Foundation for Digital Transformation

Digital transformation is the profound transformation of business and organizational activities, processes, competencies and models. There are benefits that appease the requirements of any management and meet the business need of, reducing costs, improving customer strategy, integrating operations, performing analytics, having customer centric focus and increased agility and innovation.

In many cases this is not perfected at once and there are many factors, such as the economy or the desirability of the products, organisation culture, lack of skilled workers and integration issues, that can affect a company's success. Therefore it is often advised that, no manager should view digital or any other technological innovation - as their sure salvation.

Digital is more than just a thing that one can buy and plug into the organization. It is multi-faceted and diffuse, and doesn’t just involve technology. Digital transformation is an ongoing process of changing the way one does business. It requires a foundation with skills, projects, infrastructure, and, often, clean IT systems. 

The foundation needs bridges to be built up between:

1. IT and Businesses

2. Businesses and Information / Processes

3. Actionable Intelligence

4. Human Acceptance

5. New Ecosystem

6. Technology

7. Technology and Innovation

8. Future Strategy

9. Intent and Achievement

10. Risk and Uncertainity

There is coming together of  people, machines, and business processes, with all of the messiness that entails. It also requires continuous monitoring and intervention, from the top, to ensure that both digital leaders and non-digital leaders are making good decisions about their transformation efforts.

There are three core capabilities that an organisation must develop down to successfully navigate the transformation, these are:

A. Hyperawareness

B. Informed decision making

C. Fast execution

It is important for an organisation to calibrate digital investment to the readiness of industry, by considering both customers and competitors. 

Amid the excitement and uncertainty of a new technological era, it can be very difficult to distinguish between investments one needs to make ahead of the market and investments that must be in sync with market readiness. With digital transformation there’s a lot of exploration and understanding to accomplish before the curve starts to take shape.

Here are two things one can already start doing as of right now:

I. Get any ‘digital’ expertise and culture out of its splendid isolation and let it penetrate the rest of the organization,

II. Look at where the leaks in the business are and where it’s clear that there is a need to remove or bridge legacy and necessity, among others in the technologies that are crucial to scale and move faster and better once the right strategy is in place.

From Concept to the Introduction of Industry 4.0

Today very topical issue among the major competitors in the global industry is titled Industry 4.0. According to all indications (developing machines, computer software, robotics, etc.) global business networks will soon appear. They will unite their "smart" machines, storage systems and manufacturing facilities in the form of cyber-physical production system (CPS). Such production system will autonomously exchange information, initiate activities and independently perform control. The fourth industrial revolution is based on the concept of smart factory. Smart factories have completely new approach to the production. Smart products can always be identified and located. Their history, current state and future activities that are necessary to get the final look are known anytime. Well prepared database is very important because it is necessary to filter the required reports in order to receive timely and useful information. Advantages of the virtual world are used because virtual world provides the simulation of different cases. Optimization of products, processes and the entire supply chain are continuously improved. In order to successfully close the circuit, there are trusted-cloud based networks (Cloud technology). Cloud technology provides “smart” data centres, services and applications so users (companies) can achieve lower costs and operational efficiency. The new approach allows production according to the individual customer requirements. Today many companies have moved away from mass production to mass customization production. The main goal is to have a production system that can resist any dynamic business processes. Such system must be characterized by flexibility, so it can respond to disruptions of various origins.

Features of Industry 4.0 are horizontal, vertical and digital integration of the entire system. Key areas are standardization (so companies will easily connect to each other), the management of complex systems (it is necessary to develop and apply new models and methods), a comprehensive infrastructure (high-quality information network, Internet connection), security and privacy (data protection), work organization and design (the roles of the employees are changed, they are more involved, progress is better and there is life-long learning), legal framework (harmonization of legal frameworks) and the effective use of resources (potential savings of raw materials and energy). It is important that managers at companies understand the industry 4.0 and how it looks in reality. By finding an appropriate model, with strong support of development, a vision and path to Industry 4.0, which is specific to a plant, can be created. The idea of Industry 4.0 should be linked to specific areas of concern of certain factories. It is necessary to find areas of activities and make a step further towards the Industry 4.0. Potential problem could be the priority areas of action. The introduction and use of new technologies does not mean certain way to Industry 4.0, because it would be a very narrow approach. The system will not function properly if there is advanced technology and outdated organization.  

Information Technology in Business: The big picture

Computers and information systems are essential parts of every business today. Like accounting and legal, every business needs to invest in technology to compete. Technology is both a cost of doing business, and an opportunity to do more business. Most people I talk with recognize the necessity of having a computer, an email address, and a web site, but still look at the upfront cost more than other issues.

After spending some time working with dozens of businesses, I think it's time to take a step back and look at the big picture of technology in business. Let's take a reporter's view of the topic, and ask the basic questions: who, what, where, why, when, and how much?

For today, we'll keep this short, but each of these questions deserves a more complete article in the future.

Why?

What are the benefits of technology for a business? There are many, but most fall under a few categories:

Reach more potential customers, develop a business relationship with potential customers

Streamline operations, reduce costs, improve efficiency, maximize profit, minimize waste, devote talent to core business instead of overhead

Provide better service to customers

Support better relationships with key partners

Allow customers to better guide the business

The very first question businesses should ask before spending any money or time on technology is, “why am I doing this?” If there is not a core business benefit to be gained, why do it in the first place?

How Much?

Established businesses outside the technology industry typically spend between ½ percent and 10 percent of their annual revenue on technology spending, depending mostly on the industry. Manufacturing and retail are typically at the low end of this range, while finance and health care are typically at the high end.

If you're at the low end of technology spending for your industry, you may be missing out on some key benefits technology can provide. If you're at the high end, you may be spending more than you need to on proprietary solutions, or you may be leading your industry with some strategic investment.

What?

What costs do you need to consider as part of your technology budget? These break down into several categories:

Initial cost—hardware and software, and training

Ongoing cost—maintaining systems, including licenses for proprietary software, hosting, and support

Upgrade cost—cost of upgrades, and expected lifespan of systems/frequency of upgrades

Value proposition—how much employee time will the system save? How much new business could the system generate?

Opportunity cost—how much potential revenue is lost by not implementing a system? What are your competitors doing in this area?

Risk—what are the risks of a particular system? What does it cost to mitigate those risks?

Where?

Should you spend most of your technology budget on infrastructure, hosted applications, custom line-of-business applications, or what? The answer to this depends a lot on your industry, but even more on your specific business. Generally, most businesses spend around half of their technology budget on infrastructure—computers, networking equipment, and Internet Service Providers (ISPs). As the world moves more and more online, and open source software becomes more compelling, there are huge opportunities for savings in these areas, for businesses that can take advantage of them.

When?

There's a fine line between too much and not enough. Spend too much on technology, and it will consume your time and budget, leaving you ill prepared to do anything else on your business. Spend too little and your competition may improve their business to the point that you can't compete.

You need to implement enough technology to see a real benefit, prevent the worst disasters, and not miss out on any major opportunities, while not spending more than you can handle.

Technology has a cost not just in dollars, but also in the time you and your employees need to spend adapting to it. Bite off too big a chunk and technology becomes counter-productive. Nearly always, small, incremental, ongoing chunks are a better way to bring technology into your business than large all-or-nothing systems that promise to do everything right away.

Who?

Finally, you need to decide who to help you implement technology in your business. Will you do it yourself? Do you purchase an off-the shelf product? Do you use free software? Do you hire a programmer to create a custom system? Do you use a hosted system? Do you hire a consultant to help?

Obviously, as an open source consultant, I think the answer is usually hire a good consultant to help you use as much quality free software in your business as possible. Whether or not to use a hosted system depends on your specific business needs. Off-the-shelf proprietary products are quickly becoming the least favorable way to go, but there are still a few niches where there isn't a viable alternative.

Many businesses are stuck at a tactical level, trying to stay ahead on cash flow and payroll, and don't have time to think about technology in a strategic way. But a strong plan for technology should be a part of every business plan, and re-evaluated whenever taking a strategic look at a business.