[vc_row][vc_column][vc_custom_heading text=“Value-Driven Digital Transformation: Performance through Process“ font_container=“tag:h2|font_size:38|text_align:left|color:%23e30613″ use_theme_fonts=“yes“ css=“.vc_custom_1561725646490{margin-top: -25px !important;}“][vc_column_text]Mathias Kirchmer, Managing Director and Co-CEO, BPM-D; Affiliated Faculty, University of Pennsylvania[/vc_column_text][vc_custom_heading text=“In short:“ font_container=“tag:h3|font_size:17|text_align:left|color:%23ffffff“ use_theme_fonts=“yes“ css=“.vc_custom_1561725692108{padding-left: 15px !important;background-color: #f07d00 !important;}“][vc_column_text css=“.vc_custom_1562147494057{border-top-width: 1px !important;border-right-width: 1px !important;border-bottom-width: 1px !important;border-left-width: 1px !important;padding-top: 10px !important;padding-right: 10px !important;padding-bottom: 10px !important;padding-left: 10px !important;background-color: #eaeaea !important;border-left-color: #aaaaaa !important;border-left-style: solid !important;border-right-color: #aaaaaa !important;border-right-style: solid !important;border-top-color: #aaaaaa !important;border-top-style: solid !important;border-bottom-color: #aaaaaa !important;border-bottom-style: solid !important;border-radius: 1px !important;}“]

Businesses have in general a solid management discipline around their products and an understanding of their people and information technology management. However, often the discipline around their business processes is missing or at a low maturity level. This is a significant challenge since new or enhanced processes deliver at the end the value of a transformation. If a company sells compressors and connects to them through the internet, nothing really changes. Only if it establishes processes that leverage this connection, for example for preventive maintenance or the realization of a new business model to sell compressed air as a service, the digitalization provides its full value.

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If a company sells compressors and connects them through the internet, nothing really changes. If they leverage their idea, for example through data-driven predictive maintenance, predictive quality and products-as-a-service, these new processes become valuable. In the end the BPM-Discipline becomes the value-switch for the digital transformation journey.

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Global research shows: over 75 % of organizations have started their digital transformation journey [1]. They expect to increase their performance drastically. However, the study also shows that most businesses are struggling meeting the high expectations through their digitalization initiatives. Successful transformation projects show that processes are key and in the end the BPM-Discipline becomes the value-switch for the digital transformation journey.
Digital Transformation is about the systematic integration of physical products, people and processes through the internet of things (IoT) and related information technology (IT) [2][3].
Businesses have in general a solid management discipline around products they produce or buy. They normally also have an understanding of their people and information technology management. However, in many cases the discipline around their business processes is missing or at a low maturity level [4]: according to an analyst study only 1% of organizations have their processes sufficiently under control to realize the full business potential of their digital transformation. This is a significant challenge since new or enhanced processes deliver at the end the value of a transformation. If a company sells compressors and connects to them through the internet, nothing really changes. Only if it establishes processes that leverage this connection, for example for preventive maintenance or the realization of a new business model to sell compressed air as a service,
the digitalization provides its full value. This is the challenge that Value-driven Digital Transformation (VDT) addresses: It enables significant business performance improvements by leveraging the power of process management as “value-switch”.
VDT identifies the processes that matter most for an organization. Then it transforms them holistically applying the right digitalization approach in an end-to-end process context. Finally, VDT sustains achieved results by governing processes appropriately.

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Companies only compete through 15-20% of their processes [5]. The other 80%+ are commodity processes that are necessary, but their performance can be at industry average. Digital tools mainly serve to achieve average efficiency. This is different for high impact processes. For those processes, more elaborate transformation and innovation approaches are justified and often required. Related projects have a higher priority. High impact processes that have, compared to other organizations, a lower maturity and performance level, are the best improvement targets. Digitalization initiatives that move those processes to the next performance level deliver most value for an organization [5]. However, many businesses don’t know what their high impact processes are. High impact processes can be identified systematically through an assessment of the impact of each process on the business strategy, represented through appropriate value-drivers [6]. Value-drivers describe what an organization needs to get right to make its goals happen. The impact of each process on each value-driver can either be estimated or identified through a detailed analysis. Practice experience has shown that an expert estimation is in most cases sufficient. Since the business environment and the strategy of an organization changes more and more frequently, it is necessary to adjust a process impact assessment accordingly. Figure 1 shows a process impact assessment matrix linking processes to value-drivers [7][8].

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Adjusting the weights of value-drivers or adding or removing drivers allow for the comparison of different scenarios reflecting different business situations and strategies. Transformation projects are defined and prioritized based on the processes they target. If the goals of an organization and with that the impact of processes change, project priorities are adjusted accordingly. The resulting dynamic project portfolio management allows to deliver best value through digital transformation. This is the foundation of VDT.

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Scope and direction of the process transformation are identified by looking at the process from its customer point of view. These process- customers can be external clients but also suppliers, employees or other stakeholders. A formalized customer journey map identifies touch points with the organization relevant for a specific area and helps to understand current and desired customer experience and with that the overall dimension of the transformation. This creates the basis for the related business case. The improvement in customer experience also gives hints regarding the best suited digital technologies: Artificial Intelligence (AI), face-recognition or analytics approaches help, for example, to achieve a higher personalization of the interaction with clients or robotic process automation (RPA) enables higher efficiency, e.g. to pay for valid insurance claims faster [9].
A detailed analysis of the underlying business processes identifies specific improvement potentials, delivering the baseline for the business case of the digital transformation. To accelerate this analysis process modelling and mining tools play an increasingly important role [10][11] in a rapidly changing business environment.
The to-be design of the processes in scope reflects the capabilities of digital technologies as well as their alignment with people involved in the process. It allows the finalization of the business case delivered by VDT. Process reference models reflecting the business impact of digital technologies can be used as a starting point and powerful accelerator [11]. Since many of the digital technologies, like automation platforms, can be used flexibly it is important to make their business impact transparent. This also simplifies an enterprise-wide rollout of transformed process.
The digital to-be process model is basis for the technology implementation as well as people change management [11]. It guides detailed selection and configuration of the digital tools. In parallel it helps people understand how to work in the new business environment. In many cases the roles of people have to be entirely redefined, for example to handle exceptions and have robots deal with the routine standard cases. Result is a hybrid workforce that has to be managed appropriately.
Since many of the digital technologies are cloud-based [12], business processes become the main asset of the organization. It is required to manage them systematically using appropriate tools [11].

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sustain transformation results and keep the related business processes on track, a process governance approach is required. This defines how the performance of a process and the success of a digital transformation is measured and managed after projects have concluded [5], [11]. It ensures the value-realization. Process-owners, for example, have to initiate new transformation initiatives or correction activities when appropriate. Process stewards provide the arms and legs for the owners to enable the execution of activities. Process sponsors and governance bodies set the direction and resolve conflicts, e.g. with functional leads of the organization or between business and IT team members.
A financial organization, for example, went through a major digital transformation with sophisticated process automation. Their goal was to increase agility while maintaining legal compliance. However, when initial change requests for processes and underlying technology came up, it turned out that the required agility was not that easy to achieve. Changes in one functional unit often have impacts in other areas. Hence, the traditional functional management did not work anymore. Process governance was established as “value-network” across the traditional functional organization. In the digital age this enterprise-wide view is a critical digitalization component. Figure 2 shows an example of a simple process governance organization implemented in a health research organization.

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Business process management is established as the overarching management discipline [13] organizing process governance and integrating it with the organization. Thus BPM-Discipline becomes the value-switch for the digital transformation journey, setting the right priorities, improving what matters most and sustaining the transformation results. It makes Value-driven Digital Transformation happen.

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