R E E NG I N E E R I N G

Harnessing the power of Process in Transformation

More often than not, transformation initiatives have resulted in disappointment when promised benefits are not realized. The crux of the problem is the failure of those involved to recognize process as a foundation block for any transformation. If this key point is overlooked up front, the prospects of Benefit Realization quickly dim, smothered in an avalanche of missteps, misguided intentions and “sunk cost” investments in technology.

The history of corporate management suggests that no one

gets fired for hiring a strategic consulting team armed with

all the possible models, frameworks and tools to realize

the benefits of successful transformation. However, there

have been ample examples of ruined businesses and careers

for not successfully implementing a very feasible dream of

“Transformation”. Research1 continues to demonstrate that the

top 5 reasons for failure are:

• Not having a shared Vision

• Process Design is done after Technology has already been

selected or, worse, already initiated work

• Not being able to use Data and convert it into Insights

• Silo mentality of different departments or business lines

• Not engaging employees or including them in change

This whitepaper creates the case for a looking at business

transformation approaches with a new lens, and to relook at

the way pillars of transformation are brought together.

Shattered dreams, unrealized potential

The numbers are powerful: 93% of ERP implementations take

longer than anticipated, 59% of implementations cost more

than budgeted and only 21% of the initiatives attained 50%

or more of their projected benefits5. Most of the large scale

transformation initiatives fail to meet their stated goals of

budget, time or ROI due to a multitude of reasons. “We did not

have the right project team for the implementation“; “The tool

lacked the capability”; “Our business model is unique” are just

some of the reasons commonly cited. But if one digs deeper

a pattern emerges: Research indicates the leading factor for

project failure is the lack of adequate investment in managing

the people side of transformation2. When coupled with an

inadequate and outdated process design, filled with exceptions

and shortcuts, it creates a perfect storm. Transformation

initiatives at this point enter the metaphorical “valley of death”,

which really means business performance falls (B), project

timelines get extended and projects overrun budgets (A).

(Illustration 1)

Aamir MasoodAssistant Vice President , Reengineering

Vaibhav BisenAssistant Vice President, Reengineering

To avoid these pitfalls, the project team must look beyond just IT

transformation to “Transformation.” The team needs to look at

a process design that maximizes the benefits that can be accrued

by the new IT system. It needs to build a feed-forward and

feed-back mechanism to develop a virtuous circle of interplay

between the IT system and the underlying business processes.

Finally, the project team needs to consider a third element: The

humans who use and operate these IT systems. The need is

not only to track project cost and timelines but also establish a

“realization” governance to track the benefits accrued by the

transformation initiative. The need, hence, is for a holistic view of

transformation which includes the business processes over which

the IT system is going to be deployed, the people who are going

to use the IT system to get the job done and the IT tool itself. deploying an IT tool, the amount of change to the underlying

business process is dependent on the culture prevalent

within an organization. This brings us to the second critical

ingredient… CHANGE MANAGEMENT.

Managing the people side of change: Organizations are

a sum total of the individual brilliance (or lack thereof) of the

people within that organization. Hence while transformation

leaders are allocating resources to the technical solution of the IT

tool and/or to improving the process capability of the underlying

business processes, they have to balance out the third corner

of the triangle. They have to invest in ensuring that the people

who will be impacted by this transformation are willing partners

to this change and not forced to accept it. While transformation

projects with minimal or low investment in change management

only managed to meet their stated objectives 17% of the times

this number jumps to over 85% for projects where this corner of

the triangle is adequately invested in2.

Early in the planning phase, transformation leaders must

account for the change appetite and change fatigue of their

organization. By adopting a formal change methodology

transformation leaders have reaped dividends in the order of X.

The transformation team must launch a two-pronged approach

to managing change: Organizational change management and

individual change management. The organizational approach

is to look at the macro factors within the organization,

organizational culture, other competing change initiatives and

change fatigue to name but a few. The individual efforts are

focused more on making clear ‘what’s in it for me’ for the

individuals impacted by the change. The change team has to

work on a multi-pronged strategy relying on 6 critical factors –

leadership engagement, communication, training & coaching,

tools & techniques, active engagement and finally HR actions.

Technical solution and implementation plan: The third

corner (and often times the most invested in) is the technical

solution and the actual IT tool. The transformation teams do

spend considerable resources evaluating the IT tool. The critical

factor at this stage is to make the choice not on the basis

Ingredients of a successful recipe

There are three ingredients to creating the perfect

transformation dish: the technical strength of the IT tool, the

process capability of the underlying business process and,

finally, the cultural and people readiness of an organization to

embark on the transformation journey.

Enhancing the process capability: The first step to any

transformation initiative has to be an understanding of the

current state, AS-IS understanding. Often, such understanding

is limited by the lack of a transformation leadership vision and

instead includes only a technical assessment of the current IT

landscape. The need is to go beyond the technical to look at

the fundamental business process itself. At this point successful

transformation leaders also ensure that a baseline of data is

created and that the process capability is documented and a

governance structure is established for benefits tracking. The

next logical step to be taken at this point is to improve the

process capability. Various improvement methodologies can be

used. Chief among these methodologies are typically Lean and

Six-Sigma. Benchmarking studies, as well as linkages to (and

impact of changes on) upstream and down-stream processes

must be taken into account. While it is important, critical and

necessary to look at process capability and improve it before

Process Before IT

TIME

PERFORMANCE

“Go Live” Minimize AMinimize B

Maximize CMaximize D

A

BC

D

IT Tool/Technical Solution

Enhancing the Process cabability

Managing People Side of Change

Illustration 1

of the features of one option or the other alone, but more

importantly, on what best works with the underlying business

process. One would not want to drive a fully-loaded Ferrari on

an off-road trip.

At this stage, the feed-forward and feedback loop set-up during

the process assessment or blue-printing exercise plays a pivotal

role. While the process assessment provides indicators and

constraints to look out for while making the tool evaluation,

the options and features of the tool itself spur the process

teams to redo the design, tweaking the blueprint to maximize

the effectiveness of the tool on offer. This approach, coupled

with a robust implementation plan maximizes ROI and ensures

transformation initiatives meet the time, budget and benefit goals.

Bringing pragmatism to transformation dreams!

1. Go slow to go fast: (Requirement gathering and process

blue printing) One of the biggest lessons we have learnt

RFP bids. The successful programs have tested suppliers

by conducting outcome based proof of concepts before

committing for a long term engagement. It is equally

important to set the working principle among all stakeholders

that technology will enable benefit realization, but cannot

realize business benefits on its own.

3. Simplify and synchronize: (Integrated implementation)

Another learning which we have experienced is when

Design The Future State Process First…

‘Many have faltered by putting the cart before

the horse’

Implement the integrated

solution -Process + Technology.

“Eat the Elephant bite by bite but know at all times that you need to eat the

whole”

Evaluate which Technology can best

enable the process Technology is just an

enabler, shy away from “silver bullet” solutions

while partnering with our

clients for implementing

transformation is the

importance of sequencing

decision and prioritizing

end to end process design

before any Technology decision or work is initiated. It not

only mitigates the risk of “automating broken processes” but

also ensures “minimum disruption to service delivery during

implementation”. A rigorous, deliverable-based Business

Process Design phase early in the transformation substantially

fast tracks the Technology design and delivery and increases

potential to reap ROI benefits.

2. Consider technology an enabler, not a panacea:

(Technology evaluation and vendor selection) The shift from

business requirements to

Business Implementation

is crucial and sufficient

evaluation of Technology

and Implementation

partner (internal or

external) is crucial for success. One of the two biggest mistakes we have seen

organization making is to select partners based on RFI/

organizations let the

functional teams run their

individual work-streams.

For example, a major

ERP program having an

IT stream, HR stream,

Process stream as separate

projects rather than having

one project with 3 delivery

streams. Having such silo work-streams – wherein each

function ends up focusing on providing “deliverables” rather

than achieving common business outcomes – not only creates

duplication of effort but also erodes team’s effectiveness

4. Sweat the investment: (Stabilization and continuous

improvement) Failing to track the benefits during stabilization

and not investing effort in enabling continuous improvement

surely leads to substantial reduction in ROI. It also limits

the potential of an organization to embark on any future

Requirement Gathering

and Process Blue

Printing

Technology Evaluation

and Vendor Selection

Integrated implementation

Business Process Transformation Framework

Project Management and Change Management

Stabilization and

Continuous Improvement

Benefits Realization and

Governance

1 2 3 4 5

6

transformation because

of change management

challenges. Any sequel of

a transformation project

must be preceded with an

exercise which satisfactorily

proves to the CFO and

COO that the process has

a mistake of overemphasizing the planning phase of the

transformation by putting their best resources in the planning

team, recruiting strategic and management consultants

for creating multiyear strategy and plans. Our experience

suggests that organizations do not place similar importance

and focus during the execution phase of the project. Then

they realize only towards the end that they are not able to

meet the goals they have set out for themselves. A granular,

tactical delivery approach with an equal emphasis on project

management and change management needs to compliment

the top-down strategic planning approach.

Conclusion

The totality of available data overwhelmingly proves that

transformations that are not backed by proper, upfront

process design are bound for disaster. Yes, the IT tool itself

and the implementation solution are critical elements of any

transformation. But the key ingredients every project team

needs for a successful transformation are process oriented.

A focus on process design maximizes the benefits of the IT

transformation (big or small). Likewise, a delivery plan must aim

to deliver value in small measurable terms rather than focusing

on “silver bullet” implementations. Finally, one must remain

mindful of the ever critical role of Change Management and

how important it is to ensure people are “part” of the change,

and not merely “subject” it.

..And don’t miss the Continuous Improvement Enablement

Milk the Cow (Investment) till it is time to buy another

(Transformation 2.0)

reached it capability using the existing technology.

5. Benefits are the reason “WHY” we do the

transformation: (Benefits realization & governance) But,

our experience suggests that most of the organization

spends relatively very less time in estimating, reviewing

and tracking the “benefits” as compared to planning for

“Time” and “Cost.” A quick look at meeting schedule of

a Transformation program leaders or project managers will

provide a glimpse of how little time is spent on benefit

tracking in comparison to time spent on managing time

and cost. Successful transformation program spends equal

amount of time in estimating and tracking benefits as it does

for Time and Cost. Transformation team needs to be enabled

with a robust reporting framework which not only tracks

status of the gap between estimated versus actual benefits

but also links the underlying driver metrics with savings.

6. Planning is good, but execution is king: (Project

management & change management) Organizations make

“Successful Transformation Programs ensures following questions are discussed, decided and communicated at the highest level in the organization”• How will we ensure that performance drop during & after implementation is minimum & ROI is maximum?

• Are we putting the CART before HORSE during design phase?

• Is our IT Architect accompanied with Process Architect in planning session?

• Are we ensuring people have been on-boarded towards ONE common goal?

References:

1. Trends in Business Transformation Survey of European Executives - The Economist Intelligence Unit

2. “Best Practices in Change management” Prosci Benchmarking report 2013.

3. Change Agent Team, Mckinsey Quarterly

4. MIT- Study 2011 “Digital Transformation Review”

5. “July 2008, McKinsey Global Survey Results Organizational Transformation”

Bibliography

• “TheHeartofChange”JohnP.KotterandDanS.Cohen–HBR.

• “TransformationTrends2012–CapgeminiConsulting”

• Hammer,M.,(1990).“ReengineeringWork:Don’tAutomate,Obliterate”,HarvardBusinessReview,July/August,pp.104–112

• MichaelHammer,JamesA.Champy:(1993)ReengineeringtheCorporation:AManifestoforBusinessRevolution,HarperBusiness

Books, New York, 1993, ISBN 0-06-662112-7

Acknowledgement

• Illustration1:SBala-SVPGenpactReengineering&NitinJain-VPGenpactReengineering.

About Genpact

Genpact Limited (NYSE: G) is a global leader in transforming and running business processes and operations. We help clients become more competitive by making their enterprises more intelligent: more adaptive, innovative, globally effective and connected. Genpact stands for Generating Impact for hundreds of clients including over 100 of the Fortune Global 500. We offer an unbiased combination of smarter processes, analytics and technology through our 60,000+ employees in 24 countries, with key management based in New York City. Behind Genpact’s passion for process and operational excellence is the Lean and Six Sigma heritage of a former General Electric division that has served GE businesses for 15+ years.

For more information, visit www.genpact.com. Follow Genpact on Twitter, Facebook and LinkedIn.

© 2013 Copyright Genpact. All Rights Reserved.

About the Authors:

Aamir Masood and Vaibhav Bisen are Assistant Vice Presidents for global reengineering services at Genpact. In their role, they are responsible for leading business transformation and process reengineering initiatives to deliver business impact to Genpact’s clients in Manufacturing & Services (Americas region) and Banking, Financial Services & Insurance Industry vertical (Africa region) respectively.

To contact the authors, please write to:

aamir.masood@genpact.com or vaibhav.bisen@genpact.com