Digitalization Journey – The BPM-Discipline as Guide to Value

Opportunities and Threats of the Digital World

Digitalization has become a key topic in almost every organization. According to a recent study 74% of companies have decided to take the digitalization journey – and the others will be forced to do so or disappear [1]. The integration of physical products, people, and processes based on the “internet of everything” paves the way to disruptive innovation and new business models. A company can produce for example sports shoes based on the individual requirements of a specific client leveraging transponders fixed to the shoe. The shoe “communicates” to the different machines to trigger the appropriate production activities. This “mass-individualization” gives the organization the ability to meet individual customer requirements at a reasonable price. Intelligent process management systems react to events, like changes of environmental data. Mobile devices, social media approaches, the handling of huge amounts of data in a short time through ”Big Data” approaches, related new analytics capabilities, or the use of cloud-based applications accelerate those developments [2]. The definition of Digitalization is visualized in Fig. 1.

Figure 1: Definition of Digitalization
Figure 1: Definition of Digitalization

The continuously growing computing power enables formerly unimaginable business performance – but only if you manage digital technologies appropriately so that it provides real value through better or completely new business processes. Many organizations recognize this, however they are not sufficiently prepared to achieve the full value of digitalization – or they even create more problems than benefits. A machinery company, for example, automated the final assembly of a specific product line – only to recognize later that this did not resolve their cycle time issues. The real issue was the quality of their bills of material which led to many missing parts resulting in long waiting times during the final assembly, with or without newest digital technologies.

Most Organizations are Not sufficiently Prepared for the Digital World

According to a recent study by The Gartner Group [3] only 1% of businesses have agile processes and process management capabilities in place to realize the potential of digitalization. This means that most organizations are not prepared to guide their digital journey to value. This is consistent with the findings of a study by BPM-D, Widener University and the Universidad de Chile with over 200 organizations around the world [1].  Over 55% of the respondents answered that it is a key challenge to identify the right opportunities for performance improvements through digitalization. In addition most organizations struggle with their slow decision making and the overall resistance to change. Fig 2 shows the key obstacles organizations see for digitalization.

Figure 2: Key Obstacles for Digitalization [1]
Figure 2: Key Obstacles for Digitalization [1]

The discipline of business process management (BPM) helps to overcome those obstacles and realize the digital initiatives to real business value. The BPM-Discipline transfers the business strategy into people and technology based execution, at pace with certainty [4]. It provides the transparency and structure necessary to achieve best value through the right degree of digitalization. It focuses initiatives on what really matters, improves business through the right combination of people and digital technologies, and helps to sustain improvements through agile process governance [4]. Lots of digitalization opportunities are driven through “the Cloud” [5]. This means technology moves more and more outside the company. Its value, however, needs to be realized within the organization – using the BPM-Discipline as “guide”.

Focus on what Matters

When the overall business strategy is defined, a focused strategy execution is required. Potentially cost and time intensive digital initiatives need to target the right business areas to deliver their full value in regards to the overall strategy. The BPM-Discipline helps to identify those high impact processes where digitalization can make a real difference. Process innovation and disruptive improvements lead in those areas to significant competitive advantage. Previous solid academic and practice research has shown that these are only 15-20% of an organization’s processes, more than 80% of the processes are pure commodity processes where a company just needs to meet average performance by copying industry standards [4][6]. The BPM-Discipline helps to guide the digitalization journey towards real business value.

Improve the Right Way in the Context of your specific Organization

Even high impact business processes require differentiated improvement approaches. Achieving high performance does not mean digitalization of everything. An insurance company, for example, may fully automate the handling of simple standard claims using the right process execution and rules engine. The same improvement approach does not fit for the handling of complex less often occurring claims. Here a people based execution with some support of the access to an appropriate knowledge base may deliver better results. The standardization of the sales processes of a company across different subsidiaries may lead to more value than the total optimization and automation of a few. Process innovation may be the right approach to configure the products of a biotech company but may not be the best approach for their warehouse management. The BPM-Discipline identifies the most appropriate improvement approach and combines people and digital technology to achieve best performance results [2][6].

Sustain Achieved Value

Once a process is improved, transformed or newly established it is crucial to keep on “watching” it and make adjustments when necessary. The journey needs to be well guided. Our volatile digital world does not allow for relaxing time for many of an organization’s processes. Change, on-going improvement and innovation must become part of the day-to-day business [2]. The BPM-Discipline provides agile and pragmatic governance processes executed through appropriate roles and tools [5]. The resulting process of process management itself becomes subject to the right degree of digitalization, for example by leveraging collaborative process repository tools, cloud-based process execution or social media approaches for appropriate process community management. The BPM-Discipline creates a value-network that guides digitalization into the best direction and adjusts the journey when necessary to make the overall business strategy happen.

The BPM-Discipline as Guide to Value in a Digital World

Digitalization requires an appropriate company specific and value-driven BPM-Discipline to deliver best business outcomes for an organization. It helps to focus on what really matters, improve having the specific opportunity in mind and sustain those improvements through agile governance approaches. The BPM-Discipline guides the digitalization journey to value – executing strategy fast and at low risk.

References
[1] Kirchmer, M., Franz, P., Lotterer, A., Antonucci, Y., Laengle, S.: The Value-Switch for Digitalization Initiatives: Business Process Management. BPM-D Publications, Philadelphia, London, 2016
[2] Kirchmer, M.: High Performance through Business Process Management – Strategy Execution in a Digital World. 3rd edition, New York, Berline, e.a. 2017.
[3] Cantara, M.: Start up your Business Process Competency Center. In: Documentation of The Gartner Business Process Management Summit, National Harbor 2015.
[4] Kirchmer, M., Franz, P.: The Process of Process Management – Strategy Execution in a Digital World. BPM-D Whitepaper, Philadelphia, London 2015.
[5] Abolhassan, F. (ed.): The Value-drivers of Digital Transformation; Why there is no Way around the Cloud. Berlin, New York, e.a. 2016.
[6] Kirchmer, M., Franz, P.: Targeting Value in a Digital World. BPM-D Whitepaper, Philadelphia, London 2014.