BPM: A key step towards Process Digitization, in turn, aiding Digital Transformation

BPM“Digital” and “Customer-centricity” has been key agenda items for many organizations nowadays. Broadly speaking, digital transformation entails 3 aspects (a) Greatly improving customer experience (b) process digitization and (c) rethinking/recreating new business models. Majority of the firms are focusing on (a) and (b).

Companies must tackle customer experience and process automation together to be able to leap-frog in digital transformation.

Part of process digitization is automating the existing business processes and gaining efficiencies. That’s where Business Process Management (BPM) comes in.

BPM is ….

… end-to-end business process improvement leveraging technology, innovation and human capital. BPM is not a product or service that you buy, it is something you do.

BPM strives to enable partnership between business, marketing, sales, operations, IT, customer service, product development, etc. – basically, all aspects of business, for better customer outcomes and operational agility. BPM enables an organization to develop business processes as “reusable assets” that can be leveraged partially or in whole, similar to enterprise data.

Why now? What are the current business process issues?

Big organizations have processes and applications that were built over a decade ago. Since then add-on functionalities have been patched over years. So, this has caused several problems –

  • Business Processes are poorly defined or understood within organizations, impeding visibility and strategic planning.
  • Metrics and KPIs are often very hard to measure, thereby limiting good decision-making
  • Business Processes are inconsistent across organizational or geographical silos.
  • Changes to the business strategy take too long to realize. Changes too hard to implement in business process and takes several weeks to months
  • Existing business processes and underlying systems restrict the business from innovating or creating market differentiation.
  • Lack of alignment of Business Processes with strategic goals and objectives
  • Business Processes involve unnecessary delays: due to manually intensive tasks, inefficient and/or redundant steps, or restrictions due to governance/ technology / organization.

If organization need to innovate, they must redesign business processes and adapt “Build once, leverage many times” mantra.

By 2017, 70 percent of successful digital business models will rely on deliberately unstable processes designed to shift with customers’ needs (Source: Gartner)

Deliberately unstable processes are designed for change and can dynamically adjust to customers’ needs.

BPM is “Internal” process improvement (not External)

Digital transformation can be looked at from two lens – from eyes of customer (external) and internal. BPM is internal part and provides all the capabilities to enable cool external features for end customers like blending digital+physical worlds, IoT, sensors, smart phone apps, wearables etc.

A few Business use cases that can be addressed by BPM

I’ll list some use cases as food for thought. It is recommended to pick use cases / business process that have high value and high impact, for BPM projects.

  1. Usecase 1: How to? New business initiatives and innovation, Time to market, Agility, etc
    • Answer: With BPM, you can simulate “what-if” scenarios. With process simulation, you can do cost-benefit analysis on processes well before the processes are implemented.
  2. Usecase 2: How to? Gaining operational efficiency
    • Answer: Business Activity Monitoring (BAM) provides end-to-end process view of all costs and throughput (people and technology); BPM enables monitoring compliance of key processes.
  3. Usecase 3: How to? Process standardization across geographies for ‘Performance management’
    • Answer: BPM can help define consistent and global definition of processes (centralizing business process and business rules) along-with ways to standardized KPIs for measuring performance. BPM helps move from paper-based processing to automated workflow.

Bottom-line

You may ask – I am focused on building customer experience, so, how important is BPM for me?  Very important, it’s like 2 sides of same coin.  BPM is the like the foundation to a house…. and the orchestration of the digital enterprise.  You can only enable great customer experiences provided underlying processes and technology is robust. Key point being that technology, marketing and business are now one entity in their delivery of value into digital age. All organization must  recognize “process as core business asset”.

Being relevant today requires increasing focus on customer focus, innovation and speed-to-market. BPM is a core requirement for the Digital Enterprise. BPM market is expected to grow from $3.4 billion to $10 billion by 2020 – a huge opportunity for consulting firms.

What do you think? Is your organization undertaking BPM effort and if so, what success has it seen so far? Please chime in with your thoughts.

Digital Transformation in Financial Industry – What are companies doing about it?

Every industry is moving digital! Why? that’s because it’s the new business imperative and customers are demanding it. Go Digital or be left behind forever! – has been the mantra from all pundits and they are right. Financial industry has undergone a massive change in recent years with the change in consumer behavior and emerging digital technologies. They’re shifting their attention from merely what they need to offer customers to how to deliver more value to customers more quickly – think “value creation and engagement with customer“.

Companies that have digitally transformed across industries are outperforming their competitors financially by as much as 26% (Capgemini)

The pace of digital transformation maturity have varied across industries – some have transformed business models, some have focused on transforming customer experiences whereas a few others on digitizing a few processes.

What are the barriers/challenges?

While opportunities are plenty, there are several challenges in digital transformation journey. They include

  1. Digital Benefits vs. Risks: Many companies are risk averse and don’t quite understand the benefits of going digital. So, what is needed here is more education outlining benefits outweighing risks.
  2. Regulations and Legal/Compliance issues: Will digital technology adhere to the requirements?
  3. Infrastructure issues: Tight coupling with legacy technology systems with integration issues, preventing faster experimentation and agile delivery. Digital transformation needs integration to realize value.
  4. Digital Culture: Embracing digital culture and agile-mindset is still lacking. No measurable investments in innovation.
  5. Privacy/Security: How to balance privacy/security issues whilst providing great customer experience.
  6. Cross-channel view: Not having one view of customer.

The biggest opportunity in Financial industry, be it – insurance, retail, asset/wealth management, securities, etc – is around creating a compelling, intuitive customer experience and delivering great experiences across all channels and devices. Personalization, customization and running targeted campaign is equally important.

What are financial companies doing to get ahead in digital maturity?

Companies are beginning to realize that Technology is key enabler for digital transformation and are undertaking several initiatives like –

  • Transforming Customer Experiences
    • redesigning websites leveraging Content Management System (CMS) platforms for providing more control and flexibility to marketing to make changes to site
    • Omni-channel delivery i.e. providing seamless, consistent experience across channels and devices
    • leveraging social media platforms to enhance the brand and engage with customers
    • opening up discussion forums, creating surveys and polls for customer feedback
    • showcasing thought leadership by creating blogs and engaging with customers E.g. Better Money by Bank of America
  • Process Digitization
  • Investing in Innovation and Agile Processes
    • adopting agile and devops for faster product development and rollout
    • creating user labs where they bring customers to help them work through the very early stages of thinking about a product (E.g. CapitalOne User labs), and many other things
    • providing digital tools for asset managers, wealth managers to collaborate and engage with their clients
  • Data Analysis
    • leveraging analytics data to measure customer behavior and refine strategy thereof
  • Single view of Customer
    • developing single view of customer with investments in CRM, analytics and other marketing technologies

Trends shaping up

Trends that will most likely be mainstream in few years include –

  1. Digital advise (“high-touch” replaced by “high-tech”)
  2. Robo-advisors (AI/robots based advisor to manage clients portfolio/goals)
  3. Mobile payments, mobile wallets
  4. Crypto-currencies – digital currency that is decentralized, peer-to-peer (P2P) i.e. no central third-party. (Bitcoin, Blockchain disrupting the payments industry at global scale)
  5. Smart banking (mobile, smart deposits, online bill pay, and other avenues)
  6. FinTech – Technologies for banking, corporate finance, capital markets, commodities, financial data analytics, payments, personal financial management, and many others. See Global Fintech landscape.
  7. Biometrics authentication

Today’s empowered customer wants it all: mobile, online, social, face-to-face and everything in between. The urgent and critical task for financial institutions, esp. banks is to figure out what truly matters to their customers and deliver the experience people are looking for.

Retail Banking and Insurance are leading the digital space among all the other sectors in Financial space.

Conclusion

Digital transformation is happening in every industry, industries are taking different paths at different speeds. Eventually, in couple of years, all industries will be forced to digitally interact with customers, will digitize many processes, free up their workforce on driving value-add business, operate their businesses based on real-time information, and will continue to improve job functions with more automation and innovation. Exciting times ahead!

What other trends have you seen across your industries? Please chime in with thoughts.