Digitalization. A mega trend, hype and revolution all in one, but at least one topic that affects all parts of a company, from the management down to the employees.
The need for companies to deal with this topic is being increasingly emphasized by scientists, experts and politicians, and with full justification. The (digitalization-) mechanisms and technologies are so diverse and powerful that every company can make use of them and grow with the design of digital products, processes and business models.
In our last blog article we already analyzed the most important reasons why digitalization projects fail . The main reasons from our point of view as software developers and technology consultants are summarized as follows:
Small and medium-sized enterprises (SMEs) in particular find themselves in a dilemma as a result of these points. On the one hand there is the risk of not getting the expected benefit from a digitalization project and on the other hand the many possibilities of digitalization must not go unnoticed.
There cannot and must not be a common answer to this question. Digitalization projects may or may not make sense, from hairdressing salons to the production of high-precision machines. Nevertheless, a structured approach and a suitable project framework greatly increases the probability that your project will be successful.
The issue of digitalization affects the entire company, which is why networking employees from different departments and levels is the basis for a sustainable definition of strategy. The topic of digitalization in the corporate context is presented to the people involved as an open-ended basis for discussion, and the specialist departments work together on topics in which fundamental potential is seen.
Experience has shown that an extensive list of topics is created in such a topic. On the basis of these topics, in line with your general corporate strategy and orientation, a digitalization strategy with short, medium and long-term goals will be drawn up, which prioritizes and clusters the individual topics. The alignment of the strategy can refer to these three areas, process, product and business model.
The most obvious potential for digitalization is in the area of processes. This can involve production, logistics and business processes. Therefore, the process environment is a good place to gain experience with digital technologies. Nevertheless, the product and business model level should not be disregarded. Consider the questions of how your product can be changed. What data can you collect and how can you or your customer use it? How will your business model change?
A road map can be derived from these considerations, which should also contain a rough timeline. A recommended approach is to identify a department in which a pilot project can be initiated.
A project can only be successful if there is a real need for its output. The basis for this is a detailed NEEDS analysis. Proven methods for ACTUAL analyses can be used. In production for example, procedures from lean management and value stream analysis can be applied. A typical result is that production is based on printed production orders.
It must be checked whether a digital business case exists and whether the identified pain points are suitable for digital production optimization. In the above example, it is conceivable that the paper-based production orders could be replaced by digital orders that the employee receives via a tablet.
Process improvement is about reducing costs and improving quality, but it must also be made clear to decision-makers that other factors, such as the ability to change processes and increase customer benefit, are of great importance. In addition, the effects of changes on other processes and departments must be taken into considerations in any digitalization project. In our example, an order call-off via tablets can simultaneously mean that information (e.g. processing times, machine occupancy, fault messages, price calculation, etc.) is recorded, which in turn can be used for capacity planning and (automated) calculation of a delivery date.
A recording of the user stories for the application case helps to create a deeper understanding of the changes. The user stories describe a user's requirements for the converted process. They are recorded for each stakeholder in the format "I want as <role> <what>, <why>". This description allows the development process to focus on the requirements.
A variety of technologies, software products and services are available on the market. Which technology is the right one is largely determined by the factors of application, corporate philosophy and general conditions. Using the example of the conversion from paper-based production orders to a tablet application, the associated input and its processing can be recorded via an MES system, as offered on the market by many manufacturers. An alternative is classic individual software development, which implements the desired functionality in an order-specific project. A second option is the use of low-code environments with business intelligence solutions and other cloud services.
In principle, it is advisable to map standard business processes with standard solutions and individual processes with individual solutions.
In the sense of the sustainable implementation of a digitalization project, it is necessary to understand this as a project that creates the digital structures to digitally map existing processes, products or business models and to support them in the best possible way.
The involvement of the later users from the beginning of the project plays a central role for its success. No matter how good the system is in theory, if the later users do not accept it, use it and give constructive feedback, the probability of success decreases significantly. For this reason, prototypes should be developed in the early project phases (starting with so-called paper prototypes) that make digitalization a tangible experience and emphasize the benefits for the user. This assessment is supported by the "Digital Transformation 2018" study:
"Digital change is driven by people - not by technologies. Digitalization projects are therefore not technology projects, but business transformation projects that affect the entire company and its culture.
An agile approach to project implementation creates transparency and minimizes risks, as users give feedback quickly within short development cycles and changes can be implemented with little effort. It is also advisable to develop a "minimum viable product" which is a system with minimal but functional and productive content. This proven procedure is used to obtain action-relevant feedback and to check customer requirements.
Finally, all project participants must be aware that a digitalization project is inevitably followed by an ongoing process. In this process, the real and digital circumstances are continuously adapted to each other. This is particularly important in a product and process landscape that is constantly changing, whether due to changing customer requirements or internal process optimization.
Following a successful proof of concept project, other projects typically follow that address different problems throughout the company. It is very important to keep track of these projects and to avoid isolated solutions that generate positive effects but conceal the greatest strength of digitalization. The really great benefit only comes when different projects can benefit from each other because they make information available to each other that did not exist before. If these effects can be exploited, then digitalization has the potential to enable new business models and to trigger even more far-reaching changes. Therefore, it is worthwhile to check again and again during and between projects how the current business strategy can be rethought.
Digitalization is a broad field that can be confusing. The challenge is particularly great for SMEs that have neither a large R&D department nor a large IT department with the capacity to deal with digitalization issues. However, projects that create these capacities can have great effects, especially in SMEs. Managing directors, project managers and process managers should therefore think about how these capacities can be created in everyday business.
One possibility is projects that are initiated jointly by several companies. Another possibility is to get support from external companies.
Independent consulting and project support helps to identify technological and organizational development opportunities and to share best practices from completed projects.
When selecting a partner, care should be taken to ensure that it supports the development of the required understanding of technology within the company so that it becomes available to the company in the long term.
For initial projects, the two principles "Think big, start small" and "Fail often, fail fast, fail cheap" are a good orientation aid. Also clarify the questions "Why" and "With what goal" you would like to tackle a digitalization project. The individual project design depends entirely on the requirements of your particular case. Therefore it is important to deal with these requirements already in an early project phase. .
If you have any questions regarding the implementation of digitalization projects.