Kerry Brown, Transformation Evangelist at Celonis, is a strategist and thought leader who helps companies achieve organizational excellence.
The head of the IMP predicted at the dawn of this year that global GDP growth will slow for the third consecutive year. It was a gloomy way to kick things off, but also a realistic take on a business landscape dogged by inflation, rising interest rates and growing geopolitical instability.
2024 will go down as the year when rapid cash impact became the name of the game. Many organizations are looking to fund major system transformations. So, how do business and IT leaders collaborate to get a win-win outcome? They have to find the Goldilocks-like sweet spot that balances how to make their digital transformations truly successful while working more efficiently with what they have now and deliver significant, fast return on investment.
In short, leaders have to examine the foundations of how their business runs—their processes—for today and tomorrow. They need to get it right with a data-driven approach to managing current business operations while designing a future that accelerates the performance boost needed to outpace macroeconomic difficulties and the competition.
Evaluate Process Health During System Migrations
More than half (54%) of today’s enterprise leaders we surveyed in our recent Process Optimization Report cite system migrations as a key challenge facing their business. While investment in digital transformation technology projects rapid growth, migrating from legacy systems to new technologies often results in delays and inefficiencies. To ease the transition, leaders can lean on intelligent automation.
Powered by generative AI and machine learning, process excellence technology—which combines process mining, intelligence, automation and monitoring—automatically identifies process variants and issues, pinpointing areas that impact the bottom line. For example, repetitive manual tasks for automation or process issues in legacy systems to avoid carrying over to the new system.
One San Francisco-based 3D design software company we worked with used these tools to reconcile more than 120,000 sales order line items per month during a multiyear ERP migration. The additional insight into its processes allowed leaders to accelerate a key element of the migration process by four to six weeks, and uncovered more than 15 critical issues during the transition.
Treating digital transformation as an integrated set of processes that can be optimized helps make these efforts more cost-effective, creating a greater ROI. This is not a new idea, but it now has transformative potential we can reach.
Improve Your Processes, Improve Your Business
Depending on organizational size, manually mapping processes can take a tremendous amount of time and effort. However, advancements give leaders a real-time view of all of their processes, including any deviations. With a better sense of the business’s inner workings, leaders and process owners can diagnose problems and take immediate action to fix them.
The holy grail in transformations is to retire unnecessary and costly customizations. The challenge is often getting agreement to do so or knowing the impact when it happens. Transparency from process intelligence can show customer and revenue impacts, therefore removing that guesswork.
This informed approach is critical to making company operations more efficient and setting businesses up for long-term success through reduced waste, better cash flow and better customer service in the short, medium and long term.
The Time Is Now
Given major transformations take approximately three to seven years, plenty can be done now to make moves that are directionally correct and financially meaningful. Businesses are made up of a complex web of intersecting processes that work together to achieve shared goals. However, as companies grow, processes become more complicated and harder to control, creating openings for waste and inefficiency. That is why one of the most effective ways to optimize business performance is to optimize business processes.
Here are some quick wins for rapid cash impact and better design for broader business transformation:
1. Find hidden value in accounts receivable and payable. Optimizing accounts receivable (AR) can directly enhance cash flow, facilitate better risk management and reduce non-payment occurrences. Improved accounts payable (AP) enables companies to prioritize payments to key suppliers, strengthen contractual relationships, secure cash discounts and ensure priority access during supply chain disruptions. Process optimization can bring immediate savings by identifying and eliminating duplicate payments.
2. End the supply chain blame game. While pandemic-induced snags have largely subsided, supply chains remain ripe for improvements. With real-time data, leaders can improve service levels through on-time delivery, reduced stockouts and better supplier reliability; improve working capital by reducing inventory bottlenecks and accelerating slow-moving items or reducing excess inventory; and limit returned/canceled orders with realistic expectations for customers on delivery and inventory replenishment timelines.
3. Gain advanced control over procurement. Finance leaders often express concerns about a lack of transparency in supplier relations. Controlling and tracing purchasing activities across the entire organization is crucial, especially in times of volatile prices and global friction. Addressing this allows benefit from negotiated discounts, bundled offers and other opportunities.
Freedom From Analysis Paralysis
Overall, digital transformation will be faster, easier and more effective when built on a foundation of business understanding and detailed process data. Focusing on key areas of transformation and change will allow for tighter scope, program governance and organizational buy-in and performance. Here are some truths I often reference:
• Facts are friendly. Quiet the emotional debate and decision-making of what’s working and what’s not with data.
• People don’t hurt what they own. Build confidence and buy-in for new approaches to foster shared ownership of outcomes.
• People come to work every day wanting to do a good job. No one plans to do a bad job. When shown where and how, everyone will do their best.
• Change is led and managed by people who lead and manage the business every day. Democratize data intelligence with shared access to driving fact-based goals.
Business performance has never been more important, and the time for leaders to understand how work is happening is now. Examining business processes doesn’t have to be a drawn-out, manual effort. More visibility helps leaders find and unlock both short- and long-term opportunities. Executives who take advantage of these opportunities will have a competitive edge, no matter the macroeconomic environment.
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