The digital business: What it is and how to get there

Transcription

1 The digital business: What it is and how to get there An EXL whitepaper Written by Chris Garber VP, EXL Digital Consulting Cody Reinhart VP, EXL Digital Practice Leader Matthew Pontius AVP, EXL Digital Architecture

2 Across every industry, companies have begun transforming themselves into digital businesses. This shift comes in response to a need for low-cost productivity improvements, enhanced interactions with customers, and new technology in order to stay competitive. Digitization provides the means for meeting all of these requirements through the creation of new business designs. Even though most companies understand the importance of going digital, the large amount of changes digitization seems to require can make it difficult to determine where this process should begin. More than that, the term digital business carries such broad connotations that even providing a simple definition can prove challenging. These factors can make digital transformation seem like a task whose major qualities include having no clear steps, vague objectives, and critical importance for a company s success. This may explain why only 18% of companies in the United States have embraced digitization, 1 despite CEO and CIO support for digital initiatives continuing to increase year over year. 2 However, breaking down the basic components of a digital business can make it much easier to understand as a whole. While there is no one-size-fits-all roadmap to digitization, there are basic steps most companies will take in the transformation process. What is a digital business? At their core, digital businesses do one thing: they take tasks performed by people and automate them. Naturally, this is not a new concept. It s the same basic principle that drove companies to use computers programmed by punch cards to perform complex mathematical equations in the 1950s, just with more advanced methods ExlService Holdings, Inc.

3 This is done by the application of certain tools, usually classified as either customer facing or back-office digitization. Customer facing digital programs focus on making it easier for clients or customers to interact with a company. These can include websites, mobile applications, or other tools. One example of this would be an application which allows utilities customers to monitor their energy usage, pay their bill, or check for power outages without needing to speak with a customer service representative. Back-office digitization enables increased productivity for a company s internal processes. While there are a variety of programs and systems available for automating these tasks, many of them fall into the three major categories of business process management (BPM), robotics, and analytics. BPM Business process management is often inaccurately seen as a single piece of software enabling employees to accomplish their tasks with increased speed and accuracy. Rather than being a single program, BPM is more of an approach to streamlining processes from the ground up. Using customer service as an example, a representative using a program that automatically brings up a customer s profile whenever they call in should not be seen as BPM. If that same program were part of a system that also tracks whether the representative is meeting certain performance metrics, flags and documents complaints which may require escalation, and can suggest actions for the representative to take while on a call, it becomes more representative of the options offered by BPM. The need for these systems is expected to increase dramatically, with the BPM market predicted to grow from $4.71 billion in 2014 to $10.73 billion in ExlService Holdings, Inc.

4 These systems typically consist of two components: Workflows: These automatically ensure that work items follow a defined path. For instance, if a life insurer were underwriting a new policy, the workflow would require one step of the process to be completed before continuing on to the next. Decision table: This serves as an index of information. Used in conjunction with workflows, they can automate certain steps of whatever process is being performed. Using insurance again as an example, if a decision table contained the regulations for different states, it could provide guidance in order to make sure the policy remained in compliance throughout the underwriting process. BPM can serve as the backbone platform to digitization. Because it offers a lowcode platform only requiring a minimum of hand-coding in order to adapt to an organization s needs, BPM often drives a company s digital transformation. Robotics Robotics, also known as robotics process automation (RPA), uses programs to perform work formerly done by people. In contrast to BPM, robotics replaces rather than assists humans with these tasks. RPA is often used for consistent, manual processes. Automating these rote tasks allows employees to focus on high-value assignments requiring human intelligence instead of performing mundane, albeit necessary, tasks. For an idea of what this looks like, say a bank had an employee whose assignments included taking a spreadsheet of newly created accounts and manually loading them into the bank s account database. This simple task could be automated, saving the bank time and increasing employee productivity. Analytics Analytics are typically the most familiar component of digitization. Many companies already use analytics to identify market trends and opportunities for growth. In a digital context, analytics can be used in much the same way to continually improve ExlService Holdings, Inc.

5 performance. Both robotics and BPM programs generate large amounts of data. By examining this data, analytics can find new ways for these programs to be used more efficiently, and identify issues before they become larger problems. Going back to the example of a bank using robotics to load accounts into a system, analytics could be used to identify patterns among customers whose net worth was over $100k. These high-value accounts could be automatically flagged to be tracked and monitored once they were loaded into the system. If the bank were also using a BPM system, this could produce valuable information about how to upsell these customers on new products by monitoring which marketing messages were most effective. Here, analytics augments the already increased efficiency of the robotics and BPM programs. Roadmap for becoming a digital business Because digitization receives such a large amount of attention as one of the most pressing needs for businesses today, companies often begin the process of digital transformation for the wrong reasons. These can include a belief that going digital is more of a trend to be kept up with, rather than a shift in the basic way processes are performed. Most companies are already farther along in their digitization journey than they realize. Many already have implemented analytics, BPM, and/or robotics in some form or another. The most important aspect of becoming a digital business is finding ways to tie existing programs together to enhance productivity while finding the most efficient methods for integrating new systems. In order to do that, most companies will follow a common path. 1. Define objectives Analytics, robotics, and BPM are never applied simply for their own sake. These are tools which are deployed in order to ExlService Holdings, Inc.

6 solve certain problems an organization is facing. Before choosing any of these solutions, a company must define what issues it is attempting to resolve. These objectives may not necessarily be focused on implementing large, overarching changes. Many companies initially focus on a few individual issues during this initial stage, and expand from there while also leveraging the new platform. This iterative approach often results in faster project completion rates, leading to more immediate gains in productivity. The most important aspect of defining these goals is making sure they re tied to an expected ROI. Digitization should be approached as a method for improving competitiveness, rather than as a box to be checked and forgotten. 2. Establish high-level oversight Once a company has established its goals for digital transformation, it is essential to assign leadership to oversee the process. Failing to do so can result in a fragmented approach during the execution stage, often leading to the project falling apart. The push for digital transformation is typically overseen by CIOs, though in some cases CTOs are given this responsibility. Executive buy-in and support is critical for the success of any digital initiative. A core team should also be formed at the onset to establish program wide standards. Centralized program governance, centers of excellence, change management procedures and ongoing support models will ensure consistency and quality. Ensuring the team is lean and agile-minded allows the program to adapt to changes along the way while maintaining high standards throughout the journey. 3. Determine the proper tools Not every company will require BPM, robotics and analytics be deployed simultaneously. In some cases, the misapplication of certain tools can actually reduce efficiency. For example, say a large company used robotics to perform a significant portion of their tasks. If this ExlService Holdings, Inc.

7 business were in an industry with frequent regulatory changes, this could require their system to be constantly retooled in order to stay compliant. The goal should be to tie technology to processes, rather than the other way around. The result of digitization should be to allow the company to remain flexible and adaptive. If a company does not have the necessary in-house talent or tools for digital transformation, this step often requires enlisting a third-party provider. They can often assist with assessing the readiness of a company for digital transformation, and help provide recommendations for which systems can provide the greatest improvements. However, some providers offer only one specific product or solution. If their specific product is unable to meet all of a company s needs, it can produce subpar results, or lead to unnecessary costs from contracting with other onesolution providers to shore up gaps these gaps in capabilities. The result of digitization should be to allow the company to remain flexible and adaptive. The implementation of a digital transformation roadmap is an agile and living organism. The proper project implementation plan and teams should be put in place and progressed in an agile manner, allowing the realization of value and return on investment early and often throughout the project lifecycle. 4. Test, train, communicate The introduction of any new systems into existing infrastructure requires extensive testing. Before rolling out robotics, BPM or analytics, these programs must be checked to ensure they will work with a company s systems. Each stage of the testing process must have defined expectations and objectives. While this step may seem quite obvious, the implementation process often stalls due to a lack of clear goals during testing. Employees will also require training in order to take advantage of the new features offered by these systems. This should be focused on teaching employees how to ExlService Holdings, Inc.

8 accomplish their day-to-day tasks using these programs, rather than describing each and every aspect of functionality they provide. Throughout the course of testing and training, organizations must provide clear communications with their staff. Introducing automation often causes employees to fear for their jobs, worried that technology will replace tasks formerly performed by people. Digitization can also cause stress about whether these new processes and tools will disrupt the staff s daily workload, as they will begin using an unfamiliar system. Providing clear communication about project timelines and expected benefits can mitigate employee concerns and ensure efficient operations during the digital transformation process. A robust change management plan should be created at the outset and planned for as part of a digital deployment strategy. In addition to employee engagement, process updates and creation, policy and infrastructure documentation should be taken into account. Digital business While the term digital business may seem like a vague way of referencing a new concept, it only refers to companies who are using new solutions for old problems. By defining clear objectives for the digital transformation process, establishing high-level oversight and choosing the right system for their goals; large boosts in productivity and profitability can be obtained. Digital businesses are simply companies trying to do one thing improve the way they work by employing innovation. Reference 1 high-tech/our-insights/digital-america-atale-of-the-haves-and-have-mores 2 our-insights/the-digital-tipping-pointmckinsey-global-survey-results ExlService Holdings, Inc.

9 EXL (NASDAQ: EXLS) is a leading operations management and analytics company that helps businesses enhance growth and profitability in the face of relentless competition and continuous disruption. Using our proprietary, award-winning Business EXLerator Framework, which integrates analytics, automation, benchmarking, BPO, consulting, industry best practices and technology platforms, we look deeper to help companies improve global operations, enhance data-driven insights, increase customer satisfaction, and manage risk and compliance. EXL serves the insurance, healthcare, banking and financial services, utilities, travel, transportation and logistics industries. Headquartered in New York, EXL has more than 24,000 professionals in locations throughout the United States, Europe, Asia, Latin America, Australia and South Africa ExlService Holdings, Inc. All Rights Reserved. For more information, see us: lookdeeper@exlservice.com On the web: EXLservice.com GLOBAL HEADQUARTERS 280 Park Avenue, 38th Floor, New York, NY T: F: United States United Kingdom Czech Republic Romania Bulgaria India Philippines Colombia South Africa