Successful digitalization is an ambitious transformation endeavor. It presupposes a comprehensive transformation of companies, both internally and externally, which requires much more than the implementation of new technologies. The following factors need to be considered: business model, the entire organization with its employees, all operational processes and customer relationships. Digital transformation means exploiting and exploiting the possibilities of digitalization “end-to-end”.
What worked in the first phase of upheaval – competing with digital products and services while leaving the organization largely analogue – will no longer be a viable option in the future. The era of digitalization asymmetries is coming to an end, because they mean inefficient media disruptions in the new, digital processes. The range of solutions and possible solutions differ depending on the industry. Following seven starting points are part of a goal-oriented approach:
1. Systematic review and adaptation of the business model.
It is promising to carry out a “digital due diligence” on one’s own behalf, so to speak – i.e. to check the digital value creation and growth potential in the same way that a buyer would check an envisaged target company. The focus should be on discovering and occupying digital fields of the future on the one hand, and developing a strategy to be a decisive step ahead of competitors in the digital race on the other.
2. Develop fundamental skills in data analysis and use.
In increasingly digital markets, those companies that recognize and leverage the value of internal and external data at an early stage will have a head start. Anyone who thinks of sales alone when it comes to monetizing data falls far short of the point. In the broadest sense, companies must generate an economic benefit from it. This can also be to use data to accelerate product (further) development or to optimize processes along the value chain.
This also includes the revision of all previous regulations and rules that may have been necessary for analogous processing. Extensive process analysis and consequent optimization is the basis of digitizing transformation projects.
3. Expansion and further development of the IT and data architecture.
The rapid implementation of the aforementioned digital future strategies and optimizations can only succeed on the basis of a suitable technical infrastructure and with capable and powerful teams. The head of a company’s IT department is not necessarily to be promoted the head of digital transformation but should be its powerhouse. Ideally, data, IT and digital transformation should be designed from a single source, but should not be implemented as large-scale projects, but in an agile manner and in manageable sprints, with an overarching, strategic thinking Program Management.
4. Use of software robots and intelligent automation.
To achieve rapid digitalization successes without complex and time-consuming changes to the existing IT infrastructure, robot-assisted process automation (RPA) and technologically more advanced intelligent automation are increasingly coming into focus.
Increasingly, classic RPA applications are being combined with AI solutions, which enables the automation of manual and repetitive activities such as invoice verification or reporting with potential savings of up to 30 percent especially in administration – with a payback period of just a few months. Intelligent automation represents an important lever for companies to enter the AI age and achieve direct and measurable benefits.
5. Seamless integration of new technologies.
Even though the use of artificial intelligence (AI) is currently on everyone’s lips, the portfolio of disruptive tools and applications has reached a much broader spectrum. Web 3.0 as decentralized information transmission, data economy via blockchain or peer-to-peer organizations are constantly conquering more industries and areas. With Metaverse, the internet is evolving into a three-dimensional space. Tokenization, i.e. the digital mapping of assets, is also rapidly gaining momentum beyond the insurance and financial sectors – after all, from a technological point of view, industrial plants, power plants and patents can also be virtually broken down and “tokenized”.
Tokenization and the evolution to Web 3.0 will rearrange the economic balance of power. The result is a market that the state should help to promote through regulation and incentive programs. The race for global hubs is currently entering its second round.
6. Breaking down departmental silos to increase digital innovation.
As much as the IT department may be driving the digital transformation in an excellent technical way, if the other departments remain in their usual hierarchies and processes, the company is going full throttle in neutral gear, so to speak. In order to leverage the organization’s inherent innovation potential, especially in the digitalization phase, the company absolutely needs cross-departmental processes and tools as well as explicit responsible persons who monitor, motivate and incentivize.
7. Initiating a cultural change in the workforce.
Finally, the transformation task also requires an adaptation in culture and leadership. This is important to get employees on board and get them excited about change.
A key success factor is the narrative, even if this sometimes seems overused. Management must explain to employees the advantages and benefits associated with a digital transformation, for the company, but specifically for the individual employee. It is important to build optimism, but also to address risks and challenges transparently and to take risks in a controlled manner.
The latter leads to the exciting and emotionally charged question of the macroeconomic effects on the labor market as a result of digitalization accelerated by AI tools. The first estimates are on the market and are attracting a great deal of attention – also in the media. Researchers at the start-up OpenAI, together with scientists from the University of Pennsylvania, have determined that AI applications affect up to 80 percent of all jobs in the United States. For them, at least some of the activities can be done by an AI tool. Almost one-fifth of employees work in jobs where up to half of their activities can be carried out by AI. In another study, investment bank Goldman Sachs estimates that approximately 300 million full-time jobs worldwide can be automated with generative AI.
The labor market debate can be classified with two basic points. First, the end of work and a new era of mass unemployment have been proclaimed by critics in previous periods of automation – but in fact they have never happened. Secondly, the boost in the wake of demographic change probably comes at just the right time for a location like Germany. In the end, with our labor shortage that has long since occurred, we will be happy if AI fills job gaps in the future. Germany also needs a welcoming culture when it comes to the introduction of digital technologies.
Qualifying and re-assignment instead of firing.
There is also a third aspect: Repetitive work is mostly found in administration, where fixed fact-to-consequence relationships and decision-making rules can be digitally automated very easily. It is even conceivable that processes will be further developed and optimized by self-learning AI. Here, human intervention will only be necessary in the form of plausibility and quality checks. An immense rationalization and increase in cost efficiency are possible. On the other hand, as the market becomes more transparent, it requires more customer-oriented services in sales, customer service and after-sales, depending on the business model. As a result, more skilled workers are needed here. Thus, further training and re-assignment of the existing, now released back-office staff, who are often already largely familiar with the processes “at the front” anyway, with job enrichment.
Source in excerpts: Handelsblatt Research Institute, Roland Berger, 2023: State of the Nation – Transformation as a Success Factor
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Success in Disruptive Times
PMI members have already received mail, for all others it is available here: The new PMI Pulse of the Profession Report is out. Again it is constituted that companies with a higher maturity in project management have better and more profitable projects – seems to be no wonder. But different to the preceding years the study for the first time since five years has detected an improvement of meeting project objectives: “Only” 9.7% of the investment sum were “burnt”, that is 20% less than the year before!
In Computerwoche Magazine’s issue of 12. June 2012 the authors Marcus Berger (Director EMM Consulting) and Dr. Thomas Henkelmann (Director Consulting Sevices, TPG The Project Group, München) write about Project Portfolio Management (PPM) and the pitfalls which come up for companies without a structured PPM. The article is in German.
The PMI Pulse of the Profession 2016 (again) shows very clearly and easy to understand why project success, business success and good project management are directly interrelated: projects are 2 ½ times more successful (and profitable) when proven project management practices are used. It bases its argument this time as expected on PMI’s newly introduced Talent Triangle and stresses the necessity of interacting technical project management, leadership, and strategic and business management for corporate success.
Those basics include:
I just read a brilliant article by Keith Ferrazzi at Havard Business Review July/August 2014 about the similarities of Change Management and the AA approach to replace habits – worth reading and adopting for your own project purposes.