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Part 2: Managing Processes in Digital Transformation

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In Part 1 of this series we covered why people, the culture, and the organisation as a whole was often overlooked as a risk factor in undertaking a Digital Transformation initiative. In this article we will look at the second critical element in any digital transformation program; Process Reengineering. 

However first we have to reconsider where things go wrong in digital transformation initiatives and why process improvement or process reengineering is so critical to success.

Think Big, Start Small

Almost all Digital Transformation initiatives start small following the sage advice; don’t get too ambitious and start small.  Hence, a common approach is to focus on point solution pilots, the so-called low hanging fruit that delivers visible but quick results, or proof of concept projects to build confidence and demonstrate a working value stream. There is nothing wrong with either of these approaches. The trouble is that even when these projects are deemed to be successful they are often not scalable. This is because there was no larger thinking whereby future integration challenges or process scalability were contemplated.  Instead, organisations should be following the mantra:  Think Big, Start Small.  

It’s More than Just Technology

Another challenge is often stated as “If only I had the technology.” But that is not the most common cause of failure. Instead, it is far more likely to be down to the lack of information being shared, with those that have a need to know,  in a suitable form, accessible across organisational silos in a timely manner. That is in essence the fundamental  objective of digital transformation but alas is also the major obstacle to Industry 4.0 transformation programs. This is a failure of strategy and processes not a failure of technology.

Organisational Culture

A third hurdle to Industry 4.0 transformation is organisational culture. Organisational silo decision-making is often a hindrance as organisations undertaking Industry 4.0 or digital transformation need to embark on a journey that will encompass their people, their processes, their operating technologies throughout the holistic boundaries of the organisation. Politically, that may be the biggest barrier to change. However, planning and deploying scalable processes that reach all areas of the organisation from top to bottom can prove to be challenging. This is due to process owners being territorial with their information and loathed to share and this is an organisational process failing.

Data Democratisation

Digital Transformation requires, at the very least, if it is to be deemed successful, the holistic sharing of organisational or business information to those that need the information and in a format that is useful, across the entire organisation. This is generally termed Data Democratisation; it is the delivery of the complexities of how business units and enterprise processes fit together to share data or information. This makes business process improvement (BPI), when dealing with existing architecture or business process reengineering (BPR) when dealing with new technology deployments, almost unavoidable. 

The issue is that legacy processes are no longer a good fit for new technology, or they fail to meet the requirements for modern business models with their ambitious business objectives. Consequently, many long-established practices in the handling of information in processes are heading for obsolescence. However, many organisations are still persisting with a technology first approach. Consequently, there is almost always a process/technology mismatch resulting in a failure to deliver expected benefits. Indeed sometimes the new technology can actually perform worse.

Identifying the Raison d'etre

As we have seen, a common strategy when undertaking a digital transformation is to go for a technology first approach. The belief is that advanced technology can be deployed in a forklift approach to lift and replace the legacy technology within the current architecture and that this will simplify and accelerate the digital transformation journey. The premise is that these advanced technologies will in and of themselves deliver new, better products and innovative services. However, deploying these new technologies can actually be counterproductive. 

The issue is that coupling the latest technology with existing processes is not as straightforward as it may seem.  Legacy processes are often ill-suited to the trends and enablers of digital transformation, which can in turn be an obstacle for nurturing collaboration, increasing productivity and delivering efficiency.

The problem is that the new technology must be aligned with the desired business objectives and hence be tightly coupled with the business processes. It must not become a mindset of deploying advanced technology for technology’s sake. An organisation or business is not in existence to deploy new technologies they have a core purpose for their existence - raison d'etre - whether that be to make a profit or if non-profit to provide a community service, whatever they will have a strategic purpose. The Business objectives and the business processes must always be focused on and drive towards achieving that overarching purpose.

In digital transformation initiatives enterprise leadership should always keep this purpose at the forefront of their transformational endeavours. On the other hand they also need to be focused on process modernisation and the tools and technology that can improve collaboration and stimulate innovation in the form of new-products or in enhanced service development. This of course means taking a new mindset whereby business leaders realise that just as products are re-engineered to accommodate new capabilities, or to conform to customers desires then processes also must be reengineered to meet similar business objectives and mitigate potential challenges. However, there are some caveats.

Don't Throw the Baby out with the Bath Water

It's important to analyse the existing process or if it is a new process the business requirements and key metrics. The challenge is to identify existing key or potential pain-points and mitigate those first. Always keep in mind the business objectives as that is key to delivering value. What follows is a cycle of  improvement and re-evaluation to ensure that the process works as expected. This requires close collaboration with process owners, business analysts and other relevant stakeholders. 

Interestingly, some processes need to remain as the status quo, not just because it's the way we do things, but because these processes deliver business differentiation from competitors. As a result you want to identify and preserve these specialist processes even though they might seem egregious or quaint as they produce value. Consequently during initial analysis you need to take a detailed look at why a status quo process works as it does and how it can be incrementally improved and fine tuned whilst retaining its core business qualities. After all you don’t want to be destroying value and especially not something that generates positive business differentiation.

Your Not Amazon or Google

Frequently the transformation teams will copy process blueprints from the internet. This is almost always a mistake. Processes should be tailored to the organisation's business architecture and objectives. It's highly unlikely that as an organisation the client will share the constraints and objectives of an internet behemoth such as Amazon so don’t try copying the way they do things. That's not to say you shouldn’t take inspiration and guidance from their high level principles as that is a good thing. Just be aware that their architecture and business objectives and importantly vast scalability will most likely be out of step with the client organisations. Hence, the goal is to customise the business processes to match the skills of the people and the existing architecture using a technique called business process reengineering. 

  What is Business Process Reengineering?

business processes to match the skills of the people and the existing architecture using a technique called business process reengineering. 

Business process reengineering is an approach that aims to enhance a company's performance in various aspects, such as service, cost, speed, and quality, by revamping and redefining existing processes. Unlike other methodologies sych as Business Process Improvement (BPI) that focus on gradual improvements with the intent to maintain the status quo but to fine tune the existing process via updates. Contrary to this incremental approach to improve existing processess BPR takes a more aggressive approach as it involves a transformation that transcends the organisation, touching upon every department and domain and completely revamping the system. As such, the primary goal of BPR is to elevate business process management holistically throughout the organisation and establish specific objectives, which are highly tailored to the business model and operational goals.

Benefits of Business Process Reengineering

BPR can deliver many benefits to an organisation, such as:

1. Enhanced efficiency brought about due to its extensive reevaluation and redesign of business processes. BPR helps analyse, identify and eliminate pain-points or unnecessary or redundant steps (waste) while delegating certain tasks to more cost-effective roles.

2. BPR is about redesigning business processes, so that the business is better equipped to adapt to supply chain disruption, regulatory changes, customer needs, market trends, and other relevant business factors.

3. A successful BPR initiative will likely Increase customer satisfaction, and potentially, supply chain efficiency. This, in turn, can lead to cost reductions, greater efficiency and effectiveness, which ultimately positively impacts competitiveness and profitability.

4. BPR’s objective is to radically improve process quality and hence, the quality of associated products or services, this transparency allows organisations to monitor and review processes and thus identify and mitigate any errors.

5. Engaging in business process redesign works as a significant motivator for process owners, stakeholders, business analysts, marketing, procurement, in short the entire team. BPR effectively empowers employees to study, analyse, and understand why things work as they do so that they may potentially enhance their processes. In doing so BPR provides them with transparency and insights into the business, which fosters a sense of involvement and ultimately, improved productivity.

Process Modernisation and Innovation

In Digital Transformation the preferred remedies for process reengineering include process “modernisation” and process “innovation,”. These scenarios have their own inherent constraints that can only be mitigated through process reengineering. This is where a workflow is reimagined to address the new technology’s demands, the skills required, and operational limits. This is typically performed during a technology upgrade by replacing obsolete legacy systems whilst upgrading the technical skills of the workforce. New technologies and new skills will demand the processes are reimagined to get the maximum benefit from the investments.

Changing the Work Process

A significant benefit of process reengineering is its ability to surface obsolete processes. If the workforce is to welcome change and embrace innovation, they need to recognise and let go of using these ineffectual processes. However, when undertaking a BPR initiative you need to keep in mind that re-engineering any process starts with identifying where and why things go wrong. Once the problems and pain-points have been identified and their root-causes are determined, you need to address them. In essence process re-engineering is about reconfiguring the tasks and subtasks that make up the process and provide additional capabilities. Once these new capabilities are configured you need to test and verify them. Though tedious, testing and verifying must be done diligently.

The reason for this is that reengineering a process has many potential and surprising pitfalls:

  • Processes are linked in complex ways, both from a business and technical perspective
  • Process changes occur fast and frequently and can disseminate throughout the organisation
  • Process changes at the business-unit level are triggered by innovation such as through real-time data streaming and advanced analytics
  • Process changes due to the introduction of artificial intelligence and machine learning, can affect users directly and indirectly in unpredictable ways
  • At the organisational level, processes are reimagined using model-based engineering, along with system-of-systems thinking, which in turn is based on the idea that all key processes in an organisation are interrelated. System-of-systems thinking is essential in BPR.
  • As the skills of the workforce are upskilled, inevitably new and better ways will be found to connect people, processes, and technologies.  

Perhaps the best time and approach to introduce process reengineering is when performing a workforce transition and skills upgrades as these work hand-in-hand. This can assure the ultimate success of digital transformation and secure the long-term competitiveness of the organisation.

7 Practical Business Process Reengineering Steps

The most straightforward way to introduce and implement a BPR initiative is to follow 7 basic steps:

Step 1: Identify the need for process change

These could be triggered by technology upgrades, outdated systems, production inefficiencies, poor customer service, or changes in the market.

Step 2: Define the scope

The second step in process redesign focuses is identifying the specific processes or tasks that need reengineering.

Step 3: Analyse existing processes

Now, take a deep-dive into the current processes to determine their strengths, weaknesses, bottlenecks, and inefficiencies. This is typically accomplished through data analysis, process mapping, process-owner interviews, and real-time observations.

Step 4: Redesign the processes

Based on the analysis in the previous steps, reimagine a new process design that will streamline workflows, reduce costs, and increase overall performance to deliver specific business value.

Step 5: Communicate and gain buy-in

The next step is to communicate the proposed changes to all stakeholders involved in the process. This will help you build support and get buy-in from employees, managers, and other relevant parties.

Step 6: Implement the new processes

After successfully engaging with your stakeholders, it’s time to put the redesigned processes into action. This phase involves legacy system modernization, training employees in new procedures, and modifying organisational structures.

Step 7: Document and monitor the new process design

Best Practices of Business Process Reengineering for Success

Despite the obvious benefits from Business Process Reengineering there are often many challenges as covered earlier. Consequently, there is some confusion surrounding the use of BPR but it can still succeed when following some Business Process Reengineering best practices.

 Consider a few overarching factors such as:

  • Use a Tried-and-Tested Methodology: Utilise where possible methods that have already been successful within your company.
  • Business Case: Carefully consider and document a compelling reason for implementing a process change stress the financial or business value expectations
  • Adequate IT Infrastructure: Ensure that your IT capabilities are capable of implementing the reengineered processes
  • Business-Needs Analysis: Analyse the company's business strategy and long-term goals and objectives during the evaluation process.
  • Customer Needs Are a Priority: Maintain a customer-centric approach to shape business practices.
  • Effective Change Management: Manage expectations, timelines, and the overall impact on the business.

Business Process Reengineering is a significant business and technical endeavour that requires significant resources in time, people, and investment. While there’s no hard and fast rules on when you should reengineer your business processes, there are situations where BPR can deliver optimal results:

  • When redesigning the quality or capabilities of products or services. 
  • When identifying and eliminating sources of errors and inefficiencies within existing processes.
  • When integrating new technologies into processes
  • When exploring innovative ways to automate workflows. 
  • When responding to changes in demand, competition, or regulations. 

Process reengineering can bring an organisation many benefits, such as increased efficiency and productivity, enhanced innovation and agility, whilst simultaneously improving customer and supplier experience and loyalty, and fostering employee engagement and retention. However it is not without its challenges but is undoubtedly well worth the effort. Indeed in many instances you will find that BPR is inevitable as it serves as both the orchestrator and the conduit for sharing information efficiently and effectively across the organisation. In doing so it brings about a synergy with people and technology that brings out the best in both by delivering holistic performance gains throughout the organisation.