Organizations that view digital transformation as mainly a technology difference from traditional transformation through business process engineering will end up missing the power of digital transformation. How is digital transformation different from business process re-engineering? A digital transformation journey moves an organization from a process-defined world to a data-driven world. Let’s look at why this is powerful and how it changes the value an organization delivers to customers and end users.
Digital Collapses Processes
In our current world, businesses are set up along processes, and they try to develop world-class processes. Six Sigma and other tools are designed to refine and improve those processes to create efficiency, focus and improvement in quality. In contrast, digital transformation shrinks down processes that a business currently does or could do, automates work people were doing and turns the process into software. What’s left is data.
Digital collapses processes into data. This allows organizations to look at their business through the lens of data instead of the lens of process. Suddenly, the data make clear that people matter, the customer experience matters. For instance, instead of seeing customer service as a set of processes that the customer or the organization initiates, customer data forces the organization to think about the customer experience.
As data emerge and the ability to associate that data with indicators or issues, it enables an organization to not only become more efficient but also change what it does. The business impact resulting from viewing the world through a data lens instead of a process lens is super-powerful.
In a data-driven world, an organization can rethink many of its old assumptions. When Airbnb, for example, broke away from processes and focused on data, it realized the company doesn’t need to own physical assets (hotels). Aspects of a hotel business that made it competitive in a process-driven world get stood on their head in a data-driven world. People who have apartments in great locations are a different option than hotels and provide different value in the customer experience.
In rethinking old assumptions about a business, we can get to where value or opportunities emerge in different places than in a process-defined world.
Another example of rethinking assumptions in a data-driven world is the human resources process. Companies built their employee experience around HR processes that serve employees such as payroll, benefits, employee communications, recruiting. When we move to a digital, automated experience, the data places the focus on the employee experience. Rather than asking what the organization does for an employee, the data show needs and what is going on with the employee.
Data Enable Speed
As I’ve frequently blogged, speed is the new currency in business. Organizations must be quick to deliver against customer and employee needs or expectations in a competitive market. There’s no shortcut in digital transformation to achieve this speed. But as an organization drives deeper and deeper into a software-defined, automated world, it moves faster and faster because the important data and associations in the data emerge. That then allows transformation of what the business does.
In a process-driven world, processes must be routine and allow consistently getting the defined result. Digital transformation transforms processes, making it faster and more reliable to focus on what needs to be done instead of getting trapped in the effort of getting processes right.
A data-driven world enables delivering an end-to-end, “on time and in full” customer experience. From a customer experience, it’s not how quickly the organization answers the phone but how quickly the customer can complete an order. The customer experience and satisfaction is around the fact that the customer doesn’t need multiple conversations with the organization; meeting needs can be done quickly and done once.
The same experience expectations apply to employees. In a process-driven world, an employee in sales needs to make sure the company calculates commissions appropriately and needs to enroll for various benefits. Those are separate processes with interactions with different departments. In a data-driven world, the employee can see the necessary information in one place at one time. And the company can anticipate the employee’s needs and what the individual might want. For instance: “We see that you’re using maternity benefits. Are you aware of the things we can do for you on maternity leave?” Or “Would you like your child enrolled in the healthcare program?”
Process orientation asks: did the activity complete and was it passed to the next stage or next department? A digital orientation asks: what do we need to know about you and how can we help you get done what you need to get done?
There’s No Shortcut
As I said before, there is no shortcut in digital transformation. The temptation in moving from a process orientation to a digital orientation is to cut some steps in the multi-year journey. The reality is it’s not possible. Digital transformation involves more than collapsing one process into one set of data. As an organization drives further and further into the journey of digital transformation, many aspects of the business model must change, as processes and data are interrelated.
But the digital journey of driving further and further into a software-defined, software-enabled, data-driven world is worth the effort, time and investment. In a data-driven world, an organization can understand the context of all interactions with a customer, employee or end user and whether the interaction will bring frustration or delight to that individual.
In a data-driven world, an organization has the full context of customer, employee or end-user expectations. Thus, it can dramatically change where the value is. And it can change the quality of what it does as well as doing it on time and completely, delivering the result the customer or employee wants.