Digital transformation has become one of the most used buzzwords these days. However, many business leaders still struggle with questions like – how do we achieve it? What are the steps to transform? Is it really worth the efforts? Because of the role that technology plays today in businesses’ ability to evolve, business leaders must lead their organisations through this era of digital transformation.
The myths surrounding digital transformation
The astonishing pace of change in the tech world is making it difficult to clearly understand digitalisation and fully grasp its implications in business. It has also led to several myths which are not only misleading but damaging to the overall vision of an organisation. Following are some of the most misleading ones, which have to be invalidated before an effective strategy for digitising any enterprise can be developed.
Myth one: Digital disruption is bankrupting established businesses.
Reality: For established businesses, which have been industry leaders before the tech evolution and are still in a leading position, the cautionary tale of Kodak’s bankruptcy is frequently cited. Kodak failed to react to the disruptive impact of digital photography. During 2015, around 70 start-ups achieved unicorn status, attaining valuations of $1 billion or more. Hundreds of start-ups are now attacking traditional markets. This is a signal to the established businesses to act.
Myth two: Digital is a support function focused on achieving marginal efficiencies.
Reality: Many businesses are moving beyond looking at technology as merely a supporting function and instead leveraging it as an enabler of revenue generation. Companies which have implemented digital technologies across their business have been successful in not only improving efficiencies, but also enhancing revenue sources and outperforming peers.
Myth three: Digital transformation is best suited for companies with deep pockets.
Reality: All businesses fall into the radar of obsolescence without digital technologies. Companies, irrespective of size, should start analysing how best they can plan for accommodating digital technologies instead of just keeping the lights on.
Myth four: ROI for digital transformation cannot be calculated.
Reality: The ROI calculation of digital transformation cannot be justified by just using traditional methods. Digital transformation might appear to be a bad investment if we only look at short-term gains. The reality is that the investment in digital transformation will bring in new revenue streams, restructure costs and bring a lot of indirect/intangible efficiencies. Once an organisation’s processes have been digitised, the transformation and cost savings continue to increase, perpetually removing inefficiencies and automating steps in the process throughout the transformation journey.
Myth five: Digital is IT agenda.
Reality: Nothing can be far from reality as thinking about digital as a standalone IT agenda without active business involvement. The intersection of business and technology is the key to digital transformation. There is no one approach for digital which can work de facto for all organisations, which can be plugged & played by the IT team alone.
Three areas of digital transformation in manufacturing
Any transformation is successful only after a considerable thought has gone into identifying appropriate transformation areas and embracing a strategy where technology enhances business and optimises costs. The entire journey can be divided into three wide areas as below:
Legacy systems are a single point of failure. They are not only non-scalable but also have long development cycles. Organisations need to take a hard look at their IT systems and conduct a thorough cost-benefit analysis to understand which technologies are efficient and which are holding them back. They can choose to tolerate, eliminate or modernise them based on their modernisation drivers. Once the cost-benefit analysis is completed, these drivers would influence their priorities in the phase-wise modernisation journey.
Many organisations today face the roadblock of data silos when it comes to digital transformation. It is impossible to draw meaningful insights and see the bigger picture unless all data is linked and unified. Data unification is the first stepping stone towards moving from a very reactive and intuition-based decision-making system to a more proactive, even predictive data-based decision-making system powered by AI.
This is the stage where one enters a cyber-human space, where devices become one’s employees. They work to monitor status, analyse patterns and predict intelligent insights for the business in real-time. Digital technology solutions can help manufacturers become more responsive and predictive than reactive by turning real-time data from sensors and devices into actionable intelligence.
Top technologies driving connected manufacturing
Humanised Big Data
Big Data with no context serves no purpose in the business world, and the recent developments in the field to ‘humanise’ it is helping business people derive relevant insights that affect business in the real world
Internet of Things (IoT)
In the manufacturing industry, businesses are leveraging IoT for use cases like asset monitoring, real-time field service management and more. With an upsurge of tech-friendly ‘things’, drop in costs of internet services and increase in data generation, IoT is a much more attainable transformation than it was a few years ago.
Robotic Process Automation (RPA)
RPA can serve as a boon, reducing costs, cutting process times and lowering operational risks. Also, processes which are speed-sensitive and cross-functional can be automated to increase accuracy. The manufacturing industry is utilising RPA to its fullest for creating error-free and streamlined processes, where smart leaders are embracing it to enhance their productivity.
Machine Learning enables software applications to become increasingly accurate at predicting outcomes. Its applications and platforms are helping manufacturers find new business models and optimise manufacturing operations to the shop floor level. It is enabling improvements, like modest reductions in equipment failures and faster training times in the competitive world of industrial robotics.
Critical success factors
Businesses need to embrace digital technologies to survive in the new ecosystem. Below are a few critical success factors which would help them in this journey:
The first step to any success story is a well-thought, prioritised and viable strategy. When one gets into the phase of cost benefit analysis and takes a hard look at all the business processes, it may occur to him/her that there is a lot to be done. It could become overwhelming and many people stop their effort at that point. The only way to turn it into an efficient roadmap for the organisation is to prioritise. This requires a deep understanding of what the organisation stands for and what are the top business issues it is dealing with today.
Phase-wise journey with small wins
Digital transformation is an ongoing process, which requires adjustments to maintain success. Hence, it is important to have a phase-wise approach towards digital transformation to give customers, stakeholders and employees to adapt. Small wins keep people excited about the changes and show value earlier in the transformation cycle. Deep change across process, people and culture is necessary to get the most out of digital transformation and hence, it won’t happen overnight.
Strong execution team
Digital transformation is a big opportunity and the very best and brightest in a company should be a part of the core team to exploit this opportunity. Once the core team is in place, it should be given some level of authority to make decisions. Here is where strong leadership and sponsorship needs to come from the CIO or the CDO of the organisation.
Agile and lean approach
Agile and lean project management methodologies allow managers to break work into more manageable, measurable pieces, making it possible to deliver faster with higher quality. As a result, more value can be added and waste can be eliminated at different steps of transformation. This is a powerful combination for handling something as big as digital transformation. Agile methodology can ensure company-wide process and methodological alignment. In terms of business benefits, both provide increased flexibility, enhanced transparency and decreased risk of missed objectives.
Develop a successful transformation roadmap
Digital transformation is changing the way business is done in every sector of the economy. Businesses will need to transform themselves into digital enterprises to thrive, and this transformation will need to be far more profound than merely investing in the latest technology. Few companies need it for survival, and while others may not go bankrupt without these, they will have to settle for a low margin model for their business. Business leaders must debunk the myths in the industry and learn about the technologies, thereby helping organisations to ride this tide and develop a successful transformation roadmap to develop a competitive edge. This may be a daunting task, but the time to start is right now.
Courtesy: RapidValue Solutions