Digital Transformation: Overcoming the Pain Points
Published on : Thursday 01-07-2021
Experts debate how companies can negotiate the hurdles in their journey towards digital transformation.
In December 2020, a survey commissioned by WalkMe, the world’s first digital adoption platform, had some interesting revelations. Conducted by Constellation Research among 100 Fortune 500 CIOs, the survey found 77 of them citing Digital Transformation (DX) as their No 1 budget priority going forward. With research pointing out a high failure rate of 70% of all digital transformation initiatives, it is heartening to note that companies continue to have high expectations from going digital. Also important to try and understand the reasons for failure despite the many use cases of successful digital transformation by the early adopters.
So how can companies ensure their digital transformation succeeds? What measures do they need to put in place?
“Companies that want to take the DX initiative must understand that digital transformation is about leveraging the power of emerging technologies to improve performance and adapt to the market dynamics. DX is not just investment in technology but applying digital technologies to derive business results. Therefore, it is necessary for a company that wants to invest in digital transformation initiatives to constitute the DX implementation team that understands the primary purpose of investment,” says Rajabahadur V Arcot, Independent Industry Analyst/Columnist and Business Consultant.
“Well, it is said that digital transformation is a journey. To begin the journey, a vision for the digital company needs to be in place from the highest level in the organisation,” says PV Sivaram, Evangelist for Digital Transformation and Industrial Automation, who is of the view that communication from the board room to declare commitment of organisation and management towards this vision is essential. “Watch out, just having lofty vision is not sufficient. It is necessary to have the right strategy. This strategy is needed at all the rungs of the organisation, and must have a buy-in from each group. It must be remembered that it is a people project and not a technology project. It is so necessary to perform a self-assessment of digital readiness before starting the project,” he cautions.
For Damodar Sahu, Head of Global Strategic Alliances & GTM, New Age & SaaS Applications, Wipro Limited, digital transformation is not a product or a solution. “It's a continuous process involving new technologies and ways of working to compete successfully through continued innovation. It must encompass Technology, Culture, and Processes. There are many ways to a successful Digital Transformation,” he says, and mentions two of them: 1. Leadership is most critical in times of change and demonstrating the right mind-set starts at the top, and 2. Boldness – Research suggests the following attributes besides being bold, when it comes to transformational efforts, like, Agility, Adaptivity, Data Focus and Tech-driven Talent.
“It is important to take a step wise approach to the digital transformation journey with clear actions and outcomes at each step of the journey,” stresses Amol Gandhi, Systems Engineer, SME and Innovation Evangelist for Industrial Automation and Control Solutions, Honeywell Process Solutions. Amol mentions the following as the key steps of digital transformation: Identification of Data; Enabling Connectivity; Enabling Insights, what is happening and why is it happening; Predictions and Adaptability; and Outcome-based actions.
“There are four things that need to be in place for a successful DX strategy,” says Niju Vijayan, Executive Director, Avanteum Advisors LLP. “Digital strategy – the objectives of this proposed transformation needs to be spelt out clearly and unambiguously; leadership by management – the top executives need to lead the charge to instil confidence and belief in the rank and file; right team – a capable and result oriented team needs to lead
the transformation; and right partner(s) – DX is a highly complex project and only competent and capable teams can undertake such projects,” he emphasises.
What are the common mistakes companies make while embracing digital transformation and how can these be avoided? “It is not uncommon to see
companies making mistakes during the adoption of digital transformation initiatives,” opines Dr C SS Bharathy, Founder, COO Fusion VR, and points out four of them:
1. Firstly, they get carried away without understanding the true capabilities of the technology, and fail to choose the right use cases that deliver the maximum benefit for their organisation.
2. Secondly, they fail to engage the right digitalisation partners. Such decisions may be driven by cost considerations that often lead to choosing inexperienced partners for conceptualisation, scope development and execution.
3. Thirdly, companies also tend to err in not involving all stakeholders, particularly end-users at key stages of project development, execution and operations. In addition, there is less attention to knowledge transfer and training for effective utilisation of the digital tools.
4. Finally, there is a misguided expectation on fast implementation and returns on investment (RoI).
“Digital transformation involves analysis of masses of data from different sources with the aid of technologies to glean insights that can help in decision making and automate the processes. In numerous instances the primary data and the contextualised data may not be available in the digital format. Making sure that this requirement is met upfront will help the smooth launch and progress of the DX initiative,” says Rajabahadur V Arcot.
For Vipul Parikh, General Manager, Transpek Industry Ltd, it is all about learning from experience, and having the right people, but above all, there should be a will to go for digital transformation. “There is an old saying, ‘The right person for the right job’. So we need to upgrade existing employee skills or recruit new employees from outside who are competent to upgrade, integrate, maintain and operate the digitalised system,” he says. Speaking from personal experience, Vipul relates the case of a chemical industry which implemented a process automation system through digitalisation during new project inception to avoid dependency on human labour and reduce the number of people to operate the plant. “After seeing the advantages of digitalisation, it is now an integrated part of the plant in the company. For sustaining with digitalisation, companies need to have competent people to do maintenance, who can operate the same and as a by-product, digitalisation captures the data for analysing the process and outputs to the company’s advantage,” asserts Vipul Parikh.
Speaking about mistakes, Niju Vijayan lists four of the most common in the following order:
1. Under-prepared team: The organisation has to be prepared to operate in a digital environment else the plan will flounder.
2. Complete buy-in: The organisation needs to believe in the initiatives and all employees need to be part of it.
3. Syncing up with customers: The transformation sought to be made has to be aligned with your customers. Doing it in isolation will lead to quick failure.
4. Alignment with supply chain: In the eagerness to transform fast, the partners are left behind with disastrous consequences.
The world is now well into the second year of Covid disruption. How has digital transformation helped the industry during this period?
According to Rajabahadur V Arcot, the pandemic has changed our lives in many ways and probably forever. The work-from-home has almost
become the norm and is not likely to change in the future. There is also a push for companies to automate their processes and many have implemented robotic and such other automation solutions. “These developments have resulted in cost savings for companies and have also reinforced in their minds the benefits of digital technologies. As a consequence, there is a greater impetus for investing more in digital technologies. However, there are also downsides to these developments. Greater automation may not be good for the job market, at least in the near term,” he explains.
As for Covid-19, PV Sivaram is of the view that the pandemic is a disruption, which has hit all nations. “We have had similar epidemics in the past decade as well, perhaps not so debilitating. There were also other major disruptions – collapse of financial systems in 2008, for example. There were other disruptions from technology – through the increasing affordability of computational power, through easy and universal communication links and so on,” he says. The remarkable thing, according to him, is that each previous disruption has developed tools useful during the next disturbance. “But finally, one has to realise that technology is just that – a set of tools. Change is driven by choices – which tools are to be used, and for what purpose. Behaviour of individuals and organisations is going to be different during a disturbance compared to other periods. But every such behavioural change is going to leave a long lasting ‘hangover’ – a persistence of new habits, even after the disturbance is over. During the latest disruption, organisations have realised how much work can be done through ‘Work-from-Home’ with benefits for company and the worker as well,” says Sivaram, enumerating the positive aspects of what are by and large adverse circumstances.
Speaking of transformation, Damodar Sahu points out how in just a few months' time, the Covid-19 crisis has brought about years of change in the way companies in all sectors and regions do business. “According to a new McKinsey Global Survey of executives, the companies have accelerated the digitisation of their customer and supply-chain interactions and of their internal operations by three to four years. And the share of digital or digitally enabled products in their portfolios has accelerated by a shocking seven years. Nearly all respondents say that their companies have stood up at least temporary solutions to meet many of the new demands on them, and much more quickly than they had thought possible before the crisis,” he says about the benefits of technology. But the pandemic also forced societal changes around the globe, especially with the lockdown in place, and restrictions on gatherings. “In response, businesses, organisations and schools began to look for ways to continue their operations remotely. They turned to various collaboration platforms and video conferencing capacities to remain engaged with their colleagues, clients, and students while working from home offices,” he elaborates.
“Covid has enabled fast tracking the adaptation of digital technologies for business transformation in all aspects of running a successful industrial enterprise. Remote operations with cybersecurity have been the backbone of enabling secure and successful remote operations. Adapting to cloud technologies was considered risky and low potential in pre-Covid era. Now, adaptation to cloud and remote technologies have increased multifold,” points out Amol Gandhi.
With all the benefits that are attributed to DX, why are companies still wary about digitalisation of their plants?
Dr Bharathy is of the opinion that companies tend to be wary when they are unsure about the benefits that digitalisation brings about. It needs to be
quantified and a payback period clearly indicated. “It is critical that companies have a champion within the organisation to explain to all levels of leadership the pros and cons of any digitalisation project. Another factor is obtaining the required funding from approved budgets. The investment could be significant for companies without the necessary infrastructure in place to take advantage of such digitalisation opportunities,” he elaborates.
“Culture is a key element and this typically flows top-down. The strategy outlook of the management and its willingness to embrace technologies defines investment in digitalisation. Sometimes its ignorance about the benefits while other times, its lack of courage to undergo transformation,” asserts Niju Vijayan. But that is not the only reason he says. Many organisations are so narrowly focused on their products that they tend to miss out clear and loud signals about the external business world moving faster than their own. That apart, Vijayan highlights two other concerns – lack of clarity on RoI and absence of a long digital strategy.
“Raising the topic of the 4th industrial revolution immediately prompts many questions like: 1. What does Industry 4.0 really mean? 2. What does digitisation entail for plants? 3. How will it impact our value pools? 4. What are the near-term and long-term business opportunities? This myriad of mixed reactions reveal the intense uncertainty associated both with what Industry 4.0 actually is and how companies should respond to the changing industrial environment,” says Damodar Sahu, attempting to explain the hesitancy element.
Vipul Parikh agrees with this saying mostly the people who are decision makers in the companies, are not updated with the technologies which go into digitalisation. Also the advantages, which could be availed because of digitalisation, are intangible at times – in terms of quality, quantity, process cycle time, process safety, etc., which makes it difficult to evaluate the benefits vis-à-vis the RoI. It also attracts a significant Capital Expenditure (CAPEX) and needs competent people to implement and maintain the system, which makes it difficult for the stakeholders to make a judgment. “Sometimes being a stakeholder of manufacturing industries, people are afraid of process or data theft through digitalisation,” he says.
In the Indian context, despite government initiatives, the digital divide persists which risks leaving large segments of the population outside. How can these issues be addressed?
“Why does the digital divide come about? On one hand of course it is about technological products. The products are not available to everyone, for example everyone does not have a smartphone. After that it is infrastructure – unavailability of network signals, electric power and so on. But these issues will get redressed rapidly, things are happening,” says PV Sivaram. According to him, the true stumbling block lies beyond – what is the content that people want to consume? “We have challenges in developing content for various groups – language, community, education level and so on. So a concerted people movement is needed, and it can be a public-private initiative,” he suggests.
Amol Gandhi is of the view that India is making very good progress on digital technologies mainly because of good adaptation of smart phones and government-driven digitalisation in many of the sectors like smart cities, Aadhar-connected major initiatives like CoWIN. “There is no direct answer to avoid the digital divide, but it is an opportunity for us rather than a threat. We need to keep on pushing more and more digital initiatives, which will help us in the long run,” he says.
“Majority of the population is suffering from lack of information, knowledge and communication. This digital divide creates tremendous instability and inequality among citizens especially in terms of economy, medical access and education. We need to close the divide, flatten the playing field and make digital technologies more accessible and affordable,” asserts Dr Bharathy.
“India is moving towards the same by making cell phones, data plans and data speed more affordable,” says Vipul Parikh, pointing out how during the pandemic the government has resorted to digital means by transferring subsidies directly to the people’s accounts. “Many digital applications supporting government initiatives have been launched such as Aarogya Setu or the CoWin Portal. The bottom line is ‘There is no end to Digitalisation’. From early morning to going to bed, digitalisation can make you more productive with a global exposure and builds globalisation,” concludes Vipul Parikh.
(Note: The responses of various experts featured in this story are their personal views and not necessarily of the companies or organisations they represent. The full interviews are hosted online at https://www.industrialautomationindia.in/interviews)