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The Challenges of Digital Transformation in Business Services

There is no doubt that the fourth industrial revolution is radically transforming the way customers interact with products and services. Technology has empowered consumers to decide which products or services they demand and the channel through which they receive them.

Uber or Airbnb are examples of business models that have been reinvented to better adapt to the needs of customers. Organisations are forced to become more flexible and dynamic without losing efficiency and profitability.

This is the scenario that challenges business services to become strategic partners of the business units providing the tools needed to thrive in an uncertain environment. Business services are required to do more than just outsource tasks to achieve a reduction in labour costs; they are required to be strategic partners and suppliers of the necessary skills to execute the company's strategy. One of the most relevant aspects of this empowerment is the digital transformation of business services and the organisation.

Although several organisations report some maturity in the most basic digital skills such as self-service tools or workflows, few are those that master advanced skills, such as process automation, real-time monitoring or analytics.

According to a study conducted by The Hackett Group, 95% of business service leaders believe that digital transformation will lead to breakthrough changes in their operating models. However, only 55% have a formal strategy to carry out this transformation, and only 40% have the resources and skills to execute this strategy.

This means that there are gaps in teams' skills to implement and lead this transition.

Moreover, in uncertain times of unpredictable events, such as a pandemic, asking the right questions and having the ability to adapt and anticipate are key skills that digital tools can leverage.

However, managing this transformation in business service teams brings complex challenges. Most of these services are focused on achieving the biggest financial gains as quickly as possible. This mindset leads to a preference for making quick transitions and working on improvements later. Typically, the consequence is that improvements are never actually implemented because the day-to-day routine absorbs all the teams' time.

As business services become more mature, they evolve from merely extracting transactional tasks from business areas to becoming true process efficiency units, aligned with operations. This integration between business units and services requires a transparent, continuous and relevant flow of information that can only be achieved by combining process reengineering with technology.

The potential for applying digital tools to optimise the operations of any organisation is practically infinite. However, for business services there are areas where digital is having a greater impact in creating value for business areas.

Analytics

Analytics is one of the best tools to help an organisation to navigate. Technologies like machine learning or artificial intelligence extract patterns from past data and turn them into instructions. These models quickly become obsolete when historical inputs and data changes or is no longer representative.

In contrast, the use of analytics makes it possible to identify when the rules of the game are changing and thus alerts to unexpected changes. The banking sector, which last year suffered a significant shock, represents proof of the success of this tool in early risk recognition. Since the 2008 financial crisis, the need to use different data sources to analyse the risk of loans provided to customers (such as data from supermarket loyalty cards) has become apparent.

The intelligent use of analytics means not only being able to answer questions accurately, but also being able to ask the most relevant questions. To do this, it is essential to combine technology with deep analysis of business drivers so that analytics can provide valuable insights to the organisation that improve strategy planning and execution in addition to budgeting and forecasting tasks.

Customer interaction

Integration with business units, i.e business services customers, implies a customer-centric (internal) mindset - always putting the customer first. This competence can also be leveraged with technology through the production of personalised and accessible services.

One of the most frequent applications of this concept is the use of virtual assistance interfaces or virtual assistants (chatbots). The implementation of this tool is a consequence of the customer journey mapping exercise. This exercise makes it possible to identify the pain points in the customer experience and recognise which processes need to be redesigned to optimise it - this is the starting point that ensures a holistic view of customer interaction.

Process optimisation

In business services, several repetitive and rule/decision-based tasks are still performed manually. Although RPA (Robotic Process Automation) is not an intelligent or cognitive technology, it is very effective in eliminating human time dedicated to repetitive tasks in addition to leveraging the digitalisation of operations.

Here again, it is essential to adopt a methodology of prior analysis of critical processes, prioritisation and reengineering before starting the RPA implementation journey. This approach ensures that the most critical processes, which generate too many errors or take up too much time, are optimised. In fact, this waste would be easily eliminated and thus not automated.

Undoubtedly, technology is an accelerator of business service efficiency. The disruption lies in the use of technology as a tool to generate cost reduction and increase the value delivered to the business units. From this perspective, process transformation and reengineering are as important as the implementation of the digital tool. To be able to carry out this intelligent transformation, it is fundamental to develop a culture of continuous improvement that ensures the sustainability of the results and transformations achieved.

#business services #digital transformation

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