Savvy business leaders know that ‘boil the ocean’ strategies for digital change are usually doomed. Yet new research reveals that by applying digital remedies to precisely targeted process areas, organisations can relieve operational stress and generate improvements, yielding outsized results that ripple across the process value chain.
Our daily lives have gone digital, starting when we took a single step (often on a smartphone or tablet), which created a ripple effect that helped to guide and inform our interactions with people, places and things.
But what about an organisation’s business processes? How could a precision twist on digitisation bring value to an entire value chain?
We call this emerging scenario ‘digital process acupuncture’.
The 5,000-year-old discipline of acupuncture is based on the belief that a set of accurately placed pinpoint treatments can impact the entire body.
Similarly, we believe that organisations can relieve operational stress that builds up at critical process connections by identifying and isolating processes (or sub-processes) that are materially connected to other important activities and applying precise doses of digital change.
Could your business use some acupuncture?
Precision doesn’t mean half-measures either. Decisive action requires intensive, digital focus on the connective tissue that constitutes entire functional processes.
By using digital technologies to ‘heal’ process bottlenecks, lubricate friction points, optimise manual inputs or handoffs, and relieve systemic pressure points in information flow, businesses across industries can unlock substantial value, maximise healthier business outcomes and improve the experience for all participants — customers, suppliers, partners and employees — across the value chain.
Examples of this highly targeted use of digital technologies include capturing images with drones to reduce insurance underwriting risk and bring insurers closer to real customer needs; using digital wallets and beacon technologies to create shopper awareness and boost retail sales; tethering touchless payments to loyalty programmes to predict buying patterns; and using sensors, IoT or RFID for real-time monitoring to streamline the business supply chain.
Cognizant’s recent study of 321 global executives helps us to understand how banks, PC&L insurance companies, healthcare payers and retailers are grappling with business process digitisation today. Because many businesses have different views on exactly how digital process acupuncture applies to them, we offered a tight definition of what we meant by digital process change: using digital technology to instrument, accelerate and link a seamless process value chain, often by integrating the physical and digital worlds.
Process value — both in top-line cost savings and bottom-line results — is created when targeted, precision-guided digital change revises the sequencing of key touchpoints and channels in a way that improves the experience or boosts engagement.
We also gauged how pervasive respondents’ process digitisation efforts have really been: casual, superficial or dabbling. As it turns out, most leaders are committed; in fact, only about one-third characterised their digitisation efforts as being moderate or less.
What does it take to have a winning digital process?
Early winners in the digital era have shown us what works:
Focus on the front office first
Customer-facing processes were prioritised in every vertical industry we studied. Approximately 64 per cent of healthcare payers claim to have digitised enrolment and billing services, and 67 per cent of retailers said they have digitised their B2C channels.
Trim fat and build digital muscle
Digital process change propels top-and bottom-line results by more than 18 per cent, our respondents project, which equates to true capital gain. Respondents said they decreased costs an average of 8 per cent due to process digitisation efforts, with the greatest cost take-out originating with insurers (10 per cent), and the lowest returns achieved by healthcare payers (5.5 per cent). Revenues rose 9.8 per cent due to digitisation, with the highest returns originating from insurers (11.6 per cent) and the lowest returns — though still impressive — emanating from healthcare payers (8.2 per cent).
Benefit with process and value chain integration
Precision digitisation within the process value chain significantly boosts the impact of cost reductions and speed-to-market improvements, and eliminates friction points. For example, nearly two-thirds of banks, insurers and healthcare payers cited digitisation as yielding high or very high levels of value chain integration; this was also the case for roughly half the retailers surveyed.
Keep it safe
Effective digital process change relies on secure information and platforms. Roughly 59 per cent of respondents cite data security as the chief issue today as their digital processes proliferate.
All in all, whether a company is a bank, an insurer, a healthcare payer or a retailer, the time for digital acupuncture is now. Leaders need to make some critical choices regarding initiatives that will quickly allow the benefits of digital process acupuncture to permeate into other parts of the business.
The scale of the opportunity is massive — and eminently achievable.
Robert Hoyle Brown is the Associate Vice-President, Center for the Future of Work, Cognizant