The business case for transformation

Reinvention and continuous modernization are essential for business transformation. By consistently evaluating processes and operations, companies can scale and evolve to keep pace with the market. IBM defines business transformation as the “wholesale rethinking and restructuring of an organization’s business planning, operations, technology, development, and customer experience to achieve business goals.” This is one aspect. The other is approaching transformation as a methodology that goes beyond the hype to deliver real value. Many companies invest in technologies meant to drive transformation, only to see limited returns.

Statistics highlight a significant gap between the promises of business transformation and actual outcomes. The challenge lies in navigating through hype and technology to ensure investments deliver measurable value. McKinsey suggests achieving this through clear goals and value-creating targets, moving quickly, and focusing on initiatives of all sizes, termed “rocks, pebbles, and sand.” Approximately 55% of transformation value comes from small initiatives.

“For us, business transformation has to be supported by a business case,” says Brent Flint, services executive at NTT Data. “The danger for a technology organization is wanting to transform for the sake of technology. During our transformation process, we realized we created confusion in the market due to overlapping technologies. We needed to transform our business with our customer in mind.”

Prioritizing the business case is crucial for successful transformation, as identified by EY. The firm found that transformation is a continuous journey defined by business objectives and the market. EY’s survey revealed that 65% of companies restructure for growth, 62% to leverage digital opportunities, 77% to transform operations, and 75% to transform technology.

Stability and Clarity

Business transformation requires stability and clarity. Key questions include: What is working? What isn’t? How can the business incrementally transform to achieve value? Old Mutual asked these questions throughout its transformation process.

Donald van der Merwe, program executive at Old Mutual Africa, explained that the company, with 115 entities across 12 countries, needed to automate and optimize its finance capabilities. “We aimed to enable finance to become a strategic partner to the business, delivering insights and decision-making support while maintaining core capabilities in accounts payable, receivable, and more. We needed a better way to support the business while leveraging data for real-time insights.”

Transformation’s ROI

Old Mutual's clearly defined goal led to a finance transformation program that standardized all general ledger systems across all countries onto a single platform. The company chose Microsoft’s Dynamics 365 Finance and Operations platform for its scale and customization tools. Craig Fidler, project architect at Braintree, noted, “The project spanned multiple countries and regulatory bodies with very different business units. This required collaboration with Old Mutual to ensure the initiative met their needs.”

A collaborative approach aligns with the Harvard Business Review’s stance on digital transformation – it needs the right talent, clearly defined change management, modern architecture, and a solid operating model to succeed. McKinsey’s assessment of 80 global banks showed that companies leading in digital and transformation initiatives improved pre-tax tangible equity growth from 15.5% in 2018 to 19.3% in 2022.

Sumarie Greybe, co-founder of Naked Insurance, emphasized that transformation is ongoing due to constantly changing technology. “We’re looking at how large language models can enhance our automation and self-service capabilities to allow unprecedented self-service options.”

Naked Insurance aims to reduce insurance costs through technology, similar to Simply Financial Services’ efforts to transform life insurance policies. “We use technology to help people get more cover for the same money or as much cover for less,” says Anthony Miller, CEO at Simply. “This allows for easy consolidation or replacement of inefficient policies.”

Through transformation, companies can achieve real returns on their investments. The key lies in a granular process and consistent reinvention, rather than forcing the latest technology into an unsuitable framework.