Outlining the path to value from process optimization

A tool-agnostic approach to process optimization helps identify opportunities, quantify value, and enhance processes without dependence on specific tools

Although accelerators to process optimization like automation and artificial intelligence typically catch the eye, our framework focuses on a tool-agnostic approach to opportunity identification, value quantification, and process improvement. With that as the backbone, such tools as process mining, robotic process automation (RPA), and AI can help to rapidly drive value. By following the most effective steps to actionable process transformation, organizations can get the best results from their process improvement framework and chart a path to maximum value.

This blog drills down into our introductory viewpoint on process engineering by highlighting our approach, how to identify the right process improvements, and how to measure value. For more context on process engineering challenges, strategy, potential projects, and adoption, please check out our Introduction to Process Engineering article.

Our high-level approach to process optimization

Process improvement has been an objective for many companies for decades. We follow a cutting-edge, tool-agnostic approach across six major steps:

• Identify: We analyze root causes, identify (sub) process inefficiencies, and pinpoint high manual effort. This initial identification can occur in a traditional approach through root cause analyses and value identification workshops but can also be bolstered by data-driven process mining analyses. It is critical in this stage to take your potentially long list of ideas and conduct a high-level value assessment and prioritization to zero in on a more actionable short list.
• Define: We map inefficient process steps, manual effort, and system breaks within the identified process area. Once again, this definition can take a more traditional approach to process performance management and focus on interviews or be streamlined by process mining dashboards and process diagrams.
• Assess: We quantify and validate the financial impact of identified optimization measured in order to justify the implementation effort. It is critical in this stage to identify: (1) the quantified magnitude of process improvement, (2) the right solution in order to achieve the measured improvement, and (3) the potential cost of implementing the solution. Using the three outputs, we create a business case for the idea.
• Prioritize: Using simple value and effort levers, we compare created business cases in order to prioritize the ideas and ultimately determine approval of the idea.
• Implement: Once the idea is approved, we implement the optimization by using the defined solution design.
• Steer: Following implementation, we monitor the realized value of the solution and compare with the committed value. Additionally, we revisit the adoption plan and sustain value by continuously tracking and reviewing the progress of intended improvements.

Identifying the right process improvement opportunities and high-impact solutions

During our “Identify” to “Assess” phases, we qualify a potential process improvement by employing a proven improvement framework to categorize the type of improvement needed:

1. Focus on elimination of the activities driving unnecessary work effort (i.e., duplicated processes and rework).
2. Leverage best practices to implement a standard process across all domains and groups.
3. Optimize the configuration of backend IT systems (i.e., process gaps leading to users acting outside systems of record).
4. Non-invasive technology to drive further automation (i.e., making enhancements in existing SAP systems to improve particular processes).
5. Achieve further benefits realization by applying robotics on top of or replacing existing processes or systems (i.e., RPA bots, OCR/ICR, machine learning, generative AI (Gen AI), etc.).

This framework is intended to build in complexity – a given improvement idea can incorporate one or many of these types of improvements. It is important to analyze the true root causes of process inefficiencies to understand which aspects of process improvement to deploy.

Upon identifying the right categories of improvements needed, it is essential that organizations convert these ideas into tangible solutions. Prior to implementation, we need to consider solution design, potential technologies needed and their architecture, and the overall business case for the solution which will justify its implementation. In the next section, we discuss our approach to measuring value.

Realizing value from process optimization

There are many areas of the organization where process optimization tools can generate major value. While some areas, such as finance and procurement, are well understood, others are starting to get more attention. Moreover, there are several ways to measure value. Many organizations focus on reducing costs, but equally as beneficial is the concept of cost avoidance, where process improvements can lead to reallocation of time to more value-adding activity. As shown below, we simplify the types of value into three buckets: revenue enhancement, expense reduction, and working capital improvement.

Kickstarting your journey to process optimization success

In our experience across a wide variety of use cases, it is common for business teams to focus on labor productivity as the main target. It is interesting to note that when analyzing the magnitude of improvement across these value types, we have actually seen a significantly higher potential for value in expense reduction and working capital improvement. Of course, every use case is unique, so it will be important to evaluate all of these levers while creating your business case.

The expected value of successfully improving processes helps to prioritize and sequence the multiple use cases considered. It also facilitates justification of capacity allocation across the different teams that need to come together to deliver this work. And ultimately, it clarifies who in the organization needs to approve and recognize the value to call its realization completed. We have had great success adopting this approach across a variety of business process domains and industries to the tune of multi-million-dollar improvement potential. We identify these improvements rapidly, with a sustained approach to iterate and foster likewise in perpetuity. We encourage you to unlock your process optimization potential by focusing in on your non-value-adding activities and overall process inefficiencies. We have the solidified approach and track record of success to kick start a collaborative journey on your path to value in process optimization.