A value-based approach to the ex-ante evaluation of IT enabled business process improvement projects

In this study, we propose a value-based management approach for assessing the potential for process improvements enabled by an information technology (IT) solution. Based on activity based management concepts, we perform a granular, process level analysis on workflow structure and associated resource consumption to provide quantifiable measures of potential improvement prior to system implementation. The proof of concept of this approach is illustrated in a southern United States county in need of integrating different government branches through an ERP implementation. Based on prior research, we first provide a catalog of non-value added (NVA) activities that can be used in management control and governance procedures for the systematic identification of process inefficiencies. Next, by breaking down processes to the level of atomic activities, we show that minimizing NVA activities provides a systematic means to mitigate process inefficiencies. A significant observation is that different NVA activities may impact process performance to varying degrees. Consequently, line items in the request for proposals (RFP) should be weighted accordingly during the vendor selection process, contrary to the common practice of treating all line items equally.