July 24, 2024

Is Digital Transformation overrated?

The answer is “No, but….”

I attended an intriguing presentation at the CRU Wire & Cable conference in Amsterdam where one of the talks was on one of the several inevitable buzzwords that seem to be doing the rounds these days in the work-life area- ensconced within the increasingly cliched pantheon of catch-phrases like “VUCA”, “Supply Chain Resilience”, and “Generative AI”. I refer of course to “Digital Transformation”.

Here is an interesting Mckinsey statistic that was quoted: 90% of CEOs see Digital Transformation as a key priority- and yet 70 % of CEOs say that their Digital Transformation programs did not work out as intended. I, for one, am not in the least  bit surprised atleast in the area of process industries- where I have spent my entire career.

As someone that takes pride in scratching the surface of a buzzword for fun, it seemed self-evident to me that this was going to be almost untenable. We would like to transform manual processes to an algorithmic method aided by digital tools. The challenge is not that there is an absence of sophisticated tools and technology. It is also not quite the fact that it is a question of culture within the organisation- that is to say most companies are not filled to the brim with antediluvian luddites who wished all the gen z whippersnappers would just go away and leave them alone. (This is what is often submitted as a reason for the impasse).

What it is is 2 or 3 things, depending on how you classify them. The first simply is that most companies, particularly in process industries , rely on people to not follow a regimented process. Infact manufacturing processes by definition are chaotic- with a plethora of variables exhibiting a complex interplay that is hard for any theorist to fully comprehend.  (My significant experience with high pressure die-casting of Aluminium Alloys bears testament to this). As a result humans intuitively make exceptional decisions on the fly,and not all of this can be easily programmed- it is basically a performing art loosely governed by the principles of science. But now the DT agenda requires the creation of a normative process which has to be prescribed- in order for an algorithm to kick in. So, the machine operator now has to come up with a flowchart of the spaghetti in his brain which spins the wheels quickly, consistently, smoothly, day in and day out. The complexity of doing this is, shall we say,  monumentally underestimated.

The other issue, which to me is the more central one is the efforts to cleanse poor or completely missing master data of both the static and dynamic variety - which should be mentioned separately. A digital tool unleashed with a foundation of bad data will leave nothing but a trail of destruction. But fixing static Master Data is incredibly complex, requiring massive forensic activity cutting across complex stakeholder landscapes. And yet we seldom see a really serious effort to progress this at the board level. It is viewed as a busy detail rather than a fundamental prerequisite. It is large, complex, expensive, time-consuming and utterly prosaic work. Who feels excited about this stuff? -   Certainly no board member.

And finally, no one really follows erp processes like they are meant to be done. Various short-cuts are used to make life easy for the execution teams: SAP fields are deemed as optional inputs and left blank. Key dates that are essential are misused, misunderstood either intentionally or unintentionally.  As a result the dynamic master data is also of no use. And yet if you want a machine to do the work, one has to input this information accurately. But wait a minute, says the oldtimer operator. Technology is supposed to make our job easier, but you are asking us to do many more things and making our work a lot harder. What gives? 

And these very simple roadblocks all stack up and create what seems like a point of no return. To fix this requires a lot of difficult work- there is no sugar coating this. At the executive level this has to be understood  and committed to -and the desire to transform digitally must be considered under such a context. That may lead to higher success in such programs. Equally, it may well lead you to a decision to avoid a large transformation project in favour of a small pilot to truly understand the trade-offs between cost and benefit.