The road to a digital enterprise can be exciting. It will change the way you think about your business. It will free your business from what has limited it in the past. However, you can only make progress by starting with a correct understanding of both the terminology and the challenges that face your enterprise right now.
Ever since the inception of the term “digital transformation”, it appears that there has been – and still is – a lot of confusion about what its purpose and goal was.
First, understand what digital transformation is
To me, most seem to misunderstand “digital transformation” as just another word for automation, where everything is about technology. Which, unsurprisingly, has not yet resulted in anything which could honestly be described as digital transformation.
There are two main reasons for this.
Companies misunderstand the terms digital transformation and automation.
In the 12 years I’ve been in this industry, I’ve seen most companies perceive automation as some form of a magic wand you can wave and make your problems go away. But the true nature of the success (or failure) of automation projects is consistently never spoken about. This is not surprising – companies want to patch over symptoms, and not execute these projects to solve the root cause of a problem.
Companies ignore the root causes of problems.
Companies typically spend little to no effort identifying the real root cause of a problem. Instead, they throw money at these projects in the hope something may work. Moreover, companies pair their lack of proper problem solving with an inadequate understanding of the requirements to keep automation solutions running.
Sustainable solutions are rare
It’s easy to understand the need for utilities (water, gas, electricity) to run a digital enterprise. But many are surprised by the support requirements like maintenance, custom programming and operator training. This often results in the benefits of chosen automation solutions not matching their initial promises. This is true not only for production equipment but also for software.
This double misunderstanding of what automation is and what it requires is routinely compounded. Business leaders typically pair this with a desire to not focus on what the company really does – its organization and processes. Put simply, no company wants to focus on their employees and what they actually do rather than what they ideally do in an optimal, unrealistic world.
Despite this having led to many expensive and not overly successful automation projects, companies muddled through with them somehow.
But digital transformation is a game changer. If your competition successfully achieves their digital transformation, it has the high chance of ruining you.
That’s because digital transformation is simply improving a company’s decision-making processes. This is the massive difference to automation. In automation you only focused optimizing your physical (or more rarely, data) operations.
Digital transformation changes everything
A digital transformation changes the way you think about your business and allows you to free your business from what has limited it in the past.
For example, in the automation era, a company may have said “we are a casting or plastic molding company”. This binds them to their current production process, products and processes. You can optimize limited areas in companies of all types using automation.
During a digital transformation, such a company may claim to be the world class experts in working metal or plastic. This frees them from their production processes and allows them to look at completely different processes, products, services and markets to better serve their customers.
You should not define your business by a specific product or production method. The production method you deploy now is only the current expression of how you are using your expert knowledge.
A digital enterprise is not about the technology
This may sound quite scary, and not made easier by the plethora of oft-misunderstood buzz words like IoT/IIoT, 5G, Cloud, AI/ML, Edge and so on. Many vendors claim such “smart” products will solve all your problems and help you realize your digital transformation. They rarely live up to the hype, and it’s doubtful that the vendors understand themselves what digital transformation is and what it requires.
I recently presented how I would approach a digital transformation project. Of course, I believe in the mantra, that company success is all about making the right decision at the right time. And that the best decision is an informed decision. The organization, and everyone in the organization, makes decisions because they execute processes.
Technology only serves as a tool to gather data, transform them into insights and make these insights available to support the decision-making processes throughout the hierarchy. Without the organization and good processes, technology does nothing because it has no purpose in and of itself.
The road to a digital enterprise
Hopefully, you will better understand how you could and should approach the topic of digital transformation after reading this presentation.