Business process transformation means optimizing or disrupting the way your business runs to meet new business goals or increase operational efficiency.
Business process transformation means optimizing or disrupting the way your business runs to meet new business goals or increase operational efficiency.
Business process transformation initiatives often focus on:
Strategic goals
Meeting new customer needs, warding off new competition, or to hitting a strategic business target such as expansion to new geographies, scaling up, increasing market penetration, or as part of a wider digital transformation initiative.
Regulatory shifts
Changing processes to maintain or hit compliance targets. This includes changes such as General Data Protection Regulation (GDPR) in Europe, and could include Google’s removal of third-party cookies in 2023.
Cost-reduction
Changing processes to increase cost-efficiency. This often involves digitizing, digitalizing, or updating legacy processes (for example, automating expensive, inefficient, and error-prone manual processes).
As we explain below, the most successful business process transformations are are tied to tangible customer benefit.
1. Why is business process transformation important?
Business process transformation is a key part of meaningful digital transformation initiatives. Businesses in every sector have reacted to shifting customer expectations and increased competition by launching some form of digital transformation.
But for those transformations to have a meaningful business impact, they need to address the processes at the core of the business. Sounds easy enough. Problem is…many do not. According to research from BCG, 70% of digital transformations fall short of their objectives, often with profound consequences.
In the rush to stay ahead, many businesses have overfocused on delivering new products and services and not enough on the processes that are used to deliver them. The result? Return on investment of transformation spend is scares and customer experience (CX) suffers. In the banking sector for example, this has led to declining confidence in the efficacy of digital transformation for collecting and using customer data, according to CSI’s 2022 Banking Priorities report.
2. How outsourcing supports business process transformation?
Outsourcing has typically been seen purely as a way to cut the cost of business process transformation. Consequently, outsourcing partners have been selected based on price. But while the upfront cost is lower, such an approach often comes at the cost of CX. And with modern consumers saying that experiences are as important as products or services, this makes return on outsourcing investment hard to achieve.
In response, businesses are now using outsourcers in a more intelligent way that maximizes the value to the customer.
This includes:
De-risking business process transformation
Developing bespoke industry solutions
Deploying artificial intelligence (AI), machine learning, and analytics across processes
Scaling their business more effectively
Establishing a ‘growth-partner’ relationship
Creating customer support built on empathy
In spite of the benefits, it’s not always clear what a business should cover internally and what it should outsource. We believe there are some core areas where outsourcers, with the right direction, can shine.
3. How to get ready for business process transformation?
There are two stages to assess your readiness for business process transformation:
1. Exploration
The exploration phase is designed to assess an organization’s readiness to begin business process transformation.
In this phase you should ask the following questions:
1. What is our goal? Understand why you’re taking on this transformation and how it will help your business.
2. How does this benefit our customers? Assess how achieving your goal will benefit your customers. The most valuable transformations are tied to better customer outcomes.
3. Where do we need to change? An initial assessment of what’s good and bad about what you do will help you surface the challenge ahead.
4. Should/can we perform this transformation ourselves? Do you have the resources for an in-house transformation or do you need an outsourcing partner with domain expertise?
2. Planning
Every business process transformation will contain unique challenges, but there are six stages that underpin a successful business process transformation planning phase:
1. Specific goal-setting
This is where you sharpen your initial goals into something actionable and specific. For example, to simply “be more competitive” is not a tangible goal, but “to reduce friction in our selling process” is.
2. Entrenching a customer-first mindset
In the initial exploration phase, you’ll have considered how your transformation will benefit your customers. Now is the time to entrench that approach and make sure it’s at the core of your transformation process by tying it to a specific customer outcome. For example, to lower your customer effort score.
3. Interrogating current processes
Having already assessed your current processes, this is your chance to interrogate them in detail. This step helps you to identify which processes would be most valuable to update and transform (in terms of mutual customer and business value). And which tasks, systems, and processes have become redundant.
4. Getting buy-in
Whether you’re working with an outsourcing partner or taking on your transformation internally, it’s going to take time and resources. If your business process transformation is going to be successful, you’re going to need support from the decision makers within your organization. The level of buy-in will dictate the amount of resources you’ll have at your disposal for the transformation.
At this stage, you need a rigorous plan for how this transformation will be delivered. Either internally, or with your outsourcing partner, draw out all the phases you anticipate your transformation process will take. Include timelines, budgets, goals for each phase, and who is responsible for what
5. Establishing KPIs and metrics
There are two main concerns when it comes to measurement:
Ensuring you hit key milestones throughout the transformation.
Ongoing impact assessments of the completed transformation.
These metrics are especially important if you’re working with an outsourcing partner. You need a clear vision of what good looks like, transparency on how it will be measured, and carefully outlined processes for what happens if targets are missed. Working with an outsourcing partner that offers you a dedicated Solutions Manager can make a big difference here.
4. What are the key methods for business process transformation?
Once your plan, and measurement stricture is in place, you need to actually launch your transformation initiative.
Whether you’re going it or working with an outsourcing partner, there are some key steps you should be aware of:
Step 1: Learn
Connected to your planning phase work, learn everything you can about your current processes. This will include all the documentation and any relevant regulations surrounding the processes. There should be no ambiguity about how your processes work or it will stifle your ability to improve upon them. At this stage, it can be very helpful to map the processes on a process map or even a flowchart.
Step 2: Assess
Once you’ve mapped your processes, it’s time to assess where they succeed and where they fail. Once again, this will be a continuation of the process you started in the planning stage. It’s your chance to isolate the root causes of any problems, pain-points or friction. You should also analyze the risk factors attached to the processes, and in disrupting them
Step 3: Iterate
Theoretically model different solutions to your problem. As you explore different approaches, be as detailed in your analysis as possible. This is where you lay the groundwork for your testing phase, closing down and prioritizing routes before you enter the prototyping/testing phase.
Step 4: Test
It’s time to run a pilot test of your new business process. This is especially important if your transformation involves the implementation of a new system or platform, or the running of a series of new automated tasks. You should also assess how well prepared you are to actually run your new processes and where you can make improvements or changes without accruing major costs.
Step 5: Test
It’s time to implement your best iteration. This will require you to have the following bases covered:
Technical implementation:
Your new process is likely to involve some form of digitalization or technology. This makes it vital to ensure you have (or your outsourcer has) the expertise to cover the technical aspects involved in the implementation. You’ll need to closely monitor your progress, so make sure you have the people-power and resources to make that possible
Want to dive deeper into digital process transformation? Check out our page on customer-first digital business process transformation
Training:
Your new processes will only flourish if your teams are well-trained in how to use them. Spend time ensuring both competence and confidence—it will pay dividends in the long run.
Stage 6: Measure
As soon as your new processes are up and running, you need to test the impact they are having. Remember all those KPIs and metrics you outlined in the planning phase? This is where they come into their own. Be aware that the data for these will take time to be meaningful. For example, you’re unlikely to see an improvement in Net Promoter Score within a month, but you might see one in the cost of customer acquisition.
Pro tip: Don’t forget to measure adoption on both sides
If your new processes involve a new platform or application, make sure you’re measuring the number of new users and active users. The early stages of a new process are vital for customer adoption so be prepared to put in extra resources to guide new customer behavior. You also need to measure the extent to which your employees have adopted your new processes. Many business process transformations fail because employees do not want to move away from their ingrained ways of working.
Stage 7: Optimize
As you get more performance data on your new processes, you need to put that data to work—so use it to course correct and refine your new process. This is especially important in the opening stages immediately after the go-live time. Over time, it’s also likely that your processes will need to be adapted as customer needs evolve. The data you collect will inform how you adapt and evolve to maximize business and customer value.
5. What are great business process transformation examples
Summary: In the final section we’ll look at some of the examples for great business process transformation. With options to include some real examples from our world or famous industry examples. Open the door for backlinks.
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