Value Modeling and BPM: From conceptual models to physical execution

By Fred A. Cummins, prof. Mark von Rosing and Henk de Man

Introduction

Value Modeling is one of the most common dilemmas and challenges confronting companies today, regardless of factors such as size, revenue, industry, region or business model[1].

There is a need to manage decisions to make large-scale investments in business and IT-enabled capabilities as well as to ensure that these complex investments are effectively and efficiently transformed into the different competencies to realize concrete business value[2].

In far too many cases, this business value simply is not realized[3]. Just consider the many different cases and evidence in the research space today.

In recent years, survey after survey has revealed that from 30 to 70 percent of large-scale investments in, for example IT-enabled change, is wasted, challenged or fails to bring a return to the company. In fact, one survey from the Butler Group[4] on measuring costs and value found that, in many enterprises, less than 8 percent of the IT budget is actually spent on initiatives that bring value for the company.

Another survey from Deloitte about ‘Driving Enterprise Value[5] of 124 financial executives revealed that almost 80 percent of IT projects did not actively encourage value creation and thereby realization in their enterprise.

In a yearly (from 2009-2014) accruing CEO study, IBM survey of Fortune 1000 CxO found that, on average, CIOs believe that 40 percent of all IT spending brought no return to their organizations[6].

A 2007 study[7] conducted by The Standish Group found that only 35 percent of all IT projects succeeded while the remainder (65 percent) were either challenged or failed.

[1] Value Model Reference Content (LEAD-ES20007BCPG)
[2] Applying Real-World BPM in an SAP Environment, Ann Rosenberg, Mark von Rosing, Greg Chase, Rukhshaan Omar, and James Taylor, SAP Press, 2011, ISBN: 978-1-59229-343-8
[3] Brandenburger, A. M. and H. Stuart. 1996. “Value-based business strategy.” Journal of Economics & Management
[4] Butler Group, ‘Measuring IT Costs and Value’, East Yorkshire, England, Butler Group Press, September 2005
[5] Deloitte, ‘Driving Enterprise Value,’ Deloite Press, New York, October 2004
[6] IBM Global CEO study, 2009, 2010, 2011, 2012, 2013 and 2014, IBM Value Institute Press, New York
[7] Cook, R.; ‘How to Spot a Failing IT Project’, CIO Magazine, 17 July 2007

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