Part 1: The Future of Business Transformation are Processes
For this blog post series I’ve teamed up with my colleague Lukas Egger, Head of Innovation Office & Strategic Projects, Business Process Intelligence, to share our personal views around business transformations and the future of business processes.
In the following is the first installment of our three-part series. You can find the other parts in the SAP Community as well. Part Two: “Business-Processes-as-a-Service: The Reimagination of Businesses” and Part Three: “Open Process Platforms as the Next Paradigm of the Cloud”
Ten years ago, Marc Andreessen published his famous article ‘Why Software Is Eating the World’. His main argument is that every company regardless of its pedigree will become a tech company, with software development as a main driver of its business. Thus, software is eating the (old) world.
Since then, it seems like the market has turned into a giant buffet, where the big IT players eat everyone else.
The ability to change has become crucial for success
The competitive pressure is not just felt in the world of digitalization but all around. A constant shortening of product life cycles, disintermediation of previously stable markets, and the advent of new data-driven business models, all fuel the urgency to change business models. This is often referred to as VUCA, a world of increased volatility, higher uncertainty, more complexity, and greater ambiguity.
The tables turn faster in the digital world that we see today, and nobody has a guaranteed seat. The success of companies used to depend mainly on doing what you do well. On being efficient. Today, this is not enough. Companies need to widen their appetite and develop innovative business models to ensure their competitiveness in the long term.
The need to constantly develop one’s business means that you can’t just do agility, you have to be agile. CEOs who thought they have years to fully digitalize their enterprises now have months. Digitalization, which can be referred to as the process of moving to a digital business model, is a global imperative, and the global COVID-19 pandemic just accelerated what was already happening.
The three ingredients of a successful business transformation
But what does that mean and how can businesses attain a long lasting, sustainable, and competitive advantage? It boils down to three main components, agility, resilience, and efficiency.
At its core, increased agility is the ability to respond faster to new or unexpected situations, based on a learning. Agility is not just about being fast and adaptable. You must understand what needs changing and why. Simply put, businesses need to be quick learners.
Improved resilience is the cushion that softens the shocks whenever external events challenge one’s business model. It ensures that the company has enough time to learn from either failures or challenges.
Lastly, businesses must do more with less. Cost efficiency is crucial as businesses tackle multiple challenges at once. You can’t face one struggle at a time, the competition changes as new contestants enter the market at the same time.
In summary companies need to run their daily business while at the same time adapting to change. They need to bring the business forward, in a situation where no one knows what to fix first, or how to exactly fix things. This challenge is also oftentimes referred to as the transformer’s dilemma.
Change has many faces, but successful change speaks one language: processes
Agility, resilience, and efficiency are the currencies of future success and the pandemic acts as an accelerator for change. Now what? How does one go about to enact actual change?
Common options for large enterprises are to invest in consulting, to buy new tools or to acquire companies. However, it usually turns out that none of these options lead to a sustained ability to transform. It is not a lack of expertise that consulting can fix, it is not a lack of efficient technology that tools can fix, and it is not a lack of business opportunities that an acquisition can fix. The three options merely tackle symptoms, they do not cure the cause. The underlying cause is the inability to transform a business.
Business transformation is often mistaken with aspirational goals, grandiose visions and motivating speeches. And that’s maybe where change starts but the real manifestation of successful change are improved business processes. If one wants to transform the business and make it stick, processes must change. Business processes are the language of the enterprise.
Today, most business processes are too complicated, not adequately measured, and not sufficiently tracked by data. Moreover, many processes still carry the legacy of antiquated, paper-based workflows. Automation only occurs rigidly via fixed rules and can’t help in a world of fast change.
Enterprises need to understand and put their focus into their business processes, so they can create change that is transparent and measurable. This way, businesses enable fast change cycles that can be understood by everyone. Applying this approach to enterprise systems, processes can guarantee business outcomes on a large scale while at the same time being conducive to automation and self-learning which makes success sustainable.
In summary, the business world is changing fast and will continue to do so. To be able to adapt to change, businesses need to be agile, resilient, and efficient. The actual business transformation does not manifest in the amount of cloud services a business uses, but how well business processes are managed. Thus, to successfully understand, monitor and change one’s business processes is a key business objective.
That’s why the second part of this blog series will go into detail on what it takes to successfully manage one’s business processes.
What is your take on the topic of business transformation? Please share your feedback in the comments below or raise your specific question in the SAP Community by using the Business Process Intelligence Q&A tag.