When Jeffrey Immelt announced, in 2011, that GE was going to go “all digital” with it’s offerings and orient the company from it’s traditional roots to become the new digital industrial behemoth, the world took notice. It was one of the largest projects of its kind undertaken at that point, and the world was watching to see its results. The early days showed promise – with heavy investment in IoT and data analytics and tools such as AI and ML, GE saw a quick uptick in its sales and customer satisfaction. Customers were showing confidence in GE’s ability to deliver high value and cost savings, built on the back of robust digital and analytical capabilities. Investors were cautiously optimistic about Immelt’s clarion call for change, and expected the digital transformation exercise to pay off and propel GE into the future.
Cut to 2018, Immelt has left GE, and it’s facing tough questions from it’s investors on the unrealized return on investment given the high costs of transforming an organization of the scale of GE. First off, while GE Digital was initially announced as a separate business unit under the GE umbrella, the goal was to create an autonomous entity that would invest and build more products around it’s intellectual properties (IPs) like the Predix platform. Yet, it was servicing more of GE’s internal clients and supporting “innovations” by providing tech and IT support to internal projects as opposed to actually building products to digitize the existing operations as per it’s original mandate. Secondly, Predix was supposed to be a true development platform available to third party developers. Yet, majority of the softwares built around Predix were for GE’s own internal businesses and partners. There were also issues related to integrating Predix with existing legacy systems. GE has many algorithms for monitoring its machines, but they mostly were written in different coding languages and reside on other systems in GE businesses. Fixing this took more time and money than anticipated, and the end products still had bugs and lacked features that customers wanted.
GE is still in the midst of its transformation but given the recent streamlining of its operations and more focused approach under its new CEO John Flannery, it has become a case study to learn about what should be done to avoid pitfalls while devising and implementing a digital strategy.
A Closer Look
In the past decade or so, the Indian business landscape has seen a massive technological shift towards developing and building digital infrastructure aligned towards the overall agenda of Digital India. High mobile penetration, spread of internet connectivity and low internet tariffs have fundamentally changed the way businesses connect with customers and conduct themselves. At the same time, businesses have been aggressively remodeling themselves to position themselves as digital-first companies, which requires a fundamental overhaul of existing processes and rethinking the way existing businesses are conducted.
Yet, while some traditional conglomerates and banking giants have reoriented themselves towards achieving their digital equivalent, we still haven’t seen a comprehensive case study in India that captures the true spirit of large scale digital transformation. Organizations have mostly tried to build their digital capabilities by partnering with tech startups and SIs who have the technological expertise to build solutions and implement them as a MVP to study feasibility and learn from the exercise.
A few observations regarding such digital projects:-
- Projects are often undertaken at unit level and not at organization level. The idea is to promote a pilot project and replicate it’s success elsewhere if it realizes RoI.
- Projects are generally approved for a MVP or a minimum viable product yet is expected to pass more business use cases and over perform on metrics beyond what it was designed to do.
- The tracking and management usually happens between business and senior management bypassing IT which is instrumental in achieving successful implementation or integration of said product.
Such projects are generally undertaken with a short term vision in mind. In order to achieve the full potential of a digital transformation exercise, we need to look at the long-term vision and digital strategy of the company and start building products and processes that are aligned with such a goal.
Why Digital Projects Fail
We at Decimal Technologies have been at the helm of many such transformative digital projects, shepherding the program from ideation all the way to successful deployment and implementation. Our struggles during such projects have informed our learnings and based on our experiences, we have identified few pitfalls and tuned our approach to ensure that those are avoided or converted into strengths.
- Clearly define the end state
- Align people and processes
- Understand the pace of transformation
1. Clearly define the End state
Digital projects should be undertaken with a specific end state in mind. For e.g., if you are building an application to enable your sales force, what is the final goal you are trying to achieve? Is the application only generating more sales by acting as a medium for the sales funnel and driving generated leads onto sales personnel? Or is it about generating intelligence about your sales and channel process and help act as your eyes on the street? If so, what kind of capabilities would you need to support that? A one-off front end application will not help – you need to integrate the same with your existing core systems to realize value. At the same time, what are the metrics you are measuring? If these metrics are not built into your front end application, it’s of no use. At the same time, if your core systems don’t support the required indexes, then again you are not achieving full potential. Thus, the end state is important in order to plan and execute a digital project. It is also important that your project is aligned with your overall digital or organization strategy. Even at the strategic level, the vision for the end state is crucial to enable the philosophy behind the projects.
2. Aligning people and processes
Your end state defines what you are trying to achieve. Which means you need to realign your people and processes accordingly. This is a crucial exercise. It requires an in-depth analysis and knowledge of the skills your organization possesses in terms of it’s people as well as perform a digital gap analysis – the degree to which your processes vary from your digital objective. For e.g., suppose you are a fashion retailer who wishes to create a seamless customer experience from the moment the customer discovers your product online till the purchase is fulfilled at your store. In order to create such an experience, not only would you require knowledge on what kind of products the customer was looking at on your digital channel but also ensure that:-
- Such products or similar ones do not suffer stockouts
- Your store sales rep has unique knowledge of the product and insight into the customer preference
- Tailor offerings for your customer to enable up-sell/cross-sell without it being intrusive.
Fulfilling this vision will not only involve the creation of a CRM system that delivers the kind of analytics you are looking for, but also train your people on using the system as effectively as possible to derive maximum value and deliver high customer satisfaction. Your supply chain will need to be aligned and optimized to help prevent stockouts. You will need to engage with your suppliers to communicate the forthcoming changes If they are not aligned to your processes. All of these takes time and money, but this has a direct impact on the overall success of your digital project. This leads us to the last reason outlined below.
3.Understanding the Pace of transformation
Not to be confused with the project timeline and delivery schedules, the pace of transformation highlights the time taken for a digital product/project to directly impact the bottom line (financial, social or otherwise). No two digital projects are alike, no matter what the business books and magazines say. This follows directly from our previous point. Your people and processes decide the pace of the transformation. For e.g., suppose you want an application that automatically takes care of all your sourcing needs by analyzing inventory levels. In order to enable this, you create a state of the art application for your warehouse and arm your inventory managers with hand held devices with built in digital scanners to check in all inventories in your stock. The only problem is, your supplier doesn’t supply goods with built-in radio tags or QR codes to help identify the stock. So, now while you have built an application to take care of your need, you need to either wait for your supplier to upgrade their services or enable your supplier develop the capabilities to achieve synergy amongst yourselves. Trying to take stock of the returns on the original investment made to develop the sourcing application will obviously yield lower than satisfactory results as neither are your sourcing needs being met, nor are you able to leverage value out of ancillary items such as building a digital infrastructure to support such an application. Management is unable to appreciate the timelines and the metrics required to realize the RoI as they are not apprised of the challenges related to the execution of the digital project. These challenges cannot be identified without the previous two exercises mentioned above.
Thus, we can see a clear map that outlines why digital projects fail –
Failure to realize end state -> Failure to identify people and process alignment -> Unable to appreciate the pace of transformation.
If you truly want your digital project to succeed, make sure that you do the above exercises diligently. Drop us a line if you want some help in this regard. We will be more than happy to sit with you and help your business achieve it’s full potential by devising a comprehensive roadmap to achieve success.