Category Archives: Business Process Insight

Finance Transformation – are we nearly there yet?

Business Process Insight


Consulting support to CFOs, helping them to enhance the efficiency and effectiveness of their Finance function, is proving to be a hardy perennial in the market. Surely all the consultancy that was purchased going all the way back since the 1980s should mean that the problems have now been well and truly fixed? The number of Finance Transformation engagements in the market today show that this is clearly not the case. Why is that so?

During my career I have engaged with Finance functions in many roles. Beginning as an audit student, I learnt the skills of understanding what the audit tests were telling me – when I could draw robust conclusions and when I had to recognise that the results looked odd and I needed to investigate further. Then as a junior manager in the Finance function of a fast-growing international bank, I performed the monthly cycle of Finance operations, budgeting and reporting, and learned how to strike the right balance between supporting and challenging business executives.

Ten years followed in Big 4 Finance Transformation consulting, at a time when ERP implementations were in full flow, and I worked with large complex clients to design and implement new processes and reporting suites, global shared service centres and business partner roles. I then moved joined a technology company in a general management role, where I designed and delivered outsourced Finance services to external clients. As a global managing director with activities in multiple geographies, I had my own Finance business partner who helped me to understand our financial performance and survive in a world of tough growth targets.

Nowadays back in management consulting, I interact frequently with Finance functions when working on business process transformation assignments in complex organisations. Periodically I take myself right back to the basics of debits and credits, volunteering with small charities / NGOs in developing countries, working jointly with the local team to design and implement new processes and systems such as Quickbooks. Finally, I am CFO of two not-for-profit organisations in the UK.

Back then to the fact that Finance Transformation assignments seem to be a hardy perennial. Why has the transformation challenge not yet been put to bed? What insights can I bring from the multiple different capacities in which I have worked with Finance teams for more than thirty years?   

Accounting fundamentals

The core building blocks of debits and credits are still there and show no sign of disappearing. You cannot argue that Finance has had to respond to a fundamental shift in its foundations, in the same way that a move to service-oriented architecture has transformed IT design and development.

Accounting policies and the rules for presenting items in financial reports have continued to evolve, giving rise to short term assignments to help meet the new requirements – the current “all hands on deck” requirement in the UK is in the insurance sector, where IFRS17 is significantly changing the way in which future insurance liabilities must be shown in an insurance company’s accounts.

Such projects cut across the multiple dimensions of people, processes, data flows and systems, but are more technical than they are transformational. The short term pain in responding to such new policies and regulations is in the need to reconfigure data flows, and potentially also in the need to build new sub-ledgers to hold increasingly detailed levels of data.

Tools of the trade

While the building blocks have remained the same, there has been a continued evolution in the tools used by Finance functions to access data rapidly and to reduce paper and re-keying. Good examples are the real time interface of bank transactions from a bank’s systems into accounting ledgers, and the ever-increasing availability of self-service tools for running reports and creating transactions such as expense claims.

Robotic Process Automation is being adopted, particularly by outsourced Finance functions which are under significant cost pressure, to automate rules-driven processing tasks and to eliminate data re-keying across key interfaces.

Many organisations will have moved to new accounting systems, and will have addressed the question of whether or not to use cloud services for some or all of these systems, weighing up issues of cost and convenience, data security and inflexibility. For large complex organisations, the biggest factor in the move to new accounting systems will be all the work that has to take place on the interfaces from feeder systems. 

Perhaps one of the biggest recent changes has been in the use of data visualisation tools, which aim to make reports capture the attention of readers against a background of data overload and boredom with the more prosaic reports that are provided by ledgers and spreadsheets.

These data visualisation tools have a lot of powerful functionality, but of course are only as good as the availability and quality of the underlying data. These tools are often purchased direct by the business (for example, by the Sales function to report on forecasts). While these tools have their advantages, a challenge for the Finance function is to ensure a single version of the truth is accepted across the organisation.

The growing acceptance in the wider world of alternative versions of the truth, with the selective readiness to label truth as fake news, means that the Finance function needs to stay alert and retain control of what is and is not acceptable data for performance management across the organisation. While this does not merit the label of “transformation”, it is certainly an area where things have the potential to go badly wrong.  

Evolving to meet the needs of the enterprise

The label “Finance Transformation” has typically related to the vision, organisation and skills of Finance, and has then extended to processes, controls, data flows and systems. Today many organisations have implemented concepts such as shared service centres and remote business partners, along the lines of the Ulrich model which was devised back in 1995 for HR functions.

But a transformational new Finance structure will be never last for ever. Enterprises evolve both organically and through acquisitions and divestments. Where this evolution happens across multiple geographies and lines of business, the challenge for Finance can be transformational.

The evolution of the enterprise requires a constant re-tuning of the Finance model, for example in the coverage of the shared service centre, the alignment of business partners and the maintenance of specific technical expertise. It requires the roll-out of processes and systems into new parts of the enterprise, with all of the training and change management which comes with it.

A more unpredictable world

While the themes described above are all important, perhaps the biggest challenge for the CFO is how to steer the enterprise through a world that is far less predictable than it was considered to be twenty years ago. This unpredictability extends across politics, climate, consumer trends, the ability to protect data and intellectual capital, and many other key areas.

For a Finance function, accustomed to make predictions which will influence business decision making, the inherent unpredictability of the external world is naturally unsettling. Yet it would be unfortunate if the Finance function were to step back to being simply the bean counters of what has already taken place. The bean counting is necessary, but it is surely not sufficient.

How should Finance help the enterprise to respond to an unpredictable world? Scenario modelling and the clear articulation of assumptions are important, as are the ability to provide the earliest possible warning signals when assumptions and reality are diverging. There is no overall magic answer, but the worst thing is to pretend the problems caused by unpredictability are not there or will go away of their own accord.

Maintaining respect for proper financial judgement and control is critical too. In recent years we have witnessed the huge problems caused by overly aggressive profit taking and financial engineering. The outsourcing industry, in the UK and elsewhere, has been almost brought to its knees by a vicious spiral of high growth targets that led to decisions to contract for work at ultra-low margins, leading on to the fastest possible recognition of profits to meet the shareholder expectations that have been created, leading to zero room for movement when the contract faces delivery challenges, leading to write-offs and massive reductions in shareholder value.

Where the contract is in a critical area such as the provision of public services, the damage can extend way beyond the pain caused to shareholders.

This problem does not sit in the world of debits and credits. Nor is it really attributable to weaknesses in core Finance processes and data flows. Rather it is about Finance in its leadership and business partnering role, building trust and respect and a deep understanding of the business, and being robustly involved in decision making. In the context of the example above, “robust” should not mean agreeing that the delivery team can be given highly unrealistic future cost reduction targets which somehow make an early profit take acceptable. “Robust” rather means prudent financial analysis, control and the effective use of escalation paths where necessary.

But for many organisations this requires an ongoing investment in the skills and positioning of business partners and senior financial controllers, all of which costs money when resources are scarce. So the CFO will look at the ongoing optimisation of the end-to-end Finance function, taking advantage of the automation tools that are available, creating lean processes and eliminating waste.

This is driven not only for reasons of affordability, but also because Finance needs to be confident that it is doing the simple things right, in order to have both the bandwidth and the credibility to address the bigger challenges on its plate, rather than arguing on the back foot over whether a figure in a spreadsheet is correct.

In summary, Finance Transformation might well have been put to bed as a consulting service if business and the wider world had stood still. But the pace of change, the increasing level of unpredictability and the heightened pressures on business management all mean that Finance must keep on transforming itself to maintain relevance and to grasp the very significant challenges which both the enterprise and our wider society are so reliant on Finance to address.

Big Value in Little Data

Business Process Insight, Customer experience management, Data analytics

 

 

 

 

 

 

 

 

 

 

 

As companies in many industries get increasingly good at managing and extracting value from Big Data, consumers need to stay alert if they are going to get a good deal.

A recent personal experience when renewing my family’s multi-car insurance policy (three cars, four drivers) brought this home to me.

Many of us who are consumers of insurance in the UK have learnt from experience that whenever we get an annual renewal reminder, with the lure of “Here is your premium for next year, we are giving you a great deal, if you are happy we will update your payments, saving you so much hassle…”, then the smart thing to do is to phone them back to complain that the new premium is unreasonably high.

Incidentally, the people I politely complain to are invariably charming, which reinforces my view that it’s all a big game. I actually now look forward to these annual calls.

In each of the last five years I have always ended up with a substantial reduction which is more than worth the hassle of making the call. There probably is a price I would accept to avoid the hassle, but I am waiting for my insurer to figure that out. After all, they are the ones who have the big data! But maybe they find that me and my friends are unusual, with most customers the bias towards “no hassle” is much greater.

The new realisation for me in the last two years has been that, when I make the call to see if they will give me a reduction in their quote, I am in danger of being in an unbalanced negotiation. The imbalance is in the amount of data at our fingertips. The insurer has loads of data on my premium history, but has chosen to reveal little of that to me.

To be specific, with a multi-car policy, the insurer will share with me the total premium I paid last year across all my cars, but not the premium per individual car. The individual amounts don’t appear in the policy documents. Thus when it comes to renewal, they give me verbal but not written information on their quotes per individual car, and then can easily bamboozle me with factors such as an increase in car thefts near my address which are impacting the quote – without of course sharing the algorithm.

Realising this, I have taken to keeping a scrap of paper where I write down the quotes for each individual car that they tell me over the phone. With now three years of this “Little Data”, I have found that I am suddenly in a much more effective negotiating position. I can now come back to the insurer with searching questions about proposed increases on each car individually, which generally produce the happy answer of “Ah yes sir, I see what you mean, let me find a way to make a further reduction in your quote”. David versus Goliath it might not quite be, but it has certainly persuaded me about the big value in Little Data.

Spot the difference – Robotic Process Automation and Digital Transformation

Business Process Insight, Digital Transformation, Robotic Process Automation, Shared Services

 

 

 

 

 

 

 

 

 

 

 

 

I have noticed a number of conference invitations on the joint theme of Shared Services and Digital Transformation, and when you look at the agendas there is often a big emphasis on Robotic Process Automation (RPA). Are RPA and Digital Transformation one and the same, or are there some fundamental differences to be aware of?

RPA is certainly an important tool in the shared services armoury, and we are seeing increasing breadth both in use cases and in the scope of processes which are being automated. RPA is also proving its worth as a fast and cheap solution to back office systems integration challenges.

RPA is enabling the optimisation of key activities within the end-to-end flow of business processes, through the increasing automation of data capture, data enrichment, data validation, processing, reconciliation and analytics. Software Bots, which are created to undertake these activities, are becoming increasingly sophisticated. Once the initial investment in Bots has been paid off, there can be substantial cost reductions in ongoing operations, often accompanied by quality improvement in mundane task execution.

While RPA now covers an impressive breadth of processes, in many cases the business process which has been first cab off the RPA rank has been Accounts Payable. Shared Services historians will tell you that Accounts Payable was also one of the earliest processes to come within the remit of Shared Services.

But I do question whether this keen focus on process optimisation and cost saving really does equate to Digital Transformation.

Digital Transformation is surely a programme which takes place at the enterprise level, and reinvents the enterprise’s touch points, primarily with customers, and also with partners, suppliers and employees. Digital Transformation has the potential to disrupt and change markets, transforming not only customer experiences but also the whole fulfilment chain of creating, selling and delivering products and services. Digital Transformation harnesses technology enablers such as Big Data Analytics, Cloud, Internet of Things, and often stimulates the design of new Enterprise Architectures.  It is about technology, processes and data, but it is also much more than that – it is about people, organisation, culture and business vision.

If we take Finance and HR Shared Services, typically these consist of back office processes, at one or more remove from direct customer contact. They deliver key elements of an enterprise’s management processes, but they do not normally touch the sharp end of sales or product / service fulfilment. If we accept that Digital Transformation is primarily about reinventing the way that an enterprise sells and delivers products and services to its customers, then I struggle to see how the RPA of parts of say the Accounts Payable process or the Employee Training Course Booking process – worthy though they are – can claim to represent Digital Transformation.

This is not to say that Finance and HR do not have a vital role to play in enterprise Digital Transformation. But to play that role they need to look way beyond the automation of manual steps in their own back office processes.

Finance needs to think about how it can get the right data at the right time to people at the front line of the business, on an accessible device. The data needs to transcend organisational silos, while not compromising security, and it needs to be integrated, well analysed and easy to visualise. Where the fulfilment chain involves partners and suppliers, Finance should be getting together with them to reinvent end-to-end data flows. Finance also needs to help the business to create business cases for transformation and to measure the delivery of benefits, in rapidly changing and often experimental environments.

HR needs to champion the case for organisational and cultural change, recognising that enterprise Digital Transformation carries risk for the people charged with delivering it, and also for the people whose operational jobs and perhaps “empires” are impacted by it. HR needs to promote and enable new ways of working, and to reflect these both in the policies and procedures of the enterprise and also in the way that the enterprise presents itself to potential new “digital native” recruits.

Both Finance and HR also need to be able to lend high quality experts to the business, in support of enterprise Digital Transformation programmes, people who bring core Finance and HR skills and who also understand agility and the importance of customer experience. This is not to throw away the key corporate disciplines which protect shareholders and management, but to adapt them to ensure that they remain fit for purpose.

In conclusion, RPA within a Shared Service centre contributes to the effective and efficient running of the enterprise, and can also deliver cost savings which can then be reinvested in transforming the front of the business. However, RPA should not be seen as the same as Digital Transformation. If Finance and HR, the typical owners of Shared Services, wish to play an influential role in the Digital Transformation of the enterprise, then they need to look beyond the process maps of their own back office operations.

Do You Speak Fintech?

Business Process Insight, Fintech, Retail Banks

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Photo: Eduardo Paolozzi’s sculpture “The Head of Invention” in Holland Park, London

In the course of one day in the City of London last week, I was in three different conversations about Fintechs.

What struck me was that the financial services experts that I was talking to all had different examples of what a Fintech is. One mentioned a supplier of banking systems, another mentioned a disruptive network platform provider, and another mentioned a niche consumer lender who has been around in the market for at least a decade. Added together, these cover a very broad range of businesses indeed.

Check out the web and there is no standard definition that seems to have consensus. The UK government (UKTI) definition is as follows: “In its broadest sense, we define FinTechs as high-growth organisations combining innovative business models and technology to enable, enhance and disrupt FS. This definition is not restricted to start-ups or new entrants, but includes scale-ups, maturing companies and even non-FS companies, such as telecommunication providers and e-retailers.” (UK Fintech, On the Cutting Edge, HM Treasury and E+Y, August 2014). There is so much in there, it is hard to detect a couple of keywords.

Perhaps market forces are dictating the use of a very inclusive definition. If Fintechs are currently attracting investment capital, and being championed as the provider of choice for the digital generation, then what Board is going to tell its Chief Executive not to embrace the term wholeheartedly? Especially as the definition brings with it the allure of high growth for potential investors and, for the Chief Executive, the imposition of some ambitious growth targets. Of course market forces will create winners and losers, but you cannot win if you don’t take part.

I believe however that some structured definitions within this very fluid and fast moving market are important. As an interim executive, I get frequent approaches along the lines of “Are you interested in this CXO or NED role with XYZ Fintech”. How can anyone sensibly answer this without some discussion of the nature of the Fintech business and the operating model that it needs to have to be successful. It’s not enough to say that you can thrive in this market if you understand both banking and technology; that particular competency has been around since at least the 1950s.

For simplicity, let’s say a Fintech (in the retail banking market) could be a combination of one or more of the following businesses:

·         A software provider of banking systems

·         A platform provider who uses the software to provide a processing service to multiple banks

·         A bank (or quasi-bank) which is providing technology-enabled services to its end-customers; such a bank could be a pretty much anywhere on the challenger / maturity scale.

The combination point is important – for example a challenger bank might make much of its ability to create new software, or a platform provider might aim to win direct B2C business by putting in place some key “bank-like” services. But, just like the big conglomerate industrials found in the 1980s, the shareholder value of running all three types of business through the same management team may prove be to less than the value that can gained when the different businesses can be run by real specialists. The proviso of course is that, for overall value to be created in the Fintech market, there has to be a willingness for collaboration.

All three types of business need to deliver profits and return on investment. They all need to have a vision for where the sector is heading and the opportunities for disruptive growth. They also need to embrace the spirit of collaboration. But that aside, very different operating models are needed in each of these businesses.

The software provider and the platform provider are both B2B providers, whereas the bank (in this example) is a B2C provider. B2B and B2C entail very different go-to-market strategies.

The software provider is typically focused on innovation, and managing the costs of investment. Service is important, but it is rarely the core competence of the organisation. The platform provider is highly focused on managing service levels and operating costs. The bank is concerned with market share, and the risk/reward profile of its customers, and might be ready to outsource many of its delivery services.

The bank will have a regulator on its back, the platform provider will be trying to design a service which avoids the need for regulation, and the software provider’s only interest in regulation is in making sure its software can produce the numbers that regulators want to see.

In summary, this is definitely not a case of “one size fits all”. The Fintech concept embraces at least three very different types of business, which in turn have their own distinct skills requirements at executive level.

Banks should use data to improve service, and not to erode trust

Business Process Insight, Customer experience management, Customer Relationship Management, Data analytics, Retail Banks

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In a world where it is now much easier for consumers and businesses to switch banks, one reason that so few people do switch is that trust in banks still typically outweighs the exasperation that is caused by poor service experience.

Of course, what “good” looks like in terms of service excellence needs to be continuously reappraised in order to keep pace with the expectations of digital consumers. Mapping out the optimal “customer experience” across the range of products and services is a great start-point for this, after which you can map out the processes which deliver these products and services and seek to understand where they deliver a great experience and where they fall short.

Process improvements can then be designed to address the problem areas and information can be gathered and analysed to spot and even predict service delivery shortcomings. When you can predict the problem, you can address it efficiently before it occurs, rather than expensively (both in terms of money and brand) after it has happened. Consistently good service experience will lead to increasing loyalty and a positive reputation in the market, enabling the bank to differentiate itself, retain customers and attract new business.

Naturally, the more complex the web of processes, the more likely they are going to be prone to problems. Simplicity is good. We have all observed how the fintechs and challenger banks have sought to create nimble, cost effective infrastructures which large banks, with a deadweight of complex legacy infrastructure, should in theory find it hard to compete with. To their credit, the challengers appear to have been spending more time than traditional banks, in talking to the market and finding out what customers want in terms of product design and levels of service.

At the moment, the challenger banks are, in many cases, testing the market with simple online products, such as fixed term savings accounts, rather than mirroring the full range of services which the traditional banks offer. Personally, I am not holding my breath for a real breakthrough from these banks – recently the mobile-app-only bank in the UK where I had opened a fixed term savings account managed to make my entire account data invisible to me, after pushing an app update on to my iphone. The process to make this data reappear involved a lengthy re-registration process with their contact centre. If these guys are struggling with technology at this level, it seems to me it will take time for them to develop a robust multi-service capability.

To be honest, I don’t really care about the type of technology – only how it helps support and deliver excellent service at the right price. A bank needs to use technology effectively to connect its data and its processes together and to streamline its service delivery. It should avoid the temptation to use new technology “because it’s there”, without addressing the root cause of service delivery issues.

Clearly this demands that the bank builds a clear view of what sort of service its customers want, and is able to justify the investment either through cost savings or the ability to cross-sell more products. This cross-selling requires a bank to capture information about its consumers, in market segments and ideally also to make it personal at the level of the individual customer.

A couple of ways to do this are to invest in relationship management and to invest in data analytics. Both have real challenges for a bank.

Again from recent personal experience, I have spent at least ten hours in meetings with the local relationship manager from my traditional UK bank, with an eye-watering amount of mundane form filling but also with some really value-adding observations about my potential needs. Trust was built up, and I began to look forward to each interaction. Then, all of a sudden, I got a call from the bank to say that the relationship manager was leaving and that it would be some months before they appointed a replacement. Back to square one, and a sinking feeling that when I do meet the replacement then it will be time to start going through all those forms again.

So, there is a real challenge for banks to invest in a consistent relationship management service, which includes effective two-way communication with customers.

How about removing the “inconvenience” of relying on staff continuity, and trusting in data analytics instead? There is a lot of research and investment going into predictive data. My sense is that this is probably effective at a “segment” level, but that “predictive” can become inaccurately “presumptuous” when such techniques are applied at the level of the single customer. I don’t (thank goodness) have a personal example of this from the banking sector – setting aside all those offers to move to “premium” credit cards which I don’t want or need and which get filed immediately in the recycling bin. But, given that retail banks are inclined to adopt practices from other retailers, I do worry about what might be coming.

Let me take a recent personal example from a well-known travel booking app that I (used to) use. I was recently meeting a new client whose linked-in profile showed that they, like me, had spent a lot of time in the Far East. I was trying to remember the name of a hotel I had stayed in few years ago. Via the history pages on the travel booking app I found my original booking. Great. Until I started getting a daily bombardment of emails from the travel company, offering to help me book my next Far Eastern trip. I have to say that I had seen this as a great app for making bookings and for getting good discounts. But the nuisance effect of those emails outweighed the value of the service, causing me to unsubscribe and to remove the app from my phone.

I give this as an example of what it might take for me to quickly turn off my relationship with a bank.  It is all about the grey area where predictive becomes presumptuous, and where marketing becomes intrusive.

What happens is that the bank would reach a point, where it will start to undermine its core competence of “trust”. Trust is not just about security. It is also about relying on a bank not to waste its customers’ time with presumptuous offers which they don’t need or want. A travel company can get away with such approaches. I don’t believe that a bank can, because its trust premium is a fundamental reason it stays in business.

At the start of this blog I commented on the balance of trust and service experience and its effect on customer retention. I have shown how investment in new services can lead to a requirement to build knowledge which, especially when placing too much reliance on data analytics, can lead to unintended breakdowns of trust. My own recommendation is that banks don’t mess with trust but rather focus on the other side of the equation, and invest in eliminating the exasperation that is caused by weaknesses in service delivery. 

Making lasting connections

Business Process Insight

Forth bridges

 

 

 

 

 

 

 

 

 

 

 

 

 

Last weekend I flew into Edinburgh and got this great view of the 3 Forth bridges in the late afternoon sunshine. You have the iconic 19th century rail bridge at the front, the current road bridge from the 1960s in the middle, and, at the back, the new road bridge which is due to open in May 2017.

There is a fascinating video at https://www.youtube.com/watch?v=2BrFhrBQGUA which shows how segments of the road deck, each weighing 650 tons, are raised by crane one at a time, from a barge way down below on the river, up to the bridge and then attached by cable to one of the towers. The further from the tower, the more complex the process of attachment. Clearly this requires the immense skill of a large team of engineers and support staff.

No doubt in years to come the new bridge will be admired for its graceful looks and functional effectiveness. I think it also has a message today for the business world. A huge amount of preparation and “heavy lifting” goes into the development of successful, lasting business relationships. The chief executive may be the one who signs the deal, but let’s recognise the critical importance of all the sales and delivery people, without whose expertise, focus on detail, and piece-by-piece hard work, the connection will never get made.

Are you keeping your head above the Cloud?

Business Process Insight

I was recently walking along Whitehall in London, fresh from a meeting about Cloud strategy. Raising my gaze from the cracks in the pavement, I suddenly caught sight of this dramatic view of Nelson’s Column, head above the Clouds.

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It got me thinking – how many of us are UNDER the Cloud, looking up as untried beginners, trying to make sense of the opportunity, while trying to spot and avoid a shower of economic rain. Or maybe just standing under an umbrella, pretending the cloud is not there at all, or thinking that the benefits of Cloud are so intuitively irrelevant to our organisation that they are not worth even contemplating.

And then, how many people do you talk to who have their heads IN the Cloud? The people who can talk to you for ages about how it all works, and all the great benefits, but who seem so preoccupied with the Cloud being the solution to every business problem, that they somehow seem to lack a bit of perspective around the wider challenges of business and the economy.

There is no doubt in my mind that there is huge economic benefit in being able to access data processing and storage at the lowest possible cost.  Cloud, as part of a wider solution, can provide that.

Cloud itself is a commodity, not a complete business solution, and your “Head IN the Clouds” conversation rapidly gets into the relative merits of cumulus public clouds, cirrus private clouds, and cirrocumulus hybrid clouds, together with concerns over data residency, data protection and cybersecurity.

Effective Cloud-based solutions are certainly achievable, yet I suspect that there are fewer people than you would think, who are in the fortunate position of being ABOVE the Cloud, confident that their IT strategy is in excellent shape, and therefore able to have a clear, unimpeded view of business opportunities on the horizon.  Not least because the business and IT world around us, just like the sky above our heads, is always changing shape. Nelson himself is quoted as saying “I cannot command winds and weather”.

Cloud is typically opaque, and it does not come in a one-size-fits-all package. Context and long term perspective are critical in any adoption of Cloud in your organisation.

What could a 19th century admiral teach us about perspective? After all, long distance data sharing in his line of business was reliant on flags and semaphore!  Well, maybe he offers us a different kind of perspective….let me finish with another quote from the man who famously put his telescope to his blind eye in the heat of battle: “I could not tread these perilous paths in safety, if I did not keep a saving sense of humour”.

Data is the real heart of Digital Transformation

Business Process Insight

What is at the centre of Digital Transformation? The simplistic answer is “the customer”, and indeed the ability to engage with customers – in the ways they want to engage – is pivotal to business success. New technologies keep pushing the boundaries of possible ways of engagement, giving rise to new, disruptive business models and sudden market shifts. Then throw into the mix the increasing expectations and technology adoption of customers, and you have a situation where the supplier-customer balance is tilted very much in favour of the customer.

In Digital Transformation 1.0, the focus has been principally on optimising the front end of the business, building tools such as interactive websites, accessible by both desktop and mobile devices, to enhance the ease at which “I want it NOW” customers can access products and services. The goal became something along the lines of “consistent omni-channel customer experience, anytime, anywhere, anyhow.”

More recently, businesses have turned to Digital Transformation 2.0, with a focus on ensuring that the end-to-end “enterprise” processes within their business are digitally connected. This comes from recognising that it is all very well to make commitments to customers at the front end of the business, but if you do not connect the front-end to your fulfilment and delivery processes, then you risk failure in meeting a customer commitment, a failure which is quite likely to be broadcast on social media. Digital Transformation 2.0 manifests itself in different ways in different industries. Examples include passing information on the specifications that a customer has chosen for their new car, direct to the plant floor; or gathering information from sensors that can be used to predict when the product you have sold to your customer will need maintenance (the “internet of things”); or simply giving the retail staff on your shop floor the maximum information about the products on display, via interactive tablets that they can share with customers.

And now, businesses are creating strategies around Digital Transformation 3.0, which involves planning not just the digital connection of enterprise processes in their own organisations, but ensuring digital connectivity with the enterprise processes of other organisations – partners, suppliers, intermediaries and even regulators. Seamless interaction between a motor insurer and a car repair workshop would be a good example.

In all of this, the customer focus remains vital, but is wholly dependent on tools, processes, networks, and above all “data”. Data which needs to be both secure and accessible to those who need it, and absolutely not left languishing in silos. Data which needs to be digestible and easy to visualise. Data which needs to be real time and reliable. Data which can be separated from the “noise” of big data, and turned into meaningful information and actionable insight. Data which is seen as one of the most critical assets of your business.

If you think about it, data is what is driving your customers too. Consumers are programmed by nature to gather data on what is on offer in the market – on price, on quality, and on what other consumers are buying – before making their buying decision.  They know the value of good data.

So it needs to be for businesses. In taking advantage of all the opportunities that are offered through Digital Transformation, an effective data strategy, across connected processes, is fundamental.

Digital Transformation = DT = DaTa = DATA.

Shared Services or Self Services?

Business Process Insight

The shared services concept, both in its in-house and outsourced flavours, is driven by a number of business objectives. If we asked a group of people to list these objectives, we would probably see cost reduction coming high on the list. Process efficiency would probably score highly too.

The cost reduction is historically achieved by centralising activities in one place to get economies of scale, and often this is accompanied by a shift to a lower cost location. In more recent times, cost reduction is achieved by a focus on automation, including robotics and machine learning. Continue reading Shared Services or Self Services? →