Many businesses aiming for efficiency have developed detailed plans for how they should operate. These plans are like the organization’s genetic code and require significant time and resources to fine-tune. But what’s the use if they aren’t adhered to?
Many businesses struggle to gauge the extent to which their operations adhere to established rules and regulations. The absence of clarity regarding costly deviations can trigger feelings of uncertainty and frustration.
These challenges become evident across various departments and scenarios, including process enhancement, financial reporting, ERP migrations, automation initiatives, and compliance efforts. Fortunately, the solution lies in conformance analysis within process mining.
Certain process mining software, like QPR ProcessAnalyzer, comes equipped with built-in conformance analysis, while others necessitate manual setup. Conformance analysis automatically assesses how closely the real process aligns with its predefined blueprint, delivering actionable insights.
What is conformance analysis?
Conformance analysis, in essence, involves a comparison between a pre-established process plan and the actual execution of that process using data sourced from corporate IT systems like ERP, CRM, or BPM.
These blueprints are prearranged rule sets that outline how business processes ought to function. They can depict the way the business is currently operated or how it should function in the future, often referred to as “to-be” models.
Below is an example of a process blueprint:
Conformance checking in process mining
Enterprises worldwide harness process mining to extract existing data about their business processes from corporate information systems. This practice ensures that processes are executed according to their intended design and comply with applicable regulations.
Process mining software, like QPR ProcessAnalyzer, autonomously generates process visualizations and identifies disparities between the predetermined blueprint and the current execution, facilitating an easy assessment of how faithfully the blueprint is adhered to in real-world scenarios.
Beyond conformance checks, process mining extends to the automatic calculation and monitoring of crucial key performance indicators (KPIs) for a process, such as lead times and process compliance. Furthermore, process mining software, such as QPR ProcessAnalyzer, can be configured to issue alerts or implement corrective measures when a deviation is detected.
Why conformance analysis is done with process mining
When individuals come across a business blueprint, there’s a tendency to presume that their business predominantly operates in accordance with it. It’s a common misconception that only a few minor deviations exist compared to the blueprint.
Yet, the reality often differs significantly, as illustrated below.
Conformance analysis unveils the presence of numerous deviations, ranging from hundreds to thousands, that diverge from the blueprint.
These variances can lead to unanticipated problems and process delays, underscoring the necessity to eliminate them. Conformance analysis serves as an excellent method for rectifying these process deviations and ensuring that the business adheres to the blueprint.
How conformance analysis is used in real-life
Conformance analysis stands out as an invaluable tool for two key reasons:
1. It eliminates the need for extensive time and effort to determine:
a. Whether there are issues with adhering to the blueprint.
b. The nature of these issues.
2. Conformance analysis automates the comparison of real-life process execution data with the blueprint to identify deviations.
This streamlined approach allows you to invest your time more productively in addressing process issues and enhancing overall efficiency.
Analyzing savings from harmonization
Conformance analysis finds utility in various scenarios for assessing the degree to which processes adhere to the blueprint and its impact on business performance.
For instance, conformance analysis can be applied to evaluate potential savings achievable through the standardization of processes. Consider the illustration below, which provides an example of an analysis of savings through process standardization.
Key Insights from the Analysis:
- Non-conformant cases result in a doubling of the process lead time.
- The process includes rework (price changes) that deviates from the blueprint.
- Rework negatively impacts on-time delivery rates.
Conformance analysis uncovers the consequences of not adhering to the blueprint. By aligning with the blueprint more consistently, the organization in this example could achieve the following advantages:
- Quicker process lead times.
- Reduced rework and waste.
- Lower capital and operational expenses.
Continuous improvement with measurable ROI
To gauge the extent of improvements, process mining users can leverage a business case calculator, which complements the automated conformance analysis. This tool assists in determining where to concentrate resources to yield the most substantial enhancements.
Reducing uncertainties within processes leads to a decrease in unpleasant surprises. Enhanced predictability in your operations enables you to meet customer commitments and regulatory compliance consistently. This predictability is essential not only for human-driven activities but also for various automation processes, ensuring they function as intended.
This not only enhances the customer experience but also elevates employee satisfaction by offering a more predictable and secure working environment.
ERP migration and transformation
Conformance analysis proves exceptionally valuable for organizations in the midst of or planning ERP migration and transformation initiatives. These endeavors often entail substantial time investments, which in turn heightens project risks.
By employing conformance analysis, these projects can be accelerated, significantly mitigating associated risks.
A prime illustration of this approach is the SAP S/4HANA Vectorial solution, which leverages SAP’s S/4HANA best practice blueprints as a foundation for its conformance analysis.
This process mining solution provides organizations with insights into the gap between their current process execution and S/4HANA best practices. It assesses how adopting the S/4HANA best practice blueprint would impact business performance.
IFRS revenue recognition rule
The IFRS revenue recognition rule specifies that companies should only recognize revenue once goods have been delivered. Conformance analysis can swiftly identify any violations of this rule by automatically checking whether invoices are generated before or after delivery, making it easy to spot discrepancies.
These examples have demonstrated the versatile applications of conformance analysis in process mining for analyzing and enhancing business processes in various ways.