Advancing Business Process Maturity with Digitalization and Continuous Improvement
What is Business Process Maturity?
Business process maturity is a strategy that seeks to improve the process capability and effectiveness of an organization. Why does process maturity matter? It directly impacts the bottom line: when we think about process maturity in a business context, we measure our growth or improvement by rising revenues or by rising incomes.
But when we think about business process, what is the gauge we can look at and understand? It’s the improvement in process or the maturing of process. So, we use process maturity as the model. For example, one starting point could be with which processes customers face and which processes help manage risk.
Process Maturity Model Principles
What does this process look like at the various levels of maturity? There are many different models out there, but the Process Maturity model (PMM) is based on five principles:
- Initial: The organization has begun to identify its processes and the steps involved in each process.
- Repeatable: The organization has identified its processes, but the steps involved in each process are not yet standardized.
- Defined: The organization has standardized the steps involved in each process, but there is no standardization across all processes.
- Managed: The organization has standardized all processes within the organization, but management of these processes may still be weak or ineffective due to lack of training or other reasons (e.g., lack of focus on improving management skills).
- Optimized: Finally, an optimized organization will have strong management skills along with effective tools to help them manage their processes effectively so they can achieve their goals faster than ever before while also reducing costs associated with running these operations.
And if we think about an organization that’s just starting out at level one, it could be an entrepreneur or a new business process that needs to be defined.
As we move to level two, we start to see more documentation and a little bit more management around the process. And it isn’t until we get to level three, that an organization has really defined its processes. Here, there are clear process maps, different delegations and areas of responsibility, clear requirements, something to manage the process by. And then that sets the stage for level four, which is quantitatively managed. Basically, understanding what the effectiveness and efficiency targets for that process are along with the feedback you receive from management telling you how you’re doing versus those objectives. As you move into a high performing process, you’re now into an optimizing level where you’re using that feedback on an ongoing basis to make more improvements to your process. Further, what gets measured, gets done.
Integrating Continuous Improvement with Digitalization
When you think about continuous improvement, we think about people who want to dive into a process, map it out, and understand its performance, requirements and inputs, among other details. Then you can determine the requirements for suppliers regarding the inputs that they provide to feed the process, and what is going to generate the outputs that the customer needs.
With an understanding of continuous improvement and how that can support process maturity, how can digitalization and continuous improvement work together to achieve the highest levels of process maturity? As you’re working on any type of improvement, sometimes there are low-cost or no-cost things that you can use to implement basic controls. Eventually, in the lifespan of almost any process, you’re going to reach a point where you have made all the low-cost and no-cost improvements, and you’re going to need to invest in a level of digitalization. Some companies make that decision sooner while others delay.
Digitalization is within the toolset of the continuous improvement practitioner. With digitalization, we can have ready access to data, control processes in near real time, and take advantage of strong information sources to light up dashboards and send alerts. With the help of digitalization, organizations can mature their processes and increase their process management ability.
When an organization reaches level five, this is no time to stop and rest. Continuous improvement doesn’t stop if you’re fortunate enough to hit level five. Continuous improvement should be an ongoing focus, keeping in mind how the process is performing and what can be improved.
Digitalization and continuous improvement are key components of process maturity. By leveraging the power of digitalization and automation, companies can improve their processes to maximize efficiency and profitability.