Reinvention and constant modernisation sit at the heart of business transformation. Through consistent evaluation of processes and operations, companies are better able to scale and evolve in step with the pace of the market.
IBM defines business transformation as the “wholesale rethinking and restructuring of an organisation’s business planning, operations, technology, development, and customer experience to achieve business goals”. This is one side of the coin. The other is to approach business transformation as a methodology, one that takes it beyond hype to deliver actual value for the organisation. Too many companies are investing in the technologies purported to drive this transformation, only to see limited returns on their investments.
The statistics point to a stark gap between what business transformation promises versus what it actually delivers.
The challenge is finding a clear path through hype and technology so investment delivers measurable value. This is found, says McKinsey, by having clear goals and valuecreating targets, moving quickly, and focusing on initiatives of all sizes, which it calls “rocks, pebbles, and sand”. It says roughly 55% of transformation’s value comes from small initiatives.
“For us, business transformation has to be supported by a business case,” says Brent Flint, services executive at NTT Data. “The danger for a technology organisation is that we have technology experts wanting to transform for the sake of the technology. We realised that during our transformation process, we had created confusion in the market because all our technologies overlapped. We needed to transform our business with our customer in mind.”
Prioritising the business case as the foundation for transformation is exactly what EY identified as central to success. The firm found that transformation is a continuous journey defined by business objectives and the market within which the business operates. It is also driven by relevance. EY’s survey found that 65% of companies restructure for growth, 62% to take advantage of digital opportunities, 77% to transform operations, and 75% to transform technology.
Stability and clarity
Business transformation needs stability and clarity. What’s working? What isn’t working? How can the business incrementally transform to achieve value? These are the questions asked by Old Mutual throughout its business transformation process.
Donald van der Merwe, programme executive at Old Mutual Africa, says it’s a large and complex business with 115 entities across 12 countries, and it needed to find a way of automating and optimising how its finance capabilities work. “We had a vision to enable finance to become a strategic partner to the business, delivering insights and decision-making support while still providing their core capabilities across accounts payable, receivable, and others. But we needed to find a better way of supporting the business while leveraging the data to provide real-time insights for decision-making.”
Transformation’s ROI
It was a clearly defined goal. Achieving it meant undertaking a finance transformation programme that standardised all the general ledger systems from across all the countries onto a single, standardised platform. The company also wanted to be on Microsoft’s Dynamics 365 Finance and Operations platform as it had the scale and customisation tools needed to incorporate the complexities of the business. It was not, as Craig Fidler, overall project architect at Braintree, highlighted, an easy project: “It spanned multiple counties and regulatory bodies with very different business units, which was a heck of a factor for us. Are we experts in Rwanda? No, we’re not. This project had to be done in tandem with Old Mutual to ensure the initiative gave them what they were looking for.”
“We believe transformation lies in how we use the technology to service our customers.”
Sumarie Greybe, Naked
Taking the collaborative approach echoes what the Harvard Business Review believes about digital transformation – it needs the right talent to succeed. It should also add clearly defined change management, modern architecture and approaches, and a solid operating model to its roadmap if it wants to see value. And there is value. When McKinsey’s Finalta benchmark across 80 global banks was combined with McKinsey’s Corporate Performance Analytics to assess success against financial metrics, the results were impressive. Those companies leading in digital and transformation initiatives saw an improved pre-tax tangible equity growth from 15.5% in 2018 to 19.3% in 2022.
It’s a journey, says Sumarie Greybe, co-founder of Naked Insurance. “We’re constantly transforming because technology is constantly changing. At the moment, we’re looking at how large language models can speed up our automation and self-service capabilities because our focus is on using technology to allow people to self-serve in a way that hasn’t been possible before.”
It’s a reimagining of insurance that Naked has adopted for several reasons, one of which is to reduce the cost of insurance. This is the same driver behind the use of technology to transform life insurance policies with Simply Financial Services, another investment vehicle for the Hollard Group that also has seed investment in Naked.
“We’ve set out to transform the business by using technology to help people get more cover for the same money, or as much cover for less money,” says Anthony Miller, CEO at Simply. “As a result, we see our products being used for replacement policies as people start refining their investments – we make it easy for them to consolidate or replace inefficient policies.”
Through transformation, companies can see a real return on their investment – there is proven value. Achieving this value lies in a granular process and consistent reinvention, not forcing the latest technology into a round hole.
* Article first published on brainstorm.itweb.co.za
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