Point of View

Unlock your business value with flawless operational processes

August 24, 2021

Enterprises understand they need to transform business operations to remain competitive, improve their bottom line, or drive better customer experiences. However, siloed, and piecemeal technology transformation approaches have left countless businesses with both technical and process debt. This approach means that for most businesses, these initiatives rarely reach their full potential. HFS advocates for a holistic approach incorporating multiple technology components, focusing on improving specific business outcomes—the “Triple-A Trifecta” of automation, analytics, and artificial intelligence (AI).

In response to market demand, we see technology vendors such as process intelligence leader Celonis emerge armed with comprehensive offerings like its flagship Execution Management System (EMS), which it believes will help unshackle clients from inefficiencies and drive operational excellence. To help us understand more, we connected with Celonis’ leadership team and a selection of its clients to discuss the challenges they face and how they unlocked business value by driving flawless operational processes. If you’re an enterprise trying to tackle your legacy silos, you might be interested in hearing what they had to say.

Years of technical and process debt shackle enterprises, and they must clear this hurdle if they hope to reach their full potential

Every business must strive to continually improve its operations and maintain its competitive edge. Large businesses are an endless stream of business units and functions, all of which face unique difficulties and bottlenecks. To tackle different problems, businesses have historically layered on various technology platforms and systems, from core ERPs to workflow solutions, document imaging, robotic process automation (RPA), function-specific platforms, business intelligence dashboards, and more. This barrage of digital technology products has become more complex over the years, and we don’t expect the complexity to diminish. However, new technology initiatives often end up siloed, creating a fragmented digital landscape and leaving businesses with countless unintegrated systems with limited impact on top-level performance metrics.

Further to the technical debt and complex technology concept is the concept of process debt—the creation of awkward and often manual, short-term processes designed to buttress aging technologies at the expense of long-term, transformational solutions. There’s a lot of understanding among enterprises about technical debt and needing to sunset and write off legacy technology, but to effectively change how people work, businesses must address band-aided and antiquated business processes stitched around legacy systems.

Ultimately, HFS believes that we must burn our legacy bridges to survive. Enterprises say they want “transformation” but still find themselves in the rat race to become slightly cheaper and maybe a little bit faster. While the promise of emerging technologies has captured the C-Suite’s attention, let’s be honest, we are facing transformation fatigue stuck in the old analogous world submerged in process debt and legacy thinking. We needed to change, but we’re trapped by legacy dragons and cultural silos. COVID-19 flipped this endemic, decades-old, corporate mindset of resisting change to one of demanding change overnight. Business resiliency became the lifeline that got us out of the funk of just focusing on cheaper and faster efficiency.

Exhibit 1: End-to-end process optimization is the post-pandemic goal for many enterprises

Sample: 800 respondents from Global 2000 enterprises
Source: HFS Research Pulse, April 2021

Making progress on digital transformation requires enterprises to address fundamental challenges in their fragmented technology and business process landscape. Our latest market data in Exhibit 1, surveying over 800 Global 2000 enterprises, shows that 40% of business leaders expect major changes to how they work in the next year, in the form of end-to-end process optimization. In our view, this requires fundamentally re-thinking how businesses model processes, using enterprise data to understand how to design them, creating cloud-based workflows with native automation, and empowering employees with the data and insights they need to make decisions that bubble up to improve business performance—all with continuous monitoring and improvement at the core.

Enabling business functions such as finance and accounting and supply chain has its own set of challenges
  • Finance: HFS envisions the need for “invisible finance,” where accounting transactions must run like tap water and allow finance teams to focus on better business partnering, a concept that resonated with 96% of CFOs in our recent study. Unfortunately, all too often, finance professionals are stuck doing transactional work, meaning they cannot focus on the higher-value tasks needed to drive these outcomes. A Celonis client, a finance leader, described its finance function as having been trapped, “In our payables business, we had previously struggled as we were pulling information from multiple different systems into one single place, but the disjointed collection of information made it difficult for our employees to prioritize their tasks effectively, meaning they worked on a first-in-first-out basis, regardless of the importance of each task.”
  • Procurement: In HFS’ view, procurement should be a key ecosystem builder, impacting profit by strategically creating new opportunities. However, many procurement professionals are left desperately trying to cut costs while working with outdated and inaccurate data, thanks to a lack of transparency in spending. A Celonis client stated its goals for procurement very simply, “Procurement needs to be standardized, simplified, and automated.”
  • Supply chain: In 2020, the pandemic broke global supply chains like we’d never seen before, and it exposed cracks nobody knew existed. As we settle into the post-pandemic economy, enterprises are driving six leading outcomes in their supply chains: cost, responsiveness, security, sustainability, resilience, and innovation. Unfortunately, supply chain executives are working with a complete lack of transparency, and they spend most of their time managing vendors. They don’t currently have available time to achieve these outcomes.
  • Customer service: Customer experience is top of mind for most consumer-facing industries. Yet, fragmented systems prevent customer agents from fully understanding root cause issues, gaining a holistic view of customers, and addressing customer queries adequately. As digital channels proliferate, every business must refine its customer interactions, improving self-service and digital servicing capabilities.
Celonis’ EMS hopes to help clients navigate and move beyond legacy silos with a domain-specific solution approach, embodying the Triple-A Trifecta

Addressing years—and sometimes decades—of technical and process debt is no easy task. It requires enterprises to take a holistic approach to their technology landscape. A holistic approach requires identifying and leveraging solutions that can bring together all the requisite technologies with a razor-sharp focus on business outcomes and removing any process or technical bottlenecks. At HFS, we refer to this approach as the Triple-A Trifecta, essentially bringing together multiple, critical change-agent technologies (automation, analytics, and AI) to solve specific business problems, as Exhibit 2 displays.

Exhibit 2: Find exponential value at the intersection of three critical change agents: The Triple-A Trifecta

Source: HFS Research, 2021

Process intelligence leader Celonis created a name for itself by helping enterprises gain insight into their operational processes. Using system log and user interaction data, Celonis’ technology can help you understand how to design business processes better and monitor them. The vendor has gone one step further with an ambitious vision to directly impact these processes’ business value.

You might already be familiar with Celonis’ Execution Apps, which blend technologies to bring process automation and outcome-driven AI together, but Celonis has taken it one step further with its EMS offering – which we outline in Exhibit 3. Through EMS, Celonis created a system-of-engagement layer that draws process insights and creates execution strategies by sitting on top of business processes and systems. It will then either recommend actions to business users or set configurable rules to trigger automation for certain tasks. Celonis helps enterprises identify and improve process inefficiencies, particularly those brought on by a fragmented systems landscape, and beyond this, helps unlock business-wide value.

Exhibit 3: Celonis EMS brings together multiple technology levers to deliver business value

Source: Celonis, 2021

Celonis leadership’s vision for domain-specific solutions shines through:

  • Finance and accounting (F&A): With EMS, Celonis believes that F&A professionals can finally assess data in real-time and quickly implement essential changes, improving productivity and driving cost savings.
  • Procurement: Celonis believes that EMS’ real-time transparency can help procurement executives reduce their cycle times, eliminate payment term discrepancies, and prevent maverick buying.
  • Supply chain: New visibility into enterprise supply chains, created thanks to Celonis’ EMS, allows teams to drive efficiency by identifying and reducing waste and monitoring performance across their entire supply chain.
  • Customer service: Celonis EMS promises to help customer experience (CX) teams shorten their resolution time for handling customer queries, bake in automated workflows, and use machine learning models to prioritize high-impact tickets. Overall, the platform ties all activity to its impact on net promoter scores (NPS), the ultimate measure of a customer’s relationship with your company.

Celonis EMS aligns well with the HFS Triple-A Trifecta; it provides the analytics, AI, and automation opportunities needed to improve business processes and integrates them into improved workflows tied to achieving specific business outcomes. Celonis’ alignment with the Triple-A Trifecta not only demonstrates how Celonis practices what it preaches—crushing silos and using these technologies in harmony—but it also positions the company to help its clients achieve a similar goal. Celonis has the necessary tools to help its clients achieve complete transparency into their business, identify bottlenecks in processes and silos, and identify and quantify the potential business value to be unlocked. In fact, one Celonis client provided an example of how Celonis’ ability to leverage these technologies in unison helped:

“We see these technologies throughout the Celonis ecosystem. When using EMS, we identified differences between the payment terms in the purchase order and the invoice—meaning we were giving every customer accidental discounts. Thanks to Celonis, and these technologies, we quickly identified and actioned this. We’ve even integrated artificial intelligence and machine learning to notify us if this changes in the future.”
— A leading executive from a manufacturing company

Once clients have achieved complete transparency into their operations, they can leverage all three pillars of the Triple-A Trifecta. Celonis EMS is positioning itself to be the comprehensive platform that goes from business insight to execution

Once we understood the reward Celonis’ clients had already reaped from working with the vendor, particularly the EMS, we were keen to understand what they thought the future held. One client explained how a steady adoption of the Triple-A Trifecta was a significant part of its strategy:

“For me, it all starts with analytics; you can’t have great automation unless you have good analytics. And then AI is the next level; you start to look at how you automate. It’s all closely linked – and we’re planning to leverage the three technologies together.”
– A procurement executive from a leading IT service provider

AI is a critical component of the client’s plans, and it wants to integrate AI into the roadmap as it pivots on its long-term analytics journey, although the client is already leveraging AI in some business areas. For example, it had previously struggled with duplicating invoices; however, since working with Celonis and leveraging its machine language (ML) models, the client can quickly identify any cases of duplicated invoices and address them. The same client envisions the Triple-A Trifecta delivering a connected user experience. It is primarily a decentralized buying organization, and standardizing and tracking all processes is critical. It firmly believes that working with Celonis and leaning on the Triple-A Trifecta is the best way to achieve that.

Another Celonis client, despite embracing the Triple-A Trifecta fully, decided it would never abandon its existing transactional systems. Instead, its long-term goal is leveraging Celonis and its capabilities to ensure it doesn’t need to interact as frequently with its traditional ERP systems. The client believes this would help solve its existing challenges around dealing with exceptions and providing as much information as possible to the end-user in a clean and concise format. It does have a digital roadmap that to 2025, and, as expected, the roadmap includes mastering data management and upskilling people. Critically, it also involves helping its C-Suite understand data and make the best decisions for the business.

The Bottom Line: Enterprises must unshackle themselves from decades of siloed initiatives and fragmented digital landscapes to thrive in the post-pandemic economy.

Enterprises are battling decades of technical and process debt, and they simply cannot continue to be trapped by legacy processes and technologies. Celonis EMS has the potential to become “THE platform where work gets done.” By linking data to business impact, it could be the key to helping enable business functions on their journey to become genuine strategic partners for their organization.

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