BPMCAMP Sessions: Strategies to Quantify Business Value

Scott Francis
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Retina-BPMOur own Ted Irani gave a talk at BPMCAMP on strategies to quantify business value.

At BPMCAMP we had a lot of content about building practical solutions with BPM, but this one was all about how to put the business case together and build consensus.  You may have a gut feel for what will impact your business and make a difference. But to get your ideas funded, you have to move to the next level and quantify the idea.

Heisenberg Uncertainty Principle…

And before we quantify, we have to do a good job defining both the opportunity to improve, and the units of measure that are relevant, and the uncontrolled and controlled variables. Let’s not forget the intangibles as well as the tangibles: Customer satisfaction, Quality, Simplicity.

We have to avoid the paralysis of not having everything 100% clear before we act – this kind of analysis paralysis happens all the time. You have to move forward – and start with your educated guesses, also known as hypotheses.  Come in with a hypothesis and test it.  In the end it is all educated business guesses. you’re the one tasked with it and you’re most equipped to make those guesses (hypotheses).

You have to test your hypothesis, and measure your variables – just as you would with software, you test with the business case.  In physics you can’t know both the location and the velocity vector or a particle with high precision (Heisenberg Uncertainty).  And yet we can learn a lot about what we can observe and the statistical probabilities. Similarly in Business, if we focus too much on exact information we’ll lose sight of the whole forest – we have to recognize that business leaders make decisions based on imperfect information all the time – and then keep their minds open in the event that the data changes and indicates a different course of action.

Even if you can’t measure a subjective impact, you want to list it as part of the business case – pro or con.  Socialize the business case. Put the paperwork together to build the case and the consensus behind the value.

Ted walked through an interesting example of the trash burning energy plant that failed in New Delhi – didn’t have the caloric value of trash to plug in.  Trash there had little in it that burns, and came in sopping wet (open containers, monsoon season), and so the cost of incinerating was higher than the value of energy produced.

The goal is to make decisions…

As a stakeholder, your job is to absolutely agree, or absolutely disagree with the business case. If you don’t have enough information to agree or disagree, push for more information – the information you need.  Driving consensus not driving non-disagreement.  Don’t just shrug your shoulders about it, you have to get engaged and vote yes or no – and get enough information to arrive at that answer.

“You are right, but…” 

“You can’t project this from what you  have laid in front of you.”  You’re right, but, we’ve projected based on historical and we can track as we go and feed it back in.  “This can’t work without X”.  You’re right, we don’t have X, but we have to move based on what we have today, and I’m told we’ll have X in the near future.  When assumptions are challenged, ask them what assumption they would make instead.

A big part of succeeding with a business value analysis is handling the challenges to the case.  When someone challenges you (or the business value) – their data may be right, and they may be passionate about it – get together with them and understand their data and see if you can find traps for your own effort, or specific issues you can zero in on with a new perspective or tooling.

Talk to the detractors of the business case to find out where they’re drawing their information from, and bring them in the fold because that data may help you avoid pitfalls or find new opportunities.

Value your Subject Matter Experts…

How do businesses value Subject Matter Experts (SMEs)?  Once we have recorded their knowledge in some kind of process or system, if a SME leaves the company we retain some of their knowledge.  The real knowledge of the process may sit with the operators within the process – but the company doesn’t value these front line troops, and doesn’t think you need to talk to them. But reality is that they have a lot of useful information that can save your project, and you’re empowering them by including them.

To conclude, Ted turned to applying this business value approach to buying Amazon Prime. How much does it save you in round trip mileage for gas, balanced against items you can’t avoid going to the store for.

 

 

 

 

 

 

  • Ted Irani

    Great summary Scott. Goals and a mission statements aren’t just for companies, they are for projects too! We just call them business cases.