The Platform Becomes the Process: Pushing the Envelope on Cost and Revenue with Digital Operations
Digital is all around us, in highly visible ways. That’s how many of us now summon a car, pay for coffee or order food deliveries.
But there’s also a hidden side to digital that could translate into big cost and revenue benefits for business operations: the digitization of undifferentiated—and costly— middle- and back-office functions, from claims processing, to patient care, to mortgage processing.
We recently surveyed 2,000 senior executives across industries and from around the world to understand what the future holds for the digitization of business processes. By relentlessly driving digital change across all processes, respondents said they could unlock an additional 11.2 percent improvement in both cost savings and revenue growth—beyond the impact they’ve already achieved with digital technologies, which they reported as 4.6 percent of revenues (or $364 billion).
Further, as the average impact of digital surges to 11.4 percent of revenues in 2018 (or $770 billion), the “digital process leader’s bonus” also goes up, to 18.6 percent of revenues. That’s an additional $700 million per company. This should be motivating for the many companies today that are still only dabbling in digital, or focusing on just a handful of process areas.
Companies need to digitally connect processes across the full expanse of workflows in ways that create vastly more humanized transactions and experiences
The Old and the New
What these digital leaders are talking about is changing how work gets done by connecting old processes to new digital technologies. The key digital technologies in question include Robotic Process Automation (RPA), Artificial Intelligence and standardized process platforms delivered via Business Process as a Service (BPaaS) models.
What does aggressive process digitization look like? It means identifying all the small steps within enterprise processes, and the manual gaps between customers, suppliers, partners and employees. By using digital technologies to heal process bottlenecks, lubricate friction points, optimize manual inputs or handoffs, and relieve systemic pressure points in information flow, businesses can unlock substantial value, maximize business outcomes and improve the experience for all participants across the value chain.
Examples of this highly targeted use of digital technologies include:
• Capturing images with drones to reduce insurance underwriting risk and bring insurers closer to real customer needs.
• Using digital wallets and beacon technologies to create shopper awareness and boost retail sales.
• Tethering touchless payments to loyalty programs to predict buying patterns.
• Using sensors, IoT or RFID for real-time monitoring to streamline the business supply chain.
Across business functions, respondents in our study reported on a variety of achievements and concerns expected from the application of digital technologies to their processes. For example:
• The vast majority of finance executives (more than 75 percent) expect to realize productivity and efficiency gains. Digital will first be applied to automating rote work, such as accounts payable and receivable. The cost savings will then be used to fuel innovation in tasks such as days sales-outstanding or control gaps.
• Over 60 percent of HR execs believe digital will speed their work, and require them to learn new skills over the next five years. Businesses should focus on two to three HR processes that prevent optimal utilization of skills that help their best people thrive. Longer term, they should develop a new master architecture to support a flexible and distributed workforce, centered around a platform that helps orchestrate human-led and automated tasks.
• More than 25 percent of sales and customer service execs expect to increase their focus on cyber-security, big data and Internet of Things capabilities over the next 10 years. Businesses will use new technologies such as sensors or big data analytics to gauge how customers may be interacting with sales or customer service processes differently. By laser-focusing on aspects of their best customers’ digital interactions, businesses can drive outsized results.
• In R&D, over 25 percent of executives believe top hurdles for digital adoption include security, uncertain ROI and poor alignment between investments and business objectives. New digital options such as crowd sourcing and digital innovation platforms can help R&D, innovation and new product development processes become a force-multiplier for the business. Some companies are building proprietary platforms and joining with third parties in co-innovation initiatives around R&D and customer engagement.
Leaders Already Leading
For digital processes to really change an organization—to be more than just this year’s lipstick on last year’s pig—companies need to digitally connect processes across the full expanse of workflows in ways that create vastly more humanized transactions and experiences.
Senior executives need to continuously reinforce their role as change agents that “show the way” forward. If your organization is not adapting fast enough, you risk being marginalized. Digitally-infused processes cut costs and create fuel for investment—and revenue is the mechanism that accelerates forward motion for the company. The key is to get going—or accelerate the momentum of the journey you’re already on.