Changing how you make decisions is a critical component of Digital Transformation.
“The following list of expected business outcomes are key drivers for this initiative.
Reduced time and cost, improved efficiency, increased capability ….”.
How many times have you read that line or a version of it, in a business case? Investing thousands of dollars into process improvement projects based on hope and prayer of soft returns is madness, yet we see companies repeat this mistake every day.
The result is inevitable (irrespective of whether the project was deemed to be successful or not) - any CFO, Executive team or Board will eventually question the return on investment over time, simply because the cost of transformation cannot be directly related to financial benefits on the balance sheet. This is true for all forms of transformation, whether you are replacing a system, purchasing software, building an app or transforming a process.
Questioned ROI, coupled with staff turnover and a human desire to make a difference results in General Management reacting to perceived “bad” transformation decisions. This triggers a spiral of ripping and replacing solutions, change management and poor process efficiency all supported by the business case that we are improving the way we work and therefore it’s great for the business.
The following lead indicators may highlight a need to change the way your organisation makes decisions related to process and transformation projects:
Resistance to further investment in continuous improvement of a solution, or process.
Ripping and replacing a solution within 1-3 years of implementation.
High resistance to change and perception of ineffective improvements.
3 Simple Practical Steps
Here are three practical steps for combating the transformation business case hangover:
Measure in numbers and benchmark as a critical first step.
Go Low and Often on the business case.
Measure the impact repetitively to support continuous improvement.
1. Measure, Measure, Measure
Measurement is vital to making informed decisions on current and future process transformation investments. This cannot be stressed enough. If you are not measuring the performance of your processes before you transform you are guaranteed to encounter future roadblocks and are setting yourself up for failure.
Process measurement should be divided into three stages.
1.1 Measure in Numbers
The famous Lord Kelvin quote, “If you cannot measure it, you cannot improve it” is often referenced in process discussions.
While this quote is relevant to process improvement in general, Lord Kelvin also said, “When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind.”
Expressing the impact and value of process transformation in realistic, tangible numbers in your Business Case is crucial step to ensuring that the Executive team is making truly informed decisions that can be harvested to the benefit of your employees and customers.
Gaining a deep understanding of the numbers (Time and Money) will force an in-depth analysis of the current process. Yes, this will require effort- hence the reason most organisations skip this step, but it will be well worth your time. We would recommend a combination of an online survey to measure objectives and KPI’s and process analysis activities to measure time and motion.
At minimum the analysis should cover the following current vs expected metrics for each step of the process:
Relevant objectives and KPIs
Depending on the type of process your may also want to measure risk an effectiveness. e.g Work Health and Safety Processes.
1.2 Benchmarking Policy
Financial statements are a form of benchmarking that record the financial and business activities of an organisation in a fiscal cycle. Financial statements allow organisations to compare year on year performance and support informed decision making on strategic business decisions. No business today would dream of trying to operate without some form of financial benchmarking to measure performance.
Process benchmarking should be treated with the same level of importance and consideration as your financial statements, thus enabling process owners and management to address the inevitable return on process improvement investment questions.
We would therefore recommend a benchmarking policy is implemented with simple and practical steps to repeatedly measure the impact and performance of process transformation.
1.3 Decision Dashboards
To support informed decision making by numbers we recommend that the process benchmark data is surfaced on visible reports or interactive dashboards targeted at the Executive team. This will ensure that the KPI’s and metrics are relevant and articulate the benefits in financial terms.
2. Go Low and Often
High value business cases come with high effort, high change management costs and high expectation to harvest the expected benefits.
Process transformation is best achieved in small measured incremental steps with an effective approach that matches the problem. Rather than trying change the entire process, apply the measurement approaches listed above to make informed decisions about each sub process.
As an example, let’s consider a common process that is often high on the priority list of transformation for its perceived transformation benefits, i.e. Employee Onboarding.
The Employee Onboarding or Employee Lifecycle is typically made up of 7 sub processes namely:
Business Case - Approval to Hire
Preparation for Recruitment – Position Verification
Recruitment and Interviews
Offer Approval and Contract
Probation / Performance review
The following insights results are typical of the New Employee Lifecycle Process.
The following three change steps can be applied:
2.1 Change how you make decisions.
Ensure that you are budgeting, and decision-making processes embrace the “Go Low Go Often approach”.
2.2 Understand the sub processes
Irrespective of whether your aim is to transform a process, application and changing a major platform ensure that you have a fundamental understanding of the associated sub processes and the resulting impact and value of changing or not changing these processes.
As per the Employee Lifecycle example, We have come across a few examples of HR teams that have invested in recruitment and talent solutions but have failed to tie these platforms into the greater Employee Lifecycle process. The result was increased human activity to glue multiple systems together and a higher overall operational cost.
In another ERP related example, the organisation moved to a cloud ERP solution but failed to get a fundamental understating of how the Expense claim features on offer would impact their current processes. The result was painful and frustrating.
Ensure that all transformation decision makers and implementers have laser focused clarity about what needs to change to have the biggest efficiency impact. Process change is not always about the technology. Changing policy or behavior could have significant impact at no cost.
3. Measure the impact post change Continually reporting the post transformation process metrics against the original process benchmark data enables the continuous cycle of informed decision making and continuous improvement.
Without this step you will be right back at the beginning i.e. having to answer questions on the perceived ROI of process transformation and General Managers will continue to inherit the perceived poor decisions made before them.
A practical approach to achieving post transformation reporting is to:
3.1 Repetitive Surveys
Repeat the online surveys (Measure in numbers) to measure the process impact, objectives and KPI’s.
Leverage the out of the box reporting of the applicable software, workflow or BPM tools to report on common process metrics.
Ensure that the transformation scope of works includes process metrics reporting and dashboards that display information relevant to the executive and original objectives and KPI’s
“When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind.” Lord Kelvin
Expressing and comparing your process transformation decisions in numbers to support informed decision making and transformation goals will get you ahead of the pack and guarantee ROI.
Supporting Executives and Teams to drive Business Excellence, Process Efficiency, Differentiation and Revenue.
About the Author
As a Process Transformation expert for over 20 years, Tony advises Executives and Organisations on how to realise the expected benefits and returns of improving process efficiency and avoid common pitfalls. Tony is the founding contributor to the VisibleSky Advisory program. http://VisibleSky.co
Tony has worked across a wide variety of industries and functions and has a broad depth of advisory and project development experience across multiple methodologies and technologies including, Workflow, Business Process Automation, Robotic Process Automation.
Tony's passion is to make a significant contribution to the success of executives every day, by assisting their organisations in reaching their full productivity potential.