How to efficiently carry out a digital transformation of the franchise chain with high returns on investment?

digital transformation

How to efficiently carry out a digital transformation of the franchise chain with high returns on investment?

Digital transformation, artificial intelligence, cloud technologies, Internet of Things… We hear about it every day, but which of these technologies should be implemented in a franchise network? Our clients often feel lost in the maze of technological terms and wonder what solutions will actually allow them to facilitate their daily work, automate manual activities and improve the franchisee’s experience at every stage of their life cycle.

On the other hand, with each investment, including digital transformation, franchisors want to achieve the highest possible ROI. Here the question arises, which processes should be digitized in the first place to reduce costs, or how to use technology to scale business and increase revenues?

In this article, I will share the best practices that will allow you to answer these questions, as well as give examples of functionalities that work well in franchise networks.

How to properly plan your digital transformation?

Let’s start with the plan. Below, I present examples of stages that we go through with our clients in order to develop and implement a digitization strategy in their companies. This should be accompanied by the effective implementation of selected technologies.

  • Needs analysis
  • Prioritizing activities
  • Business process optimization
  • Implementation of cloud technologies
  • Implementation of artificial intelligence and IoT

 

Needs analysis – which business processes require optimization?

The first step is to analyze the processes in the organization and define which of them are the most ineffective and take the most time for both franchisees and employees of the head office on the franchisor’s side.

Let’s look at the perspective of the first group. What is the most burdensome and time-consuming in their daily work? Here are some examples:

  • Onboarding in the franchise chain. The franchisee must spend a lot of time on all formalities related to the opening of a store and cooperation, as well as learning the processes of a given organization in order to start running their store effectively.
  • Ordering goods. Oftentimes, franchisees order hundreds of products every day that they have to add manually to the order.
  • Problem-solving during daily work. What to do when there is a mismatch in an invoice or delivery or a new model of a payment terminal has been introduced, and it’s unclear how to use it? Due to the lack of a well-organized knowledge base, franchisees need to contact the Service Center or their regional representative to find a solution.
  • Reporting and repairing failures. When a refrigerator full of products breaks down, a well-structured process is needed to efficiently submit the case, prioritize it, and repair the equipment quickly. Often, franchisees can report a failure, but they can’t monitor the progress of the case, so they waste time contacting the Service Center by phone. Watch a video on the crash reporting process.
  • No overall view of the stores on the web. Franchisees need to have an insight into the results of their store, a view of all fixed assets and the history of equipment failures, as well as a list of audits that they can always refer to. Often, they have to search for this information in different, unrelated systems, and once again waste valuable time to draw conclusions about their business.

Once these processes are defined, the potential business effect of their optimization is calculated. For example, the time spent on onboarding a new franchisee, which is accordingly shortened by technology, or placing orders, which can also be minimized.

From the point of view of the company’s headquarters, another benefit is the reduction of time spent on repetitive activities in servicing franchisees. The hours saved can be spent on developing the business and attracting new franchisees, and with a growing business, one person can service more franchisees or candidates.

Prioritizing activities – selecting areas that will bring the greatest effects

Once you have defined all of the ineffective areas, it is worth considering where optimization will bring the most business benefits – such as lowering costs or increasing revenues.

We also distinguish qualitative effects, i.e. those whose financial benefits are difficult to measure immediately, but based on the knowledge of the industry and signals from the customer, we know that they will positively affect the business in the long run. An example of functionality that produces qualitative effects may be the introduction of a portal or a mobile application for franchisees, where they can contact the headquarters directly, look for answers to questions, report problems and track the progress of their solution, or have access to all data about their own store.

Prioritization means distinguishing the most important processes and functionalities that produce the greatest quantitative and qualitative effect.

Optimization of business processes – what is worth improving before we implement the technology?

Often, technology alone is not enough to achieve these results. When deciding which processes should be optimized first, consider whether the inefficiencies are due to a lack of technology alone, or maybe partly because processes are poorly constructed. A frequent mistake in digital transformations is an attempt to digitize old and ineffective processes, which reduces the convenience of using the future system and the business effects of the implementation.

Process optimization can be done in two ways. The first is to list the steps of the current process. They can be described, for example, using the BPMN (Business Process Model and Notation) method. Then it is possible to determine which steps of the process require the most manual actions or are the most repetitive. These are the steps that should be digitized. In this approach, the target processes will not differ much from the original ones and their digitization will certainly help eliminate bottlenecks.

The second way is to redesign the whole process. Teams carry out their tasks in the originally defined way, while business needs have long changed, and new, often unrelated IT solutions have arrived and are used. In order to design the process, it is necessary to define the goal that the given operations should achieve and set the steps necessary to achieve it, and then distribute roles among the ones involved. 

Ultimately, it is worth shortening the execution time of this process and minimizing the number of people involved.

 

Our Digital Advisory department can help you analyze needs, optimize processes, and calculate business effects.

 

Implementation of cloud technologies – execution of a good plan

In this section, I am going to use an example of the imaginary network Your Store, which you might already know from the clip. Let’s assume that the franchisor has decided to digitize selected processes that currently have the highest priority and the expected business results, defined during the previous stages.

The company wants to automate the verification, training, and onboarding process – so that one person can service more candidates and, with the same team size, recruit more and more franchisees. Your Store also wants to implement a portal for franchisees to allow access to an interactive knowledge base, thanks to which the users will be able to solve everyday problems faster and more independently. The portal should include access to all financial data about the store, audit history, and enable users to report e.g. a failure case.

The implementation of technology is a key moment in the entire digital transformation. In our practice, we start with a pre-implementation analysis. We then conduct in-depth interviews about the processes to be digitized with their users to give them the best experience of the target system. The analysis also covers the IT ecosystem, because the implemented platform is often linked to data from other databases, e.g. from the financial system.

During the implementation, individual parts of the system are delivered to the client, usually in two-week sprints. After each such period, users receive a presentation of subsequent effects and still have an impact on the shape of the target system.

After the implementation of the system has finished and the users can freely use it, the investment in digital transformation begins to bring first business and qualitative effects.

You might ask how best to measure these effects. To assess user satisfaction with the system, we often create special surveys or simply monitor which modules are being used and how often.

We also measure business effects: how many candidates there are per one recruiting employee before and after the implementation, how long it takes to create an order, how much time franchisees spend on administrative activities. This way, we are able to assess to what extent the goals you set at the stage of analysis of expectations and prioritization have been achieved.

AI implementation – additional optimization of processes that have been digitized

So when is the right time to implement the “fashionable” technologies that everyone is talking about? Most often this is the next phase of implementation, because thanks to IoT (the Internet of Things) or artificial intelligence, we can additionally improve the processes already digitized in the first phase.

For example: using IoT technology we can connect sensors to devices in the store and then a refrigerator failure will be detected and reported automatically and forwarded to the queue of cases that are usually handled by the system implemented at an earlier phase. Thanks to IoT, technology can replace humans in the first stage of the process.

In turn, artificial intelligence needs an adequate amount of data for its use to bring the expected results. When the history of recruitment processes is already in the system, we can identify and disqualify candidates with high risk faster, which additionally saves the recruitment department time.

In the system, we can also have the order history of each franchisee at our disposal. Based on it, orders can be created automatically. The only task that remains for the franchisee is to accept them. Another improvement of this process can be based on Adaptive Vision – after taking a photo of store shelves, the system assesses the state of supply and calculates the need for the next order, in cooperation with artificial intelligence.

In this article, I’ve presented a model process that can be used in the creation and execution of a digital strategy in the franchise industry. Of course, every business is different, so our approach differs depending on the needs of the client we work with.

Feel free to contact us if you need support at any stage of the digital transformation or if you could use some inspiration to decide which functionalities to implement for the best business or quality effects.

 

Article by Justyna Jezierska.

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