For this blog post series I’ve teamed up with my colleague Lukas N.P. Egger, Head of Innovation Office & Strategic Projects, Business Process Intelligence, to share our personal views around business transformations and the future of business processes.
In the following is the second installment of our three-part series. You can find the other parts in the SAP Community as well. Part One: “The Future of Business Transformation are Processes” and Part Three: “Open Process Platforms as the Next Paradigm of the Cloud”.
For more than 100 years it was clear what a car manufacturer was. A company that designs, builds, and sells cars. A decade ago, this simple idea started to tear at its seams. New versions of old business models like car sharing had a revival. Powered by digitalization, the act of renting a car became radically easier. Instead of having to travel to a central hub to negotiate with a sales representative, one could pick up a car by the click of a button. At the same time, cars themselves have changed too. For the longest time a car was defined by its mechanical parts, horsepower, fuel-efficiency, etc. This slowly transitioned into the electric and digital domain. Engines started to be electric and the biggest cost of production, respectively the most differentiating features are digital, like autopilots and on-board entertainment systems.
Consequently, car manufacturers started to fashion themselves not as metal processing producers of cars, but as global service companies specialized in mobility. Those who lag behind in this fundamental transformation are in danger of becoming the workbench for emerging technology providers.
The car industry is a cautionary tale for all industries not attuned to customers
The transition car manufacturers underwent in the last two decades can serve as an analogy for other industries as well. Instead of selling the applications which enable customers, like cars enable drivers to get to their destinations, any company should think of themself as service companies first. This of course, also holds true for software vendors like SAP. Instead of getting customers from A to B, they specialize in offering processes that move entire companies from state A to B. What mobility is to cars is business outcome to processes. And the sooner software vendors embrace this mantra, the faster we will have new and exciting business models. Otherwise, if software vendors miss their opportunity to move into that direction, then they will be relegated to serve as a transactional layer only.
But how do we get there? And what does it mean in the context of SAP’s newly formed business process intelligence portfolio?
Creating business value has become a question about data
Software companies run most of the world’s critical business processes. The challenge today is how to translate an on-premise world into an enterprise cloud world. In the former scenario it’s all about owning and handling processes on a single company level. This is not good enough any longer. Businesses need more than transparency. They need the ability to make informed decisions based on live data. This entails not only the availability of data but also the interpretation and benchmarking of that data from a business point of view. This provides the much-needed context so that business functions and processes can be aligned.
In other words, owning hard and software has become less important for businesses. It has become far more important to understand and contextualize information to create actionable insights. And because of that, the area of business process intelligence (BPI) has seen a sharp uptake in acquisition and news coverage. SAP committed itself to this market by investing into this new portfolio and through the acquisition of Signavio.
Process Management includes many parts that need to work in lock-step
BPI’s promise is to build a common foundation for business processes and business transformations. In the long run, BPI will drive business process insights and business process improvements by decoupling applications from their processes via a semantic business process layer.
As a first step it is important for businesses to analyze, understand, model, improve and govern their processes in a data-driven way. This is a necessary step to create and validate recommendations. The objectives for this layer are the collection of differentiating data assets, the company’s process profiles.
As a next step potential innovation and automation use-cases are pushed to the business process improvement layer. There, automatization tools like for example intelligent RPA, Low-Code/No-Code tools, and workflow management are used to improve the processes. Business transformation is an end-to-end approach and companies with a comprehensive portfolio will be able to better leverage their scope.
Process Management is a steppingstone for bigger ERP innovations to come
Generally, cloud offerings provide more flexibility to customers. Even more so if businesses differentiate and focus on their core value proposition leaving the standard business processes to best-in-class SaaS offerings. For these standard business processes the primary goal is to provide them fast and cheap with guaranteed outcomes. As software vendors manage more parts of the end-to-end business more opportunities arise to add process intelligence and push automatization to its highest degree.
This vision of modularized processes is based on the capability to change processes and configurations on the fly. Such a change is not incremental but represents a new ERP paradigm which makes processes orders of magnitude more adaptable. This in turn will spur further innovation like for instance personalized and contextualized user interfaces.
Eventually, companies will think less about software applications, and instead will think more about business outcomes and the services that go with them. This would be the biggest potential disruption of the ERP world.
In essence, transparency across processes will be key to achieving guaranteed business outcomes. This in turn requires actionable and data-driven insights to make informed decisions. A deep integration of process intelligence and process automatization. And altogether with the flexibility of the cloud, the blurry vision of modularized processes has turned into a tangible reality.
To delineate such a momentous change in the business world, this agile re-imagination of processes is referred to as Business Process as a Service (BPaaS). In the next and last installment, we will shed more light on what BPaaS is and what it entails.
What is your take on the topics of business transformation and Business Process as a Service? Please share your feedback in the comments below or raise your specific question in the SAP Community by using the Business Process Intelligence Q&A tag.