What Is the Business Process Transformation Process?
Business process transformation (BPT) is the complete redesign of how a company works to make it more efficient and effective. It involves overhauling key processes, reimagining goals, restructuring teams, and updating workflows and delivery methods. With BPT, companies can improve operations at every level and achieve business goals.
Business process transformation is one part of business process management (BPM), which, as the authors of this 2020 study in the European Journal of Information Systems explains, involves identifying inefficiencies or redundancies in processes and workflows and streamlining them for better organizational growth.
“The entire concept can be boiled down to a simple formula: new business demands + updated technology systems + talent + culture change = business process transformation,” writes Forbes Councils Member Daragh Mahon in 2021. This is very similar to business process re-engineering, where companies also revamp processes, cultures, and systems for better workflows and satisfaction. Business process transformation more often involves incorporating digital tools and new technologies, but the two terms are sometimes used interchangeably.
Businesses might undertake business process transformation in order to grow their profit margins, lower their costs, or increase their competitive advantage. Whatever the case, the bigger objective is to cultivate additional value — through people, processes, and technology — and improve customer experience by better adapting to market demands.
Why Is Business Process Transformation Important?
Business process transformation is important because it helps companies improve their operational efficiency by reducing costs and streamlining workflows. It also helps businesses adapt to changing market conditions, which improves customer satisfaction and loyalty.
Business process transformation often involves integrating technology and data analytics into workflows. This helps companies make more informed decisions and reduces uncertainty. Improved processes can also mitigate risk and ensure compliance, as well as improve employee satisfaction.
Business process transformation can benefit a company in a number of ways:
- Cross-Functional Collaboration: Business process transformation promotes communication and collaboration across departments by encouraging a holistic view of workflows, rather than focusing on individual tasks. Large-scale transformation requires teams to agree on shared goals, use common platforms, integrate their systems, standardize their processes, and merge their data.
- Cost Reduction: Business process transformation can streamline workflows, reduce waste, and optimize resource utilization, all of which improve operational efficiency and reduce overall costs.
- Customer Experience Enhancement: Transformed processes should lead to better-quality services in the long run. By streamlining and optimizing workflows, these transformations often result in shorter overall wait times for customers. Additionally, enhanced data analytics that result from business process transformation help personalize customer experience.
- Increased Productivity: Automation of workflows allows employees to engage in more creative or strategic work, which makes better use of their skills.
- Informed Decision-Making: Digitized processes generate more data that can be leveraged for better insights. Businesses using artificial intelligence (AI) and machine learning to make better use of their data can reach more informed decisions and predict market trends more accurately.
- Market Adaptation: Business process transformation enables companies to respond and adapt to changing market conditions. For example, an efficient shift toward remote work processes and workflows during a global pandemic ensures that a company stays competitive.
When to Go Through Formal Business Process Transformation
It’s important to remember that in the general sense, a company is never done transforming, but undergoing targeted business process transformation is not always the right decision. Whether it’s the right time to undertake process transformation depends on a variety of internal and external factors, such as increased competition, process bloat, or new technology.
These are some common reasons for a business to undergo a transformation:
- Technological Advancements: If a company’s technology becomes outdated, transformation may be required to update and modernize its processes with new systems or technologies.
- Digital Transformation: A company may undertake digital transformation even if its technology is not outdated. In this case, business process transformation may be required as part of a broader digital transformation strategy.
- Changing Market Conditions: Evolving industry trends, global events such as wars or economic recessions, changes in government regulations or compliance requirements, and other market conditions may require a business to transform its processes.
- Bloat: Operational inefficiencies, or excessive waste in business processes, call for transformation to ensure that a company can stay relevant and competitive without incurring losses. If a business is losing time, labor, or raw material due to inefficient workflows, process transformation will help reduce waste.
- Competition: If competitors are outperforming a company, process transformation may be necessary to improve efficiency and regain a competitive edge.
- Growth: When companies expand into new regions or countries, move into new product markets, or acquire or merge with other companies, business process transformation is required to accommodate new requirements, customer preferences, or organizational cultures.
- Customer Experience: When a business feels it needs to reaffirm customer satisfaction and loyalty or improve its draw among potential customers, it may transform its processes to better meet customer needs and expectations.
Business Process Transformation Frameworks and Strategies
Using existing frameworks for business process transformation can save time and reduce risks. Examples include McKinsey & Company’s 7-S Model, the Prosci ADKAR Model, Lewin’s Change Management Model, and Kotter’s 8-Step Change Model. Each has its own approach to guiding organizations through change and addressing different aspects of the transformation process.
According to Varun Grover, Co-Editor of Business Process Transformation and Distinguished Professor at the Walton College of Business, University of Arkansas, there are, historically, two distinct ways of thinking about business process transformation: one focusing on cost, and the other on revenue.
The more popular model in the early years of transformation focused on cost — making processes more efficient, cutting costs, and eliminating workers. “In the later years of business process transformation, the focus was not so much on cost and slashing people, but on revenue,” Grover says. “How you differentiate your product to generate more premium and how you create more value for customers.”
These are two distinct strategies or frameworks. “Cost focuses on streamlining, so a company focused on costs will evaluate its different components and say, ‘Are we generating enough return?’ Your focus is on highly efficient facilities and cutting out marginal accounts,” Grover says. “A company focused on differentiation is focused on uniqueness. How do we create it in our people and our processes? These two strategies contradict each other. If you’re focusing on costs, you’re focused on streamlining; when you're focusing on differentiation, you want uniqueness, and uniqueness comes at a cost.”
The difference between these two frameworks depends on a number of different factors, including a company’s strategic timeline and its size. “Public companies in the United States are very sensitive to their shareholders. They have a fiduciary responsibility to their shareholders to show profit. And the cost-focused strategies tend to be more low-hanging fruit,” Grover says. “Reduce costs to show more profit.”
The revenue-focused strategies are longer-term. “That requires innovation,” Grover says, “building this uniqueness, creating a proposition that’s compelling for your customers and your markets.”
These well-established strategies for organizational change could also be adapted specifically for business process transformation:
- McKinsey & Company's 7-S Model: The McKinsey model emphasizes the interaction and combination of seven key factors for effective transformation: strategy, or the company’s plan for achieving its goals; structure, or the company’s hierarchy of talent; the staff working at the company and the skills they demonstrate; the systems and workflows in place at the company, as well as the shared values common throughout the company; and the style leaders use to motivate their teams.
According to this model, the seven factors — divided into “hard” elements (strategy, structure, systems) that influence management, and “soft” elements (staff, skills, shared values, style) — have to be aligned in order to achieve successful transformation. This model was developed in the 1980s to aid organizations that were undergoing restructuring, and it emphasized not only the technological considerations for transformation but also social and cultural aspects. - The Prosci ADKAR Model: This is a goal-oriented model for organizational transformation that emphasizes awareness, desire, knowledge, ability, and reinforcement. These five components help organizations stay focused on the human requirements for change. They also ensure that individuals in the organization understand the need for transformation, as well as have the desire to take part in it, the knowledge and ability to implement it, and sufficient motivation to continue it.
The emphasis on individual knowledge and motivation ensures that organizational change cannot happen without employees understanding why it is happening and being on board with the specific changes. This in turn ensures that managers provide the necessary training and build the required trust to implement transformation. - Lewin’s Change Management Model: This model involves three phases: unfreeze, change, and freeze. Unfreezing involves getting employees on board with the need for a change in processes, raising awareness and creating momentum in anticipation of change. Then the organization implements the changes, and people adapt to the new processes. Finally, refreezing involves stabilizing and reinforcing new processes, ensuring that policies and procedures are updated to reflect the changes and that the organizational culture supports them. Since transformation is ongoing, this model reflects a continuous process.
For example, a company transitioning to a digital model for invoicing might first have to convince employees comfortable with a current manual system that change is necessary. Then, as the company rolls out a new digital invoicing software, it might have to provide training resources and other support systems. Finally, after adopting the new system, the company would focus on stabilizing, which might involve refining workflows, integrating the new system into daily workflows, rewarding employees who use the new system well, and conducting regular reviews. - Kotter’s 8-Step Change Model: This model emphasizes the importance of building urgency in order to enact change and transform the organizational culture. It involves several key steps: clearly communicating the need for change, building a coalition of stakeholders to influence this change, forming a strategic vision, and clearly defining the ideal future state, then taking that vision to every level of the organization and securing broad-based support. It then involves removing barriers to enacting change with resources and training, generating short-term wins for the new system with quick-result projects, using this momentum to tackle bigger challenges, and finally embedding the new approaches into the organization’s work culture, ensuring that the company’s policies, procedures, and norms reflect the changes.
Learn more about optimizing your business processes with this beginner’s guide to business process modeling and notation.
Approaches to Business Process Transformation
Approaches to business process transformation typically revolve around three key areas: people, processes, and technology. Successful transformations require a holistic focus on these categories, as they encompass the essential elements for driving change, improving efficiency, and enhancing a company’s competitive edge.
According to Evan Weiner, who manages commercial operations at Tanium and previously led transformation efforts at Splunk, this is the mantra to business process transformation: “People, process, technology.” Holistic transformation efforts should consider all three of these broad categories, and most approaches to business process transformation share overlapping focuses and methodologies.
Technology-Driven:
- Artificial Intelligence (AI): AI-driven process transformation leverages machine learning, natural language processing, and predictive analytics to reduce errors, enhance decision-making, encourage innovation, and provide valuable insights for continuous improvement. This approach can involve any or all of the following:
- Automating complex decision-making tasks
- Analyzing large datasets to identify patterns and optimize processes
- Enhancing fraud detection and risk management
- Implementing virtual assistants for streamlined customer service
- Digital Transformation: Digital transformation is the process of leveraging digital technologies to fundamentally change how a business operates and delivers value to customers. This can involve the following:
- Adopting new technologies, including AI tools, or Internet of Things (IoT) devices
- Implementing cloud-based solutions
- Integrating digital platforms across the organization
- Strategic Transformation: This type of transformation involves realigning the company’s goals, business model, and market positioning for growth. This may include the following:
- Changing the mode of delivery, such as Netflix switching from the DVD rental model to a streaming model to keep up with consumer preferences and new technologies
- Developing new products, such as Nokia shifting from manufacturing cables to becoming a telecommunications company
- Entering new geographical markets, such as Starbucks adapting its product to regional tastes to become an international chain
Process-Oriented:
- Lean Six Sigma: This methodology combines Lean principles (eliminating waste and improving flow) with Six Sigma (eliminating defects and reducing variability in processes) to improve process quality and efficiency. It typically requires the involvement of certified professionals who are trained in these methodologies.
Lean Six Sigma involves identifying and eliminating activities and processes that do not add value and conducting statistical analysis to reduce process variation. It also involves continuous improvement through DMAIC (define, measure, analyze, improve, control) cycles.
Learn more about the methodology in this complete guide to Lean Six Sigma.
- Total Quality Management (TQM): TQM is a comprehensive, organization-wide effort focused on long-term quality improvement. While it overlaps with Lean Six Sigma, TQM aims to improve all aspects of the organization, not just specific processes. In other words, with TQM, everyone in the organization is involved in the quality improvement efforts. This participatory approach creates a culture of continuous improvement.
TQM emphasizes a commitment to quality improvement across the entire organization and a reduced dependence on inspections through a customer-focused approach to quality. This requires open communication and collaboration, as well as ongoing training and education for all employees.
Learn more about this quality management system in this comprehensive guide to total quality management.
- Agile Transformation: This methodology applies Agile principles, which were originally created for software development, to business process transformation. It encourages flexibility, adaptability, and responsiveness to change. This involves breaking down larger transformation initiatives into smaller, manageable components in order to focus on continuous delivery and improvement.
Learn more about the Agile methodology in this comprehensive guide to the Agile manifesto, and implement Agile project management with this complete Agile one-stop project management resource.
People-Focused:
- Customer-Centric Transformation: This approach puts the customer at the center of process redesign efforts. It involves mapping and optimizing customer journeys, implementing Voice of Customer (VoC) programs, and generally focusing processes to enhance customer satisfaction.
- Cultural Transformation: Business process transformation can’t happen without changes to the organizational culture that show support for the new values, behaviors, and ways of working. For example, improving employee engagement to foster a more collaborative workplace is necessary for making strategic transformations that focus on participatory approaches to improvement.
“I think the biggest thing when talking about transformation is the culture component,” Weiner says. “A company can implement the greatest technology in the world or put together the gold standard Harvard Business Review process, but if the organizational mindset isn’t there, and the behavior toward change and continuous improvement isn’t there, no one’s going to actually use it, and it’s not going to matter.”
- Capability-Driven Transformation: This approach focuses on building and enhancing employees’ core capabilities. This involves assessing the current capabilities, conducting gap analysis, and engaging in training to develop new skills and competencies. This enables the company to keep up with changing market demands and readies it for future growth.
- Organizational Restructuring: This strategy focuses on realigning the organizational structure with business goals. If the current hierarchy hinders innovation or communication and there is a need to break down silos to improve collaboration, organizational restructuring may be necessary.
Phases of Business Process Transformation
The phases of business process transformation depend on the organization’s goals, the existing processes, and the scale of the changes required. Generally, they involve assessing the needs of stakeholders, generating ideas, designing new processes, creating a roadmap for execution, implementing changes, and continuously refining solutions.
Simone Grapini-Goodman, Chief Marketing, Communications, and Digital Officer at the American Diabetes Association, recommends what she calls “design thinking frameworks” to think about business process transformation. Design thinking frameworks traditionally view transformation in terms of five phases: empathize, ideate, prototype, test, and implement.
“I’ve learned over the years that a slightly altered approach makes more sense for processes,” she says. Grapini-Goodman’s “adapted approach” reframes the traditional model in four phases: discovery, definition and decision, development, and deployment. “This adjusted framework ensures a more effective and collaborative process for achieving business transformation.”
Here are the four phases Grapini-Goodman recommends:
- Discovery: Traditionally called the empathize phase, discovery involves deeply understanding the needs, challenges, and perspectives of users or stakeholders. “Empathize is relabeled as discovery,” Grapini-Goodman says. “This phase is crucial for understanding the current state and identifying opportunities for change.”
- Definition and Decision: This is the traditional ideation phase. According to Grapini-Goodman, the purpose of this phase is to “define what we are solving, outline what is out of scope, and plan our approach.”
Grapini-Goodman argues that these first two phases are critical for engaging with stakeholders. “Stakeholders’ engagement and development are essential,” she says,— “make sure you bring people along on the journey, and communicate transparently and consistently.” - Development: This phase combines the traditional prototype and test phases to make a clear transformation roadmap. “This involves creating a detailed plan in collaboration with stakeholders and socializing it on a smaller scale to gather key input,” Grapini-Goodman says.
- Deployment: In this phase, according to Grapini-Goodman, the transformation is executed at scale. This phase also includes monitoring. “Refinement is key when implementing and measuring transformation,” she says. “Remember that transformation is an organic process that needs to be nurtured and adjusted at times based on ongoing learning and the changing business landscape.”
Steps to Implement Business Process Transformation
The steps to implementing business process transformation are to assess the existing processes, plan resources for transformation, design new processes and workflows, implement new systems, and monitor the process. This also involves fostering a culture of adaptability among employees and ensuring that changes are always aligned with long-term business goals.
Evan Weiner’s end-to-end process for business process transformation consists of these five stages: assessment, planning, design, implementation, and monitoring.
These are the steps for implementing business process transformation:
1. Assessment: This stage involves reviewing the current organizational design and completely rethinking the existing system to identify gaps in structures and processes. This can include business process modeling, or creating a visual and analytical representation of business processes. It also includes identifying redundant tasks or outdated systems and gathering input from stakeholders or project management teams on what’s missing. “Let’s say we have these 20 problems,” Weiner says. In the assessment phase, “let’s go in and assess what’s most important, and what’s the level of effort against it.” This stage is essential for clarifying the goal for the business process transformation.
2. Planning: This phase involves ensuring that you have enough resources to achieve your goal, and laying out your goals against a timeline, according to Weiner. “This is when I like to align on the problem statement, put together a vision and objectives, and understand the metrics that we’re going to be tracking and the reports that we need,” he says.
The planning phase can be broken down into several separate steps:
- Fill the Room: Business process transformation can’t happen without people. When undertaking transformation, make sure all stakeholders are informed of both the assessment and the plan so they know what the process will entail and what to expect. “My favorite question to ask when I’m starting a transformation effort — and people laugh because I’m asking it all the time — is, ‘Who else needs to be in the room?’” says Weiner. “The worst thing that can happen is you go through a transformation, you’re six months down the line, and you realize you never talked to Jim or Bob in finance about something that was impacting his team. The biggest thing that I’ve learned was bringing in as many people as early on in the process as possible, and making sure there’s cross-functional alignment on the problem statement and then the vision.”
One way to engage all these interest groups is to hold early-stage workshops, guided by a single “narrative,” according to Weiner. “That includes key elements such as problem statements, business backgrounds, metrics and related KPIs, business impacts, and recommendations,” he says. “Start the workshop by having everyone read over this narrative to ensure alignment. This initial step is crucial as it sets the stage for more constructive and focused discussions on the recommendations. By having everyone on the same page, we can dive deeper into the issues at hand and work collaboratively toward solutions.” - Get Buy-In: Some people may be resistant to transformation, especially when it involves new technologies, because they are used to the status quo. Hear out their concerns, and make an effort to convince them of the urgency and the benefits of transformation, using data, research, and metrics. In the long run, as your business becomes more innovative and competitive, everyone will gain from process transformation.
- Develop Samples: Bring in leaders across different departments to create a comprehensive transformation and change management plan, keeping in mind the importance of connecting new business processes end to end. This early collaboration can facilitate the development and analysis of sample process models. Try to solicit feedback and support from employees and key stakeholders.
- Compare Samples: Compare your processes to those used by competitors or those considered best practices according to industry standards. Use this analysis to identify room for improvement in your model.
- Set Goals: Once you have the necessary support and information, you can systematically set goals for your business process transformation. To get started, Weiner recommends following these steps:
- Describe Point A: Where are you now?
- Analyze existing processes, systems, and performance metrics.
- Consider your current organizational strategy.
- Identify pain points, inefficiencies, and areas for improvement.
- Write it all down.
- Describe Point B: Where do you want to be?
- Articulate the overall purpose and desired outcomes of the transformation.
- Consider how this might align with the broader organizational strategy and objectives.
- Write it all down.
- Workshop with Multiple Stakeholders: Gather feedback from every interest group on how potential changes in the business process will affect them.
- Describe Point A: Where are you now?
Start planning your first steps with these free goal setting and tracking templates. Visualize processes better with this essential guide to business process mapping.
3. Design: This phase involves using new technologies to redesign core processes. Make sure you document all existing processes and requirements, including training requirements for employees. According to Weiner, the design phase is the time to discuss the future state process. “What is that going to look like? What technology is needed?” he says. “How does the future state design impact organizational design? Do we need any new roles or responsibilities? Do we need to make any changes to the overall organizational structure?”
“I’m mostly involved in systems work or sales transformation,” he says. “So for me, this process involves asking, for example, ‘How do we actually design the system to be able to convert our customers from premium to cloud licenses?’ A lot of it will be systems-heavy, but we’ll do read-outs and have conversations with all of our stakeholders to make sure we’re on the right track. I like to have check-ins with everyone to say, ‘Are we doing alright? Is this the vision that you have as well?’ Because we don’t want to end up nine months down the road and realize we designed this wrong.”
Designing new processes involves different components:
- Create a Workflow: Diagram your ideal scenario, including all the components of an optimal workflow. This new workflow diagram should include all tasks completed by individuals, teams, and systems.
- Make a Transition Plan: A business process transformation transition plan can detail how your business will conduct everyday operations and implement new processes simultaneously. This transition plan should include a detailed timeline of the different phases of your transformation and be shared across the organization so that all stakeholders have realistic expectations.
- Define Performance Metrics: Business process transformation requires a set of well-thought-out measurements, established at the beginning of the process, to track progress and alignment with strategic goals.
- Conduct User Acceptance Testing: For technical products especially, it’s useful to conduct internal testing before implementing a pilot or a full rollout. Business users can test the entire system and process to ensure that everything is working prior to full-scale implementation. “It’s useful having a select number of people do all that testing before we actually do the release,” Weiner says.
Document and design your processes more effectively with these free process document templates.
4. Implementation: During this phase, change management is critical. For business process transformation to be executed successfully, it’s important to have employees experienced with change management on board who can help mitigate disruptive effects and support other employees throughout the transition. “Make sure that we have adoption, that we have the culture change, that we’re providing support and training,” Weiner recommends.
Implementation is usually best done in phases, rather than all at once. In Weiner’s case, he conducts a pilot test at the scale of about 200 users before a full rollout reaches about 7,000 users.
5. Monitoring: “We’re not done,” is the first thing Weiner reminds his teams after the implementation phase. In the immediate aftermath of implementing changes, integration can be challenging. This period requires monitoring and continuous improvement. “Now we’re running the reports that we had built earlier, making sure that we’re hitting the metrics that we had set out to achieve,” Weiner says.
The monitoring phase can be broken down into three parts:
- Tracking: At this point, teams need to start measuring KPIs and tracking progress with reporting tools and dashboards.
To learn more about tracking progress, read this comprehensive guide to KPI dashboards, or check out this collection of free KPI dashboard templates.
- Collecting Feedback: Sending notes to users to gather their individualized feedback allows you to check whether the user experience is as intended, and whether users have any suggestions for improvement. Ensure that these exchanges are detailed and well documented so that the information gleaned from them can be useful in the next step.
- Continuous Improvement: At this point, the process is no longer internal, and the business team hands it over to the transformation team. “It’s like the right arm and the left arm,” Weiner says. “The transformation arm will do all the reporting [which includes gathering information from tracking and collecting feedback], and once it’s time to actually implement the improvement, we pass it over to the business team and they handle implementations from there.”
Business Process Transformation Starter Kit
Download the Business Process Transformation Starter Kit
Use this free starter kit during your business process transformation process. This kit includes templates for a basic elevator pitch and an elevator pitch deck.
In this kit, you’ll find:
- A change management brainstorming template for Microsoft Word and Adobe PDF to help you brainstorm the requirements and challenges of different aspects of your process transformation
- A performance checklist for Microsoft Word and Adobe PDF to help you measure the impact of your transformation
- A business process transformation performance scorecard for Excel and Adobe PDF to help monitor your transformation cycle
- A flowchart template for PowerPoint to help visualize the current and future business process
- A workshop facilitation template for Microsoft Word and Adobe PDF to help your team work through the initial phases of transformation
Ways to Measure Your Business Process Transformation
Key metrics to assess your business process transformation are effectiveness, alignment, speed, cost, time, revenue, efficiency, customer and employee satisfaction, error frequency, and brand perception. Compare each to the pre-transformation process to monitor the success of your business process transformation.
Continuous monitoring is essential for any business process transformation cycle. Ensure that you are regularly collecting data and feedback from consumers and employees, as well as identifying changes.
You can use several tools and metrics to measure your transformation process. Using as much stakeholder and customer feedback as possible, create a scale to measure the following elements:
- Effectiveness: How effectively is the process delivering value to customers based on their specific requirements?
- Alignment: How closely is the process aligned with customer demand profiles and time requirements?
- Speed: Track the total duration of the process, from input to delivery. How quickly is the end product reaching the customer, compared to before implementation?
- Cost: Calculate the total cost to produce and deliver outputs, including inputs, processing, and resource costs. How does it compare to the process prior to implementation?
- Time: Quantify time saved with the transformed process. How does it compare to the time prior to implementation?
- Revenue: How does revenue tied to the transformed process compare to prior to implementation?
- Efficiency: How does resource consumption of the process compare to prior to implementation?
- Customer Satisfaction: How would customers rate their experience compared to prior to implementation?
- Employee Satisfaction: How does employee engagement and experience rate compared to prior to implementation?
- Errors: Track the frequency of errors and the amount of rework needed after implementing new processes. How does it compare to prior to implementation?
- Brand Perception: Rate the change in brand value with the transformed process.
Examples of Business Process Transformation
Companies such as General Motors, Toyota, and others have undergone business process transformation to improve their efficiency, adapt to changing market conditions, expand their offerings, and more. For example, Walmart increased sales by overhauling its e-commerce strategy and buying Jet.com.
Here are some examples of companies that have implemented significant business process transformation:
- General Motors: Around 2012, GM decided to overhaul its approach to IT by hiring almost 10,000 IT professionals to replace their contractors. This provided the support needed for employees to focus on innovation and development rather than solely business-as-usual maintenance work, resulting in an exponential improvement in data and productivity. Before their transformation, the ratio of internal to external employees was about 10 to 90; after transformation, it was about 90 to 10.
- Walmart: After acquiring the e-commerce company Jet.com in 2016, Walmart spent nearly $12 billion investing in technology in what Moody’s lead retail analyst called a “race for second,” competing only with Amazon. Within two years, its online sales had increased by 40 percent.
- Toyota: Integrating digital technologies such as AI and the Internet of Things (IoT) allowed Toyota to focus on data-driven insights and research, including using computer vision and machine learning for autonomous vehicles and predictive capabilities for taxi service demand.
- Goldman Sachs: In 2016, Goldman Sachs created Marcus, a digital banking platform that used data analytics to gain new insights into trends, risks, and customer behavior, and began to offer tailored banking services such as personal loans and savings accounts. Over the next three years, the platform generated more than $5 billion in loans and $55 billion in deposits across the United States and the United Kingdom.
Business Process Transformation Case Study
Business process transformation is happening all the time in a myriad of different ways. In the case of Splunk, a software company where Evan Weiner led the transformation effort for three years, one major transformation was transitioning customers from on-premises licenses to cloud-based licenses. This is a common move across the industry.
“We implemented a transformation called ‘cancel and replace,’ which was to cancel all of our customers’ existing licenses that were on premises — on actual hardware — and replace them with cloud-based licenses,” Weiner says. To tackle this, he used his three-pronged approach: people, process, technology.
First, the team at Splunk had to think about the current and future processes. “What is the process that we do as a sales team right now to sell on-premises licenses? What is the future state process going to look like, to be able to actually go in and change those existing licenses and replace them with cloud licenses?” Weiner asks.
This also involves thinking about the different roles and responsibilities that will be affected by the transformation. “Fulfillment teams, invoicing and finance teams, and sales teams — what is changing for those people to now be able to sell in the cloud?” Weiner says.
Then they had to make sure that they had the right technology and infrastructure to implement this transformation. “We have to ask: Do we have the right systems in place? Do we have the right tools in Salesforce, for example, to be able to support being able to convert those licenses into cloud?” Weiner says.
Finally, they had to consider how the organizational culture would be impacted and how it would need to change or be supported. “It’s an organizational mindset,” Weiner says. “How do we actually enable the behavioral change required to get people to now do a cloud-based sale? Everyone’s job description has essentially changed.”
To learn more about implementing practical transformation solutions, check out this real-world guide to business process management.
Challenges in Business Process Transformation
Not all businesses are ready for business process transformation all the time. Not having a clear vision or plan for integrating new technologies can lead to failed change efforts. Lack of employee buy-in is another common challenge companies may face.
In 2015, McKinsey observed that 70 percent of change efforts failed, “largely due to employee resistance and lack of management support.”
Here are some common challenges that a business might face when undergoing or considering business process transformation:
- Ambiguity: “Lack of a clear vision — or inadequate communication of that vision — is perhaps the first opportunity to get it wrong,” says Grapini-Goodman. It’s possible to invest in a transformation that digitizes a process without necessarily making it more efficient or effective, if the overall objective is not clear enough.
- Inertia: People may be justifiably skeptical or scared of large-scale organizational change. To address this, full transparency about the transformation initiative is essential. “It’s important to understand the different motivations of various stakeholders, anticipate what their response might be, and build a plan to address it,” Grapini-Goodman says.
- Integration Challenges: Aligning new technologies, processes, and organizational structures, whether with new management methods or new data systems or software, can be expensive and require significant resources. Choosing the right business process management platform and conducting thorough testing is essential. If existing systems are not well-integrated into new systems, data can end up inaccurate and cause disruption or delay to the overall process.
- Measurement: “Measuring the impact of transformation can be challenging at times since it is not the only thing that may be changing,” Grapini-Goodman says. “Nothing is constant. There might be competitors or regulatory or consumer actions that also influence the course of the business. While measurement might not be perfect, it should not be ignored. Progress over perfection will be key in understanding impact.”
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