Data is the new oil, so they say, but only organisations that learn to extract precise insights from their information will benefit.
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In recent years, almost every industry has been disrupted by digital technologies. Same-day delivery, whether household goods or restaurant food arriving at your front door within the hour, and mini cabs pulling up almost instantly at the touch of a button, are now all considered to be the norm.
Thanks to this “Amazon effect,” customer expectations across almost every sector imaginable have been transformed. Most consumers now expect increased choice of product, as well as cost effectiveness and convenience and full visibility from the moment they place an order.
When something goes wrong, they expect the issue to be resolved as quickly and as painlessly as possible and they certainly don’t want to be passed from department to department having to explain the problem from the beginning each time.
Previously considered an annoyance, but an inevitable part of the customer service process, these inefficiencies are no longer tolerated.
In this culture of immediacy, businesses are under increased scrutiny and therefore must root out all inefficiencies. To do this, they must begin to look more closely at their internal processes and the way their organisations operate if they are to compete effectively in a marketplace that is centred on technology, mobility and social media.
While small deviations from standard processes may seem to only have a marginal effect in isolation, the cumulative effect of multiple issues has the potential to significantly impact a company’s efficiency and in turn, start eating into profit margins.
Driving efficiencies in processes
Of course, companies wanting to optimise their processes is nothing new – businesses have always wanted to save time and money and work more efficiently, as this can give them the upper hand against their competitors. However, with the increase in digitisation, more and more business processes are being driven by complex IT systems.
While this can facilitate communication both internally and externally, it can also make it more difficult to control the seemingly infinite number of processes within a company.
At the same time, however, mountains of data are accumulating within companies – in fact, more data has been created in the last two years than the previous 5,000 years of humanity.
As a result, businesses are sitting on a wealth of information, but without the right tools in place, they don’t know how to make sense of this data and benefit from the insights that it can provide.
Amazon obsesses about segmenting customer data to outdo the competition
Traditionally, organisations have brought in management consultants to help them understand and improve their core operations such as purchasing, logistics and production. While this practice can often uncover inefficiencies, such as a delayed invoice or a particularly expensive supplier, it is often a lengthy and expensive exercise to carry out.
External consultants also typically rely heavily on the existing operations teams to collect data and provide context, often resulting in significant disruption to the organisation while the processes are being analysed.
This traditional process is an outdated method for companies that want to keep pace with digital-oriented competitors. A faster, more efficient and reliable solution is required to meet today’s needs.
X-raying business processes
Identifying potential issues in core processes can be like searching for a needle in a haystack.
But technology has now evolved to a point where the algorithms that are being developed are powerful enough to help even the largest of enterprises sift through the massive amounts of data being collected and uncover the hidden patterns, correlations and customer preferences hiding inside them, and as a result make more informed decisions.
One such approach is process mining, a new form of big data analytics software that helps businesses bring anomalies in the data to the surface and pinpoint inefficiencies within their core operations. Many global companies such as Vodafone, Siemens and Cisco are already adopting this technology to help improve their processes.
Large companies are turning to data mining to solve the problem
Process mining uses the digital traces left behind by every IT-driven operation in a company and provides complete transparency into how business processes are operating in real life. It automatically reconstructs the as-is process from the raw data and provides a real-time visualisation of the entire organisation’s business processes – much like a live process MRI for the company.
Using this insight, process owners, such as CFOs, logistics managers and heads of purchasing, can see how efficient (or often, inefficient) their core operations are and identify any causes of delays or bottlenecks.
They can then make more informed decisions about where the most pressing opportunities to drive efficiencies are, before identifying and eliminating the root causes of problems. This creates a win-win scenario for merchants to increase their profit margins, while customers benefit from a slicker experience and service.
Mining the path to success
As the process mining discipline is still a relatively new category within big data analytics, organisations are working to determine the best way to deploy it within their teams to maximise its value.
The theory behind the method is now also starting to be introduced to university courses, to ensure that the next generation of mathematicians and data scientists are appropriately equipped with the skills needed to take full advantage of the technology.
With a need to understand how best to apply it to their processes, it’s important that business leaders look for solutions that are accessible to everyday users across their organisations, and not just those working within the IT teams.
The bottom line is that staying competitive in the digital age means adopting best operational practices. Best practices must be dictated by analysing data, rather than falling back on traditional consultancy methods that rely on subjective and often unreliable information.
Those organisations that take control of their processes now will be able to get better transparency into their business and gain a greater understanding of their existing operations. In turn, this will enable them to race ahead of their competitors by giving their customers what they want, when they want, and truly capitalise on the promise of digital business transformation.
Bastian Nominacher is co-founder and co-CEO of Celonis.