Moving Through the 7 Stages of Digital Transformation
Moving Through the 7 Stages of Digital Transformation
Ignoring change is no longer an option in the industrial sector. Too many companies have become comfortable with their outdated systems and processes.
Since 2000, 52% of Fortune 500 companies have gone bankrupt, been acquired, or simply been eradicated due to digital disruption. We are in an age of rapid technological development and the old systems of the past are no longer enough to stay competitive.
Digital transformation is the key to success moving forward; that is the concept of adopting emerging technology, such as artificial intelligence and smart sensors to create process efficiency, precision, and safety.
As this is still a relatively new idea for most, I have laid out a roadmap of the 7 stages of digital transformation and how to progress through them into the ultimate goal of full transformation and continued innovation.
Stage 1: Business as Usual
The first stage is where many companies currently find themselves — business as usual. The mindset of “this is the way things have always been done.” Management is comfortable with where the company is at and sees no need to make any drastic changes.
Companies in this stage typically utilize a multitude of spreadsheets to organize the majority of their operations. More advanced companies have legacy systems in place, such as SCADA, which offers a good starting point for digital transformation, but still only gives a basic level of process automation and control.
A good starting point to progress beyond this stage is to begin researching use cases of digital technology to solve a specific business problem. Get an idea of what is out there, gain an understanding of its value, and begin a dialogue within the company.
Stage 2: Scattered Adoption
Scattered adoption comes after the business as usual stage. A few individuals or departments begin using some basic technology, but there is no overarching strategy across the organization.
The initial efforts are aimed towards solving very specific processes. A common first step companies take is signing up for cloud CRM or ERP systems to centralize certain activities and reduce the number of spreadsheets floating around. It is a simple solution for a subset of the company and often the start of a wider spread digital transformation.
The problem that occurs in this stage is that it often does not progress into a more formal, company-wide strategy; things remain as scattered solutions to small problems. The individuals and departments utilizing the new systems need to communicate the benefits that they have seen and try to influence a larger scale strategy for digital technology.
Stage 3: Promotion & Recognition
Promotion and recognition stems from the company’s early adopters in the previous stage. They have implemented new systems that have greatly increased their efficiency, and now they must begin to promote the idea of digital transformation throughout. That means getting buy-in from management or anyone who has influence over internal processes.
As further promotion occurs, more and more buy in will happen. But it is important that the individuals promoting the concept from within are well educated on the topic and are able to easily explain the value that comes from digital transformation.
Stage 4: Experimentation
At this stage, management in the company has been convinced that there is a value to digital transformation. They have an understanding of the benefits and may have some ideas on where it could be implemented throughout the organization.
It will be clear that this stage has been reached when the team starts experimenting with new technology and measuring the results. Types of experiments could include putting more sensors around the manufacturing space to collect data, introducing new software into certain departments, or gradually transitioning away from legacy systems.
At this point, the company is in a great mindset and is moving towards the ultimate goal of complete digital transformation.
Stage 5: Strategic Planning
Once experimentation has proven successful, the next logical step is to roll out a formal strategy. One thing to keep in mind is that 70% of digital transformations fail due to lack of employee engagement, inadequate management support, poor collaboration, and a lack of accountability. The best way to ensure success is to reach out to an expert in the area of digital transformation for guidance along the transition.
A company specializing in digital transformation services will help to identify gaps in processes, suggest technology to reach process goals, and develop the appropriate systems for an effective transformation that produces value.
Stage 6: Fully Transformed
A company reaches the fully transformed stage when they have put in place a digital strategy, deployed new technologies across all key areas, and have realized the benefits of the transformation. Decisions throughout the organization are now driven by data and more advanced automation, analysis, and prediction methods are streamlining process precision, efficiency, and safety.
Every company should strive to reach this stage. The whole industrial sector is heading in this direction and those who choose to lag behind will have difficulty competing against the efficiencies that competitors have gained through their transformation.
Although a full digital transformation has been achieved, internal innovation must keep moving forward. This brings us to the final stage…
Stage 7: Continued Innovation
Once a company has a full digital strategy in place, it is important to keep innovating processes. Technology is advancing more rapidly than ever. Certain technologies could be outdated within a matter of a year. This needs to be recognized so that the company can continuously adapt as better technology enters the market.
It is crucial not to fall back into the mindset of “this is how it has always been done.” An effective way to stay on top of this is to appoint a Chief Information Officer (CIO). Their role is to stay informed on new systems and create strategies on how to utilize them to meet business goals and create internal efficiencies.
A company that keeps innovating internally will be successful for years and years to come.
Digital transformation is a large undertaking, but one that is crucial to any industry. A hurdle that many companies face is where to get started and how to deploy it effectively. These 7 stages give an overview of the process and are a great first step towards understanding your company’s transformation road map.