Efficient Processes Must To Sustain Growth

Daniel Sheahan, SVP, APAC & Japan, IDS Scheer, in conversation with Biztech2.0, discusses the reasons companies fail to achieve maximum efficiency and the impact of Business Process Management (BPM) solutions on operational efficiency, cost control and service delivery.

What are the initiatives that IDS Scheer has taken in India?

BPM is typically looked upon as many different things, ranging from middleware through to tools for drawing and designing processes. Our ARIS solution is a platform for designing, implementing and most importantly, monitoring the performance of business processes to provide information that will allow organisations to optimise their process to the maximum efficiency.

Figures from IDC show that the BI and BPM market in India is expected to grow by 13.5%, to reach US$639 million by 2010. To tap into this enormous growth, we have just opened an office in India, with Mehul Rajparia as Country Manager, India. His role is to expand our existing footprint, which includes clients like the Reliance Group, The Furure Group, ITC and HCL.

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IDS Scheer is recognized as a major player in the global market for protecting large enterprise solution implementations and hence we have strong relationships with the big Indian system integrators, like Satyam, Tech Mahindra, Wipro and Siemens. We are also currently in discussion with TCS and some of the other players in the market for them to support our solutions.

Can you outline the need for BPM and its impact on operational efficiency, cost control and service delivery?

There are two factors driving growing organisations, particularly in the Indian market. The first being the increased reliance on large enterprise applications like an ERP or SCM. The potential for corporate failure based on inadequate enterprise applications is huge and organizations can stand to lose hundreds of millions of dollars. BPM solves this problem by providing the bridge between the business and the actual applications. By ensuring that you have well designed and efficient processes which drive into your ERP system or other enterprise applications, you can protect your organisation from this risk.

The second factor is true operational efficiency. If you have a look at the Indian market at the moment, the growth is massive and organisations have set growth targets of 100 to 200 percent per year. To be able to realise such searing growth rates without risking corporate investments, organisations need to be more efficient than they have ever been before. Unlike China, where questions of efficiency are solved by throwing manpower at the problem, Indian enterprises need to understand the cost and efficiency of their current processes and need to be able to take concrete steps to make these processes more efficient.

Thus, more and more organisations in India are looking to BPM to provide this information.

How is the adoption of BPM solutions being driven by regulatory problems and compliance issues?

As an increasing number of Indian enterprises go global, regulatory and compliance issues are another major component driving corporations down the BPM path, as they are now encountering Basel II, Sarbanes Oxley and other international regulations.

So compliance and risk management is a huge component of an organisation’s IT expenditure. On average, a large Indian organisation would spend US$2-5 million to become compliant and a similar amount each year to remain compliant.

Our solution for GRC (Governance, Risk and Compliance) accomplishes two things. The first being, documentation of the processes that exist to meet and maintain compliance, and the second being monitoring those processes, to catch any action that may lead to a breach of compliance and risk, in real time. If a process is being bypassed, our solution can spot the breach and escalate it in real time, sending out letters and alarms to red flag the action. Thus, this is a real-time risk management solution for governance.

Why do companies fail to achieve maximum efficiency and what correlation does this have to the quality of business transformation?

Inefficiency has a number of impacts, the first of which being high costs. The second deals with a negative customer experience, which can lead to a loss of revenue. Thus, inefficient processes have high costs and lead to a loss of revenue. This is the reason why understanding the impact of process and their efficiency on the business is so important.

For instance, we have been able to reduce the claim processing time for an insurance company from three weeks to four days. If you estimate the earlier cost of claim processing to be US$190 and you can reduce that to US$15, this difference multiplied by the number of claims processed each month, you will have multiple benefits. The first obvious one is the reduction of cost, while the second is in terms of improved customer experience. Reducing turnaround time from three weeks to four days is a massive change in the customer experience. Thus these changes allow an enterprise to capture a greater market share, while reducing costs at the same time.

How does IDS Scheer expect to achieve high levels of operational efficiency and services for businesses?

There are many products in the market that will document processes. We, at IDS Scheer, don’t believe in only documenting processes, we believe in actually doing BPM. So not only do we supply the BPM software, but we also have subject matter experts who teach our clients how to implement BPM into their processes.

In India we are building a consulting organisation at two levels. The first being software experts, with expertise in ARIS and other related software and the other will be business experts across various verticals like banking, finance and manufacturing.

These experts will look into the core areas of BPM at IDS Scheer, which are GRC, SRA, Enterprise Architecture, Enterprise BPM and ERP Driven BPM. Thus, we have experts who understand the application of process management and efficiency within these disciplines. This consultancy service is provided both in conjunction with our solutions and separately. A new customer will typically buy ARIS, the BPM software solution and the consultancy service to help with the design of their environment. Typically our solutions would cost an enterprise 100,000 Euros for the software and the same for consulting. Also enterprises should be able to see tangible returns on that investment within three months.