Digital Transformation - Digital Transformation

What to watch out for when adopting digital tools

01/07/202412/05/2023 by DX Talk

What to watch out for when adopting digital tools. The third installment of the Digital Transformation Process: Keys to Success guide explores key factors to consider when adopting digital tools for digital transformation (DX, DT, Industry 4.0, digital transformation). Topics covered include IT project management, budget planning, the challenges of SaaS adoption, security management, employee training, and the role of the executive team. Provides a practical guide to successfully introducing and utilizing digital tools.

Intrinsic considerations for adopting digital tools

We’ve talked about adopting digital tools as a first step to improving your employees’ digital capabilities. But does simply introducing digital tools instantly build digital skills? Not necessarily. In most cases, IT departments within organizations lead digital tool adoption projects. Traditionally, their primary goal is to deliver on time and at a given cost. As a result, it’s easy to lose sight of the post-implementation impact, adoption, and change management. But can IT be held accountable for these qualitative outcomes? It’s hard to say. It could be corporate strategy, corporate culture, or HR. But if it’s not an initiative of the IT department itself, but rather a request from the CEO or another organization? It’s just a mechanical project.

The importance of project management and cross-functional collaboration

To address these challenges, you need to take a different perspective. Treat digital tool adoption like any other IT project and don’t just look at it as a cost and schedule. The value it will bring to the company and how employees will use it must be explained and addressed within the project scope. This requires a process of employee buy-in as part of the project introduction. And if necessary, involve other departments outside of IT.

Understanding and budgeting for subscription services

Adopting digital tools inherently requires an investment of money. Subscription services, primarily in the form of software as a service (SaaS), dominate. Google Workspace, Microsoft 365/Teams, and Slack are all examples of enterprise subscription services. For subscription services, it is common to pay a monthly fee. Therefore, unlike traditional SI projects, the cost is centered on operating expenses (OPEX) rather than capital expenditures (CAPEX). If you need to create a new budget for your project, you need to fully understand these differences and prepare a plan.

The challenges of SaaS adoption and the impact of enterprise size

In the case of subscription services, it is difficult to customize them to suit your company because they are already standardized and used by companies. Until now, many companies have optimized their requirements in the form of SI to carry out IT projects. However, when using a SaaS subscription service, you have to use the service provider’s servers, let alone change the functionality. These differences make the whole process of adopting SaaS digital tools challenging. If your company is small and hasn’t yet established its own IT systems and infrastructure, you can get started without too much difficulty, but as soon as your company exceeds 100 employees, the complexity of stakeholders increases exponentially.

The importance of security and privacy

The first step is to integrate with your existing legacy systems for a seamless service. For example, automatically integrating a company’s organization chart and employee information. In most cases, the SaaS service provider does not do this directly, so the adopting company needs to integrate it separately according to the SaaS service’s specifications.

This kind of integration is easy. The hard part is security. If you’re a security-conscious company, you’ll have to go through a lot more trial and error. There are a variety of security issues that come with new tools, from document security to data leaks within the organization. Due to the nature of SaaS, these services don’t exist on your internal network, but on an external network. This means that all intellectual property created within the enterprise is stored in external storage.

This fundamental change in environment needs to be well explained and convinced to other stakeholders in the organization. While adequate security and internal controls are necessary, poor decision-making can prevent organizations from fully leveraging the benefits of SaaS and reduce the likelihood of project success. This means that the essence of DX can get lost in the shuffle of unreasonable requirements. So, whenever this happens, you should never forget to ask yourself, “Why do we want to introduce digital tools into our company?”.

Practical direction and employee training on leveraging digital tools

Adopting digital tools is all about changing the way you work. The changes that digital tools bring are bigger than you might think. Everything that was previously done in analog form or based on personal experience becomes digital and standardized. The centralization of all work processes within a company, making them available as corporate assets, is the hidden goal behind the adoption of digital tools.

As mentioned earlier, you need to provide your employees with guidelines for using digital tools in order to inspire change in their daily work. If your company’s culture is not accustomed to the digital environment, you should also consider training your employees. This shouldn’t be a one-time thing, but an ongoing process to ensure that working digitally is internalized.

Companies are already creating and distributing detailed workplace guidelines to employees even before they start a DX project, such as how emails should be formatted (subject line, content, etc.) or how files should be named when creating work files. If you’re using messengers, you might want to tell them how to distinguish between chats that need to be kept private and those that don’t, or that when editing documents in the cloud, they should always create and edit files in the cloud, not on their personal PCs. You can also include guidelines for forwarding files to links in the cloud rather than physically attaching them in emails or chat conversations.

Guidelines and training can also guide employees on how to create team spaces that align with the company’s organizational chart, how to operate channels when new project teams are created, and when to delete used online collaboration spaces at the end of a project. And while it would be great if all employees were proficient once trained, that’s not always the case, so it’s important to keep checking in with employees to see how well they’re utilizing digital tools, and to conduct internal assessments of utilization and retraining after a certain point, so that they can continue to build on their skills.

Leadership roles and strategic use of digital tools

More importantly, however, is the change in management and executives. The fastest way to spread digital tools is to start at the top. Of course, it’s harder for executives to adapt to an unfamiliar environment than it is for employees, but if you want to accelerate DX, their example is critical. For example, take meeting minutes directly in the cloud and share them with employees.

When creating slides for reports, I instruct them to communicate their opinions in the cloud, and I also check the reports written by workers and give them feedback with comments. Project schedules are also discussed in the project management tool, not in Excel tables or reports. Weekly reports are also discussed in the wiki or documentation in the collaboration space, not in a separate document. If executives or executives take the initiative to utilize digital tools, employees are bound to feel more nervous and try to use them themselves. That’s why we need to train executives separately.

The key is not to explain how to use the tools or what the guidelines are, but to focus on why they are using digital tools and what the business benefits are. It should be done in a way that resonates with them. It’s not about explaining that the times are changing and we should follow suit, it’s about convincing them that it’s a necessary step to get results. Explain how working in the cloud, giving and receiving feedback along the way, and having all information centrally managed will help improve productivity from a management perspective, not a functional or technology perspective.

And if you can explain how it helps manage the risk of employee transition and turnover, you’ll get a lot of buy-in. If you can explain how you’re sending files back and forth via physical email, but you can’t find the email, and you have to call back and ask them to send you the file, and even after the final report is created, it’s “final,” “final,” “final,” “final,” and so on, you’re going to get a lot of buy-in.

Don’t forget that digital tools are the first step in improving your employees’ digital capabilities, so don’t just focus on introducing them, but also on how to use them, what they can do for you, and getting buy-in from your employees, including management, is a critical approach to your DX journey.

Digital transformation starts with the adoption of digital tools

01/07/202412/05/2023 by DX Talk

Digital transformation starts with the adoption of digital tools. In this second installment of Digital Transformation Process: A Key Guide to Success, we explore the historical evolution of digital tools and their impact, changes in the post-COVID-19 workplace, and the impact of the proliferation of remote work on digital transformation (DX, DT, Industry 4.0). Learn how small changes that start with the adoption of digital tools can lead to big workplace efficiencies.

Historical changes in digital tools and their impact

There are many factors that have influenced the productivity of office workers over the years. If we had to pick one tool that has had the biggest impact, especially in the last 30 years, we’d have to say digital tools.

Let’s go back to the late 1980s and early 1990s. As PCs began to be utilized in corporate offices, documentation that had been done by hand or on typewriters went digital. Then came Microsoft’s Excel and PowerPoint, which not only changed productivity but also changed the way we work. We spent less time looking for information. Calculation errors were reduced as numbers were managed in Excel.

How communication has changed since the 2000s

The 2000s brought the internet. The change in communication represented by email was revolutionary: before, people used to communicate via landline phones or, if necessary, by mailing paper documents back and forth. But now, email is at the center of it all. Today, we are constantly sending and receiving emails.

The rise of mobile and workplace productivity

The proliferation of mobile environments in the 2010s also brought about a major shift. The shift from wired internet on desktops and laptops to mobile devices on smartphones has led to another boost in productivity. For example, email communication, which was once limited to wired environments, is now possible anytime, anywhere in the mobile era. There was a time when BlackBerry was the dominant smartphone in North America before iPhones and Android phones took over the market. The BlackBerry’s core feature was real-time messaging. Many office workers flocked to BlackBerrys because of their ability to communicate in real time. Now, mobile-based messengers, cloud services, and more have evolved the workplace.

COVID-19 and rapid changes in the workplace

The COVID-19 pandemic that swept the globe in 2020 changed the way we work even more rapidly. Conference calls and video conferencing, which were once only possible with expensive, dedicated equipment like Polycom and Cisco, have given way to mobile services like Zoom, Microsoft Teams, and Google Meet that are accessible to everyone. At the same time, telecommuting and remote work have become accepted as part of the workplace.

The rise of remote work and the importance of digital tools

We’ve been hearing a lot of talk lately from tech companies about increasing the amount of telecommuting and remote work. This is because they’ve found that employee satisfaction is high and productivity hasn’t dropped significantly, regardless of COVID-19. These changes are, in turn, driving the use of digital tools. Chat and video conferencing for communication, traditional email and calendar sharing, and cloud-optimized file sharing, document creation, and collaborative editing.

In addition, digital tools such as task management and project management tools for to-do and work management are not just being used internally, but also by partners and collaborators outside the company, and it has become difficult to work together without them. We started using Google Workspace (formerly known as G Suite) and Microsoft 365 as collaboration tools, and we started using Teams and Slack for communication.

Are these changes just a complement to remote work? They may have been triggered by remote work, but the end result is a fundamental shift in the way we work. Until now, we’ve been using digital tools on a case-by-case basis in the name of personal know-how. But after COVID-19, digitizing work became a company-wide task. Projects that used to be managed like a diary in Excel have become much more convenient and intuitive with the use of ‘project management tools’. This change has not only affected IT companies, but all companies regardless of industry.

Digital Transformation: Start Small, Make a Big Difference

DX doesn’t have to be intimidating. Just by digitizing the way you’ve been working, you can increase your productivity. Simply adopting many of the tools mentioned above can make a big difference. When a new employee joins your team, should they start by going through an orientation and being handed a bundle of shared documents by the youngest person in the department, or should they learn about the conversations, deliverables, and decisions that have gone into a project from the top down in a digital workspace like Slack?

If you’re comparing apples to apples, the answer is already clear. DX starts with changing the way people work. Changing tools changes the way they work, and everything they do leaves behind data. Another way to look at it is that it’s about increasing business continuity. As a result, you can take on bigger challenges like changing your business model. In this way, DX is about starting small, expanding items like a game journey, and dreaming of ultimate change.

Steps to digital transformation success: start small and fast

01/07/202412/05/2023 by DX Talk

Steps to digital transformation success: start small and fast. First Steps to Digital Transformation Success: Small, Quick Start, the first in the Digital Transformation Process: Keys to Success guide, helps you understand the importance of transforming your business model through digital transformation (DX, DT, Industry 4.0) and emphasizes the importance of an incremental approach with success stories from Starbucks and Rolls-Royce. Learn how to start your DX journey with Small, Fast Steps.

Understanding the success and importance of digital transformation

Most organizations that are interested in digital transformation (DX) often set fairly ambitious goals from the outset. This is because the digital transformation success stories that have been shared in the market so far have focused on business model transformation. There’s also a sense of expectation on the part of executives that DX will do something magical. But like all things, the DX journey is a step-by-step process.

A successful business model transformation story: Starbucks

Let’s take a look at some of the best examples of successful business model innovation through DX. (DX examples) First of all, in the B2C field, Starbucks is the best example. Starbucks added a mobile service called “Siren Order” to its business model of selling coffee in offline stores. The idea was to move from in-store, face-to-face ordering to mobile ordering.

Starbucks also created Starbucks Pay, which allows you to make deposits and use them to pay in-store, as well as a loyalty program and various rewards programs, all through a mobile app. Now, Starbucks is naturally collecting customer information and will find new ways to use it.

Several recent research reports have called Starbucks the most powerful fintech company in the world. In addition, with the recent increase in drive-through stores, Starbucks is now offering a service that connects your license plate to your existing Starbucks membership, allowing you to pay by simply scanning your license plate without having to open the app. DX is at the core of Starbucks’ mobile-centric business.

Innovation in B2B: Rolls-Royce’s approach

The next example we’ll look at is in the B2B space, with Rolls-Royce‘s aircraft engine business. Unlike automobiles, aircraft engine sales work on the basis that when an airline places an order to build an airplane, it specifies which engine it wants to use, i.e. when Korean Air buys an airplane from an airplane manufacturer like Boeing, it orders the airplane to be built with a specific brand of engine. Like most manufacturers, Rolls-Royce’s business model is to manufacture and sell aircraft engines and then provide maintenance services.

More recently, however, the company has been adding a variety of sensors to its engines and using the data it collects to provide maintenance services. An aircraft engine generates 20 terabytes of data in one hour, which is a huge amount of data if you assume that an airplane has two engines and flies for an average of six hours. The idea is to use this big data to diagnose aircraft engine faults.

This is a very important service that can save a company a lot of money in terms of preemptive checks before an actual engine failure occurs. Rolls-Royce has also created a business model that is tied to a performance system that rewards airlines for reducing their losses due to engine failures, meaning that if they can reduce what could have been a week of downtime through big data analytics and proactive maintenance, they get a share of the airline’s revenue.

It could be argued that they are actually charging for the time an aircraft engine runs. Rolls-Royce has created a new business model by moving from the traditional model of manufacturing and selling airplane engines to charging for time spent in service.

An incremental approach to digital transformation

As you can see from the DX journeys of Starbucks and Rolls-Royce, their business model transformation didn’t happen overnight. It took a lot of trial and error and constant execution to refine it. Whether you’re a mid-sized company, a large enterprise, or a startup, these business model shifts are based on years of investment and experimentation.

While it would be great if all companies could follow the same steps and navigate the DX journey, that’s not the case, which is why we recommend that manufacturing companies start by digitizing the product itself. It’s about connecting your product to the internet and thinking about what information it can collect and, conversely, what information it can provide.

In the case of Rolls-Royce, we’ve already seen how the company transformed its business model from engine manufacturing to a data-driven service business. They started by connecting their products to the internet, which is to say, they started with what they were good at and gradually incorporated digital technologies and ultimately transformed their business model.

What if you’re struggling to digitize your flagship product internally? If so, you may want to consider DX as a way to streamline your operations, not as a new business model. Operational streamlining means reducing various costs in a company’s operations. If the application of technology in the value chain of planning, development, operation, production, quality, and marketing improves productivity and reduces costs, this is also a great DX journey. Automating production processes centered on the know-how and experience of skilled workers by utilizing digital technology, even if it improves the yield of the production process by 1%, will result in tremendous added value for the company.

Other activities include analyzing customer review data after a product has been produced and sold, or tracking usage data of internet-connected products to detect abnormalities early and prevent quality incidents such as recalls. In addition, predicting the number of sales of flagship products and estimating the storage period of accessories for product repair are other areas that can be streamlined through DX. For companies producing consumer products such as food and cosmetics, instead of conducting FGI (Focused Group Interview) in the market research process, they can mechanically collect various comments on SNS and analyze them to derive insights. This is also the journey of DX.

Digital transformation starts with small goals

The ultimate goal of DX is to create the conditions for a company to always be able to shift to a new business model that allows it to continue to grow. However, if you aim too high from the start, you can end up spending money and not seeing results, or failing to implement DX due to internal resistance. Instead, it’s best to start with small goals that you can implement in a short amount of time and see immediate results.