"Process Mining 101" with Celonis' Chris Radich

All right, TGIF everyone. It's Friday before a long 3-day weekend. Welcome to In Case You Missed It, GovTech Weekly Government Technology News Roundup, where we're going to take a look at some of the biggest GovTech news from the past week and give you our thoughts on what it means for government, citizens, and the market. I'm Dustin Haisler. Joe Morris is on paternity leave as he and his family welcomed his son Max into the world this week. Not to worry, he'll be back soon enough. Now today we're going to dive deep into process mining and execution management, a new state-of-the-art approach to understanding and optimizing your existing processes and technology investments. We'll be chatting with a seasoned industry expert from Celonis to hear all about it right after we cover the news of the week. So let's dive right into some of the stories that caught my attention this week in the world of GovTech. We'll start first with a story right out of Chicago, and Mayor Lightfoot in Chicago announced some new measures in Chicago that are really focused on digital services strategies for the city. Now, what was notable about this is she put 2 of her seasoned experts at the helm of these new measures and was really looking at modernizing some of their underlying legacy IT systems, broadening data access, looking at boosting, you know, residents' ability to access these services, but it also called out specifically privacy and security. And so I think we're going to start to see a lot more of these priorities come from policymakers as they look at how do we balance the need to provide new modern digital services modernize processes, some of which we're going to talk about today, but also do it in a way that balances kind of the residents' privacy and security as a part of that. So a big initiative and some key measures out of Chicago that we'll be tracking on in the weeks to come. Next up, we got a Forbes piece that caught our attention this week around rebuilding our public sector before the next crisis. And this was a really interesting piece that kind of dove into some of the kind of hardship that agencies are facing. And as you've heard us talk on, in case you missed it before, Workforce is a major challenge for state and local government agencies. Now, one of the things that was fascinating about this piece is it called out some new research from CAP that talked about how we actually haven't quite recovered from a workforce standpoint to where we were before the pandemic. And also, we're operating right now from a worker standpoint below 2008 recession levels, which shows that there is a greater need than ever to find new ways, not just to bring new talent into government and to find innovative approaches for that, But also to augment what we already have and to streamline those processes and to make sure that we can actually do more with less. I mean, we saw the pandemic drove a whole slew of new innovations around technologies that helped augment existing call center employees. This is really front and center as we kind of think about that. Now, one thing that stood out for me in this article too is it kind of makes a call to action to agencies as we sit on this once-in-a-generation federal funding opportunity. It's very easy to kind of use the, you know, formulaic approach to take the revenues that you're going to get from some of this federal funding and backfill revenue shortfalls that you had. But it's also a unique moment in time where you can invest in the future and you can look at leveraging that funding to not just help bridge and kind of build the employment levels that we need to get to the next, you know, pandemic or whatever comes next, but also to prepare for the future. I mean, we've got a lot of technical debt, legacy technology infrastructure, So now's the time to really look at how do we optimize that? How do we get to that next level? How do we lay the foundation for the future of tech by modernizing what we have and the processes that sit on top of it? So a lot of really interesting nuggets in that. And the last piece that caught my attention is just, of course, anything that has, you know, some fun use cases around artificial intelligence always is top of mind for me. Oregon Utilities announced that they're going to be using some artificial intelligence and data to predict wildfire threats. And so This is a key aspect of, you know, looking at leveraging data for risk mitigation. So of course, you know, we're not to the Minority Report-esque ability to say a fire's gonna start in a certain quadrant. However, we can identify potential risk areas associated with weather and wind and other types of data that we do have more real-time access to today. So this is a new program that's really designed to make use of all of that data to start to identify some of those threats. And they can actually, you know, leverage that as a basis. Maybe they have to go and clear area or, you know, take some of the underlying brush and some of the forests that have been identified as an area of potential risk and they can clear it out. So a great use of artificial intelligence and always fun to see AI use cases in the public sector. So those are some of the key stories. The last one that kind of caught my attention is as we look at, you know, our guest and really breaking down this new kind of state-of-the-art approach when it comes to process mining and execution management, It's all around this post and this great blog post about building, you know, value within government service delivery and transparency and other things. And so we're going to dive into this, and I'd like to now, you know, bring in our special guest, Chris Radich, the Vice President of Solution Engineering for Public Sector at Celonis. Now, Chris and team, he's got a whole team of experts on a crusade to remove decades of friction within Process Mining Solutions. So Chris, we're going to break all of that down. You know, we titled this show the 101 of Process Mining, so we're going to dive into all of that and break it down for government so they understand how to make sense of it. But first of all, thanks for carving some time out to join us.

Of course, thank you for having me, Dustin. And before I begin, it's, it's always important to thank the public servants listening, serving our country. Uh, big weekend coming up, the 4th of July. Please get some well-deserved rest and Enjoy the time off. Stay safe.

Absolutely. So, you know, maybe to start, you know, you've got a seasoned history of working with government agencies on all kinds of public sector innovation. So let's learn a little bit more about you, your background, and your role at Celonis.

Of course. Of course. So you stole the tagline of removing decades of friction. That is our vision. And I've had a career that kind of led me here where I've been privileged to work at top technology companies over 17 years, serving the public sector that entire journey. And from IBM to Gartner to Salesforce, I've always found myself a little bit before the big thing hits, seeking it out and going after it. So it could be service-oriented architecture to cloud technologies to modern CX. And now this thing, process mining, folks are starting to hear about it, but this is definitely an in-case-you-missed-it type moment where, um, how— what is process mining? For one, I believe, I really do, back to that vision statement, we could fundamentally change the government ecosystem. Government relies on institutional knowledge. They rely on consultants, contractors to provide recommendations. on how things should be done, and it's built up friction over the years. So I saw this technology, I saw the ability to improve government from the highest levels all the way down to the lowest levels in meaningful ways, and I'm looking forward to sharing just how that vision can come to life over the next 12 months.

Yeah, super exciting times. And as you said, it's— the world is moving so fast, this is definitely one of those in-case-you-missed-it moments. Now, You know, Celonis provides execution management capabilities to a wide range of clients in multiple industries across the world, including state and local government. I'd love for you to maybe start with, let's define that, you know, what is execution management and what should state and local leaders take note of as it relates to it?

Yeah, well, I start with the category where if you dig into the category of process mining, it's actually the fastest growing category in enterprise software. So that should show state and local customers and leaders and integrators who serve the market that you always look for those macro trends. They always find their way to public sector. 50% of Fortune 500 companies are exploring the category, another great indicator. So what is it though? It's an analytical discipline. So it's a way to use your own data Your data and metadata that exists within your enterprise systems to discover, monitor, and optimize processes. And ultimately, the simple way to think of it, and I'm going to go into much more depth, your agency can ultimately create an X-ray to remove that process friction, just like you'd go to the, to the doctor's office to understand what's going wrong. And to get a full, complete objective view, you can X-ray your processes using data within your enterprise.

Yeah, that's super interesting. So let's dig into that a little bit because, you know, agencies right now have so much to do and they're focused on how do we execute, how do we ship, how do we, you know, get all of our foundation in place and, you know, optimize what we had. I just talked about some of the, you know, top needs. Agencies are strapped for, you know, just workforce talent and they have to do more with less. So where does this process mining fit into the ability for agencies to execute better?

I have to talk about 2 startling— I'll call them startling statistics, and they're correlated. Let me just rattle these off. So Forrester, 72% of organizations are using manual methods for process discovery. That is a startling statistic. And then you layer on McKinsey, 80% of system transformations in government fail. We've got lots of success stories over the pandemic, but if you really dig in, there's still lots of failure going on with these big IT modernization investments. And why are these correlated? Well, do we ever really have a single source of truth, an objective view of the current state when we enter into a modernization program? And I'm not sure we do. We're always playing catch-up, and we're really good here at Salonus at helping agencies with preparing for systems transformation because it's not institutional knowledge, or even worse, a vendor leading the way. You have such a great baseline to make decisions and on where you should really focus improvements. Sometimes those improvements should be investments in the legacy architecture. Your legacy processes. So we're— our sweet spot, we're great at shared services, back office procurement, financial ERPs, because there's large data sets. We've built out models that drive value. We're also really bullish that we're going to truly impact this market, the state and local market, as citizens-facing service providers. So where there is a major enterprise system, where there is a database, where you rely on SMEs for process knowledge is where we want to help. Unemployment insurance, HHS, Medicaid, DMV, these are all prime areas we're going to make an impact.

Fascinating. So I want to dive into the x-ray kind of analogy that you said because, you know, we're doing a one-on-one on process mining, so How does it actually work? Can you break it down for us?

All right, all right. An X-ray makes the invisible visible. We know that, and it probably seems a bit conceptual at the moment, but what we do is we use information stored in event logs. Every system with a relational database, mostly every system produces event logs, and this gives you metadata, your digital footprint, Of how a process is moving through an agency. So we have that data, we process the data, we then use advanced algorithms. This is where the magic happens. I— when I demo the software, I call it a magic trick. And we're using advanced algorithms, machine learning, and statistical methods ultimately to find patterns in the data, tracing that unique ID through the system. And I'll tell you, folks who see it, they can't believe that they had this data all along and they were doing manual discovery trying to find these answers. So these patterns are then visualized just like you would see a process flow in Visio. This is your most common path will be visualized. And this is without, without modeling it, without having a business analyst modeling it. And from there, you can double-click into the top variants. So we find a lot of processes have 100, 200, 300, even into the thousands of variants of how they're being executed in an organization. And you can have full visibility into those variants. It can be applied to just about any process. And for us, it's about finding the biggest business problems. Because the technology is that powerful.

Wow. That's kind of like an MRI, I think.

You know what? I was going to say that. We use the X-ray term quite often, and I think we're underselling it. It is more like an MRI.

So, you know, technical debt and legacy processes are, you know, such a common reality in state and local agencies. How can agencies leverage technology like this to maximize those existing investments, kind of as you mentioned earlier, and then modernize those legacy processes?

Yeah, I mean, the reality is, and you, I know you track this very closely, Dustin, the reality is agencies at all levels, any agency I've seen, they keep adding on enterprise systems, quite often not retiring legacy. And the stack has gotten more complex. I've been tracking and, and helping drive cloud transformation since 2010. And cloud sprawl has made the problem worse. So how do we help? They're a layer. You put a layer on top of them to make sense of the processes running in your organization. We often call it the brain of the organization. I know that's, that's a bit intense, but it allows you, as I was saying earlier, you can understand where the inefficiencies are in the process before committing to a technology decision. at the process level, rather than saying this is the legacy stack, we need a modern stack, and maybe then you transform all processes. Or in some cases, you take the legacy stack, you document those into processes, and you replicate them on a modern stack.

That—

there's too much risk in that approach, far too much risk without any objective view going into those multi-million or billion-dollar investments. So with this approach, you can make informed decisions whether you invest in legacy or migrate to a new modern system.

So who's driving the use of this technology in the agencies that you're working with? Is it the CIO, CTO? Are you seeing line of business leaders that need access and understanding to that data? Who's driving it?

That appears to be a trick question. So I'll give a nuanced answer, both. There's a process owner, I mean, just think about this. There's a process owner and a system owner for every single business process across government. Those where there aren't process and system owners probably aren't nearly as important, and that's where we start, is we want to find a business problem, and a line of business leader who wants to drive process excellence. There's organizational ways we do that, sometimes a center of excellence, and then we engage with IT ultimately to manage security compliance implementation and bring it into their data and analytics portfolio. But the initiatives we go after with that two-pronged approach, which is Just makes good sense, good logical sense in terms of IT and line of business should be involved. Our systems migration projects, shared service organizations looking to drive effectiveness, process excellence, COEs at the agency level, and of course citizen experience initiatives for those front office service providers.

Let's double-click on this citizen initiatives dynamic because, you know, not all the processes that agencies are struggling with modernizing are kind of back office. Now you have so many things that are transactional that are, you know, citizen-facing. You know, where does a citizen process fit into this?

Wonderful question. We think about citizen-facing programs every day we wake up. And that goes back years for me. The pandemic certainly brought that entire problem space to life. But benefits enrollment, let's use that. It's the most important process across all state and local programs. Many of these organizations invested in human-centered design, voice of the customer, but you get limited transparency into process execution. So you might improve your portal, your website, you might trim down some citizen steps to ultimately submit that application, but what's happening in the organization is what matters. That's where the— we've all felt that. That's where the bottlenecks and the challenges on CX occur. So that's where process mining comes in. You can understand with I'll use the word precision, how the process is being executed. You can then make across front office all the way through back office with your caseworkers changes that are going to improve CX, not just look at this journey model that doesn't fix the root cause.

Yeah, yeah, I think that's fascinating. It's such an important need because so many agencies are focused on that CX level right now, and they're looking at modernizing those processes. But it's not just by creating net new, it's also by understanding what you already have, because they flow from there all the way to the back. So, you know, with agencies that are so strapped for time, for financial resources, human capital, you know, what are some of the outputs that can be expected by leveraging process mining, and any standout examples from your work across the country?

This is an exciting one, and I've always loved the term, and I've— it seems like since I've started here at Celonis, I've heard it more, but shift from low-value to high-value work. So we're removing friction, but that's the shift we're looking to create. Doesn't matter what type of customer you are, shared service or citizen service. And a good recent example of low-value work we uncovered was There's a customer in the public sector that was using 4 million hours of human resources to rework block purchase orders in their procurement process. So imagine that, where with Precision you can get to the purchase order level and show exactly contracts and how that is holding up, A, the transaction being completed, But more importantly, the low-value work that's going on in the organization that shouldn't be done. Imagine what you could do with 4 million hours in your agency as a leader. You could get things done that are headline-worthy in a positive way, and you could do this for any process.

You could diagnose and then fix inefficiencies that you didn't even know existed, or you knew existed but simply couldn't get Yeah, I think that's something that you kind of touched on at the beginning, that single source of truth when you embark upon these projects. Like, do you really know where you're starting? One thing I want to double-click on here is just, you know, kind of when it comes to prioritization, there's so much right now that IT leaders and business leaders are focusing on. So, you know, why is this something that is really vital to look at now, kind of ahead of the curve, versus waiting and trying to deploy something like this, you know, down the road in the future once you've kind of worked through some of the, the other elements you're looking at?

Well, I, I think getting started now allows you to get in front of any mission challenge. Unemployment claims is a good one. I, I'd like to use improper payments though as just a way to illuminate how you could get in front of a problem by investing now. That's a pervasive problem across government. Why— I don't know if you've seen this, Dustin, but the White House released an analysis, and this is all levels of government, and it was due to UI improper payments. Between fiscal '20 and '21, government-wide improper payment rate rose from 5.6% to 7.2% on top of all payments transacted through government. So imagine that we were ahead of this challenge, managing our payments process with full transparency. So you X-ray your payments process now, you make meaningful changes, and you could probably prevent that 1.6%, which is dramatic, on improper payments increase. You could do this for citizen service challenges. All of the areas that I, that I had mentioned, you're suddenly in a proactive position rather than— I think sometimes we find ourselves trying to combat these huge challenges like improper payments without anything beyond institutional knowledge. I mean, that's a tough position as a government leader, and these are complex programs. Let's remember that. Let's have some empathy towards how complicated these programs are. This is what excites me about it's never too late nor too early to get started.

Yeah, I love that. And it's applicable to everyone regardless of their current maturity from an environment standpoint. So you start with where you're at. So now, you know, we know agencies are all looking to the future and the uncertain future that we have, and you've got behaviors and technologies that just seem to be exponentially changing, and it becomes hard to keep up. So where do you see something like this fitting in helping agencies prepare for that uncertain future?

This is such a good question because I think the greatest risk to government is reliance on institutional knowledge. I'd mentioned that a little bit earlier, but just think about that for a moment. For us that have worked in this space, we know that often it's one process owner or SME with all institutional process knowledge, whether it's payments, whether it's your benefits application process, it's always one SME. Even worse, it might be a contractor who's taken full control of institutional knowledge without documenting it. Here's a good statistic. I really like this one. Total separation rate for state and local employers is 22.6% annually. So imagine if your process SME leaves tomorrow. Where does that leave you with prepping for your systems transformation or solving a crisis, the next crisis that arises? So it gets you to deep process understanding as a core competency, not a single-threaded siloed competency, which I see this in every organization, every single one.

Yeah, I think that's a key point with the institutional knowledge risk of them leaving the organization. I mean, we've seen that 1 in 4 public servants is eligible for retirement and we've called it the silver tsunami forever, but that tsunami is finally making landfall. And that's a huge risk for agencies. It's great for them because they'll come back as consultants and they can make more money on that side. organizationally, it's a huge challenge when it comes to how do you deal with the gaps of knowledge that are existing and understanding how to deal with that and preparing for uncertain realities with those existing investments. So I think that's a really good point. Now, I think that our audience is probably also really interested in where do you start, right? I mean, there's so much that's here that we kind of talked about today when it comes to the art of the possible and and kind of what this can unlock for agencies. But for those that are listening in, you know, what would you advise them to do to kind of make use of process mining as they look at maximizing those existing investments and modernizing their processes for that uncertain future?

I always like to keep it simple, and to keep it simple here, find one process, one business process that you've been challenged with. It could be a systems transformation you're challenged to prepare for. It could be a payments challenge, improper payments. It could be a CX challenge. Find one process, have a process mining champion identified to lead the effort, and implement a process mining project. We're talking 6 to 8 weeks here that could change the trajectory of your agency. It could change from institutional knowledge to deep process understanding as a competency. But just start with one process. That's what we advise our customers to do across the globe, and they see great success and great momentum. Their process maturity goes way up. Just start with one.

Yeah, I love that. Start simple and learn from that and grow. So now the easiest question I have for you today is where can our audience go to learn more about your technology?

2 places. For one, I'd love you to reach out to me direct on LinkedIn. I love to build relationships throughout the state and local ecosystem, and I'm here to help. I'm here to drive this crusade. on process friction throughout government. Also go to solonis.com or our link, follow us on LinkedIn. There's great resources that can get you up to speed and educated on process mining and how we're a leader in the category.

Fantastic. And we'll put all of those links in our show notes so that you can connect with Chris and go to solonis.com to learn more about what they're working on. So that's all the time that we have for today. We covered a lot of ground as we kind of dove into this new state-of-the-art approach to help you maximize your existing technology investments and prepare for that uncertain future. So thanks again to Chris for carving some time out to join us today and to Celonis for helping make this episode possible. You'll definitely want to check out those show notes to learn more. And just appreciate our audience for sticking in with us for the last 30 minutes as we kind of dove into this 101. You want to join us next Friday at 12:00 PM Pacific time as we chat with the author of Radically Human: How New Technology Is Transforming Business and Shaping Our Future. Don't want to miss it. Until then, have a great holiday weekend and happy 4th of July, everyone.