Accelerating business transformation

By Vinaykumar S. Mummigatti, VP and BPM Practice Leader, Virtusa

The pace of Economic changes and sweeping impact of  globalization is severely impacting every company. Extreme competition and virtual elimination of barriers for a new entrant to capture the markets are causing every CXO to be on alert all the time. The winds of change are blowing faster than ever and the need for adapting to change is far greater than ever. No company can rest on the laurels of yesteryears. Our ability to adapt and meet the challenges thrown at us by our customers and the competition will decide our  survival. Executive management is under increased pressure to react to changing market conditions, protect revenues and deliver cost efficiencies quickly. Management needs to transform how the business operates - without major new investments.

Global companies are constantly rediscovering themselves in order to keep pace with changing business dynamics, specifically the emergence of new product and service offerings, business models, organizational structures, technology adoptions, and customer service metrics. The main determinant of success is the ability to adapt. Winners succeed because of leadership style, organizational culture, and the ability to identify, measure and constantly optimize key performance parameters.

Business Transformation & Innovation

"Business Transformation" has become a buzzword, if not a major trend in the plotting of every CEO's strategic roadmap. While many companies have been able to achieve success in one-off BT initiatives, it isn't really transformation until outcomes are measured and the results built into a repeatable, improvable model.

Innovation is becoming a key element of BT. Companies like Apple, Google and Cisco, who have made innovation and transformation a serious part of their cultures, prove the point. This is especially noticeable in global markets where competitors have similar access to capital, technology, and talent, the winners all display vision, innovation-friendly cultures, superior talent management, financial discipline, and the intelligent deployment of technologies.

What differentiates any two competitive companies with similar strengths?  Based on proprietary case studies and daily interactions with clients, we believe Winning companies leverage their processes to create competitive advantage. A quote from Cisco's John Chambers, from an interview published in Harvard Business Review, substantiates the point:

"From a business-model and leadership perspective, we're seeing a massive shift from management by command and control to management by collaboration and teamwork. You could almost say this shift is as revolutionary as the assembly line. Business processes are being turned upside down to better compete in a global environment.....If there was a time that we lost market share, it was because we moved too slowly, so we've had to build speed and scale into all of our processes."

Many companies have invested in Business Process Management ( BPM ) initiatives and technologies without larger transformational goals in mind. We need to focus on an implementable and measurable blueprint for BT. BPM is an inherent component of the BT framework. The essence is that one cannot exist without the other and demonstrating returns from BT without leveraging BPM is next to impossible.

Role of BPM in  Business Transformation Blueprint 

Business Transformation is about driving fundamental change in the way an enterprise conducts its business. This change could be driven by customers, investors or competitors. Transformation is a "lifestyle change", not just a one-time activity. It's about how a company manages itself through the various stages of the business life-cycle and adapts to change in real time. Everything a company does or delivers, is defined and governed by its processes. Business processes are the underlying linkages between people, systems, and external entities like suppliers and customers. BT programs need to integrate strategy, organizational structure, people, processes, and technology in a holistic approach.

Let us look at some real-life examples of BPM-enabled business transformation initiatives which have resulted in tangible metrics and ongoing performance improvements:

• An engineering services company transforms its customer management, invoicing and accounts receivable processes to shorten its revenue collection cycle, use working capital more effectively, and improve profitability.
• A leading electronics manufacturer transforms its call center operations to address customer attrition, decline in revenues and overall customer satisfaction.
• An insurance or financial services company transforms its account opening, loan origination and underwriting processes to become faster and cheaper while delivering best-in class customer service.

As we can see from each example, it's clear that process is the common theme across major transformation initiatives. Tying business and IT initiatives through process goals is the best way to achieve measurable returns from BT. Many of the challenges in achieving measurable success through BT get addressed through this alignment.

Strategic planning involves visioning, goal setting, and the development of organizational objectives for the near and long term. As chosen strategies are implemented through specific initiatives, it becomes important for returns to be measured in terms of their impact on key metrics such as revenue, profitability, and delivery (on-time) performance.

Each financial measure is controlled by different levers. Companies that know how to use these levers to achieve desired performance will be able to manage change and win in a dynamic environment. These levers are familiarly known as "Key Performance Indicators (KPIs)."  Defining KPIs is the first step towards the practical measurement of any strategic initiative. A clear articulation of the value chain governs the alignment of strategy to investments in technology or other assets.

Interestingly, the linkage between KPIs, people and processes is what drives innovation. The gaps between KPI benchmarks and actual metrics, drive people within an organization to find a better way to close those gaps. KPIs are the tools, process innovation is the means, and business transformation is the desirable end. This concept of a blueprint tries to form a linkage between key variables, such as strategy, goals, KPIs, people, processes and technology (systems). Because we can tie the highest level of strategy to lower levels of investments, a good blueprint enables a company to remain aligned to business objectives via tangible metrics.

Technology has become an inherent part of organizational strategy. In some sectors, investments in technology mark competitive differentiation. That said, many organizations still do not align technology investments with their transformational blueprint. For any given technology to be classified as a "transformation enabler" it must provide real time visibility into processes, be adaptable to change in real time and accelerate the time to market.

Summary

A good starting point for a BT initiative would be drawing up a high level blue print, which requires analysis of your organizations' BT maturity and definition of key focus areas. Identifying initiatives which are low cost, measurable, and offer a quick pay-back period will help spark business buy-in. The long journey toward the cultural adaption of Business Transformation, and the innovation it promises, begins with small steps and a high degree of commitment.