The high cost of business process complexity
Here’s a snap shot of the high cost of business process complexity:
- According to a recent, in-depth study conducted by Harvard Business Review, an overwhelming 86% of the 746 business managers surveyed feel their business processes and related decision making has become so complex as to hinder their ability to grow in a digital economy.
- According to one leading market research firm, as reported in Entrepreneur, companies lose 20 to 30 percent in revenue every year due to inefficiencies.
- As reported in MyPurchasingCenter, according to new research from Topline Strategy Group, inefficient procurement processes alone cost North American companies $1.5 billion annually and waste 32.3 million work hours per year.
- As reported in ITProPortal, the primary cause of wasted time during the workday is inefficient processes (44%), followed by an overload of paperwork (43%) and meetings (41%).
What is process mining?
In a nutshell, process mining is the analysis of business processes based on data stored in IT systems (databases, transaction logs, audit trails, etc.). A relatively new analytical discipline, process mining is comprised in equal parts of big data analytics, machine learning/AI algorithms and data visualization tools. The objective of process mining is straightforward enough — to improve process efficiency, but the inherently complex and dynamic nature of business processes makes achieving this objective easier said than done. In fact, it is precisely the mind-numbing complexity of today’s business processes, and the waste and inefficiency this complexity engenders, that drives the strong demand for process mining today.
Here’s how process mining works. Pretty much without exception, all business processes are supported by IT systems. As standard practice, these systems capture detailed information about each step conducted in the execution of a process (e.g., case ID, activity name, timestamp, etc.). Collectively, this information is know as a ‘digital footprint.’
Leveraging the digital footprint stored your IT systems, process mining provides an objective, comprehensive, fact-based visualization of business processes as they actually operate in your organization. By applying big-data analytics and machine learning algorithms, process mining enables in-depth analysis of business processes, helping companies across industries realize meaningful and measurable benefits such as cost savings from removing bottlenecks and decreasing cycle times; lower risks by detecting non-compliant processes or fraud; and continual process improvement by enabling quick-and-easy comparisons of new process models to actual “As-Is” processes.
At bottom, process mining is a fast, non-disruptive way to make business processes more transparent, faster, and more cost-effective while ensuring maximum transparency and oversight. Whether your goal is to increase automation rates, minimize manual intervention and rework activities, eliminate inefficiencies and errors, or check for compliance, process mining delivers the fact-based insights you need to understand how processes really work (or don’t) in your business.
Why process mining is vital to digital transformation
As reported in Forbes, by 2018, 67% of the CEOs of Global 2000 enterprises will have digital transformation at the center of their corporate strategy. However, according to a recent survey, only 50% of companies are successfully executing on their digital transformation strategies despite demonstrated efforts and investments.
This disconnect brings into clear relief the need to apply a more rigorous, strategic focus to digital initiatives. Evolving technologies, lack of leadership, lack of internal alignment, skills shortage and cultural resistance are all factors contributing to digital misfires. There’s also the daunting question of where to start? While a one-off project, probably led by shadow IT in a rogue business unit, lacks gravitas, a complete business-model overhaul is probably beyond your reach, and more than your Board could stomach.
At NTT DATA, we understand that becoming “digital” is not a one-project wonder. We also understand that few enterprises can afford the time and resources of a complete business model transformation. For these reasons and more, we strongly advise our SAP customers to hitch their digital transformation initiatives to the business-process workhorse.
As the engines of work activity, business processes are essential to transformation. They move workers forward in their daily jobs, help propel strategic initiatives, and perhaps most importantly, provide the framework to make and implement business decisions.
The key to a successful digital business strategy, NTT DATA maintains, is to focus on reimagining specific business processes – from the customer to the core – to simplify and enhance customer interactions. The results are quick and attainable. Organizations see how business insight can best be leveraged to achieve the greatest impact across the entire value chain — creating a clear path to achievable business results.
Historically, attempts to identify kinks in business processes proved costly, time consuming and inadequate. Expensive consultants, extensive process documentation, tedious manual investigations, and sketchy KPIs might correctly identify that a process is broken, but all too often they reveal little about why, where and what corrective actions might be taken.
Conversely, process mining is a fast, efficient and affordable way to get comprehensive view of processes, identify process variations, drill down to find the root cause of problems, and begin building new process models.
Process mining is a valuable, perhaps indispensible, tool for gaining the objective and accurate understanding of business processes needed to re-imagine how these processes might be automated or remodeled or eliminated in your quest to gain meaningful and measurable business value from digital initiatives.
The fact that process mining is industry agnostic, applies to businesses of all sizes, and can be applied to virtually all important business processes certainly adds to its growing relevance and popularity.
Process mining and a friction-free customer journey
Business processes are essential for any organization to function properly. Order to Cash, Procure to Pay, Plan to Produce, Request to Service, as well as processes driving CRM, HR/HCM and Finance must be in place for a business to achieve its growth objectives and service its customers.
Too often, business processes are predominantly viewed in terms of their internal function in a business. The truth is, core business processes are the foundation for a company’s ability to service their customers.
Improving customer experience is the No. 1 driver of IT investments in the year ahead, according to CIO’s 2017 State of the CIO study. It is not incidental that improving the customer experience is also the prime objective of any intelligently conceived digital transformation initiative.
Although process mining is a nascent-stage discipline, it is growing rapidly. A selection of commercially available process mining software solutions includes ProM, Disco, Celonis Discovery, Worksoft, Perceptive Process Mining, QPR ProcessAnalyzer, and Aris Business Process Analysis. This list will most assuredly grow in the years ahead as businesses worldwide step up efforts to eliminate complexity and waste in today’s hypercompetitive digital economy.
In addition to utilizing the leading processing mining solutions describe above, NTT DATA also works with customers leveraging our own Customer Friction Factor (CFF) framework. CFF is a proprietary framework for evaluating, understanding and improving how customers conduct business with your organization. Following this assessment we help you understand the degree of friction your customers are experience across channels, how that amount of friction compares to your competitors and what actionable steps you can take to improve the experience.
In the end, the fact remains that digital transformation is paramount, and every business leader must strategize how best to quickly and cost-efficiently move their enterprise's digital-business needle from where it registers today to where it must be to advance business, sustain a competitive edge, and cement customer loyalty.
Process mining is a great tool for evaluating business processes in the context of a digital transformation initiative. Beyond the low-hanging fruit of wringing inefficiency and cost from a business process, digital mining brings into sharp focus how a process impacts your customer and, more importantly, how it might be re-envisioned to improve your customer’s experience.
Contact NTT DATA today to learn how process mining and our Customer Friction Factor can accelerate the pace and increase the value of your digital transformation game plan.