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    The MicroGuide to Process and Decision Modeling in BPMN/DMN: Building More Effective Processes by Integrating Process Modeling with Decision Modeling
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Monday
Jul242006

Agility- Part 1 BPM ROI

I have developed a length study of agility – too long for a blog post. So I am going to break my article into several parts.


In my July BPI Article I took the position that Business Rules Approaches and BPM are, for most, the last step in inoculating agility into an organization.


If the project is just a ‘technology-refresh’ then BPM and business rules might improve the last mile of the project. For instance Gartner Analyst Jim Sinur stated in 2002 that through 2007, business organizations will save as much as 10% of the cost of a business process by creating a current business model and optimizing on cost. Mr. Sinur projected that business organizations will save up to 20% of the cost of a business process by simulating alternative new business flows and completing them in BPM. Most of the BPM vendors have developed comprehensive ROI techniques, for instance, there is a good posting here. Obviously, the value of a project will depend on the process that entering the realm of BPM. Many of the projects I have been involved in removed multiple layers of manual entry of accounting data. The ROI was clear for most of the projects I have been involved in. Redundant, labor-intensive systems were cut out; manual, report-driven tasks where removed. I will never forget the day I visited DoD’s Defense Finance and Accounting center in Columbus, Ohio. There was a sign at the entrance that read ‘Department of Errors’.


The cost-benefit for rules is supposed to be even higher. Analysts cite customer estimates of cost savings of the BRMS over traditional coding at between %25 and %75. I think the true value of business rules lies not in the technology. Value is in the practice of rules stewardship. I have worked for more than one corporate customer where the lack of documented rules has caused class action lawsuits. Compute the cost of SOX non compliance or a class-action law suite; you will acheive a quick ROI.


The ROI argument for BPM/BR often is not subtle. The technologist benefits because coding is reduced and simplified. There is benefit here. Business maturity is what is driving these management/technology trends. I have seen rapidly growing and successful lines of business create obvious needs for documented processes and business rules.



You can define agility as the ability of a business enterprise to run profitably in a rapidly changing fragmenting global market environment by producing quality, high-performance, and customer targeted goods and services. Government agility is the ability to run within shifting policies, regulations, mandates, budgets, priorities and changing missions and charters. Because organizations’ survival and growth depends the ability to meet mission needs and demands, agility is considered critical to organizational success. Changing economics, trade, policies and regulations change the life cycle, process, quality, and price of productive output for both commercial and government organization.


I have often heard it said that time is a businesses scarcest resource. This should be obvious. If you can lessen the time to produce businesses profits by a single day per quarter the company will gain more than %1.5 productivity. You can think of productivity as the pace of the corporate vehicle. The cost of running the company is always divided among each day. The savings of an entire corporate day is enormous. In the same manner of thinking, agility is similar to the acceleration, or rate of change, of the company. Efficiently speeding-up or slowing-down has an inherent impact on business productivity.


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