Presentation on theme: "Business Process Management. A method of evaluating the financial consequences of business investments, decisions, or actions. A high ROI means that."— Presentation transcript:
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.
ROI = (Gains – Cost)/Cost 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
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
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
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 = BenefitsCurrent Cost – Cost after Change = Benefits
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
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
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
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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