Leveraging the Common Data Model to Automate Business Processes
Previous articles in this series presented findings from our joint research with the MIT Center for Information Systems Research (CISR) that revealed that Future-Ready companies are nearly 20% more profitable than their industry peers. We pointed to the use of a Common Data Model (CDM) as a key enabler to becoming Future Ready.
A CDM that contains comprehensive internal and external information about a company can promptly facilitate both business intelligence (BI) and the ability to automate business processes. This fourth article focuses on how quickly a company can automate once it has a CDM in place and has leveraged the BI to know where to prioritize.
FIGURE 1: USING A CDM TO AUTOMATE BUSINESS PROCESSES
Upon quickly establishing data-driven decision making with comprehensive BI and learning where to prioritize, companies realize the additional, immediate benefit of the Common Data Model, which is the ability to automate operating functions quickly and affordably (figure 1). This is especially the case when it comes to routine tasks that are otherwise performed by humans and that can be accomplished faster, more accurately, and at lower costs by computers.
Most companies have not achieved operational excellence with standardized applications and automated functions.¹ They are continuing to have people perform the same tasks over and over by using manual and clerical methods, such as spreadsheets.
Low-Hanging Fruit: Moving Away From Spreadsheets
The overuse of spreadsheets in business generates excessive costs and risks. Examples of businesses that have suffered financial losses from errors related to poor spreadsheet governance are vast and significant. To avoid focusing too much on the negative, think about the positive reasons to replace work done in spreadsheets with automation instead: most notably, the reallocation of labor investments with a view to perform value-added tasks instead of routine manual tasks. We like to call this working smarter.
Common examples of excessive spreadsheet use for tasks that can be relatively easily automated by leveraging the CDM are:
Members of the accounting team perform tasks and produce standard management reports the same way every month.
Forecasting is typically done with high-level assumptions and is essentially a guessing game instead of being calculated using detailed historical data adjusted for up-to-date assumptions.
Sales-and-operations-planning (S&OP) tools facilitate integrated business processes that synchronize functions across the organization by making sure there are optimal levels of inventory, labor, and other resources needed to meet expected customer orders.
If your business relies on spreadsheets for a variety of business processes, ask the employees who work with them how much time they spend crunching numbers and formatting files compared with performing valueadded tasks. The answer is, likely, too much time!²
The additional operating benefits that result from the automation of processes are data management related— in addition to efficiencies and better use of time. First, the CDM is the established source of truth that feeds the BI framework and enables business leaders to make operational decisions. Second, through the automation of those processes and through direct feedback into the CDM, planning and forecasting decisions can get made easily visible again within the BI framework and/or to the leadership, who then sees directly how the company’s next steps could look.
Turbocharging the Front Office
The front office must have an effective back office to get the best results. Future-ready companies prioritize efforts directed to customers most likely to buy and to bring the highest profitability because the back office can systematically direct the sales team’s focus. Similarly, the back office can suggest pricings and promotions that result in the best financial outcomes.
Upon receiving an order from a customer, a strong back office instantly determines how best to pick-pack-ship through automated order-to-cash processes that have total insight into where products are available in relation to the customer’s shipment location. This is then bolstered by making all information about orders, shipments, and billings available to customer service so that customer issues get addressed immediately, including answering common questions with computer technology instead of incurring employees’ time (figure 2).
FIGURE 2: AN EFFECTIVE BACK OFFICE DRIVES FRONT OFFICE PERFORMANCE
Adding external information to the CDM can facilitate enhanced automation in addition to bolstering business intelligence value for the front office. A good example of maximization of customer performance is the capturing of competitor prices (often done through web-scraping techniques) and the use of that information to set prices that are competitive. Another external data source example for the front office is information about employee candidate targets, which can now be found on several job search and social media platforms.
How To Make Automation Happen Fast
Processes can be rapidly and effectively automated according to the CDM by collecting all-inclusive data, transforming it, performing computations, and using the resulting refined data as needed to fulfill a process or reporting need (figure 3).
Several sources of information can be collected together—such as data from internal systems and external sources—and then created and captured instantaneously from employees and business partners. Internal systems commonly include enterprise resource planning, customer relationship management, payroll, and customer-facing applications. An example of a powerful external source of information can come from, say, connecting with vendor portals.
Having a real-time connection with vendor portals gives the procurement team (1) the ability to choose from products and pricing options and (2) item-tracking capabilities that assist in scheduling—such as for customer service assistance or production. Data capture tools can be quickly configured and made available to replace the ways companies usually use various manual ways to collect data (e.g., employee time for job costing). Data capture tools can include input from apps that are available across devices and sensors that measure activities and transmit data.
FIGURE 3: A CDM DRIVES ALL ACTIVITY FROM DATA COLLECTION TO INFORMATION PROCESSING AND DISSEMINATION
A data lake is where all information gets assembled to be commonly used. Source information comes into the data lake through modern connection methods such as an application programming interface (API) or robotic process automation (RPA). Many APIs are available today that provide a connection between computers or between computer programs. If information cannot be captured through an API, an RPA process can usually be used that essentially records a common workflow task performed by a person and reruns that process digitally—by, for example, downloading data from one system, formatting it, and uploading the data into another system.
Algorithms use well-defined instructions and calculations that replace day-to-day computational and data processing tasks performed manually by humans. Many companies have teams of people that work with extensive worksheets to reprocess data and run computations in order to accomplish routine tasks and/or report information. But those functions are no longer necessary with today’s technology options. Per Forbes: “Get with the program: Your board and leaders need to accept the fact that machines already dominate the factory floor. Now they are coming to the front offices, executive suites, and board rooms. It’s time to for leaders to learn the basics of AI.”³
There are countless examples of instances where automation has added significant value without requiring major investments in time or money. Using a wellstructured CDM, these processes operate around the clock and enable a business to scale rapidly without having to incur significant operating or capital investments.
Many of the examples can be repeated across companies and industries. One of the most obvious opportunities arises for corporate financial planning and analysis (FP&A) departments, as highlighted earlier by way of routine reporting, planning, and forecasting. Take variance reporting as a simple example, wherein the every-month process of comparing actual results with budgeted results and then analyzing the differences makes for an ideal opportunity to automate a routine task. It’s surprising how many companies still do this routine process manually.
The real-life examples that follow (figure 4) show where to find repeatable automation opportunities across industry sectors and functions.
FIGURE 4: AUTOMATION EXAMPLES ACROSS A VARIETY OF INDUSTRIES AND FUNCTIONS
Rapid Transformation by Implementing a CDM
As stated by Microsoft, the top six benefits your organization will reap for automating your business processes are:
- Improved efficiency and productivity
- Reduced time and costs
- Simple data and document management
- Visibility and transparency
- Process standardization and compliance
- Improved employee and customer satisfaction⁴
After building a CDM, you can establish comprehensive business intelligence, and automate clerical tasks all within a few months. Taking these steps can move your company quickly from the low end of the digital maturity scale to becoming competitively enabled by robust key performance indicators and analytical capabilities, driving both top-line and bottom-line improvements.
- Stephanie Woerner and Peter Weill. Update on the Four Pathways to Future Ready. MIT CISR, MIT CISR Research Briefing volume XXI, Number 2, February 18, 2021
- Koh, Brendon, “The problem with excel spreadsheets,” Automate Labs. Sep 23, 2020, https://www.automatelabs.co/post/the-problem-with-excel-spreadsheets
- Beck, Megan and Libert, Barry, “Algorithms Are Replacing Leadership Strategies,” Forbes, June 2, 2019, https://www.forbes.com/sites/barrylibert/2019/06/02/algorithms-are-replacing-leadership-strategies/?sh=65c5b1fb47d9.
- Microsoft, “6 benefits to business process automation,” https://powerautomate.microsoft.com/en-us/business-process-automation/
Meade Monger, founder of Dallas-based CenturyGoal, is an expert in corporate restructurings, transformations and digital strategy. He is currently a PhD candidate in healthcare research.