually in the times of plenty when income is high and everything looks good with the world.

Having an efficient and cost-effective company is not high on their priority list as long as the revenue is rolling in. But when the market is down and income is drying up a lot of the same companies are looking at ways to reduce costs  increase revenue and positively impact the bottom line.

Some companies are looking at increasing marketing spend, while others are reducing overhead by cutting 'big ticket' items such as travel. Companies are stopping business travel altogether or downgrading essential travel from business class to economy class (nice if you are doing the 13 hour trip from London to Singapore!).

But one area which is starting to become more and more important in the cost-cutting environment we find ourselves in today is the area of optimising what we already have to be more effective and more efficient. The focus of business has changed from “How can we generate more revenue?” to “How can we reduce our costs?” One key strategy for reducing costs is to streamline processes, eliminate redundancy, and flatten organisational structures.  This falls squarely into the arena of BPM.

The current economic squeeze has now firmly moved the focus onto BPM as a legitimate means of helping to reduce overhead, decrease costs and increase profit. In a recent survey, 38 percent of respondents said that they were planning to use BPM in the future and 29.7 percent of respondents cited BPM as one of the critical areas for their organisation’s technology efforts. Bruce Silver (The doyen of BPMN) is also quoted as saying "It took a financial catastrophe for Gartner to add "cost savings" as a reason for buying BPM, instead of 'agility agility agility'". On the subject of Gartner, prior to their recent BPM Summit in San Diego, they announced the findings of a survey that estimates companies can save as much as 20 percent within the first year of a BPM implementation. The survey (of participants at a recent BPM summit in London) indicated that 70 percent of respondents view BPM as a lifeline keeping them above water during the tough economic times, 20 percent are using BPM as a catalyst to grow their business and 10 percent are planning to use BPM as a competitive differentiator for critical business transformation initiatives.

These are pretty interesting statistics, and very telling under the circumstances.

Jim Sinur (From Global 360 and, more recently back at Gartner)  has long been an advocate of BPM as a profit centre maintaining that a correctly scoped and managed BPM implementation project can approach a 15 percent internal rate of return. As Jim himself comments, "So the savings are there, but I had to pay for the BPM technologies and the salaries of the people who implemented the BPM process,’ you say. Well, if you picked a BPM project with significant savings when compared to the price of the software and people, then buddy, it’s free." Sound advice indeed.

Recently vendors are becoming more focused on the 'ease-of-use' aspect for their BPM applications as a means of raising the adoption rate across the company. If a tool is seen as being straightforward and simple to use this will then lower the barrier to entry for the organisation. This is another win-win situation for BPM.

So, given that the greater market is looking for ways to cut costs,  companies have identified BPM as a possible solution, BPM projects - when well scoped and managed - can have significant returns and the software is becoming more acceptable to users and companies. The question I have for you is "Why aren't you considering a BPM implementation in your organisation?"

The answer possibly lies in the fact that this is an unknown for a lot of people. Despite the fact that BPM as a concept has been around for many years (Steve Towers from the BPMG claims to have coined the phrase sometime in the mid 1990's) many people are still unclear about what it is and what the benefits are. It is seen by many people as being 'an IT thing', which is therefore not viewed as being something the business needs to be involved in. This apathy from the business will invariably doom any BPM initiative to failure. In a recent informal survey I held the (albeit statistically insignificant) results indicated that one of the main reasons for project failure is inappropriate change management during the project. This is exactly what I'm talking about when I say 'business apathy'. It is critical for a successful implementation that the project is recognised and accepted by the user community and as such change management is crucial. Unfortunately, many projects don't get the appropriate level of commitment from the business side of the house, the project is not accepted by the users and fails.

The current economic climate is a prime opportunity for businesses to leverage the benefits of BPM as a concept. With appropriate management, a well scoped project and some enthusiastic users businesses can benefit from the fact that BPM basically pays for itself in ROI.

(A version of this post first appeared in April 2009 at the Metastorm 'Because Process Matters' blog)

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