Organizations invest in software with the idea that the new tools will deliver a variety of benefits. Some benefits are more qualitative, such as an improved user or customer experience, but others can have a direct impact on your bottom line. Whether it's an asset management solution, payroll system, or procurement application, technology has the ability to save organizations substantial amounts of money by streamlining your business processes. But actual savings are often difficult to quantify, especially if you don't have a firm understanding of how your systems are performing today—your as-is state. Without this knowledge, it's very difficult to determine how much benefit a new system is bringing to the business.
It's therefore imperative to obtain as deep an understanding about what's going on in your business processes now before embarking on any software transformation. It's the best way to establish a solid starting point against which you can gauge the success of any cost saving measures you implement.
Turn insight to action on cost-cutting strategies.
So, what is the best way to cut business costs? One obvious way is to eliminate as much inefficiency from your processes and workflows as possible. Doing so can have a dramatic impact on your employees, customers and constituents, and your bottom line. For example, according to a recent McKinsey article, a manufacturer discovered inefficiencies within its order-to-cash processes that equated to 3–5% of its total EBITDA. Eliminating these inefficiencies would deliver the "... equivalent of millions of dollars in new business."
Some organizations take a more ad hoc approach to rooting out inefficiency, but this is not the best way to achieve broader business cost reduction. For a more comprehensive business process optimization initiative, follow these steps to gain insight into your processes and then turn that insight into action:
- Map your current state: If you don't have a clear view of how well your processes are performing now, it will be impossible to quantify the improvement delivered by any steps you take in the future.
- Evaluate where the opportunities lie: Once you have that clear picture of your as-is state, you should immediately see a variety of opportunities for optimizing your processes to deliver cost savings.
- Set goals against measurable key performance indicators (KPIs): Just wanting to deliver "improvements" should never be enough. You need to set actionable goals against measurable KPIs, such as a 5% reduction in operating expenses, a 7% decrease in administrative costs, or 10% lower labor costs, for example.
- Implement, quantify, and continuously monitor optimization measures: Achieving real business value from your optimization efforts is not a "one and done" activity. Once you've implemented measures to improve process efficiency, you need to evaluate them to determine whether they're delivering the desired impact, and make adjustments regularly to reach or even exceed your goals.
Process mining delivers data-driven insight into your processes.
Gaining insight into how well your processes perform has traditionally been an inexact science. Relying on conversations with people who perform individual tasks can give you an incomplete picture of what's going on in the end-to-end process. Their input can also be subjective and carry unconscious biases. A better way to get the real picture of what's going on in your processes is to use a process mining tool.
Process mining provides a purely objective, unbiased means of discovering exactly what takes place at every step within your processes. It uses the data created by the systems that support your processes to create a map of every task, every decision and movement, in order to highlight what's working well and what's not. The result is what's known as a spaghetti diagram, which brings to light all the areas where important steps are skipped, unnecessary duplication occurs, bottlenecks slow your processes, or activities are taking place that could introduce risk to your business.
Say for example you were to process mine a process within your supply chain operations. The tool would show any areas where your employees have to enter data into multiple systems that don't communicate with one another, where manual approvals needed to shift inventory are holding up production, or where you lack insight into where goods are when they're in transit with your logistics provider. These are all issues that could cost valuable time and money and keep you from running your business operations at an optimal level.
Intelligent process mining unlocks ... value by automatically discovering process flows, providing sophisticated tools to analyze process behaviors, helping you optimize productivity, customer satisfaction, and quality of service. Then, monitor process execution in near real-time to sustain peak performance.1
Process mining makes cutting costs easier.
Of all the technologies that can help you cut costs, why is using process mining the best business decision you can make? There are many reasons, but let's take a look at the top four:
- It's universally applicable. When it comes right down to it, all industries and lines of business are now process heavy. Whether you work in a financial services firm and are in charge of setting up new customer bank accounts, or are responsible for maintaining an inventory of office supplies at your small business, or you oversee a marketing team that develops content for a technology provider, you deal with processes that are probably not as efficient as they could be. Process mining can deliver meaningful insights regardless of the industry, sector, geography, function, or department where the process runs, which makes it so much more valuable than any single other cost reducing effort.
- Sure, it can root out inefficiency, but it can also pinpoint noncompliant or high-risk activities. The longer your processes run and the more people and steps are involved, the harder it is to maintain comprehensive oversight over everything that goes on within your processes. Even when you employ the most painstaking diligence and careful planning, you may still be vulnerable to risk. Noncompliance from within and risk from outside your organization can be effectively uncovered and dealt with when using process mining to discover everything that goes on in your processes. This helps organizations avoid the often exorbitant fines that accompany noncompliance or breaches.
- With process mining, you're getting at the root cause of inefficiencies. If you go the traditional route for optimizing processes and interview the stakeholders involved, they'll tell you what they feel isn't working well, but you won't necessarily learn why those things aren't working well. This is an important distinction, because without that insight into why you're experiencing inefficiencies, you'll lack the ability to take action on the issues. Using process mining to surface the root causes of the issues makes them actionable.
- Process mining can provide a road map for your continuous optimization/automation initiatives. Let's face it, automation initiatives don't always deliver the desired results. A failed initiative could not only negate the anticipated cost savings but could also end up costing you more money over time. With the highly visual method employed by process mining tools, you have a better view of where and how automation technologies can be deployed to deliver the kind of results that will positively impact your bottom line.
Your cost-cutting strategies should include process mining.
Every organization wants to be lean and minimize unnecessary costs. Especially for larger organizations, there are countless areas where inefficiencies can creep in and send your costs skyrocketing. Instead of guessing where your opportunities for optimization lie, use process mining to provide data-based evidence of where you need to focus your efforts. Then, once you’ve implemented measures to make your processes more efficient, process mining becomes an even more invaluable tool for achieving ongoing, long-term, continuous improvement.
Want to learn more about process mining? Get the eBook: Process Mining Guide - Optimize Your Business Processes.
1 Intelligent Process Mining in Robotic Process Automation, Ryan M. Raiker, July 2018
