"One of the worst things to do is to put some sexy technology on top of a bad process."
The sentence is from Alice Clochet of PEX (process excellence network) in an article on BPM(1) and cited from Garret Etgen, senior director at Eli Lilly & Co.
During 90s, BPR (Business Process Re-Engineering) programs were applied by many companies as process based transformation initiatives. Companies have established process CoE's as a result of these programs and other than enterprise wide transformation initiatives process based improvement efforts continued. Coming years brought with developments like web 2.0, industry 4.0 and we started to discuss new approaches.
In these approaches:
are processes be emphasized enough?
Business Process Management as a Management Discipline
The concept of Business Process Management went back till 60's Japanese factories as kaizens. Yet, it is not loudly shouted out in current trends, it is crucially important that cannot be treated as a temporary trend. It should not be wrong to call it as a discipline that is one of the main components of management science, and hence it is timeless. With a business process management point of view
it is very straightforward to define areas of interaction and integration between silos, value chains or tasks for a business to continue its operation in a healthy way. While you define the interaction lines of a company with its ecosystem (customers - employees - suppliers…) through processes, you can identify all the cause and effect relationships, input-output structures.
Where shall we begin to transform?
Next-generation customer experience programs, digital transformation programs for internal and external touchpoints, or efficiency and productivity programs for pure workforce optimization…Considering all the enhancements in the technology, paradigm changes in the workforce or human interaction business world will always needs such transformation initiatives. At this point
processes are most effective denominators providing a comprehensive MR for diagnosis and a very practical reference points. While the financial statements, key performance indicators or NPS results mostly answer the "what" question, the processes provide answers for the "how" about companies and mostly they draw the paths to root causes.
Operational Resilience:
Although we talk about "digital transformation" very widely with the pandemic, it has been started with the early 2010s and seems to be continuing during 2020s. Contactless - self-service experiences, increasing level of automations to manage costs while providing 24/7 location independent excellent product and services are the prevalent value propositions of digital transformation. However
technology also brought with its challenges. Know your customer requirements, cyber security risks, frauds from employees or customers, personal data, and a number of other local or global regulatory compliance obligations… We may feel that with digitalization business becomes process_free with automation setups, dehumanized activities, but in fact we need to manage perhaps more business rules, regulatory compliance than ever before. we have to operate the obligations or proactive controls within the processes.
A process point of view enables us to holistically manage all measures and controls that serve risk management and operational resilience in end-to-end value chains. With an end-to-end mind set
required controls would be placed at most optimized part of the process ensuring resilience and efficiency.
A "How To" of Ensuring Effectiveness of Transformation:
I'm sure most of you are familiar with McKinsey's(2) famous article on digital transformation, namely "unlocking success on digital transformation". It is not recent, and even we may call it old since it has already been written 4 years before. However the content seems to be very recent. It states that
"…ears of research on transformations has shown that the success rate for these efforts (digital transformation initiatives) is consistently low: less than 30%".
Considering the investment it requires, it is a very low ratio. It is for sure that there is no one factor to blame or to focus the heighten the success bar. There are various reasons and from a big picture they stated the following 5 as macro focus areas:
- having the right, digital-savvy leaders in place
- building capabilities for the workforce of the future
- empowering people to work in new ways
- giving day-to-day tools a digital upgrade
- communicating frequently via traditional and digital methods
When we go into details some of the figures -obtained from research conducted with companies who had a digital transformation initiative once in their company. - strengthen the importance of a "process view" for digital transformation programs.
Modifying process or to put it in a different way modifying standard operating procedure to include new digital technologies increase potential success of digital transformation by 1.8x.
Transforming "hows" of a company in terms of value production structures which are processes becomes one of the key success factors for the one who applied the change as a result of digital transformation.
Connecting the Dots:
"Processes" are one of the 4 main success factors of digital transformation along with the technology, data, and organizational change capability. (3) (Chapter 3: 4 Key Factors in Digital Transformation Success (impactfirst.co), reference to a Harvard Business Review article.)
I call processes as wires connecting all the value chains of a company. However, to work on them you need to identify them from an end-to-end perspective and after that it is only possible to improve them. One of the common problems related with the digital transformation of processes is trying to apply digitalization on the as-is design of the process, maybe assuming that it is already very mature and effective, or just because of human factor as inflexibility to change how they execute the process. However, sometimes it may be more pragmatic to stop or cancel a task other than trying to digitize it. The world's fanciest digital dashboards contribute nothing to the business if no one looks at them, and besides likely to worth so much cost with no ROI. A digital approval step may have no marginal contribution to the result of process when it can easily be replaced by an automated business rule.
The success of transformation will be very related with:
- Having an agreement and common purpose among all silos of the company to improve current processes and be willing to design new ones when necessary.
- Methods and approaches to evaluate when to have an incremental process improvement or requirement for a re-engineering approach
- Ensuring the end-to-end mindset is represented
- Going back to process basics with BPM
- The keys to a successful digital transformation | McKinsey
- Chapter 3: 4 Key Factors in Digital Transformation Success (impactfirst.co)