Processing Cost, Change and ROI

I had the chance this week to catch up someone from my former past who is an absolutely awesome consultant (in this case I mean, project manager/business analyst) who is now working for a bank.

As we caught up on how things were, we ended up talking about the drivers for a large initiative she is helping lead from the business side as opposed to her usual spot in IT. (by the way this is an awesome thing just as the business should sit in IT sometimes).

Inevitably we ended up talking about the issue of cost reduction and return on investment.

Now I bring this up as we ended up talking about how there was an issue actually understanding the cost of the current state.  So I asked how can you even talk about ROI if you have nothing to benchmark.  She laughed and said that their process outsourcer had a 3 inch binder on how the cost was calculated and nobody at knew how that worked, so they waited for the bill and then paid it.  This presented issue multiple stages – Current State.

  1. Current State – so we talked about process modelling and my favorite Casewise.  We also talked about modelling this with the cost data to come up with a mechanism to evaluate cost on the confusing model.  But I strongly suggest that she look at Casewise to be able to model current state and attach costs, people, process, systems all together to be able to evaluate current costs.
  2. Future State – the outsourcer is also largely determining the future state (in this case), but we then talked about now capturing a model about what that would be.  This actually was for three reasons:
    1. Future Cost Modelling of the processes to then calculate future cost – ultimately ROI and to look for improvement
    2. Training – once these are captured Casewise does a great job of publishing for re-use in training
    3. Testing – probably the biggest value in this case as it is crucial with the nature of this project and most back-office banking projects for this to really work
  3. Return on Investment / Cost Reduction – without the previous two items, all ROI is anecdotal and of very little true value to the business.

It was very nice to catch up with an old friend and in this case re-assure her that she was not alone and that I had talked with many fortune 50 companies that suffered from an inability to be able to truely capture these items to make them meaningful and supportable.

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