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Perspectives

Driving the Digital Process Trajectory

2017-03-15


By digitizing the processes at the heart of their companies, business leaders are turbo-charging revenue growth and cost savings, according to our latest study.

Digital experiences with our smartphones and smartwatches can be fun, entertaining and convenient. Far less appreciated is the impact of “being digital” on back-office systems — processing insurance claims, caring for patients, growing personal wealth.

There is much low-hanging process fruit, however, that could spur both revenue and cost savings — in weeks and months — by digitizing small steps and closing gaps between customers, suppliers, partners and employees. Examples include robotic process automation (RPA) software and standardized process platforms delivered via business process as a service (BPaaS) models. These platforms change the game by delivering outcomes that are no longer tied to the number of people “doing the process.” 

Your ticket to the digital economy entails connecting “old” processes to new technologies. To understand what the future holds for the digitization of business processes, we surveyed 2,000 senior executives across industries and an additional 250 middle managers. 

Turn Back Office Costs to Rocket Fuel

Three key findings substantiate the critical lessons learned in their journeys so far:

  • Digital is a two-stage, cost-plus-revenue rocket ride to outsized business process success. The average impact of digital on cost savings and revenue was about 4.6% of revenue in late 2015, according to respondents, or $364 billion. By 2018, that grows to 11.4% of revenues, or $770 billion.

    Leaders in process digitization are pushing the envelope, however. By relentlessly driving digital change across all processes, such companies say they could have unlocked an additional 11.2% improvement to the top and bottom lines, and another 18.6% by 2018. That’s a potential “Process Leader’s Bonus” of $700 million per company by 2018.

    This should be motivating for the many companies today that are still only dabbling in digital, or focusing on just a couple of process areas. In an age of BPaaS, automation and artificial intelligence (AI), even if you aren’t at the bleeding edge of “digital leadership,” it’s highly likely your organization could garner a 20% (or more) outcome in terms of efficiency and revenue improvements.

Figure 1

  • IT is universally seen as the function pushing digitized processes forward. Our data shows that information services and technology processes may be the real heroes in the digital process story so far. Both senior executives and managers alike rated the IT function as the leading business process for positively affecting cost and revenue today, in the next 12 months and through 2018.

    A digitally-savvy IT department provides a gravitational effect for other functions to move, adapt and lead the way for real change. If IT is a leader for change, it can help operational leaders see around corners, and be the digital prism to help grapple with the unknown “dark side of the moon” of new process technologies.

  • Software is eating processes. In every business function, “the platform is becoming the process,” linking customers, partners, suppliers and employees for greater digital impact. Here’s a quick summary of how each functional area is being changed by — and can accelerate — digital change:

Finance:

Over 75% of finance executives believe digital will improve productivity and efficiency.

The finance function has traditionally concentrated on lowering costs through global sourcing and shared services. The human value-add mainly consists of rote and repetitive prep tasks, such as collating, searching, cleaning and integrating data — rather than contributing true “value” through tasks like making recommendations.

Imagine injecting digitally catalyzed efficiencies into this area. The first order of business is to deploy intelligent automation to chew through the rote accounts payable/receivable work. The cost savings can fuel innovation in tasks such as days sales-outstanding or control gaps.

Then, continue to focus on the future state of “what good looks like.” Use frameworks to guide and control process, geographic and business unit change around all your digital finance platform enablers. These types of small steps can lead to big things — and turn finance into a digital showcase for the rest of the organization.

HR:

Over 60% of HR execs believe digital will speed their work, require new skills and automate their work.

Organizations should take a good hard look at all their HR processes: Are they really helping to make things better for people? Businesses should focus on two to three HR processes that prevent optimal utilization of skills that help their best people thrive.

Next, they should sort out the balance of the “art of the job” (for humans) vs. the “science of the job” (for bots). Intelligent systems are best for computational capabilities, analysis and pattern recognition, while humans are best at making judgment calls and assessments.

Lastly, they need to develop a new master architecture to support a flexible, distributed, “gig”-oriented workforce, as well as a platform that helps orchestrate human and machine tasks. The result: precision development of people, mitigation of biases, improved help for legal matters, and substantially improved employee engagement.

Sales and service:

Over 25% of sales and service execs believe Internet of Things, big data and cybersecurity will impact their work.

Modernizing customer experience processes has been a powerful catalyst for reimagining sales and service processes. Still, much more can be done.

A good first step is thoroughly assessing customer-facing processes in “real-time” terms. Processes will need to recalibrate around “handling sessions,” using the digital fingerprint (or Code Halo”) generated by customer interactions. As patterns emerge, such as the types of interventions and clarifications conducted, it will yield a powerful lever for customer service, speed, efficiency and effectiveness.

Moving forward, businesses will use new technologies such as sensors or big data analytics to gauge how customers may be interacting with sales or customer service processes differently. By laser-focusing on aspects of their best customers’ digital interactions, businesses can drive outsized results.

R&D:

For over 20% of R&D execs, top hurdles for digital adoption include security, uncertain ROI and poor alignment between investments and business objectives.

New digital options can help R&D, innovation and new product development processes become a force-multiplier for the business. For example, crowdsourcing options such as Kaggle and inno360 are changing the game by making process dynamics easier by pulling in a much broader base of smart people.

Businesses should scan the horizon from competitors and nimble upstarts — and link digital innovation platforms to “talent clusters.” Some companies are building proprietary platforms and joining with third parties in co-innovation initiatives around R&D and customer engagement.

Organizations should also consider creating a lab as a “play-space” for innovative digital processes, collaboration and ongoing experimentation. This can facilitate breakthrough thinking, and elevate decisions beyond the parochial silos of front-, middle- and back-office thinking.

We’ve only just begun the journey to change the behind-the-scenes business processes that impact organizations, and their work, in ways that really matter. The dual benefits of cost reduction and revenue growth are clearly “good” and “really good” for organizations. The key is to get going — or accelerate the momentum of the journey you’re already on.

For the full report, please read "The Work Ahead: Soaring Out of the Process Silo" or visit us at our Work Ahead website. 

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Driving the Digital Process Trajectory