Enterprise
Shaping a company’s digitalisation efforts
Behonce Beh 
Digitalisation happens when modern technology converges with existing industry best practices
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DIGITALISATION has become a buzzword in recent years and a common theme of numerous conferences and meetings by top company executives.

However, to the layman or blue collar workers, going digital could mean added responsibilities or a change in how they execute daily tasks.

This disparity between management and staff thinking can cause confusion and lead to the premature failure of an organisation’s journey to digitalise its business.

Essentially, digitalisation means marrying the domain and data sciences. Simply put, it is about incorporating modern technology into existing best business practices.

Siemens AG power generation services digitalisation head Martin Becker says there are several steps for any organisation to take when it embarks on a digitalisation journey.

“The main challenge for the industry is that nobody knows where to go. Some of the big firms in digitalisation claim they know what to do but are usually just selling their solutions.” – Becker


He says first, the management has to identify its vision and values for the project. This means identifying and understanding the challenges, pain points, and value that digitalisation can bring to its organisation.

“The main challenge for the industry is that nobody knows where to go. Some of the big firms in digitalisation claim they know what to do but are usually just selling their solutions.

“You could put out a tender and have five vendors to pitch. [But] as long as you do not know where to go, all of them may sell you different solutions and you’ll likely pick the one with the fanciest presentation,” he cautions.

He says business owners need to stop differentiating between the production, IT, business development and human resources (HR) departments and look at them collectively.

 

Teamwork

“Bring the teams together and present them with a combined challenge,” Becker says, adding that process flows in one department can impact that of other departments.

Should each department operate in a silo, misunderstandings and duplication can happen, leading to excess spending.

Once a general consensus on how the organisation should embark on its digitalisation journey is achieved, Becker suggests bringing in a third party solutions provider before any plans are executed.

“When we talk about a digital platform, it sounds cool and could take a year or so for the internal team to develop a minimum viable product.

“That product will be scrapped despite having invested resources into it when a third party consultant comes in and tells you that it will not work for the market,” he says.

Collaborative efforts between the vendor and client would then help streamline the process in order to avoid blindsided pitfalls.

Ideas on how to approach digitalisation should flow freely as those involved must have an entrepreneurial mindset of imagining a better future for the organisation and not just limit it to their own departments and roles.

Despite best efforts, one should always be prepared for worst case scenarios where the digitalisation investment would one day be counted as a loss.

“All 100% of it, of course,” says Becker when asked how much a company should prepare to lose on its digitalisation efforts.

Hence, the size of the first undertaking should be small, regardless of the availability of resources, he says.

“IT projects in the past may take you four years and millions of Euros to develop. By the fourth year, your IT developer would come back and ask for another two years and more money before the solution could be deployed.

“Digitalisation projects differ in the sense that one must define a minimum viable product which is the outcome of the project,” Becker says.

 

Providing value

As an outcome, he says digitalisation needs to provide value to the user, and if this is not achieved, then the project should be deemed a failure and scrapped immediately.

Innovation for the sake of it is of no use if nobody can use it, he says.

Becker says failure tends to occur when the project owner and third-party supplier do not have a shared vision in value creation.

“Digitalisation is about people and trust. If the project owner is dissatisfied with the vendor, they should change partners as this relationship is not about deploying products and services in your factory but building individual solutions together to meets your needs.

“When the trust is not there and the vendor is looking after its own needs rather than yours, you must get rid of him,” he stresses.

Entrepreneurs must set their own tipping point on when to call it quits with their digitalisation projects.

Though it may differ according to individual industries, a general rule of thumb for HR-driven implementation of software is that it should be abandoned after a week of failing to provide value to the organisation’s ecosystem.

Three months is the cut-off time for engineering-based projects to produce a minimum viable product that adds value to internal operations.

Is it common to expect resistance and pushback from certain departments when embarking on digitalisation?

Becker says from his experience, the biggest resistance comes from those in the engineering department due to a few factors.

The first being complacency in the job scope as “they could be doing the job for many years and they have a strong impression that they are doing their best”.

“Many [engineers] feel they could lose their jobs and be replaced with technology,” he says.

Engineers, he says, also feel their trade secrets would surface owing to the open data flow which is a transparent process where information is shared.

Such fears says Becker, are some of the reasons why process-based organisations such as those in manufacturing see resistance in its digitalisation efforts.

 

Walking the talk

That said, the management must be the one championing the cause and actively communicating its efforts throughout the organisation.

“If the management wants digitalisation, they have to talk digitalisation and nothing else. The moment it returns to its old ways, the company would fail to change as the ground staff would be unconvinced of the management’s intent,” he says.

Becker recommends starting a small incubation team internally, selecting staff who are able to spare free time beyond their existing tasks or those who are eager to give the initiative a try.

This method allows the management to prove the value of its vision in a manner that if successful, it could be scaled up to a full rollout across the organisation.

“The management must be 100% sure of its vision while the incubator team would have a proof of concept.

“Only with these two are they able to convince everyone in between,” he says.



This article first appeared in Focus Malaysia Issue 260.