Digital Business Process Services (Digital BPS) are managed services that run, monitor and optimize core business processes — whether functional or industry specific — via highly automated and digitalized solutions that are often contracted through subscription models and are based upon business transactions or outcomes.[1] The digitalization creates a transaction processing platform that includes services, assets, analytics and intellectual property (IP) that is specific to business processes and use cases.
As per most estimates, Digital BPS is expected to grow to $88Bn by 2023, at 10.8% CAGR.
Infosys BPS is a leading provider of Digital BPS and Infosys CEO, Salil Parekh earlier this year observed, “We have seen increased speed in digital adoption among our clients”, highlighting the tremendous potential of this nascent, but quickly evolving market segment.
Process Optimization vs. Process Transformation
Success with “digital adoption” depends more on identifying the appropriate business goals and prioritizing the right process to transform than on selecting the right tool or technology. Choosing the right process and determining the extent of re-engineering will be critical for securing stakeholder buy-in and managing expectations – not to mention optimizing the operating model.
These goals could be either optimization or transformation:
Optimization focuses on improving existing operating processes and business models. This is primarily about incremental gains that collectively add up to a significant change. Optimization involves executing existing tasks or process in new ways, leveraging new approaches or applying technology.
Transformation focuses on creating new operating process or business models. It involves a wholesale change to the entire business process, operating model or value proposition, often focusing on exploiting intelligent automation, or on supporting capabilities to create a robust new digital business model. The word “transformation” can mean widely different
things, from IT modernization (e.g., cloud computing) to digital optimization to the new invention of new digital business models.
“Shared Services”, is essentially a consolidation of operations that are used by multiple parts of the organization. In the post-COVID era, organizations are making significant investments in shared services, reaping benefits from centralizing and standardizing services as a part of transformation initiatives. Newer delivery models such as consumption-based, as-a-service models and sourcing models have emerged, enabling a more modular approach to processes.
“Process Transformation” has itself (thankfully) followed Ray Kurzweil’s “Law of Accelerating Returns”, according to which, the rate of change in a wide variety of technologies tends to increase exponentially. In the case of process transformation, the paradigm shift is brought in by a tech concoction of Knowledge Management tools, robotic process automation, and artificial intelligence.
In this article, we will focus on a relatively new entrant - process discovery or process mining technology and its impact on Digital Business Process Services (Digital BPS) and Business Process Management (BPM).
What is Process Mining?
Everest Group defines Process Mining as any software product or solution to examine and analyze process-related information that is captured in event logs generated by enterprise systems such as ERP, CRM, and SCM to discover processes and generate process maps. [2]
Traditionally, transformation was an initiative or a project taken up by the CXO organization, led by a group of Quality or Six Sigma consultants. If you were also looking at outsourcing some of your processes, your Business Process Outsourcing (BPO) service provider brought in transformation somewhere along the Lift-shift-transform, Transform-lift-shift, or Lift-transform-shift lifecycle.
The traditional methods of process transformation involved a one-time process shadowing, or deep dive discussions, and lengthy interviews with subject matter experts (SME). Often, this was subjective, partial, and with increase in scale and complexity, drawn out and costly.
How does Process Mining drive digital transformation?
Process Mining brings in a data-driven, objective, enterprise-wide view of the processes in real time. In the hands of a transformation consultant, the tool provides endless possibilities to collect, discover, improve and monitor processes. The process view is no longer a snapshot, but a see-as-it-happens view and this allows the consultant to understand how to make discrete parts of the business more efficient, and how to calibrate the individual components to optimize the whole for specific outcomes.
Figure 1 shows how Digital BPS have been adopting Process Mining at different stages on the project lifecycle to accelerate transformation outcomes:
- Rebadging
- Renewals
- EDBITDA Optimization
- Touchless Transitions
Digital transformation is being turbocharged by shared services, which creates an environment that is conducive for rapid adoption of digital capabilities.
Shared Service Centers (SSCs) and Global In-house Centers (GICs) are the catalysts for driving transformational changes. With a structured approach to transformation and a data-driven approach to continuous process discovery and transformation, it provides value-add, which is a win-win for both service providers and the internal stakeholders. Some of the key benefits are:
- Time to Value improvement leading to significant cash flow impact due to reducing cost of transformation and better opportunity identification
- Standardized approach to process due diligence reduces the need for higher governance layers
- Process mining exposes not just process variations but also system variations, leading to data driven IT standardization
- Better benchmarking, leading to accurate baseline assessments and sharper commercials
What’s next in Process Mining?
As Niels Bohr said, “It is difficult to predict, especially the future”. But some macro trends are worth exploring:
Reactive to Proactive to Predictive. From the initial focus on analyzing historical event data to detect and diagnose performance, forward-looking forms of Process Mining is the need of the hour. This will help tackle unexpected events in businesses. Process Mining techniques such as predictive models using machine learning and data-driven simulations are finding usefulness in everyday BPO operations. These techniques build on traditional process discovery and conformance checking techniques. Therefore, innovations in core Process Mining will also lead to more accurate predictions and more realistic simulations. Process Mining will play a key role in creating digital twins of production lines, airports, supply chains, hospitals, and many others.
From Insights to actions. The ultimate goal is to fundamentally improve operations, not just identify the bottlenecks and hence the need for actionable insights. This requires Process Mining to respond quickly, with the ability to trigger smart workflows, and automate steps, to take corrective actions. The line between Process Mining and automation is blurring ever so quickly, with back-end API automation, low-code and visualization platforms democratizing digital transformation in the hands of every operator.
“When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.” — George Westerman, MIT Sloan Initiative on the Digital Economy.
Reference(s):
[1] Forecast Analysis: Digital Business Process Services, Worldwide – Gartner Nov 2019
[2] Everest Group – Process Mining State of the Market Report 2020
About the Author
Manoj Bhat is a Director at Celonis India and responsible for Transformation initiatives with Ecosystem partners including BPOs and Global SIs. He is actively involved with academia in India, in the field of Digital Transformation and Process Mining.