Business Process Management

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

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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. OrROI (Gains Cost)/Cost

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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

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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

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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

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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

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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

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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

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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