Process before Automation – The key to truly impactful transformation
How many of us have tried to cook Fried Rice? Or at least watched someone cook them. What is the one thing which is distinctly noticeable? The prep time vs. the cooking time. Any good chef would advise one to ensure all the cutting/chopping work is done before you put the wok on the stove. The ingredients need to be ready for the cooking to begin.
Using this analogy for Business Process Automation, I would argue that the process needs to be ready for automation to begin.
But what do I mean when I say that a process needs to be ready? Keep reading..
Business Process Automation has evolved over the last 6-7 years to emerge as a major area of focus for organizations in their transformation journeys. Many organizations have started their RPA journey and many more have surpassed various stages of maturity and are scaling it up. Others are either building proof of value or researching RPA capabilities or running pilot programs.
While the adoption is certainly welcome, working on this program in isolation may not give the biggest bang for the buck. Like Bill Gates once said, “Automating an inefficient process is automating the inefficiencies in the process”.
“Organizations have a tremendous amount of ‘collective’ debt…. The cause is an extensive and expensive set of business processes underpinned by a patchwork of technologies that are often not optimized, lean, connected, consistent or explicit.”
-Gartner, Top Strategic Technology Trends for 2022
This is where process transformation needs to precede any technology intervention. Many organizations have different terminology for this combined solution – Lean Automation, Lean RPA, Digital Process Transformation, ESSA, ESAD, etc.
The underlying approach in all these methodologies involves streamlining the business processes before technological intervention. This involves doing a Value Analysis (VSM) to identify value and non-value-adding activities.
This is where Process Mining can be useful as one of the methods for discovery. Process mining is a solution that reads historical transaction lifecycle data of business processes and creates automated digital process maps. These maps contain all possible alternate flows existing in the process(es). Additionally, metrics like yield, cycle time, financial impact, etc. are automatically calculated for each stage. With process mining, it is possible to identify the sources of variation affecting the process performance and zero in on root causes.
Further deep dive into processes highlights the value-add and non-value-adding activities.
We’ve encountered these 2 terms (Value / Non-Value Adding activities) countless times in our conversations over the years, but it is important to understand the correct definition for both terms.
Value Adding – these are the activities that add value (actual or perceived) to the product or the service. A value-adding step should satisfy one of the following conditions
1. Customer should be willing to pay for it
2. Transformational by nature
3. Done the first time right
Ex: For a restaurant – cooking of ingredients to convert into dishes;
Waste or Non-Value Adding (NVA) – any activity which adds cost or time without adding any value or any activity which does not satisfy any of the above three conditions is a waste or a non-value-adding activity in a process. The focus should be on eliminating/reducing such activities. Ex: Waiting, Rework, etc.
Ex: For a restaurant – storing of ingredients (inventory), tasting of dishes before serving to customers;
Upon identification and confirmation of these activities, the focus is to eliminate them or reduce the effort spent – via standardization, optimization of inputs and/or process).
Once the solutions are implemented and the process is transformed, this is when I say that a process is ready for technology intervention.
One of the pitfalls in transformation programs is switching the automation lever before process improvement. This approach reduces the impact of automation and may prevent any future improvements due to the pre-conceived notion that since the process is automated, it has achieved maximum potential improvement.
Consider this –
A global provider of telecom infrastructure has multiple mobile services providers (MSPs) as its customers.
The process of Sales Order Generation was considered for automation, with an annual SO volume of ~ 500,000. Below were the findings after a deep dive into the process.
- Automation of the As-Is Process would yield a potential benefit of 8% efficiency
- If the input to the process (SO forms from the sales team) was standardized and variants were reduced by 50%, then the automation would result in 23% efficiency gains
- If the input variants were reduced by 75%, automation would yield 31% efficiency gains.
- If the input variants were reduced to 0, efficiency savings from automation would be ~ 45%
From the client’s perspective, there would have to be a huge change management exercise that would need to be implemented, with buy-in from country leads, and sales teams across the globe.
This is where a global champion in the client organization would be handy to drive the change management exercise to increase automation ROI.
I rest my case with a couple of questions for you all. Which option would you choose if you were the client? And which option do you think the client finally chose? No, really.
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