The 10 factors of digital transformation success
IfM Engage Industrial Associate Kam Gossal explains how manufacturers can best align their digital transformation programmes and the key factors behind their success.
By IfM Engage Industrial Associate Kam Gossal
Supply chains are getting complex, so having a carefully planned digital supply chain strategy can address critical business challenges, foster innovation, and drive growth. However, achieving goals can be challenging without strategic alignment, clear visibility on projects and IT spending, and a starting point.
The problem is that separate business functions and regions in a company create their own digital strategies. Poor project visibility, communication and inadequate IT spend oversight can result in competing solutions targeting unnecessary needs, resulting in a chaotic blend of incompatible technologies. Such inefficiencies drain valuable resources, especially in times of economic uncertainty.
Here are 10 critical success factors for aligning and optimising digital efforts:
Assess whether there is willingness from the C-suite to embrace self-disruption, allocate the necessary resources and lead change across the organisation. Leaders must challenge the status quo, embrace feedback from their junior colleagues and admit knowledge gaps. Being open and transparent will encourage cross-function and ecosystem collaboration to enhance performance.
2: Psychological safety
Recognise that transformation is not a linear process and that teams need time to embrace the uncertainty and challenges it presents. Learn from past tensions and concerns about loss of control or job security. Show empathy and engage early by delegating responsibilities to frontline teams, providing clear accountability, emotional support, resources and funding for co-creation and experimentation.
3. The digital ‘why?’ and ‘what?’
Articulate a separate and distinct digital ‘why’ that emotionally appeals to real customer, societal or environmental needs and aligns with the business strategy. The digital ‘what’ may need to shift from an internal focus to broader ecosystem-wide perspectives, inspiring business model innovation.
To get to your vision, you need to assess your company’s current digital maturity. For assessment purposes, IfM Engage has created a digital supply chain scenario framework and maturity model to help identify pain points and determine the right capabilities and technology that need to be reconfigurable, integrated and with ready-to-use APIs.
5. Project selection
Once you have identified opportunities and challenges, you need to determine project type to allocate resources sufficiently. Developing a point solution, like digital work instructions, is comparatively simple compared with coordinating a major infrastructure project which benefits future use cases or a business/operating model transformation project.
When there is limited information available, it’s not unusual to have to decide which projects should be pursued and which ones should be set aside. IfM Engage has developed a prioritisation framework, a scoring tool and a process to measure projects on opportunity and feasibility separately.
Results can be plotted on a 2×2 to help the decision process. There will always be quick wins, but there needs to be focus on the projects that either support multiple business objectives or benefit multiple areas of the supply chain, for example, customer-oriented solutions. Look out for patterns and see if multiple point-solutions can be rolled up into a system solution to simplify your IT architecture.
Shifting from a functional view of processes to an end-to-end perspective aligned with the customer journey and applying digital technology, can improve the customer experience.
7: Ways of working
Establish effective working methods by having a clear decision-making framework and programme management structure. Digital governance will ensure that digital capabilities and technologies are aligned with the business strategy, increase transparency, mitigate risk and ensure compliance.
Also, collaborate across the ecosystem to address pain points and leverage strengths for differentiation. Recognise that building successful partnerships will require a significant upfront investment of time.
Skills gaps outstrip technology gaps, so address the digital skills gap by identifying areas such as cloud computing, software development, AI and data science. Make training and learning programmes available for executives and workers to reskill or upskill for their new roles, along with continuous education.
9. Data-driven insights
Instead of treating data as a centralised and protected asset, an alternative idea is that individual teams that are responsible for data, treat data-as-a-product that provides insights, trends or actionable information internally or can be shared externally with customers, partners or stakeholders. The challenge is consistency, security and compliance, but that’s where strong digital governance comes into play.
Start small and pilot projects before scaling based on opportunity and feasibility. Develop a transformation timeline identifying which use cases to prioritise, where and when.
Cultivate core capabilities in-house, outsource or partner for ‘moonshot’ solutions. Employ appropriate metrics for each type of digital project. Alongside existing KPIs like ROI, incorporate new metrics e.g., ‘did it work?’, number of new capabilities created and even customer engagement.
These insights have been drawn from the digital transformation activities at the IfM’s Centre for International Manufacturing (CIM) and related work at the World Economic Forum (WEF). To learn more, please contact Dr. Jagjit Singh Srai (email@example.com) and Kam Gossal (firstname.lastname@example.org) or visit IfM Engage: www.engage.ifm.eng.cam.ac.uk.
IfM Engage is an embedded knowledge transfer company within the Institute for Manufacturing (IfM), combining research excellence and industry expertise to conduct bespoke strategic consultancy, talent and leadership development and company membership programmes.