Digital Transformation: Everything You Need To Know About It

(ESTIMATION TIME: 25 MINUTES)

Digital Transformation is an extremely exploited term, but still extremely on time. In fact, due to the Covid-19 pandemic, many companies have learned very painfully that their level of digitization is not enough. According to a 2021 survey by the European Investment Bank, 55% of European companies said the COVID-19 pandemic has increased the demand for digitization, and 46% of companies said they have grown more digitally.

In our conversations with our customers, we often say that what we do is support the digital transformation of our customers’ companies. And still many don’t really understand what we mean.

What is digital transformation?
What is it about?
How to conduct it effectively?
This is what this article is about.

The table of contents is as follows:

1. Transformation, meaning?
   1. Definition and problem
   2. Which processes are suitable for digitization?
2. The most common mistakes
   1. Wrong choice of tools
   2. No knowledge of your platforms
   3. Incompetent implementation team
   4. Lack of training focused on the specifics of the organization and processes
   5. Lack of RACI matrix and target communication
   6. Superficial security architecture
   7. Fear of change (and temporary failure)
   8. Weak UX of new applications
   9. Sticking to old processes (or Excel) rigidly
3. Recommendations for digital transformation
   1. Cloud solutions
   2. Ecosystem-based solutions
   3. A large, trusted ecosystem supplier
   4. Psychology awareness
   5. Fans of the supplier

ENJOY.
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Transformation, meaning?

Definition and problem

Let’s start with the definition

Digital Transformation (also known as digitization) is the process of transforming analog information and processes into digital form (e.g. using an application or automatic notifications).

What does this mean in practice? This means that whenever a person performs repetitive activities, we can “delegate” such work to a computer or telephone.

In IT we use to say: if you need to repeat something for the third time – automate it instead.

For example: Making a decision does not have to be associated with making a phone call or replying to an e-mail. All you need to do is press the “Accept” button in the application, where you can see all the relevant information.
Simple, isn’t it?

Unfortunately. If it were so, it would have been functioning everywhere for a long time (the popularization of digital transformation dates back to the 90s). And yet:

• 62% of manufacturers still use a pen and paper to track some key production processes¹
• Only 13% of manufacturing organizations have a complete overview of activities at all levels of the supply chain²
• Over 45% of store employees do not have quick access to customer data³
• Regulatory hurdles can cost up to $ 4 billion a year, because many of the processes to solve them are still done manually⁴
• Producers see an average of 17-20% increase in overall efficiency in digitized factories ⁵.

1. Source: 2017 Manufacturing Vision Study
2. Source: Global Manufacturing Outlook
3. Source: Tulip Store Associate Survey
4. Source: Global FinTech Report 2017 – Redrawing the lines: FinTech’s growing influence on Financial Services
5. Source: Smart Factories: How can manufacturers realize the potential of digital industrial revolution

To sum up, the low level of digitization is related to:

• High operating costs
• Long total work time
• Increased number of errors
• Challenges resulting from the human factor

Which processes are suitable for digitization?

The majority of them, in fact. Some examples:

• Construction industry
  • Monitoring of working time (people, machines), assignment to the project team, holidays, the amount of the reserve, etc.
  • Auditing / monitoring of equipment, structures, physical systems, facilities
  • Equipment / people availability control
  • Accounting for task completion time
  • Document processing (e.g. acceptance)
  • Vacancy register
  • Standardization of the design process and documentation
  • Monitoring the use of budgets
• Manufacturing industry
  • Auditing / monitoring of equipment, structures, physical systems, facilities
  • Equipment / people availability control
  • Supervision over the timeliness of research, reporting the use of products, surveying recipients
  • Accounting for task completion time
  • Circulation cards
  • Document processing (e.g. acceptance)
  • Standardization of the design process and documentation
  • Monitoring the use of budgets
• FMCG industry
  • Auditing / monitoring of equipment, structures, physical systems, facilities
  • Document processing (e.g. acceptance)
  • Standardization of the design process and documentation
• Health Industry
  • Supervision over the timeliness of research, reporting the use of products, surveying recipients
  • Document processing (e.g. acceptance)
  • Standardization of the design process and documentation
  • Employee evaluation system
  • Customer rating system
  • Creation, approval and archiving of contracts
• Transport industry
  • Resource management (booking projectors, cars)
  • Equipment / people availability control
  • Document processing (e.g. acceptance)
  • Vacancy register
  • Standardization of the design process and documentation
  • Creation, approval and archiving of contracts
• NGO industry
  • Planning Social Media Posts
  • Requests for delegation
  • Settlement of business trips and expenses
  • Document processing (e.g. acceptance)
  • Standardization of the design process and documentation
  • Automatic system of the recruitment process
  • Creation, approval and archiving of contracts
  • Planning investments, requirements
• Public industry
  • Handling resource allocation requests
  • Document processing (e.g. acceptance)
  • Standardization of the design process and documentation
  • Creation, approval and archiving of contracts
  • Planning investments, requirements
• Other
  • Managing visual merchandising audits
  • Planning and handling of events and events
  • Creation, approval and archiving of contracts

This is of course not an exhaustive list, but it is enough to understand what it is all about.

The most common mistakes

Each change is associated with the risk of failure. I have been observing the IT market since 2012 and have been running two IT businesses since 2020. This allowed me to see and formulate theses about what makes the transformation project successful and what will make it fail. At the Developico, we have the opportunity to verify their correctness on a regular basis.

Since 2020, Developico has served 86 clients (including Microsoft, Millenium, Budimex, Arcelormittal, Impel, Nationale-Nederlanden, Hochland) and successfully implemented a total of 213 projects (as of May 22, 2022).
EVERYONE, so far, appreciates the cooperation with us.

What conclusions have we come to? What should be avoided in digital transformation?

In the following chapter, I will extend each of the following areas:

• Wrong selection of tools
• Not enough knowledge about owned platforms
• Incompetent implementation team
• Lack of training focused on the specifics of the organization and processes
• Lack of RACI matrix and target communication
• Superficial security architecture
• Fears of change (and temporary failure)
• Weak UX of new applications
• Sticking to old processes rigidly

Wrong selection of tools

The larger the organization, the more and more its needs can be met by means of various classes of products such as Platform as a Service (PaaS) and Software as a Service (SaaS).

Of course, in every industry and sector, the PaaS and SaaS product lineup will be different, but the following classes should certainly go through the minds of every CIO or CTO for a moment:

• Communication platform
• Intranet
• BPM (Business Process Management)
• DMS (Document Management System)
• BI (Business Intelligence)
• Business Applications Platform
• DSS (Decision Support Systems)
• SCM (Supply Chain Management)
• CRM (Customer Relationship Management)
• ERP (Enterprise Resource Planning)
• HRM (Human Resource Management)
• Robotic Processes Automation
• and many many more

The challenge for CTO and CIO is to choose such a product (or products) belonging to the above-mentioned set in order to cover as much of the organization’s needs as possible, and at the same time not to overpay on licenses and to ensure the simplest possible integration and development as needed by the organization.

Not enough knowledge about owned platforms

It says, “Don’t reinvent the wheel.” And yet, very often I meet a situation like:

Employees use Microsoft Teams for communication, but virtual conferences are held at Zoom.

Or another example: design information is stored on a SharePoint Online website and files are stored on Google Drive.

In both cases, it would be possible to use only one of the platforms to address both needs (Microsoft Teams and SharePoint Online, respectively).

If I find out that a customer uses Microsoft 365 in his company, in practically 100% of cases he is not aware of what he is paying for and therefore does not use the services and functions available Out-of-the-box for him.

Incompetent implementation team

Even a large implementation company can do a bad job. Unfortunately, in ~ 20-30% of our projects, we enter clients environment after the client “burned” on another partner – he was not satisfied with his work. Sometimes it was on the technical side, and sometimes on the substantive side. And here it should be noted: the point was not that the implementation team couldn’t perform basic activities such as “mail migration to Microsoft 365”. The point is that some consultants limit themselves to basic activities (such as migration). They don’t do fundamental project activities like:

• Interview, environment, and process analysis
• Data migration and structuring
• Application migration (including pilot and switchover phases)
• Simplification of business processes
• Automation of manual tasks
• Implementation of tools
• End users training

Lack of training focused on the specifics of the organization and processes

The vast majority of training companies focus on tool training. Sometimes, unfortunately, this takes the form of boring lectures, where the trainer’s goal is simply to repeat the same material over and over again.

• “Google Drive we use in this way”
• “Now we will make a new note in Google Notes”
• “Now we will show all the features of Microsoft Planner”

Meanwhile, what gives better results is, above all, focusing on the work of end users:

• “Task management for lawyers in the new tools will be done as follows”
• “We communicate within the organization in Microsoft Teams, and with clients through Microsoft Outlook”
• “Recently we said that you need to delegate tasks, I will show you how to do it easier with the new tool “

Lack of RACI matrix and target communication

Change management requires continuous communication to all stakeholders.

Decision makers need to know the work plan and their status. Users need to understand the purpose of the changes and what to expect. In order not to get confused in communicating to various stakeholders, it is worth using the RACI matrix

An example RACI matrix might look like this:

Superficial security architecture

It’s hard to talk about the digital transformation of micro and small enterprises. Some of them are most often so agile and so modern that they have digital transformation of their view almost every day. But over a certain size, companies tend to have a lot of data scattered around the company:

• Paper documents with data (e.g. invoices)
• Excel stored on the hard drive of employees’ computers
• Duplicate data in different tools to which different people
• Employee governance process

The implementation of digital transformation should ultimately address all of the above aspects in terms of access control and security. The situation is made even more complicated by the choice of a credential platform that will allow you to manage access to all tools and systems used. Fortunately, nowadays we have an increasing selection of credential services and standards (such as OAuth2) that allow integration in the event of its absence via “out of the box”.

In general, the subject of organizational security is a completely separate, very extensive chapter.

After all, one of the huge topics is the very awareness of security and making people aware of threats (as the saying goes: the weakest element of IT security is human). I highly recommend the article by my friend Artur Rybarczyk on this topic: How are those bad guys and girls getting your passwords.

Fears of change (and temporary failure)

Change is often a process whose components do not always produce positive results. Because even if similar migrations were performed 100 times, for the 101st client it may turn out that some thing is different and causes problems. They can be, for example:

• Locked files
• Extremely complicated permission layer,
• Resistant mid-level management,
• fuzzy responsibility,
• Unavailability of key people knowledgeable about the process
• e.t.c.

And for this reason, sometimes some of the work ends in a fiasco.

AND THAT’S OK!

I mean, not entirely ok, but there is no need to be nervous or afraid of the success of the whole project. You just have to roll up your sleeves, understand the cause of the error and fix it in the next iteration (yes, digital transformation isn’t always a waterfall process).

Weak UX of new applications

Can the poor User Experience and User Interface have any impact on transformation? OF COURSE! McKinsey published a report in 2018 checking the relationship between MDI (McKinsey Design Index) and financial results. It turns out that a high MDI (i.e. good UX) can translate into up to 20% increase in profits or savings.

And actually when you think about it, it actually makes sense. The intuitiveness of the interface is nothing more than referring to patterns known to users. And if a person knows something (i.e. considers something intuitive), it will be easier and faster to change their habits. He is also more likely to learn a new tool feeling safe in a new environment (and if you think that security has nothing to do with it, google “bad UX that made me think I’m stupid”). Anyway, the topic of User Experience and the cited report will come back later in this article.

Sticking to old processes (or Excel) rigidly

In 2017, while still working as a consultant in one of the Swedish companies, we used Slack for communication on a daily basis. As I was responsible for Microsoft’s tools, I knew we had Microsoft Teams as well. I asked a friend why are we using Slack in the free version since we have Teams?

“Because developers don’t want to use Microsoft Teams”

“Aha … and the management?”

“They are using Microsoft Teams”

“Then you can’t force it somehow? Eg block Slack or Microsoft Teams and only use one? Maybe talk to the administrators?”

“Oh, administrators are also an interesting story – they love an open source Rocket.Chat”

“😧”

The example above shows what can go wrong if the higher management does not have adequate control and no hearing in the organization.

You have to approach digital transformation with an open mind and the certainty that certain things will change and you should submit to these changes and trust, not fight them. I know it’s easier said than done. In many companies there are people who simply do not accept any changes. Then the strategy of small steps (training, atomic improvement) extended over time gives better results. Drop drills Rock. However, there is no magic recipe that will solve this problem any other way. You cannot develop companies (even the public sector) without implementing changes and improvement.

Recommendations for digital transformation

We already know what causes that digital transformation may not bring the expected results.

As a reminder, avoid:

• Wrong selection of tools
• Not enough knowledge about owned platforms
• Incompetent implementation team
• Lack of training focused on the specifics of the organization and processes
• Lack of RACI matrix and target communication
• Superficial security architecture
• Fears of change (and temporary failure)
• Weak UX of new applications
• Sticking to old processes rigidly

The next topic I would like to address is what elements increase the chance of successful digital transformation of an organization. The obvious answer will be … the opposite of what to avoid 😉

But if I were to give some general guidelines, these would be:

• Cloud
• Ecosystem
• Large supplier
• People
• Fans of the supplier

Let’s expand on the above points.

Cloud solutions

Once upon a time, a computer was a digital transformation. Then it was a computer connected to the Internet. Then it was a computer connected to the Internet and the correct application.

And today?

And today it will still be a computer connected to the Internet and the correct application, but this application will not be the same as a year ago.

World is changing. The rules are changing. The threats change. Hackers learn.

To stay safe, you should hire a person who will update network security, take care of file and application permissions, update the system (runtime) and applications in the organization, and be responsible for physical access to data disks. Honestly, it sounds more like a task for the whole team. I think I will not exaggerate if I say that the vast majority of companies cannot afford such a team.

That is why it pays off to use the “cloud”. Because the “cloud” is not a magical place in Lapland, protected by a ninja-cat on a fire-breathing unicorn.

Unfortunately. These are physical disks in a safe place managed by huge teams dedicated only to the security of this data. By the way, the cloud is also the possibility of using a solution (e.g. an e-mail application), which is constantly being improved – not only in terms of functionality, but also security.

Using the “cloud” means delegating responsibility for the development and security of solutions to an external company.

Of course, the topic of “cloud” is a topic on which a separate article could be written (not to mention the topic of hybrid configurations combining on-premise solutions with cloud solutions). Therefore, I will end the topic of “clouds” here, and for those who are hungry for knowledge, I leave links to interesting articles:

Integral Networks – to cloud or not to cloud

Forbes – Why to migrate to the cloud: the basics benefits and real life examples

Carnegie Mellon University – 12 Risks, Threats, & Vulnerabilities in Moving to the Cloud

Ecosystem-based solutions

The power of digital transformation solutions is not all about relying on one “giant platform”. This can be seen in platforms such as Dynamics, SAP or Oracle ERP, which are constantly diversifying their focus to more and more specialized or vector sub-products. Or the well-known SharePoint (Developico founders were SharePoint programmers and architects since version 2003) – does anyone else remember that in version 2013 it was planned to make something like a CMS, DMS and a communication tool in one? We all know how it ended. Today, SharePoint Online is one thing, Teams is the second, Yammer is the third, and OneDrive is the fourth.

Exactly. When we talk about this multitude of areas, there are actually a lot of different alternatives in each of them.

Such a simple circular section made “super quickly” (don’t ask me how long it took me to prepare and draw below list. Too long!):

When we talk about a small company, where action here and now counts, we can actually choose whatever we want.

But as the organization grows, new challenges arise.

These challenges are:

• Licenses: You must pay licenses for each tool at some point. It generates costs (OPEX)
• regulations: for corporations, consent to the terms of use is not one-click “Accept all”. It is ALWAYS a very detailed analysis of records by the ENTIRE TEAM of lawyers. The same applies to state-owned companies or sectors such as the financial sector.
• management and security: when you have over 50 people in your organization using the application, you must be able to control who is doing and what they are authorized to do. Not even to “peek” but, for example, to take access from an employee who left work. Another example would be an attempt to abuse an employee’s access (and lead to secret information)
• platform development: is the platform you are using evolving? Can it afford to catch up with the change in legal regulations (e.g. as it happened when the GDPR regulations came into force)? Does it effectively implement improvements that respond to market needs (especially important in marketing or e-commerce processes)
• own improvements: does the platform allow for independent development? How hard is that? How popular languages ​​and frameworks are used to build your own “overlays” and will there be people on the market willing to deal with this technology (airtight joke: There is a legend that says that COBOL programmers will be resurrected in 9999 to fix the five-digit date bug )? Does the platform provide an appropriate updating mechanism so that the development of the platform (mentioned above) does not interfere with its own improvements?

These are all important issues that every architect must answer to. Although not only architects face such a challenge. Also, every novice entrepreneur will be happy to save on the purchase of a license. So how do we solve these kinds of dilemmas? The best option would be to group the platforms into the largest possible collections belonging to a single provider and apply for discounts or use volume licenses. This approach is well known to people who use Groupon.

An example of such a collection can be, for example, Microsoft and its Microsoft 365. Thanks to this, paying for one license, you can have access to many platforms. On the example of the circular section presented above, any Microsoft 365 license (as of 06/18/2022) allows access to the platforms in the following areas:

• No-code Applications (Power Apps)
• Business Intelligence (Microsoft Power BI w wersji Desktop)
• Simple lists (Microsoft Lists)
• Chatbots (Power Virtual Agents w wersji for Microsoft Teams)
• Business Process Automation (Power Automate)
• Robotic Process Automation (Power Automate Desktop w wersji Desktop dla systemu Windows)
• Tasks, Checklists (Planner)

I think the package is really solid, if we add that the cheapest business license starts at $ 6 USD per user (as of 06/18/2022 for Microsoft 365 Business Basic). The only area we don’t get as part of the Microsoft license and ecosystem is Figma. This one, on the other hand, has a freemium model, which means that you can have up to 3 projects and 3 boards for free (as of 06/18/2022). Additionally, Microsoft Power Apps natively supports integration between Figma and Power Apps, so you can transfer the prototype from Figma to Power Apps with a few clicks.

Given the above list, the pie chart outlined could be limited to actually two suppliers: Microsoft and Figma. This greatly simplifies all of the aforementioned challenges.

Finally, it is worth adding that next to Microsoft 365 there are also sets such as Microsoft Entra (authentication and authorization), Microsoft Sentinel (security and traffic analysis) or Azure Synapse (integration, data storage and analysis).

A large, trusted ecosystem supplier

But why exactly Microsoft, and not any of the smaller players like Betty Block, Webcon or Stackby?

I can personally see 3 reasons here.

Psychology awareness

I remember the story of one client with whom I carried out the implementation. A client from the construction industry. The process concerned the circulation of cost applications. It looked something like this:

1. There was a need in the company, for example, to buy a printer
2. The paper-based purchase application was sent to the manager of the office or branch
3. If the manager positively considered the application and stamped it, then in digital form (a scan sent by e-mail), the application was sent to the director’s office.
4. At the secretariat, the document was printed and if the amount was less than X (eg $ 50,000 USD), the printed application was transferred to the accountants. However, if the amount was greater than X, the printed application was handed over to the director, who additionally had to consider the application.
5. If the director accepted the application and stamped it, the document was collected by the secretariat and sent to the accounting department

A simple and very popular process. Also, its digitization was not the most sophisticated. A simple system based on the No-Code application, where anyone could submit an application, the system immediately knew who the application was to be sent to at each stage of the decision node. Without unnecessary printing, without any stamps, without moving the papers, the decision was immediately sent to the accounting computer.

A system made in a few days (yes, no-Code solutions are built so quickly), the pilot is starting. One time the Chief Accountant comes and says:

• Mr. Michał, the system is wonderful. Would it be possible for this application, after being approved, not only to appear in the system, but also to be sent to the e-mail in the form of a PDF attachment?

Not very sophisticated request, it can be done relatively quickly, but experience has led me to use the method 5xWhy . The further dialogue was as follows:

• [Me] Naturally. And out of curiosity – why such a printout? What do you need it for? All data is in the system. If you need a report or statement, I can …
• [Chief Accountant] Oh, you know. I would like to be able to print such an application and bring it to the director for stamping.
• Hm. I see. So the information in the system is not sufficient? There must be a physical copy?
• Yes, it would be very useful.
• And does such a stamped application go to an external entity (eg a tax office)?
• No …
• So he is only staying with you for internal use?
• Yes …
• Got it. What then happens with such a document? Is it shared internally?
• No, it goes to our application binder.
• Got it

</ curtain>

Digital transformation is, above all, the transformation of people. (Credits to you nExoR!)

It is not enough to make a business analysis, design the architecture, build, implement and train. You have to work with people. Be with them. Translate them. Collect their feedback. But not mechanically through polls. You have to relate with them to find out the true causes.

Surely everyone knows the humorous picture below, showing how often people do not understand their own needs and what the challenge is to communicate. And do we want to solve this problem through polls?

In 2018 McKinsey published a report in which he traced the User Experience (UX) practices of 300 listed companies over 5 years in 2012-2017 in various countries and industries. Interviews with senior business and design leaders collected over two million financial data and recorded over 100,000 design activities.

The conclusions were as follows:

1. There was a strong correlation between high MDI (McKinsey Design Index) scores and excellent business performance
2. The results were true for all of McKinsey’s industries surveyed.
3. Overall shareholders return and revenue differences between the fourth, third and second quarters were marginal.

It can be concluded that the better the UX, the greater the returns for shareholders and the greater profits.

Why is this happening?

It can be explained by psychology.

The features of a good UX are simplicity, arrangement and intuitiveness.

Imagine you are looking at a brand new app. Or the screen of a new prototype of a smartphone system. If you described it as simple, structured and intuitive, you’d be more likely to start using this tool. Maybe you would even become his ardent supporter! You wouldn’t waste your time on those old systems that made you work for years. Finally, you can stop being frustrated at the stupidity of the old solutions, because you have fallen into something that really makes your work, your life easier. Work will become so much more fun!

Jaki to ma związek z psychologią?

• Simple means “I understand it, it does not exceed my competence”, which means it increases your sense of confidence
• Orderly means less chaotic. So you know what to expect from the tool. You feel we have control over it. It lowers your frustration
• Intuitive means using patterns you’ve seen before. Which additionally increases your sense of comfort.

Anyway, imagine what relief and with what willingness you would change the tool from A to B. Then imagine would you do it if the change were the opposite?

This is, among others digital transformation. It is not only about streamlining processes.

Digital transformation is understanding people and their work environment.

Fans of the supplier

Apple has the position of the so-called “ Geniuses “.must Geniuses have a deep understanding of Apple devices and have sales skills, offering customers not only insightful advice, but also friendly, practical support. They diagnose product problems on the spot, clarify situations with patience and compassion. They are so popular and valued that although at the beginning anyone could approach them, now you have to make special appointments. Best Buy, an American electronics store, has its genius counterpart called Geek Squad .

What makes it beneficial to have such devotees? Because no one naturally penetrates every product and service of the supplier with natural curiosity. Nobody follows the latest changes as effortlessly as fans. In the IT world, where change is taking place at an extremely intense pace, keeping your finger on the pulse combined with a deep understanding of technology requires unforced curiosity and insight. Only the devotees have one.

Hiring such fans is not easy, because every company (in theory) can boast certificates, successes and awards. But only after working together you can get to know who you are dealing with.

That’s why I invite you to cooperate with Developico . It is worth seeing how real fans of their work, work. It is not a coincidence but an effect of the culture of our organization. We believe that everyone has the right and should do the work they love. Thanks to this, he is better at everything he does every day, because every day is pleasant. We also love our vendor tools, which we share in our podcast and YouTube channel created by our founders, to which we cordially invite you!

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