Process-related trends in operational excellence

Mention the term operational excellence (OPEX) and most people will instantly think about companies like Toyota and General Electric (GE), but what really is operational excellence and how important is the concept of business processes within this practice? Even more importantly, what process-related trends do we see in the market and across industries for 2024 and maybe beyond?

Join a panel of thought leaders exploring the essential trends that will shape business transformation and operational excellence in 2024.

What is operational excellence?

There are lots of different definitions for OPEX. According to PEX Network, it means:

“Operational excellence is an approach that aims to make an organization’s processes more efficient. Its ultimate goal is to ensure customers’ expectations are met, while the company’s operations are continually improving.”

To add to that, IBM states that OPEX emphasizes continuous improvement across all aspects of the business and within the operational processes, creating a culture where everybody can implement change.

Two things that stand out from these definitions are 1) continuous improvement of processes and 2) creating a change-ready culture. We sometimes also refer to point 1) as process excellence, although this typically goes further than ‘just’ continuous improvement of processes. However, when you’re looking to strive for OPEX, those additional activities in process excellence can play an important role in your endeavors towards OPEX. Think about process management and ownership, or process governance, very often topics that are not part of continuous improvement of processes but are part of process excellence.

Now, the premise behind the concept of the business process is that it aligns the who, what and how of the work that needs to be done. In the end, most organizations want to transform input into output and make money doing that (because value is added along the way). This means that you need to do something (and whether this is physical or digital makes no difference) and you want your employees to spend their time as efficiently and effectively as possible

Complexity of modern organizations

If you consider the enormous complexity of modern-day organizations and the regulations they need to comply with, the digital infrastructure and the pressure on cyber security, the physical goods flows and the extensive financial reporting requirements, it becomes easy to understand that this alignment between the who, the what and the how is paramount. Figure 1 (above) visualizes this complex web of dependencies between the various parts of an organization.

I often tell my clients that the business process is the ultimate vehicle for bringing together almost all aspects of the organization, for you to have a chance to align them. It’s not about modeling a process but rather about aligning your resources in the most optimal way. If we take this train of thought a bit further it also become apparent that if you, as an organization, want to transform or change something your starting place should be your repository (i.e. a relational database of process related information) of documented processes as it will tell you the potential impact on other parts of the organization. We all know stories about ERP implementations or transformations that went completely off the rails due to a lack of alignment on the agreed upon way of working and insufficient insight in the interdependencies between the various business processes.

Now that we’ve established the required processes-centricity, let’s look at some of the trends that we see in the marketplace for 2024 (and beyond).

Process management and process mining converging

Data shows an ongoing convergence between process mining and process management. Without a doubt, process mining is the hot topic in the business process management (BPM) universe now and it is a very powerful technology to quickly gain insight into the performance and conformance of a business process (based on factual data and not on assumptions). As such, it has become a very popular tool in continuous improvement (for obvious reasons). On top of this, organizations also start to realize that all these insights, or at least a good portion of them, should be documented to set the new standards or not to lose the lessons learned.

From the perspective of OPEX, this means that conducting the continuous improvement initiatives and supporting the subsequent change management activities will become easier because the number of applications that are needed to do this will reduce. In other words, your OPEX practice will become less expensive.

Generative AI freeing up time for more valuable OPEX activities

During my day-to-day activities with clients on BPM I always look for the connection to the human side of running an organization and executing processes. One thing most people typically dislike is repetitive activities. Things that are the same every day, all day. You can think about administrative tasks or transactional activities that do not really change and an increasing number of them are being automated or supported by AI. Verifying a received invoice to pay for a procured good or service used to be a 100% human activity, until automation came into play (using OCR and workflow management for example) and more recently where AI is deployed to cover most of the mundane, operational activities.

The role of the human in these kinds of processes is shifting towards a more supervising role and only being engaged in case of exceptions. Now, if you take this line of thought and apply it to process management, you can imagine that doing administrative activities for your process repository might also be a thing of the past soon. Generative AI will be able to handle vastly more data and see dependencies between objects much quicker, enabling the human administrators to spend their time on more value-adding activities such as queries and reporting.

There are numerous elements of OPEX and process management that will benefit from the application of generative AI. The first real life applications are already present in process mining (asking questions about the data set in natural language and getting a response in the same natural language) and process management. Exciting times are ahead in this area.

Regulation management in OPEX

The final trend I would like to highlight is the regulations management topic. The number of regulations (and more importantly the number of changes to existing regulations) is rising fast and organizations struggle to keep tabs on all the relevant regulations and norms that they need to comply with. More often than not, there are dedicated departments that deal with the regulation’s topic; however, they very often do this in some sort of isolation and the outcome could be that you end up with multiple different sets of business processes (one from a regulation perspective, one from a risk and control perspective and one from an operational perspective) that have overlaps but are not the same. Needless to say that this situation decreases the likelihood of alignment within the organization.

The realization that regulations could (or should) be treated as another input into your process repository is a very recent one. However, a valuable one that a UK-based high tech manufacturer took to heart. They documented (and managed) all relevant regulatory requirements in the same platform as their business processes so they could connect both aspects. They translated their regulatory requirements into business requirements and linked these to the business processes and work instructions that were put in place to, among other things, comply with these regulations. Proving compliance almost becomes a push of a button, or a mouse click if you like.

Summarizing, I believe 2024 and beyond will be exciting times for OPEX professionals as the breadth and depth of the available technology increases and this enables these professionals to be more effective and productive.