Best practices for scaling your digital transformation

Are you defining your digital strategy goals by listing down the applications you wish to implement? Do you not get the desired results even if you invest in new technologies? Here’s why…

We have seen that companies often plan their digitalization journey as a set of new technologies like IoT projects, AI applications, or AGVs on the shop floor, or any buzzing technologies they want to introduce into their processes, without considering the gained value. But is this the right way to improve your digital maturity? Will having a large count of state-of-the-art technologies improve your business? Here are four fundamental rules to start your digitalization journey:

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• Translate corporate strategy into digitalization strategy - Defining what comes on your digital roadmap and deciding the applications which will bring value is the real challenge. How do you start planning your digital transformation? The answer is to start with your corporate strategy. Have a clear definition of what you want to achieve as an organization, e.g., developing new business models, providing better customer service, and increasing profitability. While improved efficiency and reduced waste are frequently the first topics addressed with digital transformation, make sure to look at growth priorities to address not only incremental improvement but also the transformative benefits digitalization can bring to the company. And then translate the technical and cultural changes of the overarching corporate strategy to what it means for your digital transformation.
• Anchor your digitalization projects to company KPIs – The true measure of the success of digitalization projects depends on the impact that they create on your corporate KPIs. What are the numbers that your top management wants to see change? These are the right KPIs on the basis of which you plan the improvement of your capabilities through digitalization rather than local optimizations.‍
• Good infrastructure is the backbone for digitalization - Digital transformation is based on good digital infrastructure.  Develop a good infrastructure that is fit for the future. The projects that are part of your digitalization roadmap will need Information technology (IT) systems and Operational technology (OT) systems as well as proper data governance. All applications that you plan to implement should be a part of the digital ecosystem that you create.  It does not help to have a great infrastructure in some aspects, e.g., data collection, but lacking in other areas such as IT architecture. The build-up of the infrastructure should be step-by-step and address all needed areas to avoid needing to wait for 5 years for a major IT project to be completed in order to start seeing benefits.
• ROI does not reflect the true value of digitalization - ROI check is not the right KPI for justifying the value of an Industry 4.0 project. However, budget approval is often based on ROI projections. It is possible to overcalculate an ROI by avoiding using costly but sensible infrastructure and rather working with quick fixes, but this easily leads to unmaintainable island solutions. Since transformative value does not come from individual projects, individual ROI calculations do not do justice to the overall value creation approach. Clearly defining technology standards everybody in the company has to adhere to based on a TCO (Total cost of ownership) approach and evaluating individual applications based on the contribution they make to the overall KPI defined above is a better way to ensure an overall success than evaluating applications in isolation.