Digital Transformation is a major change process in any business, and it’s a highly complex one, too. Any business that is willing to face this journey should first prepare a digital strategy. This strategy will be your guide to take you through the Digital Transformation process. When you start looking into this task, you will find many different approaches and opinions. They reach from very simple methods up to highly complex documents that include everything for the next five years. But, if you raise the bar too high, chances are that you won’t make it.
“Digital Transformation is a major change process in any business,
and it’s a highly complex one, too”
In this article, I present six points that provide a solid foundation for your company’s digital strategy. Ideally, you will raise the Digital Transformation bar to a height that is both comfortable and feasible; athletes do not start at the highest level of competition. Because of this, these points are by no means exhaustive—they are guidelines that will help your organization successfully apply the first steps before moving on. Having said that, it is important to understand that this approach of setting up a digital strategy needs constant improvement. While you move along your digital journey, you will make adjustments as needed.
I begin my approach to digital strategy by first describing examples of digitalization. What does digitalization, or Digital Transformation, mean after all? Here are the technologies we will describe:
- Business Processes
- Production / Industry 4.0
- Products / IoT
- New Approaches in Product Design
- Digital Customer Experience, DCX
- Working in the Cloud / Mobility
I have also written a few articles about each topic in my blog. Please follow the above links for more information. Besides these, you can find additional information in some of my earlier blog posts:
Giving an overview of new technologies and opportunities for digitalization within your digital strategy will allow your readers to develop an understanding of what Digital Transformation is all about. I consider this mandatory. I also encourage you to start workshops for each topic. Invite partners on your digital journey.
Here are six ideas that should be the bones of your digital strategy:
- Involve your employees
- Encourage digital awareness and imagination
- Review existing projects
- Focus on simplification and standardization
- Prepare Cloud readiness
- Develop and continually expand a digitalization roadmap
1. Involve your employees
As with every change process in business, your employees are key to its success.
- Support a culture of failure—understand failure as an opportunity. Too many managers try to avoid failure by all means. When you try something new—Digital Transformation is the best example—failing from time to time is inevitable. Learning from failure is more useful than avoiding failure.
- Provide sufficient training for your employees. It is obvious that Digital Transformation requires new methods, thinking, and skills. These new skills require sufficient training. Preparing this kind of training strategy is not done in a day or two; it requires a lot of effort. If you follow the path of constant training, you will be highly successful.
- Organize informative events about digitalization on a regular basis. These events should be tailored to the different groups in your company. Allow employees to express their opinions, questions, and fears. Many will see digitalization as a job-killer. Take their fears very seriously, and be sure to provide answers. Digitalization is not a job killer, but it will change jobs in the long run.
- Involve as many employees as possible in the process. This does not mean that you need to involve every person in the company. However, understand that many of your employees are involved anyway. Give them a voice by involving them in the process. This may slow the transformation down a little, but it will raise company acceptance tremendously.
- Apply the Pareto principle. Pareto stated that 80% of the results require 20% of effort. To achieve the remaining 20%, you need to put 80% effort into it. By allowing yourself to achieve only 80%, you will be faster, more successful, and your team will have a feeling of success rather than failure.
- Cut projects into smaller pieces. I saw in many businesses that projects tend to be huge and long running. This leads to discouragement of the project team. When it is impossible to see the light at the end of the tunnel for a long, long time, people can lose faith in the process. Cutting projects into smaller pieces with clearly defined endings will allow you to motivate your team, be faster, and celebrate success every now and then. Ideally, these smaller pieces only last a few weeks or months, at the most.
These things might sound basic, but during my extensive career, I have hardly seen these principles applied. I believe the main reason is that it takes extra effort to do so. Companies that are willing to put forth extra effort will be highly rewarded when it comes to employee motivation, as well as achieving faster, high-quality results.
2. Encourage digital awareness and imagination
We’ve talked about digitalization since word processors and PCs superseded the typewriter. Local area networks entered companies and allowed databases with access for everyone and finally ERP systems. While the ERP systems were gradually refined, many businesses were not able to fully catch up with this development.
This is why I divide digitalization into two parts:
- Digitalization that has been available for a long time in the form of digital business processes, paperless office, etcetera. By just applying what we already have, we will improve significantly with very little investment.
- Digitalization due to new technology is just beginning. Cloud technologies, additive manufacturing (3D-printing), generative design, IoT, and others, will start to become more and more available.
We need to focus on both aspects of digitalization. Catching up with what we already have, and learning, and implementing new technology, will give us a competitive advantage. The latter will require extra digital awareness and imagination. This takes time. We have to understand these technologies in order to leverage them.
3. Review existing projects
Are you already working on some new projects to improve business processes or invest in your production? Once you have committed yourself to go digital, it is a good idea to review your existing projects.
- Do your existing projects take full advantage of digital?
- Are they in alignment with your digital strategy?
Sometimes, projects were planned many months or even years ago. They may have been planned before you even started to think about digitalization. A review of these projects might show that they are not utilizing digitalization to the desirable extent. When this is the case, you need to change relevant parts of your projects to fully leverage digital transformation. We don’t want to beat a dead horse!
4. Focus on simplification and standardization
In Digitalization, it is ideal to make the best use out of the tools and software that are currently available. Don’t become lax—keep up with technology!
Companies all over the world, especially in Europe, have used a different approach in the past. They would alter their systems to support existing business processes as much as they could. Of course, this approach meant customization, sometimes even heavy customization. The downside of this approach is that they could not install the latest versions when they became available. Instead, they had to upgrade your customizations to the new release, which is usually a lengthy and expensive task.
Standardization and simplification means that you use the software “as is.” Instead of customizing your software, look at your process. We found that we came up with better, sleeker processes, after being forced to rethink the way we work. Being able to use the latest releases of our ERP system solved more problems than sticking with the sometimes-awkward processes.
“Standardization and simplification means that you use the software as-is”
You may also want to read my earlier blog post, “Four Reasons why Digitalization needs Simplicity and Standardization.”
5. Prepare Cloud readiness
Preparing Cloud readiness consists of several aspects:
- Enhance your business processes to avoid media disruptions, i.e. have all data in one system. If you spread process relevant information across paper, Excel sheets, and your ERP system, using the Cloud won’t help you much.
- Many long running ERP systems are highly customized. Because of this customization, most won’t work in a Cloud environment. Review all customizations and eliminate them if necessary (see above).
- Update all systems (e.g. ERP) to the latest version on premises before moving to the Cloud. Many issues you might experience when using the systems in the Cloud are connected to the versions you use.
This is true for all systems in place. ERP is a very good example, but there are others. CRM, CAD, PDM, PLM, Intranet, and SharePoint are other examples. Prepare a list of each system you are running. Next, write out what it takes to move every system to the Cloud. Then, prioritize your list. Start with a system that can be easily moved to the Cloud.
6. Develop and continually expand a digitalization roadmap
After setting the standards for your digital journey by following the steps above, it is time to create a detailed digitalization roadmap. This roadmap will name various milestones and tasks. It will give your company and teams clear guidance along the way.
Figure out which digitalization steps you want to do in the next few months and years. For instance:
- Identify and optimize your most important business processes
- Implement Office 365
- Identify the systems you want to move to the Cloud (ERP, ECM, CAD)
- Prepare Cloud-readiness for these systems
- Identify the interdependences of these systems
- Move your system to the Cloud
Remember the last two points from idea #1: Pareto Principle, and cut the parts in pieces for better and faster results.
I am aware that this is a simplified approach to Digital Transformation, but it is also a very pragmatic one. It will get you going very quickly! Most of the points I mentioned here are connected in some way with each other. This adds some complexity and requires both leadership and competence.
The purpose of this blog is to start a discussion. Please leave your comments, whether you agree or if you disagree. I hope to hear from you!