Many of the latest digital companies you see in the media were born digital. They’ve never had to undertake a digital transformation journey, having bypassed the transition to a digital operating model altogether.
For others, it doesn’t work quite like that. True, there’s often a clunky period between the old and the new that can be tough to integrate into a business. However, to survive, established organizations must begin operating digitally to remain relevant, and at the top of their game.
Understand Your Current State In 3 Easy Steps
Before you head down the road of digital transformation, you need to understand your current location. Using these three assessment questions, you can quickly find out your strengths and weaknesses in terms of preparing for the route to digital transformation.
- Performance – Review the key performance indicators and other performance measures for your business, such as current underwriting timelines.
- Process & Technology – Evaluate how your business processes and technologies work. Note that it is critical to understand the “official” process and any unofficial workarounds that employees may be using to get their work done. For example, review your funding process end-to-end to see what methods, staff, and systems are used to carry out that work. In some cases, your present technology may be enabling productivity, but it could also be slowing your team down.
- Pain Points & Impact – Find and quantify the pain points associated with your current operating model. For example, a large number of exceptions may require managers to spend time every week reviewing and approving files. In addition, you may not have a sound system in place to document and analyze this exception decision-making model.
Based on this three-part assessment, you will see a few areas—especially the pain points—that could be improved with a better model. Instead of merely seeking small incremental wins, let’s take a broader view by building a digital target operating model.
Building A Digital Operating Model For Your Business
For a model to succeed, you need to strike a balance between different elements. Get this off-balance, and you are likely to have problems. As in the current state assessment, there are three elements to building a targeted digital operating model:
- Cost improvement analysis – Moving to a digital model because it’s the latest big idea is not a good enough reason to dive into the deep end. Instead, we recommend developing a business case with specific quantitative improvements in mind. For example, you might target increased speed for customer service processes. Alternatively, you might develop a procedure to enable more self-serve tools for your customers.
- Organizational design refinements – Digital transformation requires more than utilizing the latest new technologies; you will need to look at updating other areas of the business as well. That may mean changing reporting lines, combining teams and making other organizational adjustments to make the most out of the investment.
- Digital business enablers (Process & Technology) – Selecting the right software tools and technology partners and improving your business practices are the fundamental tactics you must embrace to achieve transformation.
To win support for a digital transformation program, you need to practice the core elements of good project and change management. In particular, we recommend benefits management: measure the value you realize from making the change and communicate that through the organization.
Some organizations are so confident in their digital transformation ideas that they skip the measurement of success. Don’t let that happen to your transformation program!
5 Steps To Successful Digital Transformation
So far, you have seen conceptual models for defining your present situation and the elements required to develop a transformation. These concepts will help you to develop a plan; however, you also need tactical guidance to keep your project on track.
- Minimize bias in your Current State data – Measuring your current state performance requires high quality, representative data. Don’t fall into the trap of only measuring performance during quiet periods or busy periods of underwriting, payout and verification. Likewise, if your company operates in multiple locations across the country, include data from each site to get an accurate and representative spread.
- Ground the business transformation in your business goals – In some technology projects, it’s easy to get carried away by the excitement of new technology. That’s a mistake! Instead, connect each part of your digital transformation to current goals related to revenue, cost management, customer satisfaction and agility. If you keep these in mind from the outset, they will better drive the direction your business is advancing in.
- Avoid unbalanced change – For digital transformation to succeed, you need to improve technology, process, and organizational changes as well. If you lean exclusively on technology updates, you may just be automating ineffective processes.
- Promote ongoing Self-Serve – In our experience, it’s best to look for ways to increase Self-Service options. Some companies let customers start a transaction online and little else. A modern approach allows users to interact throughout the process regularly, check their application status at will, and provide information to the system without waiting for it to be requested. Placing this element of control in the customer’s hands not only improves satisfaction with the service provided, but it can also give your team more time to solve more complex queries.
- Put Machine Learning and Artificial Intelligence in the right places – You should avoid implementing AI and ML simply because they are the latest industry buzz. However, aligning these technologies to your digital operating model and goals can help you to classify information swiftly and automate processes such as underwriting and credit decisions.
Verification and Payout: A digital operating model example
In consumer, asset and automotive finance, payout and verification processes are a critical function. If these processes work smoothly, you effectively guarantee customer satisfaction and increase the chances of repeat business. To optimize these functions, consider ways to digitize and streamline the following activities:
- Enable e-signature support – Securely store and process signature information from stakeholders instead of manually verifying signatures across multiple documents.
- Implement robotic process automation (RPA) for unknown documents – Let the automated system detect unusual or exceptional documents and route them to a person for assessment. The other 95% of standard documents can be processed automatically by the system.
Bringing your digital operating model to life
So you’ve evaluated the different ways to transition your company to a digital target operating model and are ready to begin your transformation journey. However, you don’t have to go it alone!
Many organizations struggle with a shortage of project management support and transformation governance when initiating a companywide upgrade.
Reach out to us to discuss how our consulting experts can help you achieve your new target operating model.