Saturday, 4th July 2020

Look before you leap: why business-wide evaluation of process improvement is critical before investment in new technologies

Despite the hype, comparatively few businesses are reaping success from digital transformation projects. Darren Birt, Director, at FHL Cloud Solutions shares his views on why these projects are failing and companies should carefully assess their key challenges, before making an investment in new technologies.

With all the noise currently around digital transformation projects and new technologies many CIOs are likely to be considering their next strategic IT choices. However, despite considerable outlay on technologies that promise to digitise and optimise core business processes, we still see many organisations drowning in complexity caused by ill-advised technology investments that do little to solve their fundamental business challenges.

We’ve seen businesses experience rapid growth through expansion or acquisition with multiple reporting systems that they are yet to consolidate; or those running disparate accounting systems put in place to manage different countries’ import/export requirements or tax regimes. These organisations ultimately have little visibility of their organisation-wide operations and are therefore unable to make effective decisions or even tactical ones. And for all those businesses where visibility is obscured by rapid expansion, we see just as many whose plans are constrained by legacy business systems or outmoded processes.

The right technology choices can provide businesses with significant advantages, but before leaping in and making a significant investment, CIOs need to fully and rigorously evaluate their organisational challenges and consider where new technologies can add value.

Getting it right from the outset is essential. According to a data from management consultancy, McKinsey, in spite of the growing number of digital transformation projects underway in businesses across the globe, the success rate of these projects is disappointingly low. Only 14% of business executives claimed that their digital transformation projects have delivered on sustained performance improvements, just 3% reported successfully sustaining business change.

The sad truth is that many businesses have been putting resource, energy and millions of pounds into new technologies − without really considering how they will resolve their business-wide operational challenges. Limited time, resource and budgets, and a failure to grasp the challenges that come with business change, are also key contributors to IT project failures.

Identifying the challenge and solution

To avoid a costly mistake, and before an expensive IT buying decision is made, CIOs need to assess how innovative solutions can help them solve common issues such as business-wide visibility on operations, scaling for rapid growth, or the eradication of inefficient, ineffective and costly processes.

CIOs or business managers are right to see technology as the answer to many of these issues, but it’s how and where it is deployed that matters. The real business value of any IT investment lies in the enhanced and optimal operation of its processes and business owners need to build a clearer understanding of exactly how their organisations operate.

The starting point for any business looking to make a change needs to be an evaluation of their current processes: consider if they are optimal and if not, how to re-engineer them for better performance.

The areas for improvement highlighted by this evaluation process immediately pinpoint where new technologies can be applied to successfully deliver significant business value. These new-found insights enable businesses to use technology and improvement processes to gain better visibility of their operations, allowing them to make informed decisions, boost responsiveness to customers and drive profitability.

The focus needs to be on getting to the root of the issues that need addressing within your business and finding a technology partner who can advise on how to solve your specific challenges such as making process efficiencies; or even opening up revenue streams in new territories.

Two examples show the benefits from organisations taking this deeper approach to identifying and evaluating their strategic challenges. One UK firm with multiple overseas subsidiaries identified the need to consolidate disparate accounting systems and invested in a new single platform; this has not only reduced resources needed for financial reporting but also delivered better visibility of operations and much improved insights to management based on data. In the second case, through a deeper examination of core business processes and its customer needs, a fast-growing business realised that replacing its current systems with a single system would enable it to rapidly set up an overseas sales operation that achieved easier compliance with local sales taxes and import controls while delivering better customer service and improved overall management information.

Without documenting core processes and building a clear picture of operational needs and areas for improvement, today’s IT innovations are no more likely to help a business achieve key goals than their current technology set up. Business owners or managers need to be wary of the hype around digital transformation and engage with experts who can help them review, document and realise true visibility of their business operations and identify where technology can be applied for improvement.

A decision on new technologies should not be taken lightly, and certainly not based on the promise of business transformation: understanding your processes and operational inefficiencies and applying technology to improve and transform these is the real key to effective decision making around IT and ensuring the investment delivers as promised.

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