PROVING THE ROI OF BPM IN FINANCIAL SERVICES A GUIDE TO SHOWCASING RETURN ON INVESTMENT FOR YOUR BPM INITIATIVE
PROVING THE ROI OF BPM IN FINANCIAL SERVICES TO CONVINCE EXECUTIVES THAT BPM INITIATIVES STACK UP, DEMONSTRATING THE POTENTIAL RETURN ON INVESTMENT IS CRUCIAL. In an era of leaner margins, heightened regulatory pressures and increasing competition, organizations must find new ways to operate more efficiently and with greater agility, reducing their costs and ensuring they are ready to innovate. For many of these companies, an agile Business Process Management (BPM) solution is crucial if they are to confront this challenge. An investment in BPM software will enable them to institutionalize a sustainable business process improvement program. That s the theory, in any case. In practice, senior managers in financial services will want to see a detailed business case for such initiatives before approving them. IT leaders who fail to clearly set out the returns on investment that are potentially available from BPM projects are unlikely to secure the budgets required. As with any project management exercise, quantifying the returns on investment available from BPM initiatives will require senior IT management to conduct a cost-benefit analysis. In doing so, it s important to be realistic about the costs but also explore the full range of direct and indirect benefits available from BPM technologies. 1
COSTS There are two distinct cost categories: the upfront costs of implementing a BPM solution and the ongoing costs of operating BPM tools and technologies: UPFRONT COSTS The initial costs of any BPM initiative are not nominal. In addition to licensing fees, CIOs will need to consider custom design and deployment costs, as well as the expense of rolling out the technology throughout the organization, e.g. providing training for employees, and more. ONGOING COSTS Ongoing maintenance and support costs, while still in play, should diminish as BPM improvements take root and the technology is implemented and reaches maturation. It is important to generate operational efficiencies in these difficult economic times. Using K2, we can now complete invoice approvals around 50 percent quicker than before. György Czipa, Financial Administration Team Leader, Aegon Hungary 2
DIRECT BENEFITS Financial services companies adopting agile BPM technologies are primarily looking for process efficiencies that offer potential savings in a number of different ways: AUTOMATION SAVINGS By mapping and improving processes end-to-end, and automatically managing these operations, BPM platforms offer the potential to deliver substantial efficiencies. They reduce the need for human intervention, freeing up staff for more productive and value-enhancing tasks. DUPLICATION SAVINGS With clear roles and responsibilities, along with automated workflows, employees should no longer find themselves repeating work already undertaken elsewhere in the system, or reworking tasks not fully completed by others. There is the potential to reduce or eliminate failures and breakdowns. And by focusing process automation on the potential pain points, risk management is improved, and the scope for customer dissatisfaction is reduced. ACCELERATING CUSTOMER ACQUISITION AND REVENUE By streamlining revenue-producing processes and reducing process lifecycle times, it is possible to save substantial money. 3
These direct benefits deliver both a quantifiable savings to the business and create the potential to drive process enhancements and empowered employees, giving financial services companies the ability to focus efforts on more mission-critical, customer-centric initiatives. Our new mortgage-origination solution, based on K2 and SharePoint, streamlines every aspect of the process and prevents errors or missing information. Now it takes us 45 minutes to complete something that used to take three days. Darrell Jaggers, Vice President Of Information Systems, Island Savings 4
INDIRECT BENEFITS For many financial services companies, indirect gains may be just as crucial as the direct benefits. These indirect gains may include: CUSTOMER SATISFACTION Customers benefit from optimized processes in two ways. First, today s business users are looking for simplified and seamless workflows that can provide efficient routes through what can be complex functionality. Second, by improving the efficiency of back-office processes, organizations can free up more resourcing to care for front-line services. REDUCED RISK OF ERROR Once processes are automated and controlled, the scope for human error is substantially decreased. GAINS FROM REDEPLOYMENT OF STAFF Employees freed up from cumbersome business process work can be redirected toward more meaningful tasks that deliver greater value for the business and ultimately, customers. MORE ACCURATE REPORTING With standardized and automated information-gathering processes, reporting can be substantially improved, increasing the opportunity to make gains from real-time business intelligence and data analytics. 5
REDUCED COMPLIANCE RISK In the financial services sector in particular, business process failures and errors can incur compliance risks and lead to reputational damage or financial penalty. Process automation limits the scope for such problems, while reporting improvements may deliver more of the data required to meet regulatory compliance standards. EASIER CHANGE MANAGEMENT In the continually shifting financial services sector, inflexible businesses are at risk of becoming uncompetitive. But with automated process structures in place, the number of variables in any change management process is reduced, making future change easier to manage. ONBOARDING IMPROVEMENTS With standardized processes, taking on new customers and employees becomes less complex. GREATER BUSINESS ALIGNMENT As IT works more closely with other lines of business, like operations and procurement, commercial priorities are understood and shared throughout the organization. In short, both direct and indirect benefits yield the collective impact of allowing the organization to shift priorities from addressing back-office bottlenecks to focusing on customer-centricity. 6
We are now able to serve customers and sell new products in a much more effective way. In the front office, employees are more efficient than before. The business now has more focus on the customer. Everyone focuses on the customer, and the customer gets what he wants in the time that was promised. Bjarte Marøy, Team Leader, Sparebanken Vest ALL ABOUT THE RETURN Though each organization is unique and will experience a dispersion of gains differently, it is possible to map out the potential impact of direct and indirect benefits of BPM from a return on investment perspective. 7
The key is to not overlook or underplay the less tangible benefits of BPM. For example, once a company has realized the basic efficiencies that a more controlled process brings, it will often focus on deploying new process tools to drive customer-centric innovation. When looking to introduce an emerging breed of BPM platforms low-code business application platforms specifically the ability to consistently make process updates becomes much easier. Low-code BPM platforms provide the ability to quickly prototype and deploy new processes and workflows through visual drag-and-drop tools. Analysts believe these low-code platforms are ideal for rapid customer-centric innovation. These low-code platforms help BPM teams quickly build out new experimental customer-facing process apps, and then scale these apps to production-quality solutions that can be extended across the enterprise and to the entire customer base. In a market environment where financial services companies are more focused than ever before on metrics, such as cost of capital, the crucial first step in making the case for BPM lies in demonstrating the return on investment it can deliver. 8
LOCATION TAKEAWAYS: To build the case for BPM solutions, establishing return on investment is crucial. The benefits of BPM technologies are both direct and indirect, which can be quantified. BPM tools deliver upfront gains and ongoing efficiencies. FIND OUT HOW K2 CUSTOMERS HAVE ACHIEVED A DRAMATIC RETURN ON THEIR BPM SOFTWARE INVESTMENT. METRO PACIFIC INVESTMENTS CORPORATION K2 CASE STUDY ISLAND SAVINGS K2 CASE STUDY METRO PACIFIC INVESTMENTS CORPORATION USES K2 TO STREAMLINE CRITICAL BUSINESS PROCESSES SPAREBANKEN VEST K2 CASE STUDY ISLAND SAVINGS STREAMLINES EVERY ASPECT OF MORTGAGE ORIGINATION NORWEGIAN BANK IMPROVES EFFICIENCY AND REDUCES COSTS WITH K2 PROCESSES LOCATION INDUSTRY COMPANY PROFILE SOLUTIONS SOFTWARE BENEFITS Philippines Financial Services LOCATION Vancouver, British Columbia INDUSTRY Financial services COMPANY PROFILE SIZE The leading Philippine infrastructure investment firm, Metro Pacific Investments Corporation (MPIC) manages extensive projects on water, power, toll roads, and healthcare. PARTNER PROFILE Expense/Reimbursement requests Contract management Legal management and auditing SOLUTIONS SOFTWARE K2 blackpearl, Microsoft Windows Server 2008 R2, Microsoft SQL Server 2008 R2, Microsoft SharePoint 2010, Microsoft InfoPath 2010 BENEFITS Island Savings is the fastest-growing financial institution based on Vancouver Island. With 13 branch locations and more than 60,000 members, it s one of the 10 largest credit unions in British Columbia. Approximately 400 K2 users Reimbursement process cut from 1-2 weeks to 3-5 days Increase control and assurance for contracts management Eliminate paper routing and approval KnowledgeTech provides comprehensive application development, integration and business productivity solutions based on the Microsoft platform. Finance, compliance and governance, human resources and more K2, Microsoft SharePoint, KnowledgeLake Faster turnaround No errors or lost information Real-time application tracking capabilities Consistent processes across branches Real-time visibility and reporting System integration INDUSTRY Banking COMPANY PROFILE SOFTWARE PARTNER PROFILE SOLUTIONS USERS BENEFITS Norway Since 1832, Sparebanken Vest has been providing financial services to private and corporate customers. It has 54 branches in western Norway and employs 800 people. K2, Microsoft SharePoint, Microsoft Outlook, Microsoft Visual Studio Vivento is a Norwegian consulting company with offices in Oslo. It helps customers design and implement business process management solutions and create platforms for continuous improvement. Over 50 front- and back-office banking processes Up to 800 K2 users Significant efficiency gains for front-office staff, freeing them up to spend more time with customers Reduced back-office staff, resulting in long-term cost savings Faster, more robust processes, facilitating a higher quality of service for customers Standardised procedures for all employees across 54 branches and offices DOWNLOAD CASE STUDIES NOW