Business Processes and Change - Reasons, Drivers, and Considerations
Times change. And that's one of the biggest reasons there's now a resurgence in business process management. Globally, firms are reaching a point where they don't feel they can eke out any more efficiencies from their current processes. At the same time, they understand that new entrants are coming into the marketplace with dramatically different business models.
In the insurance industry, for example, companies such as Progressive have developed an online Internet service that has had an obvious impact on older insurance companies and their business model. Examples like that exist throughout this industry, and just about every industry throughout the world. New competitors come online and throw a "spanner in the works" to existing business models. Times change, and organizations have to change with them.
On a high-level, strategic reasons for wanting to change can be broken down into the following three categories:
- The need to survive. This is often masked from many people in the organization and is really understood only by senior management. It is not always apparent, but this may be the single biggest reason for business process change.
- The need to grow (or grow further). Although companies don't always need to grow, growth is what most companies strive for. To do that, the organization may need to reduce some inefficiencies, save some money, and improve its processes to deliver value to its customers.
- The need to stay relevant. This is increasingly important for small businesses and for businesses in areas that are ever-changing - for example, technology. While what the organization is doing now may be working well today, technology changes quickly, and it's important to be prepared for change while it's still a choice. Too many organizations wait until they are irrelevant before making needed changes – just ask Blockbuster. So staying relevant is in a real sense the same as surviving.
In any of these cases, it's important to be aware of which reason or combination is driving your particular project because it will impact how the project is shaped and driven.
What are Some Specific Reasons for Process Change?
Here are some more specific reasons for undertaking process change:
- To reduce costs associated with a particular process: For example, banks used to return your canceled checks every month with your statement. If you wrote a lot of checks, that was a lot of postage that they had to pay. Today's statements are online, and the postage savings are significant.
- To reduce the time it takes to complete a process: Similarly, some of us used to count on the "float" - that is, the time it took from writing your check to being processed by the vendor, their bank and your bank - to avoid bouncing checks. In some cases, this was a week or more. Now your transactions are processed in near real-time.
- To improve customer satisfaction and focus on the customer: Continuing on the banking theme, the check deposit process used to require you, a physical banking location, a human teller, and a fairly narrow time window to conduct your transaction. Today you can deposit at a mini bank in your supermarket, or at an ATM, or even by taking a picture with your smartphone and app. Improving the customer experience is a significant reason for updating and automating business processes.
- To grow revenues: As we noted earlier, most companies need to grow in order to build awareness, market share, and profitability. We're all doing less with more, so revenue growth most often has to come from improving processes and becoming more efficient in order to better serve its customers.
- To explore new markets or simply to look at new opportunities: Once upon a time, Apple sold computers - and that's it. Today, more than 50% of Apple's revenues come from iPhone sales, while computer sales are slightly below 10%. This has pushed Apple to become one of the largest, most valued companies in the world.
What Are the Key Drivers for Process Change?
There are three main drivers for process change.
- Changes to the marketplace. As noted earlier, these are changes that can render an organization or even an entire industry irrelevant. Consider the Fortune 500 – the list of the largest companies in the U.S. by total revenue. Since the original list was published in 1955, more than 400 of the corporations on that list no longer exist, at least in the same form. Competitive pressures in the marketplace don't just come from other competing organizations, but also from changes in how consumers use and perceive the marketplace.
- Changes to legal or regulatory requirements. Organizations are required to comply with these or face penalties and other liabilities. One of the more pressing issues today is privacy and protection of personal data – in just the last few years we've seen a number of changes to privacy regulations around the globe, requiring any organization that collects or processes personal data to review and potentially overhaul any process that relies on it.
- Finally, changes to technology can displace previous technologies very quickly. Netflix won over Blockbuster for many reasons, but a large part had to do with the ability to stream media and movies directly to consumers courtesy of ubiquitous broadband internet, ever-increasing data speeds, and mobile device capabilities. But something as relatively simple as moving from "wet-ink" to digital signatures can significantly streamline business processes.
As you consider whether to change a particular process, it's important to keep these considerations in mind.
First, every process touches another process. Very few processes are completely self-contained. This means that it's important to understand that changes to a process will likely cause issues to related processes and to understand the impact of those changes. This is one of the most overlooked aspects of the planning phase, but it can cause significant unforeseen complications.
Next, technology and automation approaches cannot fix bad processes by themselves. A bad process that is fully automated is simply a more efficient bad process. It's important to look at the process itself to see whether it has issues, can be streamlined, etc. before starting the technology discussion.
Finally, changes to processes will require changes to behavior. Management consistently underestimates the amount of change management that will be required in order to effect change. Sometimes this manifests as the idea that if your staff don't get on board with the changes, they will be fired. But you can't fire everyone.
Change Doesn't Require a Reinvention of the Wheel
Why start from scratch with your business process automation when you could get a head start with templates? Process templates are already automated and ready to use and cover many of the common process tasks you're looking to automate - like contracts, claims, accounts payable - already built and ready for you to use.