Business process transformation and digitalisation: why and how to implement it


Today I would like to talk about the digital transformation of a company, through which business processes can work effectively.
Editorial Commitee Qualified.One,

An important point worth mentioning at the outset. Business process transformation and digitalisation is not just about doing away with paperwork and fully automating processes. It is about following trends, finding innovative solutions to ensure an integrated approach to organizing work in a company using modern technology; it is about transforming business processes to create an updated, sustainable business model for companies capable of operating effectively in today's economy and adapting to its changes. We'll talk about all of this below.


Digital transformation of business processes is most often carried out in the areas of e-commerce, IT and fintech. Its implementation enables companies to:

  • increased productivity and reduced business costs;
  • increase the quality of planning and business management;
  • improve customer service and provide consumers with better and more convenient products
  • create a positive brand image and achieve a leadership position in their market segment.

Digital business transformation is carried out to create updated, sustainable business models for companies that are able to operate effectively in today's digital economy and adapt to its changes.

Business process transformation and digitalization

Business process transformation and digitalization

Examples of digital business transformation include the development of:

  • integrated internet marketing and business promotion strategies;
  • new websites using modern technologies;
  • Effective mobile applications for various platforms;
  • CRM systems to manage content or customer interactions.

Automation and digitalisation - what's the difference?

To show the difference between digitalisation and automation in a company, let me take a simple example: contract processing. This is a routine process which most often takes a lot of time for in-house lawyers.

Paper-based contract processing

This method is still used in many companies. In this case, the employee who handles the contract drafts it, prints it out and takes it on paper to the company's lawyer. Once approved, they sign and register it in a paper journal in the legal department.

Automation of contract processing

There is a common server and a disk with templates of agreements, which are available to all responsible employees in the company. In this case, if there is a need to create an agreement with a new client, they just need to replace data about the counterparty and some of the terms and conditions, and that is all - the agreement is ready. The logbook is also electronic. Approval is done via e-mail or in the contract negotiation system. In this case, processes can be said to have been converted into electronic form. However, it is still the responsibility of the staff to comply with contract policies, deadlines, and approval procedures.

Business process transformation

Business process transformation

Digitalization starts when electronic tools are introduced for working with contracts, controlling the compliance of the process with the company regulations, plus connecting the necessary approvers. Version comparison and highlighting of changes, automatic registration and sending to the counterparty after signing, plus a reminder of the deadline for the return of obligations are also used. Thus, digitalisation is about reducing the human factor, increasing speed and increasing the reliability of processes.

This is a simple example, but illustrative enough. Now let's look at what you can digitise in a company of any size in the first place.


There are several strategic directions to help realise digital transformation of business processes. These include:

  • Digitalisation of business processes (business digitalisation) - the transition of companies' activities to electronic platforms. With the help of business digitalisation, the number of steps required to perform a specific task can be significantly reduced, replacing the activities of the company's staff with the work of software solutions;
  • Data management (Big Data, Data Analytics, Data Science) - work with large volumes of information using neural networks, machine learning and other artificial intelligence technologies. Data management can be used to model customer behaviour, predict demand and generate preferences, enabling products and services to be tailored to specific customer needs;
  • Customer centricity - companies build a customer-centric business model when developing their products. The customer-centric model also takes into account the value of each customer to the company;
  • Digital partnership - the company creates, together with partners, a common digital infrastructure (a set of technologies and computing, telecommunications and networking capacities) to solve the tasks set;
  • Implementation of innovations - continuous research and testing of new business areas, products and solutions. This strategy involves active use of modern digital channels and systems;
  • Value management - this strategy involves adapting and customising products to meet changing customer needs. The value of the product to customers in this case consists of its usability, the possibility of obtaining the necessary services, continuous product improvement and the company's work on service.

Business processes transformation and digitalisation examples

The contract example above was given for a reason, because office work and contract work are the first thing you should start with when optimising a company. And it is worth "digitising" them in the first place. It has already been mentioned very briefly how to do this. But there are other processes which can also be taken to the next level.

Human resources processes

Human resources work in any company is a complicated, complex and very time-consuming task which is, at first glance, difficult to digitize. But in fact, everything can be solved. Here are the main processes that can be digitised:

  • recruitment and hiring;
  • holiday planning and management;
  • travel arrangements and organisation;
  • transferring and firing employees;
  • familiarization with orders and local normative acts (LNA);
  • staff appraisal and training.

In addition, digital technologies should be used to select CVs, create an individual training plan for employees, prepare advance reports on business trips and forecast termination (the latter is actively used in many Western companies, this point is classified as predictive analytics).


The main problem with the accounting department in a company, even with automation, is that documents come from a variety of sources, including even mail, courier delivery, email, messengers, etc. The problem with paper documents is that they need to be digitised manually and it is not easy to organise an orderly storage.

But with the introduction of digital technology and machine learning, primary accounting documents can be processed automatically, and there is little or no need for a human in the chain. Specialised services allow full control over all sources of any documents, as well as the processing of scans and further accounting. Forming a single archive of documents simplifies the task of financial and tax audits.

It has already been said above that digitalisation of processes is relevant for companies of all sizes. But, of course, it is much more complicated for corporations, because they have a huge number of processes. Large businesses may be advised to outsource some functions, including legal, HR and accounting processes, to dedicated units. These are commonly referred to as shared service centres (SSCs). But they should only be formed if the company has taken care to have channels for quick interaction with other institutions and convenient shared access to documents.

If done right, you end up with a single window for employees to quickly process any request - from ordering references to placing a request for repairs or obtaining equipment. And this is where machine learning, an AI assistant, comes in handy:

  • divide the incoming flow into documents and classify them, extract the information and fill in the details in the registration cards in the system;
  • identify a responsible employee and send a document to him or her for review;
  • prepare draft resolutions and propose executives for the document;
  • compare the internally agreed agreement with the signed paper version received from the counterparty and highlight any discrepancies;
  • simplify and speed up document retrieval by processing natural language queries without specifying exact criteria.
Business process transformation: Airbnb business model canvas

Business process transformation: Airbnb business model canvas

What does it take to digitise a company's processes?

When it comes to adopting new technology, it may seem like a huge investment, huge labour costs, etc. But that's not really the case. Of course, there will be some costs and some effort. But these technologies, if properly planned and implemented in the company's business processes, will almost immediately or slightly later produce a significant effect. The payback period for these investments varies from three months to a year, depending on the scale of the company and the amount of work to be done.

In practice, no one will ever be able to calculate any return on investment. There are many reasons for this. I will not go into detail here. There is simply a trend. If income comes, then they invest in systems, in processes, optimization, etc. If income leaves much to be desired, then they have to make do with what they have. As in private life. Does a new repair ever pay for itself? I don't think this question is being asked.

Payback optimization seems to be stipulated, because of the large investment, but it's so - for paper and for the beautiful words of publicity, then everything lives its own life. A complex life, where hundreds of factors in the formula for payback. Which of them is more weighty and which less weighty - no one will - and probably can't - conduct such an analysis.

At the same time, the business also receives additional benefits, including reaching a completely different technological, secure level, increased speed of operation and competitiveness in general. All of this enhances a company's ability to meet the challenges of the near future.

Digitalisation does not happen overnight, but the process can be divided into a number of stages.

Stage 1: A company needs to understand what it needs to implement, what is most relevant at the moment

So, initially the business can try to integrate digital technologies into selected processes. Then they can either stop there if they don't need anything else, or they can go digital globally.

An example is the digitalisation of payment signatures. For example, once the register has been digitally signed, all payments in it are automatically signed and sent to the bank for execution.  

Stage 2: Choosing the digitalization path

Here, the processes selected in the first stage are discussed, the exact work plan is approved, the functionality is agreed upon, and test benches are set up. 

Business process transformation: Netflix business model canvas

Business process transformation: Netflix business model canvas

Stage 3: Implementation of the selected tools

Usually, this should be done by an engineer (programmer, test analyst, implementation consultant). At the third stage, test operation of the selected technologies is carried out, so far on a limited scale. If everything is OK, testing is successful, the company launches the system in the OPE and begins to work 100% with the new technology, transitioning to the new model.

An important prerequisite for the successful implementation of digital tools - when selecting and implementing innovative solutions, it must be clearly understood that this is only justified if there is a significant effect immediately after implementation, or if the effect is determined by the new automated capabilities. Simply put, it will make more money immediately or pave the way for some advanced solutions in the future for which the current infrastructure was not ready. To mine bitcoins, you first have to trade in the Dandy for a powerful PC. Secondly, awareness of the entire management team, including line managers and the "stars" of the organisation. After the global digitalisation, the company's work becomes more systematic than before. Many of the processes are being set up automatically, and the very "stars" who used to do the lion's share of the work can no longer perform as much routine work. Their energy can be channelled into more creative tasks, thereby increasing the company's efficiency.

Problems with business processes transformation

According to McKinsey, about 84% of digital transformation projects fail. There are several key reasons why digital transformation fails or fails to deliver results in a timely manner.

Lack of prior performance evaluation

This is one of the most common mistakes: companies deploy digital solutions without first estimating whether the time and resources invested will be recouped by improved business performance. Going digital is only appropriate when it is understood that it will lead to specific benefits - reduced labor costs, improved margins, increased sales.

Otherwise, the digital transformation turns into a pile-up of initiatives that are useless for the business - at least at a particular stage of development. For example, it does not make sense for a young, small startup to spend its energy on implementing a staff gamification system - it is more important to focus on scaling up and reaching a return on investment. Such initiatives not only fail to produce a positive effect, but can even hinder, because they entail piling up new regulations and causing team resentment. How can this be avoided?

Any digital innovation should be preceded by a lot of analytical work. It is important to answer the questions of what tasks are currently facing the business, what technologies can solve them, what investments will be required, how exactly and in what time frame they will pay off, and how much the financial performance will improve. Ideally, one should not limit oneself to preliminary analysis, but also evaluate the interim results at each micro-stage in order to adjust processes, if necessary.

Lack of a digital culture

According to research by consultancy KMDA, one of the main obstacles to digital business transformation is considered to be resistance to change by the team. If the head of a department believes that a directive from above to log transactions into an online system is unnecessary and disruptive, he or she will not require his or her subordinates to do so either. As a result, the entire process will turn into a formal filling of reports. And this is logical: if employees do not understand the meaning of the implementation of new initiatives, they will always reject innovation in the company.

Staff's resistance to digital transformation may stem from fear that automation will take their jobs away ("robots will replace people") or concern about their personal data. These fears have been heightened recently, with the economic crisis triggering fears of joblessness, and the loss of access to the digital tools needed for work, making it clear that there is a downside to total digitisation of processes.

That's why it's so important to work on the culture of digitalisation in the company and build appropriate principles and values within the team - something that most businesses don't pay attention to. For employees to promote change instead of resisting it, they need to understand

  • exactly what benefits each new solution will bring;
  • how it works - at least at a basic level: all processes need to be completely transparent;
  • how their tasks and responsibilities will change following implementation. Thus, in the context of large-scale business adaptation to new realities, it is important to convey to the team that the workforce is now more important than ever, so there is no need to fear layoffs. Of course, this can only be said if you really don't plan to downsize - otherwise you will only undermine the credibility of your remaining employees.

Ethical problems often arise when the technology itself does not work properly, especially when it is related to artificial intelligence. Suffice it to recall the case when Amazon's AI solution, designed to sort through job applicants' resumes, began discriminating against candidates on the basis of gender. Such cases certainly undermine the credibility of digital solutions - although discriminatory principles were not intentionally put into the system. In Amazon's case the reason was unrepresentative data: the algorithm was trained on CVs from the last ten years - and most of them belonged to men. From this, the artificial intelligence concluded that men were preferable to women as potential employees.

To prevent such cases, AI solutions need to be built ethically from the outset. In 2020, 14 countries joined together to form GPAI (Global Partnership on AI) to develop approaches to the creation and use of AI systems based on human rights, inclusivity and responsibility.

Lack of competences

Another common reason why digital transformation attempts fail is due to a lack of competencies. These are situations in which managers and teams simply do not have enough expertise to carry out a digital transformation. In addition, in most cases, companies refuse to create a single digital transformation body (e.g. the CDTO - Chief digital transformation officer). All this ends up in numerous mistakes.

But even the creation of an entire unit for digital transformation, if the team lacks competencies, can lead to collapse. This was the case with General Electric, which set up GE Digital in 2015 to work with external customers. In the pursuit of quick financial results, management turned the structure into a tool to solve the company's internal tasks, and all the planned effect failed.

Copying practices from the market

According to statistics, when implementing digital solutions, more than half (53%) of Russian companies copy best practices from the market. But although at first glance such a decision may seem logical, it is erroneous: even in similar businesses, the effectiveness of the same digital tools may be different, as it depends on a variety of factors. In 2019, for example, Columbus, an international consultancy, decided for the first time to move advertising online to promote a warehouse automation tool. A seemingly win-win method was chosen, which has proven to be effective in the market - a Black Friday campaign on Facebook . But this campaign did not take into account the specifics of the business, so the KPI was not met even halfway. Columbus subsequently learned from its mistakes and developed its own digital promotion strategy.

In addition, when borrowing seemingly successful practices, it is important to keep in mind that companies do not always disclose real data about the effectiveness of their solution. Sometimes digital "chips" are launched solely for the purpose of PR, and in reality may even be unprofitable, so it makes no sense to copy them. Yes, the implementation of some digital projects for PR purposes may be appropriate in some cases, but in order to understand the extent, each case requires thorough preliminary analysis.

Lack of a coherent strategy

Digital transformation is not made up of disparate digital solutions: it is first and foremost a fundamental restructuring of all processes, which requires a full-fledged strategy. You can't turn a traditional bank into a fintech company by simply converting individual processes into a digital format: you'll have to change the product itself, the way you interact with clients, your positioning and marketing, your organizational structure, and other aspects - all of which requires a holistic approach.

To prevent this from happening, there needs to be a unified digitalisation strategy, with each initiative fulfilling its function. In the process of developing such a strategy, it may turn out that in order to go digital, you have to change the entire business model and sometimes the product itself.

This was the case with Netflix, which was originally created as a DVD rental chain. As it expanded its business, the company implemented solutions that fit the concept of digitalisation: for example, it developed its own system for recommending films based on an analysis of user preferences, introduced subscriptions to rentals, and created a bonus system. But with the development of streaming video, the DVD format itself was doomed, and no amount of digital enhancement would have brought the business to success. Netflix realised this in time, and in 2007, ten years after its founding, the company made a pivot, switching to streaming technology. This decision made Netflix one of the largest companies in the world - but to do so, it had to completely change its product and business model. That's what a strategy is for: to assess in advance the scale of the change and understand how prepared you are for it.

A little about risks

With global changes, there are of course risks. Some technologies may not work, others will have to be customised, adapted. After all, the work of any company is unique, it has its own specifics, which must be taken into account. You can't just integrate digital technology without modification and refinement.

There is also the risk that some employees will not accept the changes - in this case, you will have to work on convincing the doubters. The best way to do this is with examples of successful problem solving using the new technology.

Initially, there will be problems after the changes have been implemented, which means that the digital system will have to be fine-tuned. But once everything is done, employees and management will be able to see how much the company has improved. There will be far fewer, if not no, emergency situations (during a tax audit, for example). And it will be possible to work without collapse during difficult periods - the system will work like a well-oiled clockwork mechanism.