You’ve done the difficult task of conducting a business process reengineering effort, but how do you quantify the results? BPR is a very drastic practice, and can be somewhat more difficult to measure than you might think. When you consider the scope and depth of a BPR project, cleanly pointing out tangible benefits might seem like an impossible task.

However, with the right strategy in mind, you can successfully justify all expenditures in terms of materials, funds, and other resources. Thankfully, you don’t have to go about figuring out practical strategies on your own. We’ve got you more than covered in today’s guide, which will go over the ins and outs of how to measure the ROI of your BPR projects.

Understanding Core Objectives

Before starting your BPR project, you’ll want to take a moment to grasp the fundamental objectives behind your initiative. These will differ from organization to organization. Some common ones can include items like cost reduction, quality improvement, and increased revenue and profitability. You’re undergoing a major change in your current processes, overhauling them from scratch.

To achieve dramatic improvements, you need to have a clear finish line in mind for your project. When it comes to measuring ROI for any BPR project, having transparent, concrete core objectives for your initiative is vital. While we often look at these items as just a matter of course for the likes of any sort of process improvement, they’re highly important later on in the BPR project when you’re measuring output.

So, take the time, confer with your team and stakeholders, and get a handle on where exactly you’re steering things. BPR isn’t something done half-heartedly. It will need complete and total commitment in addition to a robust road map to get you to the ideal solution.

Define Measurable Objectives and KPIs

Of the various guidelines we’re suggesting for measuring ROI in your BPR project, this is the most important. You can’t quantify unknown objectives. It’s simply impossible. For each objective you set in the previous step, you want to use SMART to identify viable KPIS for measuring later on.

When looking at something like cost reduction, this could be operational costs, inventory costs, or even debt. The same applies to something like quality, where you’ll be looking at the rate of defects and first-time resolution rate. Simply put, you want concrete metrics. Measuring ROI with intangible targets is doable, but it saves you a lot of legwork to find the right metrics now.

Having the right sort of metrics plays heavily into the next few steps, so take the time now. If you want to guarantee success and prove that expenditures and investments were worth it, you’ll need data. There’s no getting around that.

Establish Baselines

Before the start of a project, go around to whatever you’re targeting for an overhaul for monitoring and recording. Accurate data for your chosen metrics paints a compelling picture and can allow you to readily see just how effective your BPR efforts have been. When it comes to how you’re looking to establish any sort of baselines, that’s a relatively simple matter.

Historical data, time studies, surveys, and process mapping are fantastic ways to get the data you need. Further, they’ll likely illuminate why you’re undertaking a BPR project in the first place. Baselines act as a before picture in a crash diet, and are highly useful for measuring ROI in any sort of project. Additionally, having a baseline in ideal conditions can help right the ship if things start to go wrong with your BPR implementation down the road.

I know it’s a considerable amount of work, but any BPR project is going to have quite a bit riding on it before you get down to brass tacks. Eliminating this step and targeting the right metrics you’re after is a great means of demonstrating just how stellar your project’s progress was in the first place.

Identify and Quantify All Costs

Accurately measuring ROI for any BPR project is going to require some rather exhaustive quantifying of costs. You want to take a closer look at all the seen and hidden costs. Direct costs can be the likes of outside consultants, new technology, training, and change management expenses. When factoring your direct costs, be diligent. Even smaller costs can mount quickly.

Hidden costs aren’t always readily evident, but are prevalent in any BPR project you’ll encounter. These include things like employee time, the cost of productivity dips, negative impacts for the transitionary period, and opportunity costs.

One distinction you’ll need to make is between one-time and ongoing costs. When calculating long-term ROI, these costs are important to have on hand to get the most accurate numbers possible. Take your time when calculating out costs, be meticulous, and be ruthless, as it’ll only help you in the long run for justifying the project.

Calculate and Quantify the Benefits

You captured the before picture for your organization’s crash diet. Now it’s time for the after photo. Once your BPR initiative has settled and processes are stable, it’s time for another round of data collection. The metrics and objectives established previously will be your target here. Taking direct measurements is incredibly useful at this stage, but that might not be the only option available to you.

Looking at the impact on revenue and where you’ve reduced risks or defects are also valuable data points, even if they aren’t directly measuring ROI. Intangible benefits will run throughout the project itself, and that’s to be expected. While it can be difficult to quantify something like employee morale, brand reputation, or the ability to adapt and respond to challenges with agility, they provide a complete, holistic view of your organization.

If you’re looking to quantify things like customer satisfaction and employee morale, surveys are a fast and effective means. These can be readily turned into quantifiable, measurable data that will help with the next step. You’re getting ready to put the rubber to the road and show your stakeholders and leadership that everything was worth the plunge.

From here, you can calculate your ROI, which can be done as such:

ROI = Total Benefits−Total Costs/Total Costs ​× 100%

With your ROI in hand, it’s time to present everything.

Reporting and Interpretation

By now, you’ve calculated your ROI, so it’s time to demonstrate just how effective your BPR project was. While measuring ROI might be done, reporting your findings, results, and so forth to the upper brass is vital for future projects.

There isn’t much to say here. Be clear with your findings, contextualize your ROI, and provide those intangible benefits, and you’ve got the makings for a solid post-mortem.

From here, you can start recommendations for other projects and continuously monitor your newly implemented processes.

Other Useful Tools and Concepts

Looking for some other tips and tricks to get the end of the week rolling? You might want to look at how to quantify ROI in your Lean Six Sigma projects. While we’ve talked at length today about BPR, Lean Six Sigma is a complementary practice that benefits from some practical strategies for measuring ROI.

Additionally, you might want to take a look at some of the applications of Kanban outside of manufacturing. While highly useful for manufacturing, Kanban is readily applied to every industry you can think of.

Conclusion

Measuring ROI in any BPR project might seem like a daunting task, but it is easily achieved. The important thing to keep in mind is that you need a solid game plan in place before you start doing the work. With the legwork out of the way, you should have clear results at the ready.