• Gunther Rameseder, Vice President Solutions Engineering at Celonis


• 21.08.2019 12:45 pm
Digital transformation

Back in 1958, the average lifespan for a company stood at 61 years. But today, things couldn’t be more different. In the current landscape of rapid technological innovation, the average lifespan has shrunk to fewer than 18 years. Managing Director of McKinsey & Co., Dominic Barton, attributes this shift to the power of digital transformation. He ascertains that “technology has led to fundamental business change for everyone” going on to cite urbanisation, big data and significant improvements in computing power as contributing factors.

Financial service businesses globally have entered into a race to transform how they operate through the digitalisation of every business unit in the hopes of remaining competitive, but there are some common mistakes that are tripping up lots of digital transformation programmes.

Not knowing where to start

Recently commissioned research from Celonis of over 1,000 C-suite executives and over 1,000 business analysts found that businesses lack a clear understanding when it comes to their transformation efforts, with just under half (45%) of senior leaders admitting they don’t know where to start when developing their strategy.

Not setting clear goals to measure success

Perhaps more concerning is the lack of clear results and return on investment from implementing strategies, as 45% of senior leaders in the industry believe their business transformation has been a waste of time. With nearly two-fifths (39%) of financial services firms having spent more than £500,000 on transformation strategies in the last 12 months, organisations run the risk of incurring huge costs with no return. This practice could result in projects that are likely to be dismissed before they have even taken off.

Not understanding as-is before leaping to what can be

Most organisations are struggling with transformation initiatives because they are diving into execution before understanding what to change first. Companies need to set goals for business outcomes instead of simply prioritising technical results. C-suite executives should first understand business drivers and internal processes before delving into a transformation programme. In fact, more than eight out of 10 (82%) of executives in the sector admit they do not review their internal business processes to understand what needs to be prioritised when setting initial goals and KPIs for a transformation strategy. This might stem from the fact that they don’t know how to gain better visibility, since the majority of leadership (65%) said they would feel more confident in their transformation strategy if they better understood how their business is being run.

This trend doesn’t only apply to financial leaders, but also the wider organisation as a whole. Our research found that more than a third (37%) of analysts in the industry are not basing their work on internal processes when executing their company’s transformation strategy. This paints a larger picture, revealing that business leaders are investing in transformation initiatives without identifying a specific problem, going in blind with no clear path.

Racing to tactics before strategy is understood

Despite acknowledgements that an understanding of the here and now would be beneficial

to inform transformation strategy, businesses are still jumping straight into tactics. As an

example, only 36% of C-suite executives in the financial industry state that they plan to invest more in getting better visibility of their processes, a crucial step on the path to digital transformation.

Yet, over three-quarters (76%) of senior finance leaders identify artificial intelligence/machine learning and automation (80%) as areas they want to maintain or increase investment in, without truly understanding the benefits and outcomes of these technologies. From beginning to end of any digital transformation strategy, organisations need to realise how internal processes shape their businesses in order to determine which technologies will work best.

Transformation strategies will inevitably be part of every financial firm’s operations, because no business can avoid adapting to the latest industry and technological trends without the risk of being left behind. However, transformation strategies should be founded in concrete insights derived from processes that are actually happening within a company. Financial services businesses are rushing into costly initiatives and are falling at the first hurdle. But having a better understanding of inefficiencies in underlying business processes can help them to invest wisely to enable greater productivity and provide the best possible service for their customers.