Separating Fact From Fiction In Digital Transformation ROI

by Neal Oswald

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As a former CFO and COO, I have witnessed many ROI fairy tales. 

Today’s finance chiefs are probably getting told many Alice-in-Wonderland stories about the benefits of digital transformation. Promises are made, assumptions are compounded, and time money, resources are allocated and spent. Many CFOs are justifiably skeptical of “digital transformation promises.” Digital transformation business cases generally have a poor track record of benefits realization flowing through to the results you are seeing in your monthly P&L. In fact, according to a 2021 report by McKinsey & Company, approximately 70% of all major transformation projects fail. 

Promises of new customers, increased sales, new products, improved net promoter scores, lower costs and improved operating leverage are all in the “digital promises” playbook, but are they truly materializing, or are they entirely fictional? Let’s go down the rabbit hole for a minute. 

What if you could clearly see and estimate the impact of newly designed or re-engineered digital processes and measure your inline client, employee, and partner experience – before you started the transformation? If you knew this, you’d have a baseline from which to measure the success of the digital transformation. You could in essence compare the old and the new. If you could see this then, you would know the true cost of onboarding, servicing and fulfillment for these “new” channels, partners, and products. Knowing this you could calculate the volumes, costs, revenue, and ultimately ROI. 

Using the right process mining and task mining software, CFOs can see – with full detail – what individuals and teams do in the end-to-end digital process. Digital process instrumentation and its cousin, digital process mining, make processes truly transparent and measurable. The key here is that this type of software records what people do – every key stroke, every look up, every query etc. The value of this type of software is “understanding” what’s happening. This insight is now available using process and task mining tools, better yet, its affordable and quick. 

Before process and task mining software, you’d have to hire a team of consultants to document the processes based upon staff interviews, process walk-throughs and a review of process documentation. This traditional method of process documentation was labor-intensive, inaccurate, and slow. With process mining, full operational transparency, process instrumentation and measurement are now affordable and possible.  

Process instrumentation, transparency and measurement change behavior in three ways: 

  1. If people know that outcomes will be measured using automated tools, they are less likely to overpromise and underdeliver. 
  2. When business cases are developed, they are based upon explicit process performance drivers – business volumes, task time, cycle time, quality, and cost. 
  3. Baseline measures also help determine the highest priority, most impactful, best returning automations and digitization initiatives  

Fully automated process mining and task mining tools are available from companies like StereoLOGIC – a company I’ve been recommending and using as a consultant for years. This software can generate and visualize a digital twin of the actual work that is performed in the value stream. The result is a fully transparent landscape of timings, statistics, cost estimates and process documentation that will change the dialogue within and across teams. 

Several use cases come to mind that help digital transformations succeed and deliver the promised results.  

Decide what to automate. Process and task mining can be used to identify where automations would be most impactful by enabling the quantification of manual work, error correction cycles, additional reviews, and idle wait times.  

Resolve internal debates between departments. Process and task mining can be used create transparency around client service and client experience (CX) issues. Process and task transparency will change the dialogue between departments - for example if IT says the delay is a user training issue and the users say it a spinning wheel system delay then, evidence can be prepared to see exactly what is causing the service and CX issue. Detailed process documentation can then be used to determine possible remedies to address the root cause.  

Enable cross-team comparisons and the adoption of best practices. Often teams find ways to work around system limitations and constraints. Typically, these home-grown ways of working are not shared. Discovering what is really happening and sharing what others do typically results in teams finding a better way to execute their work. In some situations, these benefits are realized without automation, or they highlight a very beneficial automation.  

Using a tool like StereoLOGIC helps teams and individuals see their processing activities and tasks in the context of the end-to-end process. Leaders can also quickly see how the technology is enabling or disabling the front line. This change in dialogue enables culture and performance changes that impact the client (CX), employee (EX) and partner (PX) experience. 

Business cases become fact-based, rather than imagined, as the cost and benefits from automations and process improvements can be quantified, seen, and discussed. Deploying software like StereoLOGIC will help you know the benefits of automation and digital transformation before you start – making sense of the chaos and applying logic to come to a proper solution, much like Alice had to do before leaving Wonderland. 

Neal Oswald is a former CFO, COO and Partner from Ernst & Young and PwC.