The CIO’s guide to digital transformation through process mining
TODAY, digital transformation is synonymous with business continuity.
Organizations that neglect to climb the digital maturity curve and accelerate their progress with support for experts and employees are fated to lose out in the medium to long term.
However, this doesn’t mean businesses should simply chase digital projects for the sake of it.
Replacing old processes with new ones is great but businesses must know which processes need an overhaul and the quantum of benefits such a project will create for the company.
Since organizations don’t invest in “process mining”, unfortunately, they seldom have access to data that tells them which processes must be prioritized when it comes to accelerating digital transformation and overall productivity.
According to a recent story in the Harvard Business Review, the idea of mining for process data is picking up steam in Europe and in some pockets of the US — and has caught the attention of think tanks like Gartner.
However, businesses in the APAC are still overlooking the idea, and as a result, the benefits that such an exercise can produce to the organization’s overall digital transformation strategy.
What exactly is process mining?
Process mining is simply the collection of data or logs on how a process was carried out or performed.
Although it starts to sound a lot like big data analytics, it just involves understanding what an organization does in each process, mapping how they’re carried out, how many steps are involved, how long they take, and so on.
Demonstrating process mining on a piece of paper is quite simple.
However, when you factor in the complexities of modern-day business, a mix of paper and digital tasks making up processes, and take stock of the fact that companies often don’t follow the actual flow at some stage — the challenges to process mining start to become apparent.
How does process mining help with digital transformation?
Process mining helps organizations understand where they need to focus their digital transformation efforts.
Obviously, it’s more helpful for large enterprises than for young startups, but every kind of business can benefit from process mining at some point.
Another important situation where process mining really helps companies is when there’s a merger, a spin-off, or something similar in play.
The HBR story we mentioned earlier pointed out the case of Chemours which was spun-off from DuPoint in 2015 and inherited legacy processes from the parent company.
In order to understand its order-to-cash (O2C) process and make it more efficient, the company’s CIO and CFO worked with their Director of Business Process Transformation, to spearhead a process mining project.
The article revealed that prior to running the project, no one could really articulate how the entire O2C process was performing at Chemours, as people typically see just their part of the process.
However, over the four months that the project ran, the organization discovered gaping holes that disappointed customers, slowed down the business, and provided no benefit to anyone whatsoever.
Credit holds, for example, was one of the issues that were found in the O2C process. It was found that due to manual steps in the process, strategic customers were sometimes placed on credit hold needlessly.
How to get started with process mining
Understanding process mining is easy for companies that understand why it’s being done, how it’ll help them, and how it fits into their overall digital transformation agenda.
In order to help companies get started, here are three key steps that companies need to take:
# 1 | Prepare to gather data
Processes aren’t always digital. True, they often have a digital audit trail but tracking how things actually progress, and making sure that all bottlenecks are captured appropriately is quite challenging.
As a result, organizations need to prepare to gather data. Using tools, usually, they need to log each task appropriately, whether it is performed digitally or on paper.
Consider the replenishment of factory spares, for example. The organization needs to ensure they capture data on what is ordered, how the order is triggered, where the order is placed and who it is placed with, how long it takes to be delivered, and the inward processes with regards to storage.
# 2 | Review what ideal and actual process flows look like
In the world of process mining, professionals understand that there are always deviations from an ideal process flow.
Hence, they concern themselves with thoroughly understanding the actual process flow to capture every single deviation effectively.
It is only when they’re able to map the exact actual process flow that they’re able to understand the full implications of it on the business, and therefore, assess its impact on things that rely on the process but aren’t exactly involved in it.
In the case of Chemours, the company was only able to pinpoint what was wrong with its O2C process when it plotted the deviations from the ideal flow.
# 3 | Hone in on regular deviations accepted as standard
An important part of process mining, especially when performed with a view to better focus digital transformation projects, is making an effort to understand regular deviations accepted as standard.
Take invoicing, for example. Many organizations use notes and memos created during the sales process to offer special considerations when an invoice has to be drawn up.
That process neither standard nor ideal but is definitely accepted across the board.
When this is identified and highlighted, it might be easy to digitize the process with more standardized forms (with plenty of flexibility) so that it accommodates the special considerations but also makes invoicing quick and painless.
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