Sunday, 5th July 2020

Digital transformation

Say the words ‘digital transformation’ and many business leaders will immediately think of the dynamic technologies driving it. But for those companies which embark on digitalisation without considering it within the context of their broader business and, crucially, the people they employ, the chances of failure are high, warns Dr Andy Levers, Executive Director of the Virtual Engineering Centre (VEC), which is part of the University of Liverpool. He sets out the key factors that should inform a digital transformation strategy and explains why small-to-medium sized enterprises (SMEs) are uniquely placed to reap its benefits.

Digital technology permeates almost every aspect of our daily lives. From smartphones, voice-activated speakers and heating thermostats, to online shopping and banking, the vast majority of people have embraced digital transformation in their domestic lives at an extraordinary pace.

It’s well documented that the industrial world has been significantly slower to embrace digital technologies and, where they have, the failure rate has been high. Even major players such as Nike, Lego and Proctor & Gamble have seen their multi-million pound digital transformation projects flounder, despite the ambition, innovation and investment ploughed into them.

Common among the myriad reasons for failure are lack of executive sponsorship, an absence of workforce buy-in due to fear of job losses, insufficient cross functional planning and a silo approach to implementation.

So, how can companies avoid the pitfalls and ensure that their digital transformation projects deliver concrete operational benefits and added commercial value?

It’s important to recognise that truly successful digital change is as much about cultural and behavioural readjustment as it is about innovative technology. Before any investment is made in hardware or software, it is essential to develop a robust digital strategy which is fully integrated across every company department and function.

Leadership and strategic vision

Digital transformation must be driven by a clear future vision for the business - and that has to come from the very top. Board members are as likely to lack digital skills as any operative, so it is crucial to have board-level digital transformation champions with the skills and vision needed to guide implementation.

They carry the authority needed to cut across managerial bias and departmental boundaries, legitimising the teams tasked with implementation and increasing the likelihood of buy-in for the project at all levels of the workforce.

Your vision for where you want to be at the end of your digitalisation journey may be crystal clear. But you also need to have an in-depth understanding of your starting position, and what is needed to navigate every step of that journey productively. Take stock of the data, digital tools and skills you already have within the business. Establish where you’re starting out from, the challenges you are likely to encounter, and identify the best pathway to take. This might seem blindingly obvious, but these basic tenets can be overlooked in the enthusiasm to take a giant digital leap.

To plan for success, it is also essential to look at the bigger picture. A digital strategy is worth little if it fails to encompass every function of your company from the very outset.

Factor in your existing business plan and your strategy for every aspect of the business, from finance and marketing to sales and staffing. Look at the Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis for every business unit and ask where a digital approach might help.

A truly holistic digital strategy will also consider future drivers for business such as increasing sustainability and reducing the environmental impact of operations.

Implementation team

Many projects fail because they pick the wrong person to lead digital change.

The misconception that digital transformation I just about technology means that many digital transformation projects are handed to the IT team, which is given sole responsibility for planning and project management.

Valuable as the work of an IT department is, delegating wholesale responsibility to it is a mistake. The Internet of Things (IoT), 3D print, AI, data and immersive projects are technologies that have the potential to disrupt business performance. Their adoption must be driven by the business itself. Digitalisation is about creating commercial innovation and value for the business as a whole entity.

Likewise, no amount of technical nous from an external consultant can compensate for a lack of in-depth insight into the everyday operations of your company, and a sympathetic understanding of the needs of your workforce. The need for workforce engagement cannot be overstated.

Ideally, a digital implementation team should involve colleagues from across every business function, led by an in-house project manager who understands both the business and the benefits digitalisation can bring, and has the ambition and focus to drive the project from start to finish. Awareness of the skills-shift that digitalisation will bring about, and the recruitment and staff training needed to meet that challenge, is fundamental.

Seek free support

The support available from outside organisations should not be overlooked, however, particularly when unbiased advice is available to enable insight into emerging technologies and trends which are likely to influence industry sectors and supply chains.

For SMEs in particular it is advisable to tap into as much shared experience, advice and demonstration of success as you can, to help inform your decision making, prove the case for investment and support your team to deliver.

University based digital impact centres such as the VEC, which is part of the University of Liverpool, offer a vital resource of funding and expertise. Their insight into emerging technologies and trends which are likely to influence industry sectors and supply can be invaluable in guiding and sustaining digital transformation projects.

The VEC and its partners recently launched the £3.9 million LCR4 START initiative, which offers targeted support to help Liverpool City Region SMEs develop impactful digital strategies and identify opportunities to unlock the operational and commercial benefits of digital technologies.

It will expand on the work of the LCR 4.0 initiative, which helped more than 300 SMEs to adopt digital technologies, with the enhanced capacity for innovation predicted to bring 955 jobs and £31.1m GVA to the region in the next three years.

Local chambers of trade and commerce, and industry trade groups, are also valuable points of contact.

Piloting and rollout for long-term success

In large organisations failure frequently comes at the rollout stage of a digital project, with managerial tensions, miscommunication or poor planning contributing to projects being abandoned.

However, SMEs are far better placed to avoid falling at the final hurdle. The very fact that they are smaller makes them more agile. Once a project is piloted, feedback can be swiftly analysed and acted on to ensure that final rollout is as problem free as possible.

The challenge now is to optimise any opportunities for innovation and growth made possible by digitalisation, and sustain your strategy into the future.

Traditional five, three and one year static planning cycles are incompatible with the disruption to business organisation, product development and the marketplace that digital brings.

A dynamic digital strategy is key. As customer demand increases and new technologies continue to advance, we will see more and more companies implementing Industry 4.0 technologies, and their digital roadmap will need to evolve to reflect this.

Digital transformation should be viewed not as an end destination, but rather a driver that continues to create value for your business. With foresight and prudent planning and implementation, it can have a huge impact and reap game-changing results. Failure really need not be the overwhelming norm.


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