Business Process Management: Vision 2030 - Time to think on 2020 and beyond - Exaatto Group
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Business Process Management: Vision 2030 – Time to think on 2020 and beyond Vision 2020 meets reality, and passes the baton for futuristic visions to 2030. How businesses balance and meld fantastic futuristic co-exists with tried-tested, and how business process management world will need to evolve and adapt, explored. Anupam Jain
2020 is here! Having lived through the last decade, going through countless presentations, speeches and articles talking about “Vision 2020 Document”, I must say that arrival of 2020 is both underwhelming and overwhelming. Underwhelming in terms of what has been achieved from what were set out as lofty goals, and overwhelming in the magnitude of change that has come through, popularly termed as “Disruption”, for want of a better word, and to appear in tune with time. However, once we start peeling the layers, there’s a different reality that stares back at us. That reality can be expressed simply as “Change is the only constant”. Indeed, humans, their needs, wants, desires keep on changing ceaselessly. Technology, Society, Governance change accordingly (Sometimes happily, sometimes being dragged kicking and wailing), and the evolution continues. What was cutting edge yesterday, is normal today, and will be outdated tomorrow. This simple fact is what has defined businesses, and will continue to do so. All businesses have parts that need to be “RUN”, parts that can be “TRANSFORM” for better outcomes, and parts that must be “BUILT” for newer expectations. And as businesses evolve, so will their processes, and so would have to the Business Process Management (BPM) providers. Vision 2030 Page 2
‘Digital’ world is changing how companies think Sample these:
about the meaning of Run, Transform and Build • In North America, about 95% of ATM swipes use
At the risk of oversimplification, the very core of COBOL code, (a language devised in 1960s!).
the ‘Digital’, is all machines being connected to What’s more, Reuters in 2017, calculated the
each other through web connectivity, delivering a existence of 220 billion lines of COBOL code in
seamless experience, with output being receivable production then, and handling about $3 trillion
on mobile devices. Sometimes these outputs are worth of transactions everyday
outcomes as well. And a lot of what was physical
earlier is now simply stored in virtual form of 0s • According to Computerworld, in 2012, Bank
and 1s (Think about a physical bank account of New York Mellon’s IT group had to tend
passbook of yester-decades, and now the ability to 112,500 different COBOL programs, an
to pull up account statements on any connected estimated 343 million lines of code!
device!).
• Commonwealth Bank of Australia replaced
While this is wonderful, it has also thrown a its core COBOL platform in 2012, the project
tremendous challenge of assessing and upgrading taking 5 years to complete with a price tag of
the technology that allows this to be done. The ~$750 million
problem is the vast amount of code written already,
and powering our daily lives, before ‘Digital’ burst Try as anyone might, the code written in previous
on the scene. It is around us everywhere, critical to decades cannot be simply re-written, and certainly
our everyday lives, and can cost a huge amount of not in an instant. Therefore, much as anyone
money, time and effort to re-engineer! would hate, there’s need to RUN, some parts of
business on existing technology. Parts of that can
Connected devices, mobile(s) in particular, are fuelling digital
Internet Penetration
Users
Mobile App Usage Growth
Sessions 54%
Active Internet
Users 90% A – Lifestyle
B – Games
C – Personalisation
D – Photography 20% 20%
33%
43%
Total Population
E – Sports
7.676 Billion
57% Access Internet A B C D E
through Mobile
F G H I J
-8% -8% -8%
F – News, Magazines
-16%
G – Utilities, Productivity
H – Business, Finance
I – Music, Media, Entertainment
-40% J – Shopping
Active Internet Active Mobile
Total Population 7.676 Billion Users 4.388 Billion Internet Users 3.986 Billion
Annual Mobile
Annual Growth +1.1% Annual Growth +9.1% App Usage Growth +8.0%
Source: Hootsuite (Digital 2019); Flurry Analytics
Vision 2030 Page 3be enhanced, extended and modified to enhance
functionality. This is the TRANSFORM part. Competition then comes with more attractive
And it’d be shame to not take advantage of new propositions and this forces the incumbent to
technology to BUILD new processes. make choice between sweating the existing
technology, augment it or build a new replacement.
Run AND Transform AND Build businesses This isn’t an easy decision to make, because it
This concept of businesses not being monolithic, involves time, effort, money and considerable risk
living, evolving and ageing is the key to of disturbance to existing systems and processes.
understanding the shift in business processes This has only become more difficult, as the existing
and business process management. Technology systems have become increasingly integral to
(somewhat expansively used here to cover existing landscape, making their clean pull-out
telecom, and computing) in some capacity has and replacement almost impossible.
been designed as a part of most product/service
offerings. These decisions are also tied down by The case of TSB Bank serves as a poignant
profitability calculations. Once frozen, technology example. In April 2018, TSB, a UK based retail
cost is locked down, and enterprise then tries and commercial bank, rushed the upgradation of
to extract as much usage out of it as possible. its digital banking platform leading to massive
Typical of technology life-cycle, at a certain point, problems as it received around 100000 complaints
what was cutting-edge, becomes an also-ran, within a month and over 12500 customers left the
and then archaic. However, the product/service bank within three months. The crisis expanded
delivered/supported by it is still being offered. In with losses amounting to almost £330 million,
the meanwhile, the existing systems are upgraded, resulting in the firing of its CEO, Paul Pester. As of
enhanced, interfaced, and integrated more with Nov 2019, the bank is still reeling from crisis with
the overall enterprise technology systems. the closure of bank branches, job cuts and losses
Love-Hate with Legacy systems
Enhancements Interfaces
Upgrades Interconnects
Widespread Entrenched Expensive Time-Consuming
Just about everywhere in Interfaced, connected with Expensive to re-platform, Prolonged time required for
world, legacy systems are lots of other systems, especially when competing writing, testing code,
present – ATMs, PoS creating risk of disturbance for funds against new increases risk and
machines, Treasury to other existing systems initiatives uncertainty in the system
and processes
Vision 2030 Page 4Challenge of running a business today!
Faster
Juggling efficiency, effectiveness
Longer
and experience running on treadmill
mounting up to £370 million and potentially more better, and some are trying to change the game
in the form of regulatory fines. altogether (Many start-ups fit in this category).
And enterprises don’t get the luxury of shutting
Juggling three balls, while running on a treadmill down everything, rebuild from scratch, and come
in open-air, on a windy day, trying to run faster back to compete. They must compete with what
and longer than others (some younger and fitter)! they have, what they can jury-rig, and what they
As if the above was not enough, enterprises, can devise.
especially the publically listed ones are also under
constant pressure to deliver shareholder value, Moral of the story:
often being evaluated every quarter. The focus • RUN what you MUST
on short term doesn’t align itself well with the • TRANSFORM what you CAN
investment needed to keep technology updated • BUILD what you WANT
(As the technology lifecycle is measured in years).
The three balls being juggled are Run, Transform,BPM needs to partner in RUN and TRANSFORM
Build parts of the business. And almost all and BUILD
enterprises are juggling them, while competing In line with BPM buyer enterprises, BPM providers
in the marketplace, alongside incumbents and as well need to change their strategy. The days of
running large-scale offshore centers doing mostly
start-ups, trying to deliver shareholder value and
remaining relevant to and loved by customers. transactional kind of work, with limited technology,
transformation infusion can no longer generate fat
As if this was not enough, these enterprises are and lucrative margins. Here are a few examples to
also competing against others in the market. highlight the point
Some competitors are worse, some similar, some
Vision 2030 Page 5Enterprise Strategy 2030!
RUN TRANSFORM BUILD
What you MUST What you CAN What you WANT
• Document management outsourcing work, service providers were picked in each of the 4, with
pioneered by the likes of Xerox has been a view of picking a representative sample. The 4
steadily losing margins buckets (some providers overlapping in multiple
• Almost all big global contact center outsourcing of them) are: a) Document Management Service
players are witnessing constant pressure on Providers, b) Contact Center Service Providers, c)
growth and profit margins Horizontal Processes Services Providers, and d)
• In fact, Synnex, recently announced spinning- Vertical-specific Processes (Banking, Insurance
off Concentrix as a separate entity, and the etc) Providers. The exercise points towards a
market largely cheered the move! general trend of below-par performance from
the first 2 categories, while the the last posts
BPM providers have the advantage of working the most impressive performance. While the
micro, but also able to look at macro picture. In other first 2 categories are largely comprised of Run
words, they work with individual units amongst and/or Transform BPM solutions, the other 2
enterprises, but collectively across all their clients, have a different ratio of Run and Transform BPM
have the big picture view of what’s unfolding in solutions, in addition to offering some Build BPM
the industry. The BPM industry came into being solutions as well.
primarily to support Run part of the enterprise,
tasked with taking out costs, and delivering Enterprise decisions on whether a product/
technology is in the RUN or TRANSFORM or BUILD
efficiency to the business. As it evolved, it started
assisting in Transform part of the business. And bucket, decides their strategy on associated
now it stands on the cusp of deciding whether and business processes and therefore will need to be
how to help Build businesses. mirrored by BPM provider(s). Looked collectively
as an industry, it is clear that there is demand
It is always a good idea to see how a theoretical for Run, Transform and Build assistance from
world construct fares in the real world. Over a business process management standpoint.
long-term time period (relatively), equity price
performance can be a good indicator of how One-trick solution days are passé for BPM
an enterprise’s current performance and future providers too!
potential. Accordingly, BPM service provider world BPM originated with cost take-out as the primary
was viewed from 4 lenses (according to the services objective. It then slowly kept following the ‘Hindu
offered, detailed below). Five representative rate of growth’ mantra, under various creative
Vision 2030 Page 6What do the last 3 years’ equity price performance tell us?
Document Management Contact Center
Services Providers Services Providers
27.95% 142.71%
-9.03% 34.96%
-36.21% 18.73%
-65.91% -11.70%
-81.19% -69.72%
REPRESENTATIVE; NON-EXHAUSTIVE
Horizontal Processes Vertical-specific
(F&A, HR etc) Processes (Banking,
Services Providers Insurance etc) Providers
84.09% 143.43%
71.65% 84.09%
44.64% 54.98%
-36.21% -36.21%
-65.90% -65.91%
REPRESENTATIVE; NON-EXHAUSTIVE
Vision 2030 Page 7Evolution of BPM
2010s 2030s
Efficiency Efficiency Effectiveness Experience
names, in some combination of lift, shift and fix. The new-age solutions encompassing machine
The next step was taken after some providers learning, APIs are opening doors to bring the older
bought platforms to provide better solutions (Such solutions in the digital age. Additionally, it is also
as mortgages, insurance etc). The next half-step allowing a window for BPM providers to be able
was infusing of analytics in the BPM ecosystem to to craft custom solutions that allow them to use
make the system more efficient and effective. All their deep industry and process expertise and
this while, the buyers’ systems were still more or experience.
less how they were for quite some time, patches
and lifecycle upgrades notwithstanding. And then It is time that all of the above solutions are thought
the next half step of Robotic Process Automation. of as building-blocks, that can be used either alone
And this is where the shared bucket of run and or in combination(s) depending upon the scenario
transform solutions end. at hand.
The shared bucket of transform and build solutions Different horses for different courses.
is really coming into its own in last 3 years or so. While it is correct to say and assume that there
While historically, it included a collection of small is demand for RUN, TRANSFORM and BUILD
bolt-on applications and platform offerings, the solutions, it is also foolhardy to believe that
real boost was from RPA. The power of RPA lay in focusing on just one stream is what will make for
the fact that it was a tool, and not a solution, and a sustainable competitive strategy for any BPM
so offered many different ways of using it across provider.
applications. Analytics, which started as more
of process diagnostics also evolved into a more • Focus on RUN business alone, and there will
powerful tool that helped make existing processes be gains on top line, but declining profitability
and solutions more effective. over medium to long term
• Focus on TRANSFORM business alone, and
Vision 2030 Page 8Why BPM 2030 strategy needs to be multi-pronged?
RUN TRANSFORM BUILD
• Gains on topline (Short-term) • Gains on profitability • Gains on topline
• Declining profitability • Loss of revenue growth • Severe pressure on revenue
(Medium to long term) (Short-term) and profitability (Short-term)
• Demand for investment • Significant demand for
resources (Short to medium investment resources
term) (Continuous)
there will be gains on profitability, at the cost advantage is to balance all three parts. RUN
of short-term revenue growth and demand for business to generate revenue flow, allowing
investment resources funding for future investment, TRANSFORM to
• Focus on BUILD business alone, and there will help build medium-term stability in revenue and
be severe pressure on short-term revenue and profitability, and BUILD to create future competitive
profitability, along with a significant demand differentiation. While the three buckets’ proportion
for investment resources would remain relatively stable over a period of
time, what needs to evaluated at regular intervals,
The way to succeed in this time for BPM providers is what is in these buckets, what needs to be added
as well is to juggle the three parts of their clients’ and what needs to be taken out.
businesses. Help in cost take-outs in RUN, assist
in TRANSFORM by augmenting and infusing Just another bit of theory, without any evidences?
technology (including but not limited to platforms, Not really, as we already see evidences of this
analytics and RPA), and helping BUILD parts of already playing out. There are now multiple
new businesses (for either incumbents or start- examples of how balance is both extremely
ups) by setting up processes. important, as well as difficult to achieve! Consider
these:
The only way for a sustainable competitive
Vision 2030 Page 9• Conduent – Conduent’s history traces its roots erstwhile strength that turned into a weakness.
through Xerox to ACS. A detailed look through And there’s truth in that. Once the organisation
its offerings and client feedback paints a picture is up and running, and has perfected formulae
of the company overly reliant on RUN bucket, for hiring, training, and delivering, they become
with some dabbles in TRANSFORM bucket. For extremely prone to inertia, and start losing the
that model to succeed, revenue and headcount ability to be agile. It of course, takes a lot more
correlation need to be broken. Otherwise, the effort to turn around an aircraft carrier, when
margins keep slipping, the investment pool compared to a speed-boat!
keeps drying up, and the company keeps
falling back from its peers. Almost exactly, theAnd this creates does open up windows for smaller
Conduent story till date! players to experiment with TRANSFORM and
BUILD buckets. Smaller (relatively) BPM providers
• DXC – Spun off from HPE, and merged with are able to experiment with smaller teams on
CSC, to again create this largely RUN bucket newer solution areas, and scale what works, have
business. Along the way, both HP and CSC had been able to achieve stronger growth.
made a number of acquisitions. However, today,
sampling through its offerings, client feedback Do I care as a buyer?
and data again points a picture of business Of course, yes. This means that the days of using a
services as largely RUN, with some sprinkling canned list of providers to short-list and work with
of TRANSFORM. Expectedly, the performance are gone. It also means, that most quadrant based
hasn’t been anything to write about assessments start being less and less useful,
as they are trying to force-fit a multi-dimensional
• Concentrix – Starting life as Daksh, then being analysis in a 2X2 grid, which does not convey the
acquired by IBM, before being sold off to true picture.
Synnex, who after acquiring Convergys last year
and merging with Concentrix, finally decided It also means that the choice of a good BPM
to spin it off, possibly admitting the margin partner, not only depends on the industry and
dilutive effect Concentix on the larger Synnex geography that you are operating in, but also what
Group. Again, largely a legacy contact center part of the business are you seeking assistance in.
operations business that’s been averaging just A good provider for Run part of the business, may
a middling performance! be a poor choice for Build part of the business and
so forth.
Is there a pattern here?
Of course, there is! Innovations from decades Let me explain this with an example from the
back, is not the innovation today. One could argue banking world, for what would a buyer want to
that ACS, HP, CSC, Daksh were in the pioneering consider.
class of outsourcing. And became huge megaliths
by perfecting that formula. However, they failed • RUN – The considerations on this are going
to keep pace with changing times, and are now to be rather straightforward, including BPM
lagging behind some of their other competitors. provider’s experience with the deployed core
They’ve failed to move beyond RUN to TRANSFORM banking solution, experience with lines of
and BUILD buckets, and the results of that are now business (such as mortgage etc), experience
showing in their current performances. and expertise of deploying automation tools
and track record of delivering productivity
To be sure, it can also be argued, that it is their benefits at competitive commercials
Vision 2030 Page 10Buyer considerations for Run, Transform and Build (Banking example)
Technology Domain People
Expertise Expertise Expertise
• Experience with installed core • Experience with lines of • Track record of delivering
banking systems and other business (such as mortgage productivity benefits at
deployed applications etc) competitive commercials
• Experience and expertise of
deploying automation tools
RUN
• Expertise of developing point • Experience with lines of • Experience of developing and
solutions on the existing business deploying analytics and
technology base machine learning tools and
• Suite of context-specific plug ability to bring them for wider
and play tools that can enhance access (using APIs, for
functionality instance)
TRANSFORM
• Expertise in bringing context- • Experience with lines of • Experience in setting up green-
specific technology-infused business field business processes
solutions (such as Customer
Lifetime Value engine) • Experience working with current
and upcoming technology
BUILD (including Fintechs)
capitalisation, it may be Tesla. And while all three
• TRANSFORM – On this, the considerations are “correct”, none of the three indicators capture
would include BPM provider’s expertise of the complete picture.
developing point solutions on the existing
technology base, suite of plug and play tools It is a similar story when it comes to evaluating the
that can enhance functionality, experience BPM service providers’ landscape. Rankings of any
of deploying analytics and machine learning kind (Listing, Quadrants) simply can’t do justice to
tools and ability to bring them for wider access the evolving situation. While employee numbers
(using APIs, for instance) may make one the largest, focus on strengths
may be making another the most profitable, while
• BUILD – In this bucket, considerations would the technology and skills portfolio may be making
include BPM provider’s expertise in bringing a third one as the company to look out for in the
technology-infused solutions (such as future.
Customer Lifetime Value engine), experience
working with current and upcoming technology A new yardstick to find out the ideal BPM partner
(including Fintechs) and experience in setting In a multi-axial world, one-axis simple rankings are
up green-field business processes not only meaningless but may also be harmful. As
BPM providers evolve to provide services across
Who’s the greatest? Toyota, Mercedes or Tesla? a range of Run, Transform and Build functions, so
This is a trick question because it depends on must the analysis.
what’s the parameter to judge. Revenue, it’d be
Toyota, Profit Margin, it’d be Mercedes and Market What this also means is that the old established
Vision 2030 Page 11ways of ‘Analysing’ BPM industry players is now processes, are in fact, the connect between the
outliving its utility. Most analyst firms look at service world that technology would want to be, and the
providers through their fixed-view prisms, such real world that exists, with all its nuances, quirks
as offshoring leverage, or technology solutions and imperfections. Additionally, hitherto till now
or automation revenue. In reality, this means that BPM-untouched areas would open up, as service
most of such analyses are able to focus on one delivery starts incorporating digital, and needs
static view, but are quite inadequate to paint the BPM support to deliver the outcomes.
complete picture. Add to this, the legacy data
burden (Akin to driving forward by looking through And this gap between both worlds, the digital-could-
the rear view most of the time) and it is easy to seebe, and the real-as-is is most reliably and effectively
why most analyses do a good job of explaining bridged by BPM providers. BPM providers will have
events post-facto, but are completely at sea, when to graduate to a tiered strategy of ready-to-be-
it comes to making forward-looking projections. tailored solutions for each client situation ranging
from solutions that help establish business
All this sums up the need to find a new lens to look processes to go with pioneering offerings and/
at BPM industry and individual providers. or technology, to those that augment established
technology to make it more efficient and effective
A new method to look at BPM providers is to analyse to those that provide low operating cost solutions
them along axes of Run, Transform and Build for end-of-life technology.
independently. Each of the three axes be further
looked through lenses of Industry, Technology And the analyst world would move away from all-
and People. Indicators for existing achievements, encompassing numbers, cover-all matrices and
and future strategic roadmap guiding through the over-simplified lists, to more detailed, nuanced
process. coverage. Critically looking at trends coming
through the broader world to predict market
Vision 2030! evolution, articulate buyers’ needs and carefully
As enterprises and BPM providers kick-start 2020, look through BPM providers’ repertoire, track
it’s also the time for them to start thinking about record and strategy to curate a set of useful
how the world would be in 2030, how their buyers decision-enabling information.
would be evolving, and how can they help them
achieve their objectives.
It is inevitable that the cutting-edge technology of
today, will become an also-ran in couple of years,
and possibly a drag, couple after that. Yet both
enterprises and BPM providers would want to
remain alive, and relevant.
So, enterprises will realise the importance of
‘technology’ in the digital world, and that technology
also goes through its life-cycle of being imperfect,
kinky, but promising at start, to being expensive,
clunky, difficult to run and maintain but vital to
operations in later years, business processes
don’t necessarily go through that cycle. Business
Vision 2030 Page 12Concluding Thoughts A decade is a long time indeed. In 2010, the world was just starting to find its feet after the 2008 crisis. And some parts took years more to do that. 2010 saw iPhone in its 3G avatar, Google launching its first Nexus-branded Android device, 3G networks just starting to see roll-outs, AWS (Amazon Web Services) revenue breaching the $500M mark, Microsoft venturing into cloud with launch of Azure, and Uber starting to become more than an idea. Business Process Services, largely meant outsourcing and offshoring, a euphemism for a solution designed to reduce back-office costs, and create an inexpensive way of running customer call-centers halfway across the globe. But, during the past 10 years, computing power, storage and data bandwidth improved by leaps and bounds and became affordable and accessible. First it changed the way people consumed computing, storage and bandwidth. And then, computing, storage and bandwidth changed the way people experience the world. And as 2010s ended, Business Process Services, had evolved into BPM. BPM allowed buyers to not only improve the efficiency and effectiveness of their operations, but also improve the experience offered by these. BPM started as a peripheral device, at an arm’s length to an enterprise, and ended the decade with being an important piece of the puzzle that allows an enterprise to deliver value to its customers, shareholders, and employees. It today stands at the edge of a new decade and an opportunity to help enable fuller harnessing of the power and opportunity of ‘Digital’ by enterprises. The coming decade promises to be an exciting journey! Anupam Jain is the Managing Principal of Exaatto Group Vision 2030 Page 13
Exaatto Group is a boutique global research, advisory and consulting firm focused on Business Pro-
cess Management (BPM). It seeks to help BPM ecosystem (buyers, service providers, and facilitators)
make better decisions, through its work. Its unique approach and focus on ‘digital’ and ‘industry’,
helps it understand issues in microscopic detail, build the larger picture in telescopic expanse and
bring meaningful, forward-looking and actionable insights.
www.exaattogroup.com contact@exaattogroup.com
https://linkedin.com/company/exaattogroup/ https://twitter.com/ExaattoGYou can also read
