Thrive or survive? Operational optimisation has become an ongoing priority for businesses. But too often we see optimisation projects fall short of their aims due to an obsessive focus on technology to the detriment of people and processes.
As technologies proliferate, companies spend considerable amounts of time and energy adopting the latest software and gadgets, which can add significant value. However, businesses are run by people for people, so optimising the way humans and processes work alongside technology, using process excellence techniques, is crucial to becoming operationally world class.
In today’s connected business environment, no process stands alone
This is an increasingly pressing challenge for businesses across sectors, sizes and function. Even before the coronavirus crisis, operational concerns dominated the top ten global risk issues in 2020, according to research by Protiviti. These included regulatory scrutiny of operational resilience, finding talent and resistance to change: issues that have become more important now than ever.
Another trigger for the race to optimisation is the rise of so-called born-digital firms altering the face of markets, from retail to utilities, banking and insurance. They are responding to consumers’ needs and challenging traditional analogue businesses that are reacting with transformations aiming to achieve process excellence.
All these challenges and pressures can seem daunting to organisations that try starting a journey of process excellence without being clear about what it entails.
What is process excellence?
Customers are empowered like never before. Great customer experience drives loyalty and revenue. Add to that financial pressures and the constant need to stay on the forefront of technology developments and organisations often risk getting lost along the way.
Process excellence means streamlining processes and leveraging technology to achieve effective change management. This includes improving financial processes, integrating risk considerations into performance management and reducing working capital. The result is improving cash flow, risk management, and control and optimisation of costs.
Process excellence also results in better customer experiences. In today’s business environment, processes and their outputs are interconnected in myriad ways. Even internal processes reach and affect the customer.
Process excellence also seeks to understand, control and manage business risks in the process. This builds resilience, which is key to customer experience. Hence, the customer needs to be at the heart of process strategy.
Digging into the process
To achieve excellence, companies must start by understanding, mapping and analysing all the variations in their core processes. Only then would we advise they choose the right digital solutions, build them to drive efficiency and control in the processes, and align these with people and strategy.
However, we experience that organisations regularly underestimate the complexity of their core processes, often as a result of mergers, bolt-ons and opportunistic growth. For example, a chief financial officer (CFO) might think there are 15 to 20 variations in their purchase-to-pay process, when the actual number is far greater.
Without such understanding, these complexities will undermine the company’s agility and lead it to fail to meet customer needs. They will find it hard to realise business case benefits, so their investment in business improvement will go to waste.
Because it requires transformation, change enablement is also key to successful process excellence. It must be sustainable too, so ongoing monitoring is essential.
Process mining can help you look more forensically at individual transactional data in a process, providing more insight into what it does. When you understand all the variations, you can see how each one may drive different actions and how you can optimise them for the benefit of your organisation and customers.
Supportive tools, such as process-mapping, customer journey-mapping and data-mapping, are available to help you understand and run your processes better. After achieving day-one optimisation, world-class organisations also keep using these tools to monitor processes continuously and understand any future variations.
People and culture
We often see companies spend a lot on technology they do not fully employ because they have not thought about how it will fit in culturally.
As an agency imbued in change management, we start any transformation project by looking at the risks and opportunities, gaining a comprehensive appreciation of your firm’s digital capabilities and maturity, how they are empowered, and how they learn and develop.
Communication should reassure staff and help them get excited about the benefits of the change. If it doesn’t, organisational resistance, one of Protiviti’s top ten risks, will occur. Understanding cultural and behavioural dynamics is also critical for a successful transformation, alongside traditional mechanics.
Traditional programme assurance and management focuses on hygiene factors such as governance structures, programme management, policies and standards. These functional and technical aspects could lack some structure and oversight, have unclear objectives, miss unknown dependencies and lead to unplanned costs.
Often these are not the root causes of failure. We recommend combining traditional mechanics with dynamics that might generate risk, which include cultural characteristics, beliefs, behaviours, relationships, antagonistic behaviours or abrasive work environments.
Some leaders are excited and enthused about transformation. Others do not have enough positive experiences to believe in it; their companies tend to fail to deliver change. So, we aim to educate, from the board down, about the organisational benefits of process excellence and how to realise them together.
Role of CFOs and COOs
We repeatedly see transformation attempts fail because the finance and operations functions do not keep up with the pace of change. So CFOs and chief operating officers (COOs) need education around the investments available to them.
Machine-learning, artificial intelligence and robotics, for example, are now mature enough to deliver process excellence. We often help CFOs and COOs build the business case to show that benefits of transformation are real and economic.
Quick wins help. The days of waiting years for a return on transformation are gone. With many of our clients, we therefore aim for a return on investment in under a year.
For more information, contact derek.cummings@protiviti.co.uk or visit protiviti.co.uk
