Digital Transformation Requires Detailed Scrutiny of Business Process Management KPIs and OKRs
While technology modernization and integration are, of course, essential to enabling a digital transformation, business culture and business processes are equally important components.It is business process management that ties together the cyber-physical ecosystem – information, employees, products, and customers – and aligns them to strategic objectives.
By incorporating advanced analytics, activity monitoring, and decision management capabilities, business process management suites are able to coordinate people, systems, and information and material to achieve business outcomes. As a result, they have been particularly helpful in accelerating digital transformation strategies.
— IBMi
As we note here, assessment and planning – the critical first step in any digital transformation strategy – should establish performance measures and anticipated outcomes across four key areas:
In this post, we focus on business process management and the role of clearly documenting outcomes and key results (OKRs) and defining key performance indicators (KPIs) to create a transformational strategy.
Focus on the vital few.
There are multiple reasons why less than 30% of companies that have executed a digital transformation report them as meeting their objectives or sustaining any benefits gained.Among them, going too big too fast looms large as a prime causal factor.
Consider how many business processes (and types of processes from automated to systems-based to human-touch) exist in your organization across all lines of business and functions. Attempting to define, measure, analyze, test, and improve all processes at one go will not only prove disruptive to the business but will likely fail.
The path to successful and sustainable digital transformation success is execution that is holistic, robust, and focused.
Capability Maturity theory suggests that firms need to develop digital transformation capability incrementally by focusing on a ‘vital few’ improvement priorities for advancing progress…To succeed, firms should be incentivized and supported to think beyond technology….
—Lilla Hortovanyi, et al.ii
If focusing on a single process may be too narrow to achieve transformational goals,T42 suggests focusing on a single line of business or function. For example, if your goal is to increase customer satisfaction, focus on those processes that directly impact customer satisfaction, and will most advance your strategic goals.
Develop the metrics that matter (KPIs & OKRs)
Digital transformation is not an event. It is a process. A journey. And like any journey, a detailed roadmap is required. There are three critical points of reference:
- Starting point (current state)
- Where you want to be (desired future state), and
- In-process indicators that you are on the right path
Key performance indicators (KPIs) that map to outcomes and key results (OKRs) are your points of reference. Crucially, OKRs, not KPIs, define the desired outcome(s). Remember, your end goal is not to improve processes, it is, as in our example, to enhance customer service.Improving the related business processes is just a means of achieving that goal.
KPIs quantify your starting point, provide signals that you’re on the right track, and help quantify results (e.g., improving customer satisfaction by 25%). Keeping on the right track is a key reason why an agile development approach that incorporates iterative testing and feedback is so important.
It is the stakeholders that define the OKRs and KPIs and through this process gain agreement on what has the most value and where to focus. To do this requires
- Business Process Mapping
Determine the processes that support the LOB or function targeted for transformation and most impact your end goals. - Channel Process Mapping
Document and assess the support (e.g., finance, IT, operations) processes that directly impact outcomes. - Develop OKRs
Carefully detail the outcomes sought and quantify the desired results. Detail and measure the attributes of the processes that are impeding those results (such as information flow, error rates, speed, etc.). Importantly, this could include human-centric processes involving decision-making, and access to information. - Develop KPIs
Measure current business process performance. Ensure what you are measuring matters to outcomes. (Measuring the wrong attributes is distracting and burdensome at best. Worse, it will sustain and can shift or mask failure points. If the goal is to improve company-customer data flow, then focus measurements on data flow, not some other attribute (unless it is a contributing factor).
With OKRs defined and KPIs agreed, measured, and continuously updated throughout the digital transformation journey, you will have an effective roadmap, the means to stay on target, and the ability to demonstrate that you have achieved both the qualitative and quantitative outcomes sought.
About Transform 42 Inc.
T42 is a digital transformation specialist relentlessly focused on delivering targeted, measurable, and sustainable outcomes against clearly defined success metrics. Deploying a people-first strategy, we implement tooling, modernization, and process enhancement that enable people to interpret, develop insights, and act on that data to better serve the business and its customers.
T42 partners with our clients to design and implement digital strategies that survive growth and change.
i What is business process management?
