The Corona pandemic has undoubtedly given digitization in Germany a major boost. But the momentum did not happen voluntarily everywhere. While young companies, in particular those with fluid structures and processes, are finding it easy to go digital, the comprehensive digitization of business processes is still meeting with resistance in many long-established companies.
This is one more reason why established companies should take action now. However, they should do so with the aim of achieving effects – not just for the sheer sake of taking action. In our experience, digital projects are initiated far too often without being implemented consistently.
The last two years, in particular, have clearly shown where successful digitization failed in many companies: instead of implementing digitization with all its consequences for the structures and processes in the company, action is taken step by step at best. Expensive software tools are purchased and incorporated in the IT infrastructure. However, many companies fail to take the decisive next step, which is the end-to-end integration of new digital structures and processes into the company's organization. As a result, digitization remains piecemeal - and will never be able to develop its full potential.
Patchy implementation, limited benefits
Here is an example: The systems used in companies – first and foremost ERP software –generate vast amounts of relevant data such as sales figures, daily updated customer sales, inventories, etc. In doing so, they create a treasure trove of data that many companies do not even begin to use. In many cases, this would not even require investments in additional tools.
Quite the contrary: Significant progress can be achieved simply by using the functionalities of the existing ERP system more comprehensively and implementing them in the company processes – for example, by acting swiftly in fast-moving industries such as consumer goods retailing on the basis of daily analyses and generating competitive advantages. In reality, however, many companies still work with monthly evaluations. While these are excellent for assessing performance retrospectively, they are less suitable for intervening on time in the operational business and initiating short-term measures to achieve the company's goals. For example, current data can be used to identify trends in certain product groups at an early stage, to take them into account promptly in merchandise planning, and consequently to generate sales and prevent markdowns. Other possible applications include the daily analysis of personnel scheduling so that companies can react more quickly to fluctuations in capacity utilization.
But what is the reason why many companies fail to consistently digitize and leverage their treasure trove of data? Why do they struggle to consistently implement their existing digital assets?
Let's take one of our reorganization projects in the food industry as an example: At first glance, the company was working with industry-standard software solutions in all areas and demonstrated a high level of digitization, at least on paper. However, a more in-depth analysis revealed that the software solutions purchased were only used partially or not at all. There was no shortage of useful application areas. The reasons for incomplete usage are complex, but they occur in varying degrees in many companies.
In our experience, digitization projects often fail because of these three points:e company, companies often have the deceptive feeling that they are on the right track with their digital transformation. In reality, however, singular projects do not develop the desired effects - especially not sustainably and to the full extent.
Lack of target definition
At the beginning of digitization projects, there is usually a certain euphoria, especially with regard to the multitude of potential applications. This was also the case with our customer from the food industry: Even before the basics of a warehouse management system had been implemented and executed, those responsible kept picking up new topics. The result was that the complexity of the digitization process increased significantly (and without need).
In the worst case, such a project comes to nothing because the desired success fails to materialize. Organizations with established structures in particular should therefore define clear goals right from the start and keep an eye on them throughout the course of the project. Successful analog processes must be digitized step by step in order to bring employees along with them. Permanent realignments and additions jeopardize the success of the digitization project and should only be tackled in follow-up projects with newly defined objectives after successful implementation.
Inadequate (master) data maintenance
High-quality and up-to-date data is the vital lubricant of digital systems. Only when these are available do analyses and automation processes generate the desired additional value. Digital systems offer a wide range of options for this – but not all of them make sense for every company.
However, master data of a high quality requires appropriate personnel and time resources as well as clearly defined mandatory data focused on the essentials. In the case of the above-mentioned company from the food industry, the topic of master data maintenance also proved to be difficult. Although various software solutions existed, they were used as individual solutions and only for specific departments. Those interfaces that would have enabled cross-platform use and the exchange of data were not able to be utilized at all, or only in part, due to the insufficient master data quality. Inconvenient duplication of work could have been avoided, and the evaluation quality of the data would have benefited as well.
Nevertheless, due to the implementation of the systems as individual solutions, they were not able to be utilized without prior adjustments to the existing interfaces. In this specific case, the master data quality was significantly improved by appointing an employee who has since been responsible for controlling the data quality. In addition, that person can demand the necessary cooperation from the specialist departments and, if necessary, initiate an escalation process. In order to achieve a sustainable effect, it is important that such a cross-departmental function is also responsible for data quality after data cleansing has taken place.
- Lack of support
Companies must actively work with their treasure trove of data, in order to exploit it to the full. This means continuously maintaining data and systems and keeping them up to date. Otherwise, the quality of the data and thus the meaningfulness of the analyses as well as the success of downstream automation processes will suffer. Stakeholders doubt the usefulness of the database, which leads to further neglect of data maintenance and ultimately to stagnation in the use of the system. To avoid this, digitization projects need strong advocates in the company who actively drive the issue forward across all levels and divisions and successfully model the process.
In the case of the company from the food industry, the lack of support meant that considerable potential for increasing efficiency was not exploited. The newly implemented scheduling software showed deficits with regard to company-specific requirements. Instead of actively remediating them and driving forward the successful implementation of the software tool, the company gradually reverted to the old, previously used system. The tool was only employed in a truly effective manner after the project had become the focus of management, which proactively demanded and closely monitored its implementation.
Better to do less, but do it right
In summary, many companies have powerful digitization tools, but do not use them effectively or efficiently. Subsequently, companies often invest in further digital tools to make up for a possible competitive disadvantage. If digital projects are not implemented successfully, it not only leads to frustration among those involved, but also jeopardizes confidence in digitization projects as a whole.
It is important to invest in sound fundamentals, particularly in digitization projects, and adhere to the principle that less is more, i.e. to focus on just a few goals, but pursue and implement them rigorously. It often helps to think outside the box: What possibilities are there in my industry, what is best practice and what can I implement with the existing systems?
What questions do you have about digitization? We are happy to support you in identifying and implementing new application possibilities so that you can leverage your treasure trove of data. Get in touch with us. We look forward to hearing from you.