Establishing an Effective Operating Model for Business Process Transformation

Establishing an Effective Operating Model for Business Process Transformation

Establishing an Effective Operating Model for Business Process Transformation

If you follow these simple steps, you can ensure that any operating model you create for business process transformation is not only effective but efficient as well.

Effective CFO involvement can lead to improved business outcomes and performance improvements across departments. CFOs and solid financial functioning can help companies successfully navigate toward full transformation, add value, and lead to improvement.

What is Business Process Transformation?

Business Process Transformation is the concept of initiating changes in management strategy with the goal of aligning three components—people, processes, and technology—across a wide range of different departments. Digital transformation is very important to companies today but according to a 2016 survey, while 33% of companies are developing their plans for digital transformation, they won’t execute these plans in the next twelve months and 47% of companies haven’t even started to embark on a digital transformation journey.

If the reason your organization isn’t executing digital transformation plans is because you are not sure where or how to start, follow these simple steps.

Creating an effective operating model for business process transformation is much easier than you may think

Steps to Create an Effective Operating Model

1. Assess Your Current State

The first step to developing and documenting an effective operating model for business process transformation is to thoroughly understand the current state of your organization. It’s important to identify and interview key stakeholders to capture opportunities, pain points, and overall themes about the current state. 

2. Determine the Need for Change

Once you have assessed the current state of the organization, you may determine that not much needs to be changed or you may unearth pain points that hinder growth, get in the way of achieving goals or even put the organization at risk. In these cases, a strong need for change that includes the consequences of not changing needs to be developed and communicated across the enterprise. For the success of your operating model, it’s critical to get employees excited and mobilized around a common need to change.

Perhaps the director of innovation and change management at the Government Administration Agency says it best with this statement, “Educating people on the process of designing an operating model builds a strong foundation for change.” The executive vice president of strategy at the Provincial Regulator also makes a good point about determining the need for change with this statement, “It’s critical to uncover passive resistance and make sure everyone understands the case for change.” It’s not enough to just determine the need for change; you have to get everyone on board with your initiatives as well.

3. Coordinate with The Right People

Coordinating with the right people is essential for the success of an effective operating model for digital business transformation. Involving the right people in your effort will not only expedite decisions but also offer representation across business units and functions. Involving the right people also creates the right working teams and committees that can bring additional diversity of thought and even aid with buy-in.

4. Define Design Principles

The fourth step to create an effective operating model for business process transformation is to define your design principles. Design principles are not only born of an organization’s strategic priorities and current state assessment, and articulate the parameters for the future state, but set the context as well. Design principles also result in key statements to guide the development of the operating model document.

5. Include Critical Elements

Once the case for change has been developed and the right people are on board, it’s time to shape your future state. Regardless of the amount of change anticipated, it’s essential to determine the key elements needed to include in your documented operating model and give attention to elements that are most critical to your operations. Implementing an effective operating model for business process transformation happens through a series of workshops with each one focused on a different element of your operating model. Your workshops should anchor attendees on the purpose of your operating model, the case for change, and a definition of the element at hand.

The executive vice president of strategy at the Provincial Regulator says it best with this statement, “If the operating model is out of reach for the audience, it’s not delivering what it needs to deliver.” It is very important to create a workshop that not only informs attendees but engages them as well. Communication is so important, the vice president of program investment at a not-for-profit organization states, “Without very strong communication and implementation, efforts to develop an operating model are utterly wasted irrespective of how good it is.”

6. Document Your Operating Model

Capturing all the salient points, decisions, critical questions, and answers, as well as opportunities for change and improvement, can be tough which is why post-workshops, it’s essential to document the outputs of the sessions into a single, coherent, and cohesive document. This document should not only be simple, straightforward, and thorough but easily understood as well.

7. Implement Your Model

The last and possibly most important step for internal stakeholders is to implement your model. Once you’ve implemented your operating model, it’s essential to not let any momentum go to ensure that your efforts are effective. It’s also important to identify initiatives that will help you achieve new goals and place those initiatives in the broader context and assess accountability for them. Dedicated change management and communications efforts not only ensure that employees are aware of changes and understand them but are committed to helping make changes as well.

Implementing your model is essential to prove its value to internal and external stakeholders. According to a 2016 survey conducted by Forrester, Squiz, and SugarCRM, 43% of organizations with a mature digital strategy see internal departments competing to own digital as the most significant barrier to digital transformation. It’s essential to implement your model as soon as possible to stay ahead of your competitors. In fact, a 2016 survey revealed that 59% of companies are worried they may be too late with their digital transformation efforts and will fall behind their competitors.

How to Know When to Undergo a Business Process Transformation?

A Business Process Transformation is a rather lengthy and thorough process that must be planned well and implemented step-by-step. So, when do you know if you need to undergo this process?

Ask yourself these 3 questions:

  • Is the company reinvesting in opportunities?
  • Is the company’s performance superior to that of major competitors?
  • Is the company’s competitive advantage strong enough to leverage more customers and more business from existing customers?

If the answer to even one of these questions is doubtful, it could be time to change your approach. A business process transformation will help support innovative business strategies.

There are many advantages to undergoing such a transformation including:

  • Streamlined processes
  • Improved efficiency
  • Productivity improvements along with stronger financial and process controls
  • Development of reenergized leadership
  • Improved customer service and increased profitability
  • A clear understanding of competition and the ability to adopt leading industry practices

With these advantages come a set of risks that shouldn’t be overlooked though:

  • It’s like starting your business all over again, which means a ton of research, implementation, and strategy.
  • Technologies need to be upgraded to provide scope for transformation.
  • Business transformation needs continuous innovation, so a constant change of the business model is essential.

This is where the CFO comes in. A CFO has a very comprehensive and central role in the whole process of undergoing a business transformation. CFO involvement can lead to better outcomes for organization-wide performance improvements.

Key Roles that a CFO Plays in the Business Transformation Process

1. Establishing a Clear Financial Baseline

A transformation can be an expensive endeavor. As stated before, it is almost like starting a business from scratch. A CFO must set a baseline and a ceiling for spending. While setting up spending limits sounds like a simple dynamic, it is often misunderstood and poorly communicated, so CFOs must make clear calculations while keeping various aspects of a business in mind.

2. Clarifying which Initiatives Create Value

Given the volume of initiatives involved in setting up an entirely new business process and the limited time and resources available, managers often find it challenging to prioritize tasks. It is important to focus more on the tasks that have the most impact. Prioritizing tasks is key to a successful transformation.

3. Ensuring that Benefits Fall to the Bottom Line

In today’s day and age, CFOs are responsible for much more than finance. According to a McKinsey report, five functions other than finance now report to the CFO on average. More than half of the CFOs surveyed said their companies’ risk, regulatory compliance, and M&A transactions and execution report directly to them. Additionally, 38% of CFOs surveyed were responsible for IT. Some CFOs even managed cybersecurity and digitization, suggesting just how diverse the list of demands on the CFO are. Therefore, a CFO has a wide-ranging role in the business process transformation operating model.

Creating an effective operating model for business process transformation is essential to the success of your efforts. If you’re looking to undergo a business process transformation, it is essential to understand that this process is time-consuming, can be very expensive, and requires a lot of effort.

Emily Pribanic
Emily Pribanic
Emily is a graduate of the University of North Texas. She has her B.A. in Advertising with a concentration in Copywriting. Emily has been writing since she was young and has a creative imagination. She lives in Dallas, Texas with her family and two cats.
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