BPM Cloud Requires a New Business Model to Add Optimum Business Value

I’m not saying that Cloud offers no value. Rather, I am saying that Cloud offers the technology and the opportunity to deliver far more customer value through an improved business model.

Traditional BPM Project Spend

When we set out to design e5 Workflow, we didn’t want ‘just another BPM solution’ bolted to’ just another ECM solution’ delivering the same lumpy project style. Our goal was to create an ECM/BPM framework that could be used in a far more agile fashion, to support both the initial project and ongoing improvements. It seems counter intuitive, but we started making the argument with our customers and prospects that the initial projects should be smaller, cost less, easier to deploy and be a ‘flatter’ investment. From our customers’ perspective, their experience has shown that after the initial BPM project is launched, nothing new happens for quite some time. If functionality is not included upfront, it won’t be available until the next distant upgrade.
We needed to dispel these fears to get a “foundation” project implemented and go live, visualize the metrics on ‘how many, how fast and how much’ it cost to flow the existing processes and then engage the customer in a constant improvement program (CIP). In effect, the project needed to look more like this:
 

e5 ACM Project Spend With CIP

 
This approach worked very well for the initial project and why wouldn’t it? We, as the vendor, are recommending that the customer spend less which minimizes risk, and since change is introduced over a period of time (versus the big bang approach), user acceptance and training are improved. Once the initial project is online, we are ready to engage in a never-ending quest for processing perfection.
We were wrong! Once the project was implemented, we effectively fixed the most burning issue. And while we had created a platform to chase constant improvement, our process owners typically turned their focus to the next biggest burning issue.
We then realized we needed a better way to engage our customers and keep them interested on an on-going basis. The answer: Cloud – which provided a catalyst to develop a new business model – one that ‘lands’ the platform at minimal cost and risk.
Most of our customers run very similar business processes. But their products, skills, and company cultures differ. We cannot take an out-of-box template, lay it over a product environment, and get the customer to adapt their business processes to suit the template. Even if there is only a 20% difference in process, there is still a significant amount of professional services effort required to build a 100% custom solution. With e5 workflow, our objective is to enable skilled business analysts to setup, configure, and extend the bulk of the solution. Coding is kept to a minimum and only done when absolutely necessary (e.g., integrating e5 with an in-house system). This means that coding provides flexibility and removes barriers, but it does not and will not form the basis of the solution delivery.
If the business analysts and developers are highly skilled in understanding the solution, we are confident enough –  assuming we pick our projects carefully and manage customer expectations well –  to deliver all of the services upfront at our cost and deliver the customer a pay-by-the-month Cloud solution.
So now the project expenditure graph for our customers looks like this:

e5 Cloud ACM Project Spend With CIP

 
Can we afford to engage this model on-premise? No. On-premise projects are owned by the customer and as a solution provider, we rarely have sufficient control to risk an amortized services cost. The Cloud however is different; the customer owns the outcome, the service, the daily use of the solution, but they do not own the’ build’ of the solution. Customers expect us, as a solution provider, to be the experts and to deliver the solution TO THEM. Customers will accept a far tighter “foundation” project as long as it delivers real value at a cost that makes sense. This allows the service provider to put every effort into making the project as tight and efficient as possible by managing scope, clearly focusing on customer value, using highly skilled solution resources and building re-usable components. Given that the solution provider can better manage the risk in these projects, the added risk of funding the project is not onerous.
With every customer where we have engaged in a Cloud CIP Program, they see regular and iterative improvements to their solution. The CIP program can be built into the monthly cost of the solution or, we can provide a stepped payment arrangement where brand new initiatives attract further services which lead to increased monthly payments. As long as the customer gets real value for each increased payment and the solution provider manages cost, risk and the quality of the solution, why shouldn’t this be the basis for a long term and rewarding partnership?
We have implemented Cloud CIP projects successfully several times now, and every project has resulted in a successful partnering arrangement between e5, as the software provider, and the customer. I firmly believe this is our future as solution providers. Our challenge is to arm ourselves with the appropriate tools to support this highly agile approach, engage forward thinking customers who desire a services outcome and most importantly, create trust so that our customers will partner with us for the ongoing improvement and value realization.

Leave a Reply

Your email address will not be published. Required fields are marked *