3 pillars of a successful digital transformation
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Digital technology is more important than ever for the success of Canadian businesses.
The ubiquity of giants like Google and Amazon has changed customers’ expectations of online services.
In addition, with the shortage of manpower, Canadian SMEs need to invest in digital to improve their efficiency and profitability.
But how do you start making a successful technology investment? How do you identify your needs? How do you prioritize what’s important?
Our goal in this blog post is to describe the key steps you need to take to achieve a successful digital transformation, improve your efficiency and become more profitable.
Create a digital strategy
To organize your efforts and target the most promising initiatives, first you need a comprehensive plan.
IT has often been seen as a function of the organization like any other. There was no overall view of the company’s objectives or technological development. For example, finance would acquire an accounting system and HR would purchase another personnel management software without any coordination. By creating silos of information, systems don’t communicate with each other. Instead of doing this, integrate technology with the rest of your business with a digital strategy. A digital strategy allows you to:
- Place technology at the heart of your business strategy
- Select technologies that are in line with your business objectives
- Establish links between the various projects and departments
- Prioritize the initiatives that will benefit your business the most
However, to be as effective as possible, your digital strategy must go beyond technological investments. Along with purchasing new hardware or software, you must create a digital corporate culture that is backed by specific training for your staff. It’s part of the sustained effort to improve operational efficiency.
Create a digital roadmap
To get a better overview of the processes that you would like to make digital, you should start building a digital roadmap and timeline.
The roadmap should give priority to the critical systems that form the basis for future developments. You can also identify opportunities for immediate gains that will give your project impetus and allow your employees to see the benefits of digital.
As you can see in the digital roadmap model provided below, process improvement and change management should be done alongside the selection and implementation of a new system.
3 pillars of a digital transformation
After working with a large number of companies of various sizes and from various sectors, we came to a realization: a digital transformation must be based on the optimization of key processes, cultural change and information integration.
1. Optimizing key processes
Choosing a system such as an ERP or CRM is often very risky. Optimizing key processes is therefore an approach that we are suggesting to an increasing number of entrepreneurs to limit risks and maximize the return on investment.
A process is a series of activities or transactions that must take place in a specific sequence to create added value for the client in the form of a product (physical transformation flow) or service (information transformation flow).
The most important systems in a business will generally be chosen based on the company’s key processes. For a company that makes doors, for example, those processes are the transformation of wood or aluminum into doors.
However, processes are often established without conscious planning. We get into the habit of doing things without first determining whether the best process was used. The result is frequently unnecessary informal and undocumented activities, costs, delays, loss of quality, and a lack of value creation for clients.
You can’t add a layer of technology on top of a deficient process. This would create chaos on top of chaos. The deficient critical processes therefore first need to be identified and optimized before a new system is brought into the business.
Mapping processes to better understand them
To do so, we usually start by mapping a company’s current processes.
It is often difficult to see how a process works as a whole. Beyond the theoretical concept of operations, it is important to take time to talk with the employees who do the work.
The goal is to identify waste and determine the issues that need to be addressed. This will also give you the opportunity to review your current technologies, how you use data, and what skills or resources are missing.
Prioritizing for greater efficiency
Not all the company’s processes need to be optimized for a successful digital transformation to take place. Most of the key activities are already working well most of the time. It is better to focus on the 20% of processes that are critical – those that are the most visible and that create the most value for the customer.
It is recommended to first optimize critical processes that are deficient in terms of quality, cost and time. For the other critical processes in your company that are deemed efficient, it’s simply a matter of documenting them to make your new systems easier to integrate. The other processes (80%) will be customized according to the best practices proposed by the solution’s integrators.
Process optimization will allow you to resolve issues such as delays, production with uneven quality (do-overs, rejects), inefficient work practices, high number of customer complaints, etc.
Solutions you can implement include:
- Mapping processes to eliminate steps with no added value
- Clarifying roles and responsibilities so all workers know what’s expected of them
- Implementing a dashboard to measure and monitor performance
- Using technology to automate certain tasks
- Eliminating silos through cross-training and implementing open workspaces that favour collaboration
2. Cultural change
A successful digital transformation also involves a philosophical change for the business. Key to this success is involving staff at all levels of the company.
The Kaizen approach, for example, can be a tremendous lever for cultural change.
Developed in Japan by Toyota in the 1940s, Kaizen consists of forming multidisciplinary teams composed of employees directly or indirectly involved in a process. These problem-solving teams discuss ways to identify and resolve sources of waste.
The idea is to make gradual but quick changes in order to optimize practices and then support them with digital solutions.
Processes at the heart of cultural change
The Kaizen approach is an example of tools that can be used to modernize a corporate culture to make it more effective. In a traditional company, decisions are often made
in silos. For instance, the operations manager makes decisions for operations, the sales manager for sales, etc.
In a process-centric approach, decisions are made by all the teams in the areas affected and contribute to cross-sectional synergy. This approach helps:
- Break down silos
- Focus on the company’s overall activities
- Focus on customer needs
3. Information integration
One of the key elements of digital transformation is the increased use of data to make informed decisions as quickly as possible for both employees and management.
One of the major challenges of efficient information integration is that many technologies operate in silos. The information flows within the silos, but has a hard time moving from one department to another. Worse, instead of being stored digitally, the information is sometimes stored in Excel files or even on paper. The result is data being handled, re-transcribed and compiled a multitude of times.
Total integration into an all-in-one system easily avoids such time wasting and reduces the risk of error.
This unifying system enables the different systems in your business to be linked. In fact, there’s an increasing number of entry-level ERP or CRM systems that can enable SMEs to integrate their systems easily.
Think about data use
Beyond the technical challenge of connecting all computers for data collection, it’s important to know how to provide the right information to the right person at the right time in order to decentralize decision-making.
While there may be work-related procedures for all employees, there is also more practical knowledge about equipment performance and team capacity. You won’t need sophisticated computers to collect and use this information, but rather business models capable of making the right decisions. Once in place, the data will allow you to make operational and strategic decisions that you can measure and compare as needed.
Formula for a successful digital transformation
In summary, your technological investments must be backed by initiatives to improve your operational efficiency and create a digital culture in your business.
This approach limits the risks and is more likely to result in a successful digital transformation.