Succeeding With Digitalization Today, and Tomorrow

Almost every organization has a digitalization initiative, with IT playing a major role, but not all digitalization efforts work. Why?

Mary E. Shacklett

President of Transworld Data

January 02, 2023

Credit: Zoonar GmbH via Alamy Stock

Few projects secured management and budgetary backing faster than digitalization.

Digitalization projects produced immediate, tangible results. They eliminated closets and drawers full of physical documents and artifacts. This freed up floor space. Digitalization even reduced the amount of square footage that organizations needed for their businesses.

Now, the challenge for digitalization champions, project managers, IT executives, and business leaders is to meet upper management’s new demands for digitalization. Organizations want to know how they can leverage the digital technology investments that they’ve already made.

The common questions that are being asked are:

How many departments within the company can access digital information to improve their work?
Can all of the digitalized data be mined with analytics to produce unique insights into the company and its markets that will improve performance?
Are there ways that digital data can feed work processes that can automate the company's processes?

The Digital Sand Traps that Companies Fall Into

When upper management starts asking the “what’s next” questions about digitalization,

CIOs and digitalization project managers can find it difficult to respond.

Here are three major reasons for that difficulty:

The ‘project is complete’ syndrome. Once the initial implementation of a digitalization project is complete, project managers and staff members check the project off their to-do lists and move on to something else. A digitalization project can run 18 months or longer, so checking the project off as “complete” is welcome relief!

The project is complete if all the organization wanted out of it was a way to digitalize physical documents and artifacts. However, few companies want to stop there.

Even five years ago (2018), the average digitalization budget in mid-sized to large-sized companies was $14 million. With so much time and money invested in digitalization, corporate management expects digitalization to be a launching platform for business transformation that goes well beyond the conversion of physical documents into electronic facsimiles.

The pilot project syndrome. A second sand trap that digital projects fall into is the “pilot project” syndrome.

Many digitalization projects were started as pilot projects because digital platforms were new technology, and IT and the end users were unfamiliar with the technology.

Thinking of digital projects as pilot projects became ingrained as frequent new software releases, patches and physical artifacts were added to the system. There was a feeling that the pilot phase would never end because of this continuous change. This made it difficult for companies to think about digitalization as a mature system that had moved beyond pilot mode.

The problem with pilot mode thinking is that system performance expectations and capabilities remain relatively low. You're not expecting a pilot system to perform like a production system.

Pilot project thinking with digitalization doesn't work anymore. Management wants to see more results from the substantial digital investments that have been made, and business results come from systems that are installed and maintained in full production.

Lack of post-implementation leadership. Who’s in charge of digitalization once the initial phase of digitalization (conversion of paper-documents to digital) is complete?

If ongoing leadership is unclear for new phases of digitalization that would move on to revolutionize work processes, deliver analytics, and fuel automation, a digitalization effort will stagnate.

Designing Digitalization Initiatives for Success

Next generation digitalization efforts can be designed for success if companies do these four things:

1. Develop a digital vision.

Once a digitalization platform is in place, almost every department in the company will have new projects where they want to use digitalization. All these projects can have merit, but they can’t all be done at once.

For this reason, it’s important to prioritize digitalization projects, with upper management buying into the strategic direction.

How can new digital work best to benefit the company? It may be by automating internal operations for greater efficiency; by improving the digital customer experience; or by implementing the use of advanced analytics that can help with market forecasts?

By clearly defining business goals and priorities, and then establishing metrics to assess project success, management can build a long-term strategic roadmap for digitalization that tracks with the business goals. These metrics could be different from the historical metrics previously have used to measure corporate performance, especially if digitalization is going to reinvent or create new business processes and goals.

2. Appoint a champion.

Whether it is the CIO or a separate digitalization executive, there should be a single “go to” person for digitalization decisions within the enterprise. This person will be responsible for the digitalization strategic plan, for overseeing the digital projects that are executed under this plan, and for reporting to the CEO, the board, and key stakeholders on progress.

3. Orchestrate projects but don’t forget people.

Digitalization changes how people do work. If you implement a digital logistics system that feeds data and activates AI to automatically optimize fleet routes, the expeditor who used to do logistics planning by hand must be trained to do the work with AI assisting, and perhaps even assuming a central role.

Companies tend to underestimate and under-plan for the cultural changes and impacts on employees who must change how they work for a new This can invite risk and user resistance, which can undermine projects and cause them to fail.

To avoid this problem, training (and retraining) employees for new work processes must be a priority in every digitalization project.

4. Navigate cultural changes with extreme collaboration.

Trust, motivation, open communication, and accountability are all important ingredients for facilitating a work culture that is adaptable to the changes that digital transformation brings.

Central to these elements is inclusiveness and collaboration between all parties that are affected by a digital project.

At the onset of a project, employees whose work will be affected by the project should be brought into the business process redesign sessions. These are the people who know the work best. If they are actively engaged in business process redesigns from beginning to end of a digital project, they are likely to be enthusiastic and supportive.