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Your Processes are Broken: Here’s How to Fix Them with Data

By   /  August 1, 2017  /  No Comments

Click to learn more about author Alex Rinke.

In his landmark 1996 HBR essay entitled “What is Strategy?” Michael Porter famously stated: “Operational effectiveness competition shifts the productivity frontier outward, effectively raising the bar for everyone.” This adage has never carried more weight than right now, in the digital age. Global players like Amazon have perfected processes, creating a need for businesses across all industries to transform their operations. Customer expectations are rising: to stay competitive, a company must deliver products and services within hours instead of weeks, and inefficiencies cannot be tolerated. Business processes need to be faster, more efficient, and more agile.

Almost every business pursuing increased operational effectiveness encounters a familiar pattern: flawed or inefficient processes are uncovered, and management consultants get called in. Consultants are taught to survey the process in its existing state first, then map out the ideal process path and determine how to get from the former to the latter. Whiteboarding sessions commence and interviews are conducted, all with the objective of optimizing core operations like purchasing, logistics, and production.

If root causes of process inefficiencies are eventually uncovered, consultants can develop a plan of action and execute. However, there are problems with the traditional approach: it can take weeks, months or years to uncover root causes, scope creep is common, and root cause analysis may not be completely accurate. Even worse, because the existing process may not be up to date, and because the traditional approach is built on so much subjective information, the “solution” might end up causing more problems. Fortunately for businesses and consultants alike, there’s a new wave of technology that presents a more objective way to drive business process optimization.

Dow, Cisco, Vodafone, and Siemens are already using an approach called Process Mining, a breakthrough way to visualize and understand processes, and to pinpoint inefficiencies within them. Process Mining software takes a game changing, innovative approach, leveraging big data analytics and machine learning to create complete transparency and provide proactive recommendations for improvement.

The Fundamental Principal Behind Process Mining Tech is Straightforward

Tremendous amounts of data accumulate in businesses’ IT systems. These data logs can be reconstructed into a visual representation of how every process really happens in real time, acting as a real-time process MRI. The technology works to reimage every variation of the process, and business leaders are gifted complete transparency on key processes like purchase-to-pay (P2P), logistics, accounts payable and IT service management.

Built from a straightforward concept, but rapidly becoming a critical tool, Process Mining software continues to grow in its value proposition. The technology has created extraordinary success for businesses, and the latest Machine Learning algorithms have effectively turned the software into a virtual business process consultant.

Why is Process Mining Becoming Critical?

Competition isn’t getting any less fierce. Businesses are squeezing out every last drop of operational effectiveness. Finding solutions to known problems is tough enough already, but it’s nearly impossible for businesses to find solutions for problems they don’t know exist. Non-compliance wreaks havoc, and it becomes common for business processes to deviate from the desired state more often than not.

Take the Purchase-to-Pay process as an example, which causes seemingly perpetual headaches for procurement departments. Imagine that frequent prices changes were causing delays in the P2P process – a common issue whose scope of impact is near impossible to measure without someone knowing where to look, and what to look for. It takes minutes to manually correct each pricing change, and in a large organization, price changes like this are often occurring tens-of-thousands of times. The value drain adds up quickly, and systemic issues that could have been averted become cash hogging headaches.

The bottom line is that staying competitive in a digital age means adopting best operational practices, and best practices must be dictated by analyzing data. Companies cannot continue to rely solely on subjective input when striving for continual improvement. The new wave of Process Mining technology pushes businesses beyond standard outdated practices, and creates unbiased visibility into processes to improve margins, business agility and customer service. The bad news: your processes are probably not as efficient as they need to be for your business to stay competitive. The good news: you already have the data to fix them.

About the author

Alexander Rinke is an enterprise software entrepreneur. He co-founded Celonis in 2011 and serves as Co-CEO and Chief Product Owner. Celonis is the market leader in process mining software, a new discipline in Big Data Analytics. Celonis became one of the fastest growing enterprise software companies in the world, helping customers such as Siemens, 3M, Dow Chemicals, Vodafone and many others save millions through improving their core business processes. As an actively involved early stage technology investor, Alexander helped to found other enterprise software companies – such as Testbirds and Talentry. Alexander has always been an entrepreneur at heart and founded his first company, a tuition agency at the age of 14. Alexander is a very active speaker at university events, business events, trade shows, entrepreneurship events etc. Follow Alex and Celonis at: Twitter, LinkedIn (Celonis), LinkedIn (Alex), Facebook, Google+

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