Across process industries, stakeholders are asking themselves, with more frequency, why payback on their digital transformation projects is falling short of expectations. For many, it turns out that their initial vision of digitization was too restricted and rooted into what we call a “physical-world” mind set. (See our recent blog, “Successful Industrial Company Digital Transformation Starts with a New Mindset” for more information).
Understand Your Customer’s Vision of and Objectives for Digital Transformation
For instance, our consultancy practice recently engaged a senior procurement executive who brought us in to help enhance his ability to gain additional operational insights surrounding his procurement process. For this procurement executive, the buying decision has a significant impact on the efficiency of the production process and profitability and ultimately building and improving customer experience. His challenge was a lack of information at his fingertips that would enable him to make the best decision. Critical decision-driving variables such as buying price, the impact on profitability, settings of the production machines, and potential improvements based on previous experience, were all difficult to assess.
When we asked him to share his vision of digitization, he described a scenario where his buyers could access the information they needed on a tablet or a smartphone. While such a vision can result in improved access to information, which adds business value, it did not represent holistic digital transformation. That is, such streamlining of existing processes will not result in game-changing insights that lead to marketplace competitive advantage.
Identify the ‘Customer Experience’ Expected from Digital Transformation
True digital transformation starts with a clear business ambition and purpose. Transforming procurement systems so that buyers have access to information on a smart phone is just scratching the surface. A digital transformation ambition envisions an exceptional “procurement” experience. In the case of our procurement executive, his customer is an internal purchasing agent who wants to move beyond just digitizing a manual process.
As that agent interacts with various stakeholders in the value chain, his process for validating a decision on a purchase of raw materials can take several weeks. Up and down the decision tree are multiple individuals involved in planning, in shipping, and in injecting these raw materials into the production process. The longer it takes that agent to gather enough information to make the right decision, the more likely his window of opportunity for making a good deal will close.
In this case, the ambition for digital transformation should focus on “how can we structure our process so that the agent is enabled to make a ‘go/no go’ purchase decision in seconds,” rather than just accessing existing information on a smart phone/ tablet. Realizing the new ambition requires a reinvention of how a process works, how people contribute to that process and then, finally, how digital technologies can help tie up the loose ends. All this thinking and planning results in a better customer experience.
Start with a Process and New Mindset
Since such ambitions are what fuel true digital transformation, it follows that executing these projects is not fast and simple work. A discipline is required that encompasses a structured “4D” process: discovery, diagnostics, design, and delivery. Below is listed how the 4D process works:
- Discovery – Sometimes setting the goal is the hardest part of the knowledge sharing phase. This is often where people need the most help and where digital transformation consultancy can ease the process of discovering and unearthing both explicit and implicit requirements. How do the humans interact with the processes and the systems? Are they just collecting data and then failing to monetize it? Are they only applying business value within a restricted silo? How do their actions impact the customer who is the target of the ambition? None of these questions are easy to answer in an objective manner.
- Diagnostics – This phase is where we establish the link between the client requirements discovered earlier to the associated business value. As an outside consultant and partner, we challenge the customer to reassess existing norms. We also press the stakeholders to explain why they want the transformation and to describe what their conceptual new world will look like.
- Design – Once the diagnostic due diligence has been performed, the design phase involves delving into operations technologies (OT) to see how the ambition translates into the physical world of data gathering, centralization, and analytics. This collaborative process results in some combination of solutions that expedites processes by automating decisions that typically involve a long line of human specialists.
- Deliver – the groundwork has been laid out to enable cross-functional thinking, teams involving digital evangelists at both the operational and management levels who are willing to recalibrate some of the rules–become crucial to rolling out the digital transformation ambition as it has been crafted.
Our experience has shown us that properly scoping a true digital transformation project takes longer than a typical physical world improvement/optimization project. However, once kicked-off, these projects gain momentum through an agile execution approach. The acceleration occurs because the collective commitment of the various stakeholders has been aligned ahead of time and the benefits of transformation are made tangible to the affected parties.M
To learn more about how your company can embark on a journey that embraces true digital transformation, contact Rik De Smet or Kishore Natarajan.
CNN Indonesia published a Digital Transformation article co-authored by Rik and Farid Belbouab, CEO of shipping company Meratus. Read the English version here.