Is it possible and necessary to automate all business processes in the company?

Hi there. My name is Valerian Brunin. I am the CEO of a product development company, and in this blog I write about the company’s experience and talk about awesome cases.

9 years ago, like many studios, we started with the development of lendings, online stores, and in general, we took on any task that the customer assigned. We didn’t work with templates, CMS systems and constructors. All projects were done on a turnkey basis — from design and development to programming. During the work process, customers sometimes asked us to automate some process additionally: to send leads not to the CRM, but to add them to the admin panel, upload them, add filters, tags, and so on. This is how we step by step increased our level in business process automation and digitization of data for companies.

After 9 years, we have two large cases of automation and digitization.

The first is the outdoor advertising network of a whole country. From putting the object on the balance sheet, to approval with state authorities, to analytics and utilization, including the sales system and documentation. And this is only a small part of the system.

The second is, of course, an ERP system for our own company, which includes the hiring process, HR, project management, finance, and other aspects of the IT company.

As a result, the main focus of our company is the development of custom ERP and CRM systems for companies and digitization of business.

That’s why I decided to share our methodology, how we approach such tasks, so that every business can apply this framework on its own and understand what it can automate and digitize.

What business processes are.

Of course, let’s start with minimal theory in order to approach practice in a consistent manner.

A process is a sequence of actions or operations aimed at achieving a certain goal or result.

A business process is a sequence of related actions or operations that are performed within an organization to achieve a specific business outcome or goal.

Business process automation is the implementation of technologies and systems which allow certain steps or operations within a business process to be performed automatically without the need to manually manage them.

These definitions tell us nothing. After all, if your company is working, it means that processes are occurring. If your employee comes to the office, turns on his laptop and writes to a client — the process has occurred. And even more, your company also has automation, because a telegram chat on a project or with a client, in relation to 10 years ago — is a very cool automation. Oh, and the printer has also automated the process of manually drafting documents.

But my task is not to speculate on the topic and describe some clever theses. I don’t want to say that all processes should be automated and data should be digitized. Because sometimes the cost of automation can be more expensive than a simple manual process, or the company is just starting and not working on clear processes, adjusting to the client and only developing its approach. Or there are 3 items of data per company and the owner can see them every day in the warehouse or in the bank account.

My task is to give you a framework by which you can look at your already formed processes and see the possibility of automation, calculate its cost, profitability and build the process of automation itself and its implementation in the company.

The logical question is why?

When we work with small and medium-sized businesses, the business process in such companies is essentially necessary for two tasks.

The first task is set when the owner wants everything to work without him according to a clear process. Let’s analyze the cases of bicycle rental or key making.

For bicycle rental we took a base of 10 bicycles, made for each of them a schedule of occupancy, rental cost and payment by card only. As a result, the owner saw the load, rent, cost, income and expenses without appearing at the rental point. The simplest possible system that didn’t do anything genius, just allowed any employee to sit down, click on the CRM system screens and give/receive the bike. The owner is completely free. He was only involved in emergencies or breakdowns. Oh, and the repair process was then automated.

Another case is a key making shop.

The owner rented the office, set up a master and his task was to control the purchase of bases for keys so that they were always available, payment of rent, taxes, calculation of the employee’s salary based on the number of keys made and their cost. We made a web site, in the admin panel we wrote a script that controlled the balance of billets, which was formed on the basis of made keys and received payment in banking. In case of small remains of a group of billets — we automatically sent a request for delivery to the supplier. Salaries were calculated automatically. The owner practically didn’t participate in the process.

The second task is set when the owner wants to develop a business process with a clear understanding that he will scale it.

The most obvious example is a CRM system for logistics.

In a small regional company, there were three managers who looked for orders, looked for a contractor, and tried to make a margin on the difference in price. This is the classic work of logistics companies without their own machines. The owner realized he had built a great process for three managers and was ready to scale. But saw that employees were spending a lot of time on the manual process of data entry, creating applications and orders. And the document process was as routine as possible and still had a high error rate due to the human factor of inattention, typos, and simply forgetting to send a document or monitor its receiving. Scaling a company in this format means scaling errors and risks.

As all processes in the company were designed in perfect excel templates, our task was as simple as possible — to make prototypes, design, program the main processes and automate routine tasks. As a result, in 4 years the company has grown several times, opened an office in the capital and recruited managers without any problems, knowing that it will become a clear process, and all routine and risky places will be automated.

What exactly has been automated.

• The manager enters data only for the request he has found.
• According to the parameters of the request, performers are selected immediately.
• If a performer is entered for the first time, he is automatically saved in the database.
• If a performer has approved the request, the system automatically generates an order from it.
• As the customer data is in the order, it is taken from it. Order data is also taken from the order. Data about drivers are taken from the card of the performer.
• If the performer has several means of transportation, the manager only needs to select the necessary one from the drop-down list.
• A package of documents is automatically created among the three parties.
• Order, document and payment statuses are controlled by the system through statuses that are either set automatically or entered manually. Validation is applied to manually entered values to prevent errors. The statuses that are manually entered have notification logic so that they are not forgotten or the director can see the inactivity.
• Since logistics is a huge number of international transactions, a separate module was created for accounting where dates, rates, losses and exchange rate differences were recorded.
• Since managers work on KPIs, the time taken to calculate salaries and bonuses grew as employees grew. This block was also automated.

These two tasks are usually set by a start-up business.

Large and successful companies strive to increase their efficiency by solving the following tasks.

• Routine tasks that need to be performed, but do not require unique solutions. These tasks often remain unnoticed or are performed with minimal employee involvement.

As a rule, it is work with primary documentation, sending welcome letters, follow-up after a call or controlling water in the cooler at the office. For example, when the administrator of a repair service hands over a phone, he doesn’t need to print a report and enter data manually. He can take them from the request (full name and phone data and reason for the request), add the master’s work that he has tracked in the system to the performed work and the report can be generated.

• Tasks that affect process speed. Long processes reduce the company’s profits.

As a rule, this is a work with manual data entry for a request, a client, a transaction, and so on. If you have a high cycle of repeat transactions, sales, then the data should be entered once, stored in the database and selected from a list when working with them in the future.

• Tasks which require human or technical resources.

For example, you need to take pictures of thousands of objects around the country. You need to hire an employee, give him a cool camera, make a lot of acts of property transfer, train him to take photos and upload huge files to the cloud. Or you can make an app that any employee can download to their phone, and when they take a photo of an object, it goes immediately into a database with marked data on geolocation, date, time and author of the photo. The cost of the app will pay for itself with one or two cameras, and employees can be hired, dismissed and without worrying that he still has expensive equipment and photos. Blocked access to the app and that’s all.

• Human factors and error probability.

For example, any document flow in a company. If you use a template of documents in which employees only change the date and counterparties with details, all this is perfectly automated and no one else will make a mistake in the document. Or, with a complex system of forming data on the application or order, you can build a system of validation of the entered data. For example, on passport data. When selecting the country and type of document, a mask is applied, and it is impossible to enter with an error. Although practice shows the wonders of human skill, when entering data by mask.

The question “why” is solved. Now let’s start in order: let’s look at the company and try to develop an understanding of where and what can be automated.

A small digression. Here I’m not trying to talk about the methodology of business processes. How to build processes in a company, what requirements to the processes should be specified and how the process is implemented in the company through instructions, regulations, the image of the final result and so on. This area is more relevant to business analysts, managers and consultants in managing company processes.

Yandex GPT recommends the following information on this topic:

Here are some materials worth reading about how to build processes in a company:

• “A Guide to Business Process Improvement,” Harvard Business School.
• “Business Processes. Tools for Improvement,” Bjorn Andersen.
• “Purpose. The process of continuous improvement,” Eliyahu Goldratt, Jeff Cox.
• “Business Process Optimization. Documenting, analyzing, managing, optimizing,” James Harrington.
• “A process approach to management. Modeling of business processes”, Vladimir Repin, Vitaly Eliferov.
• “Business processes. How to describe, debug and implement them”, Mikhail Rybakov.

I won’t argue with her and I also recommend this literature. But we’re not going to talk here about how to build a business process, the next step is how to automate it. And I will talk about automation only from the IT side. In other words, what technologies can be applied to automate the process.

What I like about automation through IT. This process requires resources: zeros and ones. And there is an unlimited number of them in nature, so you can automate and digitize a lot of things, but not everything.

Which business processes there are in a company to be automated.

So, we have a set of business processes in our company. How do we understand which of them must be automated, which of them can be automated, which of them are better not automated, and which processes cannot be automated?

When a new project comes to us, we ask to show the structure of the company from the point of processes.

The classic structure of most companies looks like this:

Sales and marketing processes:

• Generating and managing potential customers.
• Management of marketing campaigns and advertising.
• Automation of the sales and ordering process.

Customer relationship management (CRM) processes:

• Managing and interacting with a customer database.
• Tracking and analyzing customer activity and feedback.

Enterprise Resource Planning (ERP) processes:

• Inventory and stock management.
• Management of finance, accounting and financial analysis.

Production and operations management processes:

• Production operations planning and production resource management.
• Quality management and process control.

Human resource (HR) management processes:

• Recruiting and hiring staff.
• Time management and salary management.

Customer service and support processes:

• Handling customer requests and complaints.
• Providing technical support and consultations.

Project and task management processes:

• Planning, tracking and managing project execution.
• Task management and resource allocation.

Analytical and reporting processes:

• Collect, process and analyze data for decision making.
• Generate reports and dashboards to monitor key performance indicators.

The more detailed the structure is described, the better.

Next, we ask to put the following tags next to each process.

What is the process in terms of importance to the company:

• Primary
• Additional

How this process affects money:

• Affects money directly
• Does not affect money directly

If the process affects the company’s money directly, additionally put:

• Saves the customer money
• Increases the check from the customer
• Saves the company money
• Helps the company earn more money

Relative to employees:

• Monitor employees
• Help employees

Relative to risks of error:

• High risk of error
• Low risk of error

Relative to scalability of the business:

• Scales with the company
• Does not scale with the company

In relation to the degree of variability:

• The process is linear with no branching
• The process is not linear and has many extreme scenarios

It is possible to create a custom tag list for each company to help you and the owner understand how to start. We parse out the framework that we use in-house at the presale level. During the requirements gathering and formation phase, everything is detailed and customized.

Now let’s imagine that one process collected the following tags:

• Primary
• Affects money directly
• Helps the company earn more money
• Helps employees
• High risk of errors
• Scales with the company
• The process is linear with no branching

What can be in practice? In 90% of cases in service companies, it is work with leads. This is the main process of the company, because if there are no leads, everything that came before it (marketing) and everything that comes after it — doesn’t make any sense at all. Does it affect money? 100%. Does it help the company make more money? 100%. Does it help employees? Yes. Any head of sales will tell you: no automated funnel and notifications means you don’t have sales. High risk of error? Yes. Imagine you forgot to call a lead, or send him a Commercial Offer when he asked for one. Does the number of leads scale with the company? Yes. The bigger the company, the more leads (or higher the level of leads). Is the process linear with no branching? As a general rule, yes. A company has about 10–20 steps in sales with no particular extreme scenarios that are hard to program.

In summary, the owner realizes that this process is the first priority on the road to automation.

But there can be another situation. Take, for example, a construction. Each area has tools that are issued to employees. Tools are stolen, lost, forgotten, broken. In a huge construction company, this is not a core process that makes money or helps earn customers. A lost hammer doesn’t destroy the economics of district construction. But it saves the company money, keeps employees under control, and scales with the company. What we did for our client: we uploaded the employee base and tools, printed a QR on the tool and a master, when receiving the tool, scans the QR and selects an employee in the app. When the tool is returned, it is removed from the employee. That’s all. The cost of the app pays for itself with one season and increases discipline.

This is a first approach to where automation is worth starting.

The second approach is to see the bottleneck of your company. By looking at your processes and tagging them you can see what is preventing you from growing. If that bottleneck can be removed through automation, then it’s a good point to start with.

For example, creating a typical package for a client takes 40% of a sales manager’s time. And automating the process reduces that time to 1%. You’ll end up with 39% additional employee time that could be spent on sales.

The Bottleneck Analysis methodology is aimed at identifying bottlenecks in business processes that slow down or block the achievement of company goals. The main idea is to identify the stages or resources that are limiting factors for the fulfillment of the process as a whole.

Several methodologies that have similar principles and goals to the Bottleneck Analysis methodology include the following:

• Theory of Constraints (TOC): TOC is a systematic approach to business management that focuses on identifying and resolving limitations which prevent a company from achieving its goals. Like the bottleneck methodology, TOC recognizes bottlenecks in business processes and aims to resolve them to improve productivity and efficiency.
• Ishikawa Diagram or Fishbone Diagram: It is a quality management tool that is used to analyze and identify causes, problems or weaknesses in business processes. Ishikawa Diagram helps to identify the main factors affecting a process and can help to identify bottlenecks that may be causing problems.
• DMAIC (Define, Measure, Analyze, Improve, Control): It is a six-step methodology used within Six Sigma to improve the quality of business processes. By performing the Analyze stage of DMAIC, companies can discover bottlenecks and problem areas that can be addressed to improve performance.
• PDCA (Plan-Do-Check-Act): This is a continuous improvement methodology, also known as the Schickhart Cycle. In this methodology, the results of the Plan are analyzed to identify problems and bottlenecks, which are then corrected in the Act phase.

And the theory of inventive problem solving is a systematic methodological approach to solving problems and inventing new solutions, which was developed by Heinrich Altshuller in 1946 in the USSR.

The third approach we take in terms of choosing a process to start with. This relates more to the approach and methodology than to the framework for determining the need.

• Process automation from the beginning and incremental automation of the whole company chain.
• Process automation from the central point and incremental expansion to other departments.

In other words, the first principle is a chain of processes and we start with the first link. The second is a pyramid, where we start at the top and go down the pyramid.

The first option, the chain, is suitable when the company is a beginner and wants to introduce automation step by step, starting from the first department. Or vice versa, a large company with established processes wants to implement automation step by step, process by process. With this approach, the team feels comfortable immersing into the processes, starting with employees, staff, and so on.

The second scenario is when we start with a central process. We can create a system that automates the document flow, because this is the process from which the business has decided to start automating. And starting with it, we expand to nearby processes that link to that central process.

If talking about smart books that will tell you more about our methods, we’ll recommend techniques that help you understand which processes are worth automating.

• Business Process Analysis: Conducting a detailed analysis of the company’s current business processes to identify bottlenecks, routine operations and tasks that can be automated. Using techniques such as BPMN (Business Process Model and Notation) to model and document current processes.
• SWOT Analysis: Evaluation of the strengths and weaknesses of the company’s current business processes, as well as opportunities and threats that may affect its operations. Identify processes where automation can improve the company’s strengths or resolve weaknesses.
• Priority Matrix: Creating a matrix that evaluates business processes by such criteria as importance to the business, complexity, and automation costs. Selecting processes with the highest priority for automation based on the evaluation results.
• ICE methodology (Impact, Confidence, Effort): Assessing the potential business impact of automation, confidence in successful implementation, and cost of implementation. Identify processes with the greatest potential for automation based on high impact, high confidence and low cost.
• Low-Hanging Fruit Principle: Identify “low-hanging fruits” — processes that are easy to automate and deliver meaningful results with minimal effort and cost. Starting automation with such processes to achieve benefits quickly.

So, we have described the structure of the company and chosen the processes we want to start with. The most important question remains. Will automation pay for itself and will it be profitable for the business?

When we have chosen a process, we have to calculate:

• the cost of the process in the company in its current state;
• the cost of automating the process;
• the benefit from automation expressed in money;
• payback period.

For example:

• a manager costs the company $1,000;
• handles 100 requests a day;
• makes 10 sales for $400;
• it costs $10,000 to automate requests and workflow;
• it will increase the processing of requests and orders by 40%, which will be 140 requests per day and 14 sales;
• which means it would bring $560 per day, not $400, which is $160 per day plus;
• 10,000$ is 62.5 days payback per employee, if a company has 10 employees, payback will be in a month.

Of course, I took the numbers as an example, but you have to understand the logic in the calculations. Since sometimes there are such complex processes in terms of extreme scenarios that don’t affect money, the cost of implementation will be colossally expensive. For example, the order of photographing outdoor advertising objects in a city, is such a manual process and cannot be automated, as the objects can be next to each other, on top of each other and neither AI nor geolocation will help. And the cost of an employee who will come and understand what to take a photo of and how to sign, will not change in any way from this implementation.

But sometimes there are situations when the process will not pay back, but it is important. So these costs should be spent by the company as innovation and optimization costs, without expecting payback.

And the final question that you should decide for yourself in the company is whether to carry out automation on ready-made solutions or to create everything individually for yourself.

Discussions among developers on this issue are similar to the debates about Android and iOS, Nike and Adidas, Coca-Cola and Pepsi.

We think both approaches have business value. Implementing automation based on ready-made solutions give you speed of implementation, ease of implementation, and of course, the cost is much lower than custom development.

Custom development is longer, more complex, more expensive, but it fits your company perfectly, serves your processes rather than you customizing processes to fit the solution and allows you to not just scale, but create a digital copy of your company.

When deciding on this topic, we recommend talking to representatives from both sides and deciding for yourself.

So, let’s summarize. Is automation important for a company? Yes.

How to approach this process:

• Divide your company into departments and describe the processes within the departments.
• Label each process with tags that characterize the process specifically for your company.
• Identify the most important process that affects money or select a process from the point of view of a bottleneck in the company.
• Determine its payback period.
• Choose a ready-made solution or a team that will develop a solution customized for you.
• Move on to implementation.

This is the first material we have dedicated to automation and digitization of the company. Then there will be topics that will step-by-step reveal the other aspects of a company’s digital transformation.

In the next material, I will tell you how, after the automation of business processes, we move on to the digitization of the company. Then there will be another article about how the process of developing such products takes place.

An interesting topic will be about how such solutions can become a product for a company to make money from. I will also talk about how we developed and implemented our own ERP system in the company and automated the product development processes.

If you are interested in what processes you can automate in your company through the development of a customized ERP and CRM system — welcome to our company!

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