What is Business Process Transformation? Why transform? Digital transformation is understood and is a no brainer. Business Process transformation is an overburdened term, and many get overwhelmed by the sheer meaning or understanding of the term and what would it entail to achieve that. For a lot of companies this becomes more of a theoretical topic of discussion. I think the right term to use is Business Process Simplification and more importantly Simplification in all aspects of the running and growing a business. The positive effect of just replacing a word ‘Transformation’ to ‘Simplification’ makes it all appear as a tangible and relatively easily achievable action. For this post, we would keep the technology and the product fit for the business processes out of this discussion.
Many in the IT industry would have been involved in projects and as part of the review, architecture and design a question of “Why does the process have to be that complex” would have been a common and recurring theme. In many such cases, you would not get a satisfactory response. For companies and organizations where the Sales, Contracts, Commissions and Revenue sharing processes have a longer history, this is a more recurring theme. Habit and routine execution over a longer period make the processes extremely complex. For companies where you see this, you also know that a significantly higher Capital and Operational budget must be allocated and even that does not prepare you well for the frequent surprises in delays, quality and additional cost. More and more of such companies are burdened and spending way too much energy on ‘Running the Business’ and not on Growing the businesses.
Why would you need to simplify business processes?
To understand this the companies must ask a few questions of themselves:
Are the business processes understood easily by a critical group of people within the company?
Are the business processes understood uniformly within the company or do they have many different versions and interpretations of the processes?
Where applicable, are you easily able to explain this to your customers, partners, vendors externally?
Can you explain why it is the way it is?
Do you honestly think the processes cannot be simplified?
Your “honest” answers to yourself for questions like these,
- will be a sort of awakening that will tell you as to how process simplification will create a healthy culture with common understanding within the company and externally
- will also help in setting a ‘NO’ response culture to un-imaginable expectations and complexity and nipping such things much earlier in the execution cycle
- will also increase cohesiveness and the team dynamics across departments, roles of the organization and bridge the gap between IT and business
The benefits of having a common understanding of the simplified business process within the organization and externally is invaluable and will save significantly on the execution cycle, technology/product certification and management. Additionally, with simplified business processes, the following benefits result in significant cost savings
It would be much easier to find a product/technology fit for the business process resulting in significant savings in the form of ‘Total Cost of Ownership (TCO)’ and much improved ‘Time to Market (TTM)’.
Both the capital and operational budgets would be reduced significantly by requiring much smaller operational, support and management teams.
Will result in significantly improved quality and reliability with the delivery from your IT organization. This also would drive higher and happier Customer/Partner retention and boost a Customer Obsession culture within the organization resulting in much improved cost savings and revenue.
Change is inevitable and the business process simplification will create ‘Enablers’ in your organization for future changes.
Simplified Business processes will be the most common and the smallest denominator for a successful completion of an Acquisition for companies growing out of Merger and Acquisitions.
Just pause and think about the perceived or actual cost savings and improved margins from some or all the above.
Plan for Disruption
It is 2020 and the most important strategy for C-Suite executives is to prepare and plan for disruptions. With the technology landscape changing at an unimaginable pace, disruption to your organization is just around the corner with a new company, new technology and with that new competition. This new competition will force the C-suite executives and the Board-of-Directors to improve the operating margins and respond to the competition favorably and most importantly in timely manner.
The business process simplification by itself and then combined with the right technology/product fit will prepare you well for that disruption. Without that, you are guaranteed to be chasing the 8-ball. The technology/product fit would be an article for a separate discussion.
How would you achieve simplification?
- Know – The first important step is information and knowledge. It is required that you gather that information in easily readable and understandable form. For that,
Catalog – Catalog all your business processes. It might be advisable that you do that by functional role and then sequence them together in a bigger business process and repeat that for each business process
Summarize – For each business process, write a small summary of What is the business process, what is the intended use, what is the perceived scale of complexity. A survey for a critical pool of employees asking the “Why” questions might help with this summarization – Why contracted this way, why priced this way, why sold this way, why partnered this way, why audited this way, etc. can help with the summarization
Define Boundaries – For each business process, clearly define the boundary of where the process starts and where it ends.
- Process – This phase includes the following:
Establish Accountability – Define and establish who or which group has the complete and total Accountability of that business process.
Assign TCO value – This does not need to be an exact science and will organically improve over time. However, you should know the Capital and Operational Budget allocation over a defined period and allocate that to the business process as TCO of that business process. Once you associate a cost against the business process, it will automatically help set the goals or targets to reducing that TCO. Note that a business process in the earlier stages of the cycle can have a significantly higher cost for latter business processes.
Gather input – A survey for a critical pool of employees asking the “How” questions might help with this activity – How can we simplify revenue sharing, how can we simplify pricing, how can we simplify the contract, etc. Make sure that you have stakeholders from the IT and business side in gathering this information. This will be an iterative process to get to the simplified business process definition and understanding. Once that is done re-assign the new complexity level for the business process and a TCO value as a target after simplification.
Understand the Impact – Simplification is also a change and change has impacts. The purpose of this step is to understand who all are going to be impacted within the organization and externally in the form of vendors, customers, partners, etc. and how. Once you know who are impacted, you should also define a phased roll-out program depending on the level of impact. Where and as required, adjust the policy documents.
- Execute – Simply put, this is where the business process simplification roll-out is executed in a phased manner. In many cases, this will be an iterative affair as you are shaking the status quo which may mean changes required externally as well. If it is harder for you to change, you may require forcing others to change as well. That can be offset by stronger partnership and attractive pricing/discounting strategies.
Many organizations are burdened with “incomplete” merger and acquisitions and that typically leads to maintaining many technology stacks within a large enterprise. Not all technology stacks need to be eliminated, but many can be consolidated into a handful of global platform or technology stacks that by itself can save Tens of Millions of $$ for the organization. However, all of that can only be effectively achieved with serious effort towards business process simplification. It is the pre-requisite for the evaluation of the technology/product fit if you want to give yourself a higher probability and higher degree of success. Are you there yet? Are you ready? Go for it!!