Discovering the Impact of Regulation Changes on Processes: Findings from a Process Science Study in Finance
Antonia Wurzer, Sophie Hartl, Sandro Franzoi, Jan vom Brocke
This study investigates how regulatory changes, once embedded in a company's information systems, affect the dynamics of business processes. Using digital trace data from a European financial institution's trade order process combined with qualitative interviews, the researchers identified patterns between the implementation of new regulations and changes in process performance indicators.
Problem
In highly regulated industries like finance, organizations must constantly adapt their operations to evolving external regulations. However, there is little understanding of the dynamic, real-world effects that implementing these regulatory changes within IT systems has on the execution and performance of business processes over time.
Outcome
- Implementing regulatory changes in IT systems dynamically affects business processes, causing performance indicators to shift immediately or with a time delay. - Contextual factors, such as employee experience and the quality of training, significantly shape how processes adapt; insufficient training after a change can lead to more errors, process loops, and violations. - Different types of regulations (e.g., content-based vs. function-based) produce distinct impacts, with some streamlining processes and others increasing rework and complexity for employees. - The study highlights the need for businesses to move beyond a static view of compliance and proactively manage the dynamic interplay between regulation, system design, and user behavior.
Host: Welcome to A.I.S. Insights — powered by Living Knowledge. I’m your host, Anna Ivy Summers. Today, we're diving into a fascinating study titled "Discovering the Impact of Regulation Changes on Processes: Findings from a Process Science Study in Finance." Host: In short, it explores what really happens to a company's day-to-day operations after a new regulation is coded into its IT systems. With me to break it down is our analyst, Alex Ian Sutherland. Alex, welcome. Expert: Great to be here, Anna. Host: So, let's start with the big picture. Businesses in fields like finance are constantly dealing with new rules. What's the specific problem this study decided to tackle? Expert: The problem is that most companies treat compliance as a finish line. A new regulation comes out, they update their software, and they consider the job done. But they have very little visibility into what happens next. How does that change *actually* affect employees? Does it make their work smoother or more complicated? Does it create hidden risks or inefficiencies? Expert: This study addresses that gap. It looks at the dynamic, real-world ripple effects that these system changes have on business processes over time, which is something organizations have struggled to understand. Host: So it’s about the unintended consequences. How did the researchers go about measuring these ripples? Expert: They used a really clever dual approach. First, they analyzed what's called digital trace data. Think of it as the digital footprint employees leave behind when doing their jobs. They analyzed nearly 17,000 trade order processes from a European financial institution over six months. Expert: But data alone doesn't tell the whole story. So, they combined that quantitative data with qualitative insights—talking to the actual employees, the process owners and business analysts, to understand the context behind the numbers. This let them see not just *what* was happening, but *why*. Host: That combination of data and human insight sounds powerful. What were some of the key findings? Expert: There were three big ones. First, the impact of a change isn't always immediate. Sometimes a system update causes a sudden spike in problems, but other times the negative effects are delayed and pop up weeks later. It's not a simple cause-and-effect. Host: And the second finding? Expert: This one is crucial: the human factor matters immensely. The study found that things like employee experience and, most importantly, the quality of training had a huge impact on how processes adapted. Host: Can you give us an example? Expert: Absolutely. After one regulatory change related to ESG reporting was implemented, the data showed a sharp increase in the number of steps employees took to complete a task, and more process violations. The interviews revealed why: there was no structured training for the change. Employees were confused by a subtly altered interface, which led them to make more errors, repeat steps, and get frustrated. Host: So a small system update, without proper support, can actually hurt productivity. What was the final key finding? Expert: That not all regulatory changes are created equal. The study found that different types of regulations create very different outcomes. A change that automated the generation of a required document actually streamlined the process, making it leaner with fewer reworks. Expert: But in contrast, a change that added new manual tick-boxes for users to fill out increased complexity and rework, because employees found themselves having to go back and complete the new fields repeatedly. Host: This is incredibly practical. Let's move to the most important question for our listeners: why does this matter for their business? What are the key takeaways? Expert: The number one takeaway is to move beyond a static view of compliance. Implementing a change in your IT system isn't the end of the process; it's the beginning. Leaders need to proactively monitor how these changes are affecting workflows on the ground, and this study shows they can use their own system data to do it. Host: So, use your data to see the real impact. What's the next takeaway? Expert: Invest in change management, especially training. You can spend millions on a compliant system, but if you don't prepare your people, you could actually lower efficiency and increase errors. The study provides clear evidence that a lack of training directly leads to process loops and mistakes. A simple, proactive training plan is not a cost—it's an investment against future risk and inefficiency. Host: That’s a powerful point. And the final piece of advice? Expert: Understand the nature of the change before you implement it. Ask your teams: is this update automating a task for our employees, or is it adding a new manual burden? Answering that simple question can help you predict whether the change will be a helpful streamline or a frustrating new bottleneck, and you can plan your support and training accordingly. Host: Fantastic insights. So, to summarize for our listeners: compliance is a dynamic, ongoing process, not a one-time fix. The human factor, especially training, is absolutely critical to success. And finally, understanding the type of regulatory change can help you predict its true impact on your business. Host: Alex Ian Sutherland, thank you for making this complex study so clear and actionable for us. Expert: My pleasure, Anna. Host: And thank you for listening to A.I.S. Insights — powered by Living Knowledge. Join us next time as we uncover more valuable research for your business.
Process Science, Regulation, Change, Business Processes, Digital Trace Data, Dynamics
