Process visibility rather than process replacement. The fourth installment of Digital Transformation Processes: A Key Guide to Success explores the importance of process innovation and digital transformation (DX, DT, Industry 4.0, digital transformation), covering examples and challenges of real-world process improvement. Emphasizes new approaches to process visualization and the importance of process digitization.
Contents
The importance of process transformation and how to approach it
Along with business strategy, process transformation has long been a major project for consulting firms. Process transformation involves creating optimal processes by drastically eliminating redundant and unnecessary work in various value chains, such as sales, marketing, supply chain, purchasing, logistics, production, and manufacturing, and introducing customer-centric ways of doing things so that better products can be made faster and cheaper.
In general, it’s important to keep the following in mind when driving process innovation Start from scratch, without thinking about the existing processes and systems; define the existing processes as a legacy and look at them from an outside perspective; and create and implement an organizational change management plan. This means training employees to adapt and buy into the new system. It’s not unlike applying a DX mission by creating a DX execution organization and engaging with different departments within the company.
The Challenge of Process Transformation and the Opportunity of DX
One thing we shouldn’t forget is that many process transformation challenges are not easy to succeed at. Most often, we diagnose a process and come up with meaningful conclusions about how it should be changed. However, when it comes to execution, the new processes are often ignored due to unfamiliarity and the old ways of doing things are reverted to. In the process, we add one exception after another to make things easier, and we get farther and farther away from true process innovation.
If you’ve been through this before, a DX project is an opportunity to do process transformation right. Processes that have been left untouched for the sake of expediency or avoidance of responsibility by some incumbent departments.
Real-world examples and challenges of process improvement
Let’s take a look at some examples of unreasonable processes. First is the process of individual employees applying for and approving time off. While some companies have moved to self-approval, many still rely on team leaders to approve team members’ vacation requests. At its core, personal time off is a matter of self-determination within the time allowed, and there’s no need to go to the team leader for approval.
If the purpose of the approval process is to check the schedule of the team leader or manager, a separate schedule management system can be used to check and adjust the schedule. In this case, the schedule management system becomes an element of the DX project. Let’s also look at the payment process for expenses. In the U.S., individuals are given a lot of authority and the organization is basically based on trust.
So if there is no agreement on the expense, you just notify the people involved via email and if there is no feedback that it’s a problem, you just do it. However, in the case of Korea, we basically derive a process based on the premise that individuals can misuse it, so the approval process takes quite a long time.
The processes of ‘approval’ and ‘consensus’ can also be said to be a case where they are only separated by name according to the roles and positions in the organization, and they are misused to hold on to organizational influence or to avoid responsibility. The definition of this will vary from organization to organization, but there are certainly ways to reduce the time it takes to approve processes. The final example is related to budget increases. In larger organizations, each department is given a business budget and an expense budget at the beginning of the year to guide their execution.
This is important from a financial management perspective, as it ensures that every organization stays within its budget for the year. However, the problem arises when a particular account goes under budget. Since budget limits for each account are determined at the beginning of the year, when an account runs out of money, it’s necessary to divert money from other accounts, which requires reporting and approval of the diverted money. This is the same process we’ve been doing in our organization for a long time without realizing it.
Process visualization: a new approach
So how can we change these processes with DX? The bottom line is that instead of trying to change the processes, I would recommend focusing on “process visualization.” Process visualization is about making the way you’ve been working implicitly tangible, and creating a kind of visualization of how much work goes into each process and how much time it actually takes to do that work. In other words, making the process visible at a glance, like a billboard, just as you would if you created a dashboard for DX management. To do this, you should start by digitizing any files that aren’t already digitized and are being managed manually.
The importance of process digitalization and data analytics
Once a process is digitized, it becomes easier to analyze the time spent on it from a data analytics perspective. You can see how often a process occurs, how long it takes, and how it affects productivity. This is not unlike a DX project.