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Business Process Management

Business Process Management. Return on Investment/ROI And Value Stream Mapping/VSM. Return on Investment/ROI. A method of evaluating the financial consequences of business investments, decisions, or actions. A high ROI means that investment gains compare favorably to investment costs.

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Business Process Management

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  1. Business Process Management Return on Investment/ROI And Value Stream Mapping/VSM

  2. Return on Investment/ROI • A method of evaluating the financial consequences of business investments, decisions, or actions. • A high ROI means that investment gains compare favorably to investment costs. • The higher ROI is considered the better choice, or the better business decision. • Calculating ROI helps us avoid pitfall projects, helps get our co-workers to buy-in to project ideas, and helps us prioritize how we use our resources. • ROI is a simple concept; it’s the total dollar/time return your organization will receive in exchange for undertaking a project or initiative of some sort. • Measures the impact of projects that support DCSS strategies to improve productivity and competitive positioning.

  3. How to Calculate ROI • To calculate ROI, you simply take the gain of an investment, subtract the cost of the investment, and divide the total by the cost of the investment. Or:ROI = (Gains – Cost)/Cost

  4. Identify Gain • Tangible and intangible benefits • Process time (captured in VSM) • Convert time to dollars • How many users perform task • How much time is spent • Equates to how much money

  5. Identify Cost • Initial cost and maintenance of system change • Time consumed (business) in preparation, analysis, testing, implementation • Training costs • Hardware, software, supplies • List all costs you can think of

  6. Calculating Benefits How will the proposal benefit the Division? Common project benefits include one or more of the following: • Cost reduction • Productivity increases • Process improvements • Waste reduction To calculate the benefits of a proposal use this simple formula: Current Cost – Cost after Change = Benefits

  7. Factors Outside ROI Consider factors beyond the numbers. How will the proposal affect employees, suppliers, prospects, and customers? Non-financial impacts include: • Attitude • Morale • Image • Ease of use • Environment • Satisfaction • Retention

  8. System Changes • Initiatives involving system change begin with a process that needs to be replaced or improved. • Identify business requirements for change • Map the current business process - VSM • Team must understand exactly what is happening to addresses the key requirements and fit the broader business goal

  9. VSM • An ‘as is’ process map will highlight problems and identify bottlenecks, duplication, delays, or gaps. • Each step can be assessed to determine if it can be improved. • A ‘to be’ process map will incorporate improvements and help confirm the proposed solutions are adequate and appropriate

  10. Coming Together • Expand upon the uses of the VSM • Implement ROI calculations on all processes • Recommend priorities based on the information gathered • Promote understanding of the processes

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