Digital Transformation - Why many fail!

?Digital Transformation is a popular topic of discussion among today’s manufacturing leaders, and rightfully so. The future of Making things is changing very rapidly. Consumer demands, technological advancements, and driving competitive advantage are forcing change at a record pace and turning manufacturers on their heads. There is no question why many manufacturers feel they are being left further behind.

What is Digital Transformation?

While there are many appropriate articles about Digital Transformation, I have found that many have taken an overly generic approach. Here is an example quote from one:

“Digital transformation is the application of digital technologies to fundamentally impact all aspects of business and society.”

I find the broad definition quite frustrating. What does it really imply? How is this helping companies transform? This led me to explore other articles and notice a recurring theme. Many of them were tailored specifically to one problem or a point solution that a vendor was trying to sell.

Personally, I view Digital Transformation as the following:

“Digital Transformation is the application of digital technologies that unify data and standardizes the process for all stakeholders throughout your entire product lifecycle (Design, Make, Use).”

So, why haven’t past efforts been successful??

Over the years of helping clients through their digital transformations, we have identified 4 common themes for why customers have not been effective in making this transformation.

1.????? Lack of leadership commitment and enterprise maturity

2.????? Core fundamentals of the business must be in order before you can take on more complex transformations

3.????? Digital Transformation should be viewed at an enterprise level, not at a department or solution level.

4.????? Data needs to be viewed as a critical asset

Let’s look at each one separately:

Leadership and Enterprise Maturity

Leadership commitment means there is a strategic plan connecting Digital Transformation to the company’s vision and mission and how it will help the company meet its financial objectives. Digital Transformation, as it relates more specifically to effectively managing data and processes throughout the value chain, touches all aspects of your organization. It is imperative that you have a broader strategy and understand its consequences and effects within and across departments.

While everyone has the best intentions to deliver on corporate objectives, the moment enterprise-type decisions are passed to a department level is often when/where challenges can occur, especially if they are not tied back to the broader enterprise vision. All too often, department heads will focus on “their” specific portion of a problem when they need to consider how to solve more profound enterprise-wide challenges collectively with their peers. The domain or siloed approach can exponentially perpetuate the problem. As you dig deeper into understanding these issues, it’s more important than ever for Executive Leadership to create a strong, unified vision, strategy, and well-communicated roadmap.

Enterprise Maturity refers to the organization’s degree of formality and optimization of process, data, and technology across the product lifecycle and its readiness or capability to undertake a project or projects successfully.

Understanding Maturity and Readiness is critical for ensuring the success of enterprise projects. While often discussed at the same time, these concepts are different: maturity addresses the state of process and capability, and readiness deals with current capacity. The two concepts work together to help an organization understand its most important priorities, where it will gain the most significant returns on investment, and how it must prepare for enterprise-wide projects.

“Data Transformation will never be achieved when companies lack an overall strategy for data and/or lack process standards for lifecycle efficiency of your products. Lack of maturity will leave individual domains/departments to fend for themselves, which forces a solution approach to the problem, creating disparate data, perpetuating a lack of enterprise maturity, and resulting in the need for manual and ad hoc processes as the vicious cycle repeats.” ??????????????????????????????????????????????????????? Mark Lackovic, CRO Team D3

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Focus on Core Fundamentals of the Business

Customers need to focus on the fundamentals before investing in new areas. While digital transformation is unique to every individual manufacturer, we see multiple examples of customers focused on new initiatives. In these instances, the basic blocking and tackling of their organization has either been ignored or is too immature to get the ROI from new investments.

The fact is companies continue to struggle with essential challenges that have plagued them for 30+ years and prevent them from working on new transformational things. Companies should focus on the practical application of technology towards their essential corporate goal to advance in Digital Transformation. Without getting the fundamentals down, the basic blocking and tackling of data, and your process throughout your ecosystem, the other components of Digital Transformation are almost futile.

Focus on Enterprise, Not the Department

Companies often look for the silver bullet solution and are dismayed with the overall results. Chaos ensues because of a lack of a unified strategy between the domains/individual departments or simply taking a tool approach to a wider problem.

The siloed approach mentioned above causes organizations to investigate a solution or technological approach to the problem. In other words, “We are in sales, so we need a CRM solution,” “We are in manufacturing, so we need an ERP solution,” or “We are in engineering, so we need a PDM (Product Data Management) solution.” While this may be true, the big picture of how these systems function together within the product lifecycle is often overlooked. They may have solved some critical and well-needed elements of your business, but they still lack the connectedness of data and process and ultimately fail your original intent.

By focusing on niche data and/or an individual domain process, you will ultimately create or perpetuate a silo. We relate these business systems to something we call a “solution of record,” which relies more heavily on the data that resides within them than the process around them. By this very fact, you may have solved a few symptoms and not necessarily the overarching problem.

Product Data is an Asset

Product Data is the lifeblood of any organization and should be viewed as an asset, just like any other asset in your organization. After all, it is your intellectual property, design knowledge, and business rules. Unfortunately, many customers don’t look at it this way. Nor do they understand the many forms data can take as part of a more extensive Product Lifecycle Process. All too often, companies look at data in a tactical form. Therefore, it is usually the last consideration regarding how and where it fits into the overall business strategy and specific outcomes.

To take a single, myopic view of data, or worse, not factoring it into the equation at all, can have very poor consequences. To tie back, many of the business solutions we discussed above that solve specific domain challenges are focused on the data in its tactical form. What do I mean by that? Business systems (CRM/PDM/ ERP) are there to manage specific records. That’s usually the primary focus or intent.

Data records are not typically the problem within the business system or the specific domain. The challenge often resides between the domains. This is where a system like PLM can really help companies. It can help drive towards a single source of truth. Let the business systems do what they do well but utilize PLM to leverage a common data platform while driving standards at the enterprise and domain levels. It’s not either/or. It is an AND. This is where true Digital Transformation can take place at a holistic level.

Ideas to Get You Down the Right Path

There is no magic answer to the challenges we have identified or silver bullet to the vision of Digital Transformation. But that should not prevent you from getting started or moving faster. The benefits of digital transformation, while different for everyone, are genuine. The cost of doing nothing is also real.

So, what are some things you should do to get started, modify, or maybe even move faster?

1.????? Create a 2–3-year Vision & Roadmap

2.????? Focus on a whole enterprise transformation roadmap/plan versus a domain approach (leadership commitment)

3.????? Understand your enterprise challenge and map out the “to be” process

4.????? Understand where you are at an Enterprise Maturity Level

.????????? Understand how your “vertical” data works today

.????????? Understand how your “horizontal” enterprise process works today

5.????? Take an outcome-based approach to the problem versus a technology-based approach

6.????? Prioritize the roadmap based on outcomes, maturity, and value

7.????? Be practical. This is not a race…it’s a journey