How to succeed at digital business transformation
It’s well known that digitization and data can transform the way businesses operate. But the process is not a simple matter of gathering more information and using the familiar data warehouse and customer analytics approach that starts by collecting data and builds insight from the past. Instead, becoming a digital business requires a major change to the cultural code of an enterprise and developing the skills to find new kinds of value in data. Here are ways to help your journey to digital transformation go as smooth as possible.
Be clear about the scale and impact of your digital project
Keep in mind that the journey is not simply about big business transformations. The majority of digital innovations are smaller and aim at improving parts of a business or individual business processes. Sometimes these small digital transformations get ignored because they do not produce big business headlines. Yet they can have massive value for parts of the business. For example, encouraging "citizen developers”—line-of-business experts who aren’t professional programmers but can write apps using no-code/low-code platforms—can bring about many small improvements through their ability to work with data in their day-to-day activities. Those small improvements can ripple through the rest of the organization and have a great impact.
So first, get a handle on the scale of your project and the impact you expect from it. Make right-sized promises. Digitization can bring small, medium, large, and gigantic benefits, and so you must understand the scale, scope, and impact of any proposal to ensure niche projects are not misrepresented as major transformation.
Use new kinds of data—and think like Einstein
Industrial transformations have been going on for hundreds of years, starting with the first Industrial Revolution and continuing through today’s fourth one. Businesses that want to transform themselves need to prepare for a world in which everything computes, where technology is embedded everywhere, and where everything is connected and has the ability to be understood. Key to making use of all that are the apps that work on the data. These applications can run everywhere, including in your phone and in pieces of data center equipment. They may be new apps or even legacy applications, so enterprises need to understand how new and old applications will work together because applications digest the data to yield the insights that can transform enterprises.
Albert Einstein once said, “We can’t solve problems by using the same kind of thinking we used when we created them.” While we can identify a problem using our current way of thinking, the solution will require a new approach—a new cultural code making use of new data, old and new applications, and innovative thinking. It requires new operational behaviors driven by near-real-time data—the kind seen in innovations like Uber, social media, and business transformations like online retail.
Remember three factors for successful digital transformations
What does all this mean in practice? How can we make sure that everyone at every level inside a company thinks with data and uses it to transform their companies? I’ve found three highly linked factors that are essential to the success of digital transformation. The first is understanding how corporate key performance indicators (KPIs) roll down throughout an organization. The second is making sure the company is an agile one and can follow the dictum “fail fast, learn fast.” And the final is to have a good, solid IT foundation so you can invest all your time and effort into your business and not have to worry about keeping basic IT running.
We’ll begin by looking at KPIs. Every organization has corporate goals, measurable intents that lead to a variety of initiatives. The initiatives must have their own clearly defined KPIs, because without them, a project won’t succeed. If you hear about an initiative, such as a data consolidation program, and it doesn’t have measurable KPIs that show an actual value that’s being delivered to the company, it’s not going to conclude successfully.
Let’s say someone is in charge of an IoT project. That person is enjoying doing it and thinks it’s fantastic. But that’s not what’s important. What’s important is whether it has its own KPIs that deliver business value well beyond what already exists.
It’s not enough that those KPIs are understood by the people involved in the project. They need to be in front of everyone in the business. I’ve worked with companies where the KPIs are publicly published throughout the organization, and those are enterprises that succeed. KPIs need to be rolling down throughout an organization and available at every level, starting at the top and ending with every individual employee.
For example, our KPIs are rolled down and made more specific so that everyone knows which ones they should focus on. If the roll-down KPIs don’t become part of people’s jobs and are not tied to specific objectives, people can’t be expected to always follow them.
KPIs must roll down throughout an organization and be available at every level, starting at the top and ending with every individual employee.
To succeed at digital transformation, handling KPIs correctly isn’t enough. Companies must also be agile and move quickly. And a big component of that is targeting the right-sized projects for their digital transformation. Companies often come to us with a project they need help on. They’ve collected all their requirements into an enormous book. But it will cost them a huge amount of money. It’s a multiyear project and can be very disruptive to the enterprise. So our recommendation is to look at the first step to getting value, what we call the minimum viable product, and getting value from that quickly. That way, you can start the transformation right away.
I’ll give you an example from a company we’ve worked with. Rather than try to transform the entire company, we worked with it to put a small data center into a factory to run the manufacturing execution system, interface to the ERP system, and work with IoT applications. We built it as a minimum viable product. We were able to get it up and running quickly, providing benefits for the company right away, rather than having to wait a year.
Strong IT foundation
The final step in digital transformation is ensuring there are trusted foundations for your digital projects. This is where you tame IT complexity and make sure the maximum energy is available for you to work on your business applications and the data around it. You want to free the smart people working on your IT foundation so they can spend their time and creativity on your new digital projects. And you also want the foundation to properly run your apps and handle your data.
That means choosing the right partner with the right expertise and platform. That’s what we do at Hewlett Packard Enterprise. We’re in the business of building trusted foundations for companies. And because we know how to help you design a minimum viable product, you won’t be working with an over-engineered, massive system that's going to sit around with only 20 percent of it being used for the first few years. We help companies get to the right scale at the right level, without wasting time, effort, or money. We look after the infrastructure and IT foundation so you can put your energy into your applications.
Digital transformation is more than a buzzword, and if you do it properly, your business can see sizable results. Here’s one example of a project we did with one of the world’s leading manufacturers of compressed air systems and services. Before the company embarked on digital transformation with us, its market was being commoditized. Manufacturers were coming in from countries in the Far East and other places and challenging its market share. The company sells air compressors, but anybody can make air compressors, and it didn’t want to have to differentiate itself by reducing its prices.
As part of its transformation, the company leveraged the power of IoT. It used sensors in and around its products to capture key environmental and performance data such as temperature, humidity, and vibration. The data is transmitted directly, and in real time, to a system that conducts ongoing predictive analytics to determine whether a part might be prone to failure. This allows the company to identify and replace faulty parts during regularly scheduled maintenance, helping customers avoid unexpected, costly outages on their production lines. So, rather than lowering prices, it offered better products and services—a 60 percent reduction in unscheduled system downtime and costly emergency service visits, giving the company a competitive advantage by enhancing its customer care and customer satisfaction.
The results your company will experience will be different, of course. But if you take the time to handle KPIs properly, be agile, and work with a trusted IT foundation, you’ll be able to focus on the things you know best and succeed in your world.
Digital business transformation: Lessons for leaders
- Identify measurable KPIs and share them with everyone in your business, not just those directly involved in a project.
- Start with a minimum viable product and get value from that quickly.
- Build a strong foundation that allows IT teams to maintain less and innovate more.
Read more from Colin:
Success in industrial digital transformation projects
Digital driven ecosystems will drive transformation
This article/content was written by the individual writer identified and does not necessarily reflect the view of Hewlett Packard Enterprise Company.