The Importance of understanding business process when it comes to Digital Transformation

Research by McKinsey & Company shows that 70% of all digital transformation fails. All business processes and systems within a company are all interconnected, if you make a change in one of the parts, at least another part will be impacted somehow. A siloed approach doesn’t take into consideration the impact of the changes in one area to another, it doesn’t create the dynamic required to make fundamental changes in the organization. The change of business processes is inevitable and is often the key driver. Business processes are the way organizations get work done. If transformation is about changing the work that is required and the way it is done, then it must be about changing business processes.

Digital transformation can create competitive advantage and position your organization for future growth – but not without an understanding of the importance of change the way we work. If your initiative is truly a digital transformation, that means you’re changing more than your technology – you’re undergoing large-scale change and fundamentally altering structures, processes, and employees’ day-to-day jobs.

The understanding of how to redesign a business process is a crucial element in digitalization that is often forgot in many industries.

What is Business Process Reengineering?

Business Reengineering is the fundamental rethinking and radical redesign of your current business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed in any organization.

Business process reengineering is an approach used to improve organizational performance by increasing the efficiency and effectiveness of processes that exist across the organization.?In addition to the redesigning of business processes, it also involves the redesigning of associated systems and organizational structures in you organization.

Reasons for redesigning your business processes is like new market opportunities, increasing competition, poor financial performance, implementing a new digital system, etc. ?This all trigger the need for a business process redesign.

The redesign of business processes involves the analysis and transformation of several major components of a business. These include,

-?????????Technology as a tool

-?????????Intellectual capital; Organization; Culture; Employees

-?????????Processes

-?????????Strategy

Reengineering of Business Processes includes three phases.

Reengineering a process focuses on redesigning a process as a whole which includes fundamentally rethinking how the organizational work should be done in order to achieve dramatic improvement. ?

Phase 1: Set the vision and business goals

This is where the senior management needs to identify the business situation, customer expectations, competition, opportunities, etc. This will make it easier to understand the need for change and create a clear vision of where the company needs to be in the future. Then clarify the objectives in both qualitative and quantitative terms.

Phase 2: Establish a competent team

The team you select needs to be cross-functional because expertise and perceptions from all levels of the organization are necessary to minimize the chances of failure. It should be the responsibility of the top management to have a clear vision of the activities that need to be carried out and provide strategic direction. You also need to have an operational manager who knows the ins and outs of the processes. It is equally important to have the right engineers with different expertise from various fields to make the team complete.

Phase 3: Understand the current process

In this step, you need to select the process(es) that you will be redesigning. Such processes that are broken, cross-functional, value-adding, have bottlenecks or have high-impact on the organization, etc. can be prioritized. ?Once you select them, map them out using flowcharts or process maps to analyse them thoroughly to identify the gaps, inefficiencies, blockers, etc.

Phase 4: Redesign the process

Keeping your vision in mind, redesign a new process that effectively overcomes the inefficiencies of the previous process. Here you will create a future-state map that highlights the solutions you have identified for the issues of the current state process.

Phase 5: Implement the reengineered process

Once the process has been redesigned, you can run a small test to see how it works by monitoring with the KPIs you have defined earlier. This will allow you to make necessary adjustments to the process before implementing its companywide. If the new process works better than the current one, you can implement it on a larger scale.

The TIPS Model

There are several business process reengineering methodologies in the market. In the TIPS model I have highlight more ways of reengineering business processes in addition to what we have discussed above.

Phase 1: The CEO who initiates the reengineering process must start by mobilizate the organization by introduce it to the employees by explaining the current situation of the company and the future vision and Strategy for the company.

Phase 2: By identifying and analysing the business processes in terms of how they interact within the company and in relation to the outside world. Analyse the current performance of the processes as opposed to what is expected from them in the future.

Phase 3: Select the processes that need to be designed to have the potential to bring value to the company once reengineered and those that are easy to be reengineered.

Phase 4: Implement the redesigned business processes

Phase 5: Continuous improvement. Continuous improvement is an ongoing process to improve your current products, services, or processes of your organization. The improvements sought can be incremental over time or achieved with a breakthrough moment.