Lascom Solutions Inc., San Diego, CA, USA
Document management is critical to efficient business operation, but is a complex task. One OEM supplier has found a solution that can not only handle its annual turnover of 56 000 new documents, but also bring tangible savings to its international business.
An industry-leading OEM supplier designs, develops, and constructs major components for global utility and power producer customers, and has delivered over 450 custom component systems for plants ranging in size from 2 MW to 350 MW. With its strong technical staff, proven track record, and focus on core business process improvement, the company strives to maintain the competitive advantage to continue its market leadership.
With a major increase in orders and customers in 2001, the OEM supplier needed to increase the efficiency of its mission critical processes such as document review, document release, and vendor/customer transmittals. To find a solution, it established a Business Process Management (BPM) software selection and implementation ‘core team’. This team consisted of representatives from product design, project management, systems engineering, and information technology (IT).
Figure 1. Advitium project cash flow. The ROI model shows that both tangible and intangible savings can be made
The core team looked for a software solution that could automate processes, while maintaining the capability to manage the different versions of documents. In fact, the company was looking to consolidate several existing data management systems into one solution. The four key selection criteria were: ease of installation; adaptability to changing or evolving system requirements; low lifecycle cost; and rapid deployment.
Ultimately, the company evaluated and purchased Advitium from Paris-based Lascom in July 2001 to manage its critical business processes. Advitium is a Package-Centric BPM workflow application that automates, controls, and traces information through predefined and ad-hoc business processes. Advitium met the company’s key selection criteria and also impressed the core team with its ease of adaptability. In addition, the company was impressed by Lascom’s professional services expertise and implementation methodology. It began its Advitium implementation in August 2001 and went into production with over 250 users and four custom-automated business processes just six months later on February 4, 2002.
With the rapid increase in orders, the OEM supplier needed a BPM software solution that could manage over 56 000 new internal and vendor documents annually with an average monthly run rate of 310 document review and 556 document release packages. It also needed to provide its 250 users with the ability to search, retrieve, view, and print from a database of over 180 000 legacy documents and drawings. Being a Microsoft-centric company, a solution that leveraged Microsoft technologies would fit well into its IT framework of application servers, file servers, and database servers.
Figure 2. Lascom’s Advitium solution is a Package-Centric BPM workflow application that can help OEMs manage critical business processes and reduce costs at the same time
The next step in the solution purchasing process was to look at the business model and see if the Advitium solution could provide a significant return on investment.
The return on investment (ROI) model outlined a 3.5-year cost/return project lifecycle window and measured three business factors ” total solution acquisition cost, tangible solution returns, and intangible solution returns. Before diving into these business factors, the core team established reasonable assumptions for allocating fully burdened personnel labour costs and the company’s financial cost of capital.
The first ROI business factor, total solution acquisition cost, calculated the complete Advitium solution cost over the entire solution lifecycle. The cost analysis began with the Advitium software cost and Lascom professional services costs including the cost to install, configure, train, and rollout, which totalled $250 000. Added to this was the computer hardware, solution maintenance, and the personnel required to set up and operate the system. Some 44 per cent of the total $660 000 solution cost resulted from internal labour cost.
As anticipated, the internal labour costs were more than double the cost of the Advitium software and the Lascom professional services combined. The lesson learned here is to not underestimate the costs of internal resources required during both the solution set up and the maintenance phases of the project. This internal personnel investment helps to ensure that the software solution meets the specific targets and the unique needs of the users, and that it also provides value to the organization.
Tangible solution returns
The ROI model then outlined the tangible returns (hard dollar savings) resulting from the operation of Advitium. As determined during the process design phase, manual document logging and tracking, which was performed by the engineering secretary and design clerk, could now be completed automatically by the Advitium system. As such, this individual could be assigned a new role in the company with a direct savings to the operation of $120 000.
The OEM supplier had designed, developed, and maintained its own data management systems built with off-the-shelf application development kits and SQL server databases. Before the implementation of Advitium, these systems managed over 180 000 document and drawing files, revisions, and meta-data. By consolidating these internal systems, it eliminated the hardware maintenance, the software upgrades, and the personnel needed to train new users on the system. This resulted in total savings of $50 500 over the 3.5 year project horizon.
By enabling the electronic review and approval of these documents, Advitium drives down printing costs. Using a 50 per cent reduction target, Advitium contributes over $95 000 in savings. Moreover, with Advitium’s ability to share specific technical information electronically, the number of express mail packages sent will decline, yielding savings of $64 000. In addition, Advitium’s error checking reduces the number of vendor and customer transmittal packages that need to be present due to erroneous data. Assuming that each reworked transmittal package requires six hours of labour and that four per cent of the 3624 transmitted release packages need to be reworked, the ROI model yields a savings of $60 405.
All in all, Advitium yielded a total tangible return of $409 276. Personnel reduction/reassignment and paper printing reduction yielded the largest tangible savings of 29 per cent and 23 per cent respectively.
Intangible solution returns
The last step in the ROI model outlined the intangible returns (soft dollar savings) resulting from the operation of Advitium. These included document review/release cycle-time reduction, document retrieval and distribution reduction, data accuracy improvement savings, and business information status reporting reduction.
As shown in Table 1, the Advitium solution reduced the review process by 0.1 days and the release process by 0.3 days.
When multiplied by the total number of review and release packages and by the project manager’s hourly rate, this reduction in cycle-time yields a $1.9 million return for the company across the 3.5-year project lifecycle. When compared to the other intangible costs, this cycle-time reduction drove 81 per cent of the intangible returns for the solution.
This cycle-time reduction benefit is consistent with the intuitive value proposition of getting information to the right people in the shortest amount of time. The document retrieval and distribution reduction results from the ability of each user to search, view, and print documents and drawings in the Advitium vault.
Since the data is more accessible and the process is self-service, the time saved in the process results in intangible savings in user wait time. Because Advitium reduces multiple data entry and also provides basic data entry error checking, input and processing errors are also reduced. This increase in data accuracy reduces information scrap and rework, thus providing further intangible savings.
In comparing the tangible and intangible Advitium solution returns, it is interesting to note that the intangible returns drive over 80 per cent of the total returns for the project.
This result is attributed to the significant return impact that cycle-time reduction creates. For this ROI model, a 0.3 day reduction per Advitium package results in a total savings of over $1.9 million. Clearly, cycle-time reduction drives the best return for companies looking to automate their mission critical business processes.
The complete Advitium solution yielded a total project ROI of 434 per cent, a net present value of $1.3 million, with a payback period of only 5.9 months over the 3.5-year cost/return Advitium project lifecycle window.
A mission-critical solution
Advitium is a package-centric BPM workflow application that automates, controls, and traces information through predefined and ad-hoc business processes. It operates in a browser-based environment for both intranet and extranet hardware configurations.
Using industry standards of XML (eXtensible Markup Language), SQL (Standard Query Language), and XSL (eXtensive Style Language), and proven technology from Microsoft, Advitium provides customers with an end-to-end solution for automating the movement of task-critical information through an organization’s internal and external customers, while maintaining complete traceability. Advitium also provides the technology to archive and organize information for future analysis, thus helping companies to build and maintain a complete knowledge base of best practices.
Advitium operates by storing all data for a particular instance of a business process in the form of an XML package. All the package meta-data, product configurations, intelligent routing slips, history, transactions, user inputs, reporting, and data items are stored in the package. By using Advitium to automate a business process, integration to query and import data from legacy systems occurs between the Advitium XML package and the legacy system only. This makes the queries easier to manage and maintain. It also increases the performance of such data exchanges.
Once the data is queried and received by the Advitium package, it is then stored in the package for processing during the workflow. Usually at the end of the business process, data is then written to the Advitium vault/library function. This data can also be written directly back to the customer’s legacy systems. This package-centric approach with XML provides Advitium customers with real world flexibility.
The two key functions of the Advitium application are the vaulting/library functionality and the process workflow automation. With these functions, Advitium helps manage the information related to a product, from managing configurations, to tracking documents and collaborative processes. Authorized personnel can view and edit this information online. Advitium is fully scalable, and can be used to manage anything from a single project to multiple facilities at multiple locations.
Advitium’s process workflow automation enables professionals to be more effective with their existing business processes by pushing the right information to the right process stakeholders at the right time in the process. With just an internet browser you can create a virtual review package containing process forms, documents, drawings, pictures, supporting URL links, tabular information, and data from other information systems. Then you submit the package to the process and Advitium does the rest.