How To Make a Business Case For Process Mining

Fire-fighting should not be the mode in which we change processes

Most organizations have complex processes that are hard to manage and control. Moving out of a fire-fighting mode and stepping back to understand the existing business processes is the necessary starting point for process improvement.

A lot of data is available in IT systems (e.g., CRM, ERP, Workflow, PDM, ITSM, homemade or legacy systems, data warehouses, or even Excel) that contain detailed information about which activities are performed, when, and by whom. What is needed are quick methods to gain insight in this data to understand the underlying processes and take actions.

Process mining can be used to quickly and objectively get a complete picture of a process by automatically analyzing the IT data and visualizing the real process flows that took place.

Many of you already know this and are convinced about the benefits of process mining. But you may still be asked to make a business case before you can start. So, how exactly can you quantify the added value of process mining?

You will need to look at the precise use case and business context in which you want to apply process mining. This article provides several example scenarios in which process mining helps internal process improvement departments. Many of these advantages also apply to other process mining use cases, such as auditing. At the end of the article, we provide you with an ROI template that you can use as a starting point for your own process mining business case.

1. Challenges for Process Improvement departments

A Lean Six Sigma or Process Improvement department, a Change Management team, a Process Excellence function, or a Process Performance or BPM group employs process experts and internal consultants who help different departments in the organization to re-structure and optimize their business processes. In cooperation with the process owners, these teams deliver process improvements that aim to provide long-lasting cost savings and increased revenue for the company.

The starting point for any process improvement project is the so-called ‘As-is’ process analysis, in which the current state and all the deficiencies of the process are mapped out, and improvement opportunities are identified. The traditional way of process discovery is carried out manually through workshops and interviews.

The advantages of process mining are the objective and quick diagnosis of process issues. If you use a traditional method of manual process discovery, you typically have the following problems:

It takes lots of time for the people who do the interviews and process mapping. This is about the time that is spent by the internal consultants. If they could do their work faster, they could do more projects and therefore deliver more value for their organization.
It binds people (interviewees) from productive work into discussions about how things are currently done just to understand the ‘as-is’ process. This is about the time other people (outside the process improvement department) must spend on ‘As-is’ process discovery. For example, suppose there is a one-week workshop with one consultant and ten employees from the operations department. In that case, this costs the company the consultant’s time plus 50 FTE days for the participating operations manager and other stakeholders.
The results are subjective, based on what people think about the processes, not necessarily on how the processes really are. If these subjective insights are used as the basis for the improvement project, there is the risk that the applied improvement measures will not be effective (because they do not address the real problems).
Different opinions may not be resolved (political deadlock). In situations where the participating people cannot agree on a unified view of the ‘As-is’ process and its problems, the risk is high that the project will fail, and no process improvement will be carried out at all.
You get only a sample view, not the complete picture. The manual picture will never be complete if you ask people to spell out the process. Like with the risk of a subjective bias, an incomplete picture carries the risk of missing important parts in the process analysis and therefore the risk of implementing the wrong (ineffective or even counterproductive) improvement measures.
Manual tracking and measurement is costly and biased and provides only sample data. This is about the practice of measuring process steps with a stopwatch to collect objective evidence: (1) Doing this manual work is very time-consuming, (2) People who are observed behave differently than normally, and (3) Only a limited sample can be obtained (e.g., tracing 30 cases over a few weeks).
Because the cost of process diagnosis and information collection is so high, it cannot be easily repeated. Therefore, the impact of process improvements is often hard to estimate (“Did we really achieve what we wanted to achieve?”). Without a way to measure the effect of the improvement initiative, the actual value that the project delivered to the organization cannot be measured. There is also the risk that people fall back into old behavioral patterns after some time.

In the next section, we review how process mining can help to address these seven challenges.

2. Benefits of using process mining in process improvement projects

Process mining significantly lowers the cost of understanding the current process by bypassing interviews and extracting the necessary information out of the existing data from the IT systems. This way, you can focus your discussions on ‘why’ the processes are performed the way they are. Furthermore, iterative improvements with continuous assessment of the impact of changes become possible because you can repeat the analysis at any point in time at little cost.

The benefits of process mining with respect to the challenges discussed in the previous section are described in the following table:

3. Ingredients of your business case

While the benefits of process mining are often obvious and it is clear that using process mining will “pay for itself,” you will most likely find yourself in the position of having to justify the investment. How do you do that? You create a business case for your management to approve the purchase.

Ultimately, each business case is unique, but you can follow a number of guidelines to put it together. In this section, we give you a starting point for how you can create a business case for your own process mining projects (see also the ROI template in the next section).

First, you can assemble the investments that you need to make. Think of the following components for a process mining project:

Software license cost – The use of the process mining software
Training cost – Educating the people who will use process mining about the approach and the software
Employee cost – Time investment of the people involved in the project (analysts but also additional stakeholders)
Data extraction cost – You may need to pay the IT department (or your external IT provider) to extract or transfer the data
Professional services – If you are getting help from an external consultancy to help you with the project, their services need to be incorporated as well

To quantify the return, you can think in two dimensions:

Saving costs: Where will you reduce your current expenses?

There are two categories of cost savings that you can consider for process mining projects:

1.1. Cost savings through more efficient As-Is Process Analysis

Revisit the section ‘Benefits of using process mining in process improvement projects’ above to think through this category of cost savings. Doing at least one small pilot project in your organization (that you can compare with past projects that you had done in “the old way”) will help you get some hard numbers you can use for your business case.

For example:
- Time reduction for process analyst: How much faster was the process discovery for the analyst? How much effort did it take before to understand the current processes and collect and analyze data manually?
- Less time for subject matter experts in the As-Is workshops: How much time have you saved for these stakeholders in the workshops by focusing on the ‘Why’ rather than the ‘What’?
- Avoided risk of focusing improvement activities in the wrong area: It is easy to waste process improvement resources by focusing on the wrong places or processes. If you have seen project failures in the past, can you quantify their loss in proportion to the risk and include this component in your business case?
1.2. Expected cost savings through the process improvements themselves

If you make your business case for the overall process improvement project (not just the use of process mining in your current process improvement activities), include the potential cost savings from the improved processes. This is usually difficult to quantify beforehand because you do not yet know how much improvement potential you will find.

Also, here, it can help to first do a quick scan of your process to get some hard numbers, if possible. Alternatively, you may be able to draw upon your experience from past process improvement projects or your domain expertise about the process and the potential value of improving it just a little bit (especially for high-volume or high-value processes, small improvements can have a big impact).

The expected savings will then be quantified in a unit that makes sense for your particular process.

For example:
- Fewer steps: How many steps are needed to complete one case in your process? Your process mining analysis can often determine an ideal range of steps. Cases that take more steps indicate rework. Your improvement project will focus on finding the root causes and avoiding this rework in the future.
  
  You can then determine the improvement potential based on the process’s volume. For example, for the incident management process at a bank, the cost of one step was estimated to be around 20 Euros. If you can save 200,000 steps within one year, this cost reduction is 4 million Euros.
- Reducing total activity time: In processes where the time of activities incurs significant costs, reducing their duration can amount to cost savings. For example, in call centers, one minute of an agent being on the phone with a customer is often quantified with 1 Euro in costs.
- Avoided penalties: In some processes, missing specified Service Level Agreements (SLAs), for example for how fast the service is delivered, leads to penalties that need to be paid. If improving the process leads to a speed-up that helps to meet the contract SLA for more cases, then these penalty payments can be reduced.
- Improved quality: If poor quality of the delivered product or service leads to the rejection by the customer, then all the steps that were taken to deliver this service or product were essentially wasted. Clear processes with quality assurance measures on the way, and the adherence to these process guidelines (i.e., compliant processes), can ensure that services are delivered more consistently. If your process mining analysis helps to reduce the variation in the process and improves compliance, then the reduced rejection rates can be quantified in terms of less waste (i.e., cost savings).
- Fewer people: If, by improving the process’s efficiency, fewer people can handle the same amount of work, then their salaries can be used to quantify the cost savings.
Increasing revenue: What will you gain that you did not have before?

If you can tie your process improvements to additional revenue, your business case should state these expected gains and put them in perspective with the investment.

For example:
- More orders processed: In a telecom process, almost half of the customer orders were lost because the ordering process did not work well. Solving these process problems increases the revenue in the value of these otherwise lost orders.
- Happier customers leading to more business: In customer service processes, often the focus is not so much on saving costs but on making the customers happy and, therefore, keeping them as a customer and having them recommend the company to their friends and colleagues. Their process improvement initiatives target the increase of customer satisfaction measures, such as the Net Promotor Score (NPS), which are then used as a proxy to estimate the resulting increase in revenue.
- More payments: In processes that deliver services to their customers based on contract SLAs, it can be the case that the customer only pays for the service if it was delivered on time. If the process efficiency can be improved in such a way that more cases meet the SLA, then this leads to an increase in revenue.
- Sustaining improvements: One of the challenges discussed above was that traditional process improvement projects have trouble maintaining the effects of their process improvements over time. If people slide back into old patterns, then the gains from these process improvement initiatives are lost. Process mining can help to verify and monitor the effectiveness of past process improvements to sustain the improvements.

Finally, even if they are harder to quantify, make sure to mention “softer” benefits such as being in control, being proactive, etc., and also think about whether you can tie your proposal to your company’s strategic goals. For example, many organizations place importance on digital transformation in their strategic agendas for the next five years.

4. ROI template

You can create an excel sheet, where you list the investment on the one side, and the expected cost savings and revenue increase on the other side, to show how long it would take to recoup the investment over time.

For example, if a total investment of 100,000 Euros will lead to an expected revenue increase of 20,000 Euros per month, your business case shows that the investment has paid for itself within five months. After that, every month will continue to deliver an additional 20,000 Euros for the business.

To make this calculation easier, we have created an ROI template that you can use as a starting point:

→ Directly download ROI Business Case Template in PDF format (contact us for the Excel and Numbers versions)

When you look at the template, you will see that it follows the same structure as this article. However, it is more detailed and provides examples for process improvement roles, auditors and controllers, IT departments, and process owners. Furthermore, it includes examples of soft benefits and further references.

We are curious if you get to use the ROI template and if you have any additions or feedback about it. Let us know, and if you find it useful, share it with your colleagues!

5. Process Mining Café

Business cases can be tricky. What do you include in your calculation, and what do you leave out? What is a realistic assessment, and what is just wishful thinking?

In this month’s Process Mining Café next week on 17 April, we will look at a concrete process mining project and discuss its business case in more detail. We would love for you to join us and share your own process mining business cases.

Keep an eye on this blog or sign up at our café mailing list to be notified about this Process Mining Café and all future café editions.