The process and fundamental importance of digital transformation is fully recognized by almost every business leader today. In fact, 69% of CEOs in the US are planning to divert funds from other parts of their business in the next 12 months to make sure they can keep up their digital transformation efforts (27% say they have enough resources already). However, the question is not whether to be more digital, but how to get there – both from a technical and business perspective.
There are two parts to this challenge – the first being what it means to be ‘digital’. For me, it’s around data – being able to automatically collect, analyze, and apply it to key decisions is what separates analogue from digital. Apply this model to any process and it will become digital. Once you connect multiple digital processes or departments, you will have a truly connected enterprise.
The second part is how to focus your transformation resources. It’s impossible to do everything at once – both from a resource and a technical perspective – so pick what you need to do first. Find your mission critical software, the things that affect your infrastructure. Moving to cloud or otherwise, open processes are important steps in the right direction of digital transformation. Always remember that the ability to connect your entire infrastructure together is a key part of being truly digital.
Why is the connection so important? Because data holds the first key step in becoming digital. And if data can’t be extracted from processes and/or it cannot be moved freely around the business, then it’s not really digital. It’s simply technology.
Take a look at some industries that, generally speaking, are facing challenges at the moment: supply chain, manufacturing, and retail to name a few. The thing they have in common is that they have many processes, some highly significant, which are essentially analogue. This makes it impossible to extract data from these processes and therefore you’re left with no valuable analytics, insights, or clear actions to be taken.
Typically, projects in these organizations are characterized by trial and error. They simply don’t have the information available to objectively diagnose the challenges they face. Even with groups of experts on the case, they’re operating with one hand behind their backs if they don’t have the relevant information at their fingertips.
Let’s look at the technology and business perspectives for how to turn technology into ‘digital’:
Getting data from real-world equipment
Many industries are ‘brownfield’ sites for equipment and processes – ie, they were built before the notion of them becoming digital was conceived. Factories producing the world’s goods, farms, ships, or retail stores do not naturally produce data. Nonetheless, they need insight into their operations if they’re to make the efficiency improvements needed to satisfy customers and partners in today’s macro-economic climate.
Smart devices can collect and stream relevant data into a platform, which then carries it to the cloud, or wherever else it needs to go. The ‘Internet of Things’ (IoT) – the connected network of these devices – has gone through several stages of its long evolution to become more of an ‘integration of things’. In this state of maturity it serves as a powerful tool for business efficiency.
The insight it can provide, plus the ability to automate many manual processes – such as people having to visit machines individually to perform checks – can quickly deliver a rapid return on investment. We don’t have an industry average, but a Total Economic Impact report for our IoT platform Cumulocity that showed less than a year to payback on the IoT investment and 339% ROI over three years, with $8.1M in benefits. This context can help to build the business case for making key equipment digital much easier.
Understanding processes through data
Valuable data can also be drawn from your processes. Whether it’s information that helps boost efficiency, standardization, or simply discovery, processes are a rich source of insight. As companies become more distributed and more complex, the need to understand their inner workings has never been greater.
Process mining tools can help to not only provide empirical data on how the organization works, they can also identify a live process that perhaps isn’t officially recognized or accounted for. This is where the big savings can start to materialize.
Once again, we don’t have an industry average, but a Total Economic Impact study of our business process management suite ARIS shows a 301% ROI with $7.9M in benefits over three years.
Building the business case
The ROI numbers are one thing, but it’s crucial to apply technology to the right problems. Asking some essential questions up front can help to increase the effectiveness of digital transformation projects:
- What are the most expensive or resource-intensive areas of your organization to operate, and do you feel you know enough about them to be sure they’re working efficiently?
- Which parts of your business have the biggest impact on your customers or partners, and do you feel you know enough about them to be sure they’re hitting those goals?
- What is going to be essential to your company’s survival in the next couple of years, and do you feel in control of that area?
If you know the answers to these questions, and you know that you need more information to make the digital changes you want to see, then the numbers speak for themselves. Go out and find the right solutions to simplify the connections you need to build.