Haven’t Mastered Digital Transformation? It’s OK, You’re in Good Company

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Digital transformation isn’t easy, but organizations are taking unique approaches to integrating new and innovative tech into their business processes.

IoT, machine learning, big data, blockchain and other extremely compelling technologies are causing both justified and unnecessary confusion among super savvy companies. In fact, the numbers are quite startling. An Oxford Economics report, “4 Ways Leaders Set Themselves Apart,” revealed that only 3 percent of efforts to reach digital transformation actually got off the ground and into production.

In efforts to digitally transform and reach real-time decision making, organizations are taking different approaches to integrating new and innovative technologies in their business process. Some are experimenting with incubator projects or implementing niche solutions without an organizational strategy. Alternatively, another set is launching massive multiyear initiatives with unclear achievability while others are so overwhelmed that they’ve decided not to move forward with technology updates and are sticking with the status quo.

See also: Using BPM applications for digital transformation

Overcoming these hurdles is no easy feat, but clearly, businesses should be on the digital transformation trajectory, and success is possible when leadership follows best practices.  Even though digital transformation and real-time decision-making are relatively young, it’s mature enough to have valuable research and real-world examples that highlight what works and what doesn’t in digital companies. Interestingly, success is a mix of factors that require change around people, technology, and processes. These four best practices are proven and tested starting points for companies ready to jumpstart their digital transformation and ensure that the technologies they adopt deliver business value.

Tap Leaders Who Encourage Transformation

Leadership is crucial to any successful project. The Oxford Economics report identifies the type of leadership companies need to not just make a project successful but to transform into a digital leader.

The researchers defined four traits of a digital transformation leader:

  • They are focused on true transformation.
  • They transform customer-facing functions first.
  • They invest in next-generation technology using a bimodal architecture.
  • They are talent driven.

The overwhelming majority (96%) view digital transformation as a core business goal, and 93% say technology is critically important or very important to retaining competitive advantage. In these companies, the leadership views business differently, and they make different choices from the status quo. Essentially, these companies adopt a data-driven culture and use real-time decision making, allowing them to reinvent business models and pump new energy and revenue into the organization.

Identify the Problems Important to Your Customers

The next factor of success centers on solving a problem that is important to your customers, both internal and external. While this seems logical, companies often make the mistake of adding technology in a vacuum. Projects will tackle a concern that benefits a small set of users or isn’t valuable to the business. To avoid this, companies need these projects to be led by leaders from across the organization that can identify a sticky problem and provide a meaningful solution.

That’s how digital transformation started at La Chapelle, a fast-growing multi-brand fashion group in China that designs, markets and sells ladies casual wear apparel. La Chappelle’s business problem was retail distribution and store balance. With more than 7,100 retail points in China, the company needed the right distribution and balance of merchandise across its stores during every season.

La Chapelle has nine brands, and each formulates its own distribution and circulation rules to the retail stores. Before going digital, the company separated its enterprise data from its back-end procurement, receiving, inventory and sales booking. Altogether, the enterprise data amounted to around 12TB, but the company was unable to quickly run reports against the data to understand store needs. Calculating the transfer application required three days, and the business department manually processed the product transfer decisions then imported the results into the system to be executed.

Integrating data between ERP and enterprise systems and making it available in real time changed how La Chapelle distributed its merchandise. It has significantly increased how often it distributes and transfers merchandise to 48 distributions per year and one regional transfer per week. The transfer application takes 6 hours now, much lower than the previous 3 days.

In terms of business outcomes, La Chapelle has increased sales 5% and reduced logistics costs by 30%. “In the past, 15% of sales were lost due to out-of-stock merchandise at the storefronts. Now, the fashion enterprises can respond more quickly to market demand changes, which is leading to sales improvement, supply chain optimization, and precision marketing,” said Song Sheng, I.T. General Manager, La Chapelle.

Quantify the Business Impact of Real-time

The third factor to consider is understanding when and why real-time is important. When defining your problem, the solution needs to be quantifiable. What money is saved or made? How much time is saved? Rarely do businesses want to assign numbers to these projects, but those that do take the time and effort have a much higher rate of success.

Network provider Cisco Systems was clear about what it wanted to achieve with digital transformation: more sales. The end goal was to unify data in a single platform so that the sales group could create data models in real time to identify leads that were most like to become sales.

Within Cisco, data relevant to sales is distributed across multiple systems, regions, and business units. These systems track more than 1300 product families and 190,000 SKUS, sold by 15,000 reps and 70,000 partners in 165 countries. Under its digital transformation project, Cisco made all data—20 TB—available in real time.

The data is collected from 10 source systems and presented to sales teams through a dashboard.  Non-technical users can create data models, merge data sets, and make predictions about the sales pipeline in real time.

Creating a single platform that lets more than 15,000 sales agents use real-time predictive analytics for sales has led to more than $1 billion of new revenue being created for Cisco. 

Deliver Insights Where They Matter Most

The fourth factor of digital transformation success aligns closely to the previous one. Who really needs real-time data and what differences will it make in how they do their jobs? And just as importantly, how will it benefit customers, clients, and end users?

For Mercy, a health system located in the Midwest, real-time decision making touches everyone in the organization. Millions of patients visit Mercy’s 43 acute care and specialty hospitals and 700 physician practices across Arkansas, Kansas, Missouri, and Oklahoma, hoping to find pain relief and feel better. What these patients are unaware of is that their caregivers at Mercy are not only trained in the latest healthcare procedures, they are also taking advantage of the organization’s data. Staff throughout Mercy relies on data to make real-time decisions.

Data sets from electronic health records, financing, and business processes are available for every group to run tests against, giving Mercy greater visibility into variations of clinical care for patients experiencing heart failure, pneumonia or undergoing surgery at its facilities. They also embed data in electronic health records and in dashboards to provide instant answers.

Having consolidated data available in real time has transformed the healthcare provider. Mercy reduced heart failure and pneumonia mortality rates to less than half the national average. Physicians also improved processes around clinical documentation and the use of operating room supplies—saving nearly $75 million.

Opening up the data and empowering its employees has led to $9.42 million saved by eliminating or minimizing the use of certain surgical products, reducing variation in surgical protocols, and establishing best practices across surgical departments to ensure quality in postoperative results for patients.

Mastering Digital Transformation Distinguishes You

The rewards of real-time decision making are very real. While you could argue that digital transformation is too risky based on success rates, that thinking puts you in danger of being left out of the digital economy.

Digital companies thrive on real-time insights, and they are realizing better business outcomes. Retailers are increasing sales and reducing costs. Network providers are realizing new revenue, and hospital patients are receiving critical medications more quickly. Through all these examples is one common thread. Each one abandoned siloed data that served individual business groups, and they created an integrated data repository that supported real-time, data-driven decisions.

While these examples show that digital transformation is possible, it is a journey. When you bring together process, people and technology, your organization can get IoT, Big Data, machine learning and blockchain projects into production successfully. Reaching this point requires both commitment and a combination of leadership, forward-looking technology adoption, and openness to change.

Mike Flannagan

About Mike Flannagan

Mike Flannagan is active in the startup community, as an angel investor, mentor and board member. Prior to joining SAP, Mike served as an advisor to Machine Learning Startup DataRPM (acquired by Progress Software) and was Corporate Vice President and General Manager of the Data & Analytics Software Group at Cisco Systems. Mike co-founded ChallengeUp, an IoT focused startup accelerator, with executives from Intel, Deutsche Telekom and Cisco. Mike holds multiple patents, is a published author, and a frequent speaker at industry events. He earned his MBA from Auburn University, where he now serves on Advisory Boards for the College of Business and the Graduate School.

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