Business

Reasons why business digitalization fails

Digitalization is an effective optimization tool. But without transforming business processes, a technical solution will not lead to a qualitative improvement in performance, but to an additional load. How to prepare a company for the implementation of new solutions, why do IT projects fail, and how to fix mistakes? You will find answers in this article.

Digitalization is not magic

Digitalization is often marketed as a tool to deliver quick results and directly improve business performance. The currently popular trends – robotization, machine learning, and artificial intelligence – promise an effect here and now, as long as you implement it yourself.

Digitalization can indeed effectively solve problems and deliver the expected results. An excellent service in this direction is provided by https://iwanta.tech/. But digitalization requires the development of end-to-end processes, simplification, elimination of duplications and bottlenecks, a clear understanding of the parameters and results of the future automated process. Without all this, it will turn out like the saying: “Automation of chaos leads to automated chaos.”

Perhaps, as a result of working out the process and simplifying it, automation will not be needed at all.

Reasons why the implementation of IT solutions fail

An IT solution cannot improve business performance on its own. At the stage of implementation, five factors can be distinguished, ignoring which leads, at least, to a mismatch of expectations, and most often entails a loss of investment and time.

People

The key role is played by the attitude of project participants, stakeholders, and the operational team, which will continue to use the implemented solution or changed the process. Resistance to adoption and refusal to use can nullify the effectiveness of even the most innovative solution.

Therefore, even before implementation, it is important to carry out preparatory work with the parties involved so that everyone clearly understands the purpose of digitalization and is ready for the upcoming changes. Thus, change management should be a mandatory step in any project management.

It is necessary to identify all the participants in the parties, the main owners of the process, and who make decisions on this or that change. Often, when a project is submitted for testing or launched into operation, “new” persons or real owners of the process appear who block the change since it is not agreed with them. Also, there are frequent launch problems, for example, automation in a warehouse, when employees simply do not want to enter data into the systems, because “they need to work, not push buttons.”

The correct organization of work with people is one of the most important factors for the success of any change.

Processes

Any automation should be preceded by a stage of elaboration of all processes. Business often perceives the now popular Agile approach as an opportunity to start a project without thinking it through to the end. But this is precisely the reason for endless projects with uncontrollable costs.

Before implementation, it is worth carefully working out the project, taking into account various scenarios, and simulating the vision of the final result as clearly as possible. This will help at the very first stages to show what problem the project solves and to which final point you need to move.

In cross-functional projects, each participant often knows only their area well. Assessing the big picture is the task of working through the process from start to finish. Participants should see the entire chain of steps and evaluate how their sub-process interacts with another sub-process. For example, if you take the process from purchase to payment, it contains many blocks – changing any of them will inevitably affect the result of the entire process.

Flexibility

Any process must generate value or support other business processes. It is important that, even at the development stage, the necessary flexibility and scalability for the changing business environment are incorporated into the project. Otherwise, with the slightest change in the conditions or structure of the business, the solution will be useless, and the money will be wasted.

Business does not standstill. Sometimes, even within a month, there is a change in activity and focus. Take seasonality: what works well during normal times does not work well during peak periods — you need to be “taller, faster, stronger, and more flexible.” In this regard, flexibility in the “changing business environment” must be built into the system at the design stage.

Technology

The main problem when choosing a particular tool is the lack of a well-built IT strategy and architecture. Often a business is guided by “minute” impulses: cheaper, the consultant has sold beautifully by others. As a result, a so-called “patchwork implementation” occurs with huge costs for maintaining data exchange interfaces and duplicated maintenance of master data.

This can be avoided by systematic work:

  • defining the goals and objectives of IT departments, performance indicators;
  • selection of qualified personnel who would be trusted by top management when making decisions.

The mission of any business unit is to bring value, and IT is no exception. In addition to providing the entire cycle of IT tasks – from collecting needs, implementing solutions, and subsequent support – it is necessary to build an IT strategy based on a business strategy.

For collaboration with a business, the Business relationship manager role, or business relationship manager, works well. It is the liaison between business and IT and translates the business’s need for project initiatives.

Adaptation

Business often does not analyze the work of a new process and the consequences of its implementation do not make adjustments. Without constant monitoring, the solution may lose its effectiveness and remain only a nominally working tool.

Even the most modern approach at the moment can inevitably become outdated, and faster than it might seem. Technology is developing so rapidly that it is important to always be on the lookout for innovation and look for ways to improve. If everything is left to chance after a successful launch, the efficiency will end very quickly.

A good practice is an approach when taking into account the return on investment, working groups are organized to assess the financial result, the level of product use and collect analytics to adjust and adapt the solution, if necessary.

Increase the efficiency of digitalization

Automation should make the process work more efficiently, but first, you need to understand its criteria. The concept of “efficiency” has many definitions, but the simplest and most intelligible is enshrined in the ISO 9000: 2015 standard – this is the ratio between the achieved result and the resources used.

The number of resources is influenced by four factors:

  1. Incoming volumes, or load drivers – the number of direct shipping warehouses, customers, employees, volumes of documents. To optimize the process, you can reduce the number of drivers, for example, outsource logistics to a transport company.
  2. The level of service. It is determined by the quality and time of the task. The higher the requirements for quality and speed, the more resources are required.
  3. The efficiency of the processes. The efficiency of the process as a whole is determined by the most ineffective part of it. To improve efficiency, process reengineering is necessary – finding and eliminating problem areas, simplifying, setting responsible persons, identifying gaps. Automation also helps to increase the efficiency of this unit.
  4. The effectiveness of the performers. Obviously, an experienced employee completes tasks better and faster than the one who came a week ago. In this case, everything can be solved through training, mentoring, and transfer of experience.

If the process works ineffectively, it needs analysis and adjustment. In our company, we use two ways to review business processes:

  1. Detailed workshops. They are time-consuming and involve a large number of participants. Most often, this approach is needed to create a new process and then automate it.
  2. Method of “quick wins” (Quick wins). The end-to-end process is split into large blocks, each of which is divided into constituent sub-processes. Next, it is determined what is supplied to the input and what becomes the output for transfer to another subprocess. Based on the results of the analysis, the weakest points are worked out: the quality of documents, the timing of submission, the correctness of the information, the level of automation. They are mapped to actions, responsibilities, and deadlines. Then comes the phase of change management according to the project management methodology. This technique allows you to see progress in individual areas in a short time – in 1-3 months.

How to get the most

Modern realities demand from the business maximum operational efficiency and cost reduction. Business process reengineering and digitalization are proven tools that can be used to achieve significant impact and benefit your business.

With the wrong approach to automation, the result cannot meet expectations and lead to losses.

To avoid this, you need to look:

  • for the period of return on investment,
  • scalability,
  • flexibility,
  • the total cost of the IT solution,
  • replicability,
  • the ability to integrate with other systems,
  • the expected and received business value.

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