Part 1 of 3: Successful digital transformation for industry

Digital transformation has been a hot topic in every industry for the past several years. But is it really happening the way we had imagined, or is progress slower than expected?

In reality, it’s much, much easier to fail with transformation initiatives than it is to succeed – especially if you don’t follow the right structure. Often, we see a gap between an organisation’s existing capabilities, and the technical possibilities it would like to reach.

In this blog, we’ll explore a proven and repeatable framework that can give you the best chance of achieving your goals.

Digital possibilities are transforming industry

Today’s markets change quickly. New technologies, agile digital-first start-ups, and transformative data-based services are constantly disrupting the status quo, reshaping value chains, and creating new business models.
Within manufacturing and process industries, these changes relate closely to the introduction of “Industry 4.0”, where developments promise to unlock a wealth of opportunities for innovation and automation.

In this space, the proliferation of sensors and other connected devices facilitate a more data-driven approach to operations – enabling manufacturers to boost productivity, increase product quality and flexibility, reduce costs, and improve sustainability.

Every day, articles and blogs are published discussing the benefits and success stories of digital transformation – and, as a result, many established firms face pressure to reshape business models and modernise operations.

But the truth is, digital transformation is not happening with the pace that was projected a decade ago. And it’s not because companies don’t invest time and effort into digital initiatives. It’s quite simply because 70% of these projects fail.

One big reason for this is that digital transformation is not a one-size-fits all activity. Organisations have unique infrastructures, business models, skillsets, and ambitions. And readiness for digital transformation also varies extensively. All of which means transformation strategies and roadmaps must be tailored to meet specific needs.

To keep up with the rapid developments in their markets, manufacturing and process companies must set aside their traditional focus on assets alone, and instead undertake three important tasks:

1. Assessing their current organisational capabilities
2. Determining clear business drivers
3. Creating a holistic approach to transformation activities

Without a clear view on these topics, we often see organisations struggle, trying to implement isolated initiatives to keep up with changing environments, rather than taking a long-term, big-picture approach to transformation.

A tried-and-tested framework

When talking with our clients, we often see one major problem emerge with digital transformation projects: a lack of alignment between their technical ambitions and their existing structures and capabilities.

At Royal HaskoningDHV Digital, we know that sustainable digital transformation requires a structured and holistic approach – and that’s something we provide with our own transformation framework.

The framework combines both the physical and digital perspectives of transformation, as these are interdependent. And, to engage with both short-term and long-term goals, we focus on continuous improvement and incremental value creation, providing the agility required to keep pace with changing environments.

The framework focuses on three main areas:

1. Enabling organisational capabilities

When we talk about organisational capabilities, we refer to the people, processes, data, and assets deployed to run your operations..

These key capabilities define your current situation and create the starting point for every transformation project you will pursue. This is the stage where we see the largest interdependency between digital ambitions and the physical world.

Although it’s likely that many technical solutions already exist (maybe even within your organisation), they must be embedded within existing – or new – processes to positively impact operations. Building new capabilities alone is never enough.

Which brings us to our second area of focus…

2. Drivers for digitalisation

One of the biggest contributing factors in failed transformation projects is poorly chosen drivers, or a lack of targeted ambition.

Transformation should never be for transformation’s sake. Whatever projects you pursue should trigger change within your company, influence organisational value and, ultimately, be an essential ingredient of your future success.

When transformation projects start without clear business drivers, it is difficult to determine your aims – and therefore impossible to plan the best route to completion.

With different interpretations of the expected benefits, it can also be difficult to measure the success of your projects, both as you are executing them and once they are completed.

Conversely, clearly defined drivers will establish a feedback loop that allows you to constantly reflect on the expected and achieved results and adjust your plans when necessary.

These drivers should be based on a clear contribution to your organisation’s strategic goals, and will ultimately guide the design of your desired end state.

3. An integrated roadmap for continuous improvement

Real digital transformation will impact your entire organisation. It can require changes in your core business, organisational processes, and technical infrastructure. Transformation can change the basic building blocks of your business, and if it’s not approached with the proper care and attention it can cause irreversible damage.

To transform successfully, your desired target state has to be translated into executable actions, concluding in a transformation roadmap that brings Digital to the physical environment. This allows you to continually align services, processes, applications, and infrastructure with your new enhancements and changes.

Put transformation at the centre

Taking this holistic approach, digital transformation becomes a central part of your organisation, as opposed to an isolated project that only exists within limited departments. And in our view, this is truly the only pathway to success.

If you have any questions about digital transformation, or would like to learn more about our digital transformation framework, please get in contact.