The high failure rate for digital transformation projects is scary. Here’s one way to improve your chances of success.
For many companies, Digital Transformation (DT) has become a nonstarter—no surprise given it’s negative track record. According to studies conducted by McKinsey & Co., Boston Consulting Group, KPMG, Bain & Co., and business-media publisher Forbes, the risk of failure in DT projects is between 70% and 95%.
So why keep trying? Isn’t digitalization enough? The answer is “no”, but it’s a good start. Digitalization converts analog data and information into 1s and 0s so they can be accessed and read by any digital toolset or application; the goal is to make all of an enterprise’s information available to anyone in the workforce who needs it and is approved to use it.
Ultimately, DT completes the process of digitalization by digitally connecting the enterprise throughout its products’ lifecycles so that it can continuously transform itself. DT is about enabling dramatically improved processes, new business models and new value-added products and services to give you a competitive advantage. DT’s goal is to create growing value everywhere in the organization with more competitive products and services, speedier production and deployment and more effective service—all while fostering collaboration and innovation.
DT accommodates and fosters continuous change and radically new digital work environments, placing tough new demands on the workforce while helping them adapt and succeed. DT leverages the organization’s digitalized knowledge base to levels previously out of reach.
Sounds wonderful, right? So, how do we get started? How do we successfully digitally transform when so many have failed in the past?
Here, I offer seven DT Success Premises. These premises represent keys to successful DT and were formed during CIMdata’s four decades of untangling data and information.
We begin with two blunt statements.
The first Success Premise states:
Digital must be at the core of your company. To be successful, digital (i.e., the availability of valid digital information and process enablement) must cut across all the enterprise’s departments and even include development partners, suppliers and customers, as well as the end-to-end product lifecycle.As a result, we—those of us who deal with DT every day—must continue to understand how PLM and other digital enabling strategies and tools are evolving and stay ahead of them.
To this, we must add a second Success Premise, likewise the fruit of four decades of focused work with data and information, which reads:
Digital strategies need to be built on a solid foundation of business justification, as well as a set of strategy elements that have been designed to evolve with the business. As a result, we must know and promote how PLM is a major foundation of your company’s DT and other business-critical elements.
We will explain five more Success Premises after we look into why DT faces so much resistance. The resulting workforce problems include having to:
• Jot down critical information from their workstations and operations on paper forms or sticky notes.
• Protect information in obsolete and cumbersome formats—on paper or digital.
• Work with organizational information they know is incomplete and thus not fully trustworthy.
Little wonder, then, that factory floor workforces will be among DT’s biggest beneficiaries. This brings us to CIMdata’s third Success Premise:
Implementing PLM and other digital enabling solutions is “like performing open-heart surgery on a person while they run in a marathon.”
Corollary: “You must strive to keep the complex simple.”
Because DT seems to take forever, the fourth Success Premise reads:
Digital is not something you implement overnight; as a result, what you define today may not be appropriate tomorrow. Therefore, flexibility, configurability and sustainability are critical. DT enablement with PLM is that and more, and it must be communicated early and often.
The fifth Success Premise addresses endless change:
DT requires a company’s PLM strategy and associated roadmap and support to be robust and flexible … Rome wasn’t built in a day … DT is a journey.
The sixth Success Premise:
The evolving nature of the typical enterprise and how digital strategies should be defined and implemented should also be handled in a sustainable manner that naturally addresses change.
Corollary: “Change happens; you might as well embrace it.”
The use of the word “enable” in the fourth Success Premise should not be overlooked. To be effective, DT must focus on workforce enablement. In other words, the finalization of DT is not implementation, as if something is done by uploading blocks of code into databases, but an enablement— as is virtually anything accomplished with PLM. The new way of working and the new processes enabled by new technologies must not just be implemented; they must be embedded in the organization’s culture. This isn’t a one-time action; it requires an ongoing state of continuous enablement and improvement.
The seventh and final Success Premise addresses terminology:
Don’t be afraid to call PLM something else. PLM by any other name is still PLM, but you may need to stop running into the brick wall. Either remove the wall or go over or around it.
You might be asking yourself, why would I, as the CEO of the leading PLM strategic management consulting company, say something like that? Because as noted in the first Success Premise, DT must reach all the enterprise’s departments and development partners, suppliers and customers throughout the entire product lifecycle. Many essential enterprise units are skeptical about PLM, believing it’s needed only for product development and the engineering department. They mistakenly fixate on the “P” in the PLM abbreviation rather than on the “L.” From an overall organizational or enterprise standpoint, “product” implies a focus limited in ways that “lifecycle” is not.
Corollary: “You can only run into a brick wall so many times before you break your collarbone.”
To sum up the seven Success Premises, we must always bear in mind that as a digital strategy is built, it must be communicated early, often and firmly to the entire workforce. Most new technology can be imposed—implemented top-down. But, with or without PLM, digital enablement is best done bottom-up.
Rationale
These seven Success Premises show why expertise and experience are indispensable, even crucial, in any transformational change.
The surging importance of expertise and experience recognizes, perhaps belatedly, that digital is endless in its reach and depth. This means finding it, getting access to it and transforming it is a bigger challenge than expected at the outset.
Until now, too much DT discussion has focused on questions such as:
– What makes each solution provider’s offerings superior to those of its competitors?
-How satisfied everyone will be once enablement is complete, however “complete” is defined.
– What is likely to go wrong?
As we better understand our DT challenges, changing information-handling practices is ever more important—especially on the factory floor and out in the field. The following conclusions crystalizes this.
Conclusion: critical success factors
Finally, I’d like to share the insights CIMdata has gained from participating in hundreds of digital transformation (DT) and PLM enablement projects. These seven key points of critical advice are as follows:
• Use a broad vision and approach: people want business solutions, not another system.
• Educate senior management and the initial team.
• Support and do not undermine company culture.
• Seek partners: people who understand your business needs and who have proven solutions & track records.
• Scope should be well-defined, clearly understood and under change control; required functionality must be precisely specified at each stage.
• Use pilot projects as the key to success.
• Seek to continually learn and adjust as required.
Ultimately, DT success is a multi-variable equation that is the sum of the enterprise’s DT vision, the organization put in place to support it, the processes included, the solution providers chosen to support it, the approach taken and the technology and process environment.
