The use of modern technology can save a company a lot of money. According to the statistics of the Slovak branch of Konica Minolta, for example, only manual processing of an invoice costs companies about 50 cents. With the computerisation of costs, the price can drop by more than half. Slovak companies are fully aware of the opportunity in the form of emerging digitalization. The number of non-technology companies that have embarked on digitisation has more than doubled in the last five years. However, adopting modern technology is very challenging for many. Any misstep can cost a company a lot of money. We’ll show you how to successfully implement digitalisation in your business too, so that you avoid the most common mistakes and don’t waste your time and money unnecessarily.
Employees are key
Changing access to technology and the associated digitalisation can bring significant gains for companies. But they can also drown millions in them. Global giants such as carmaker Ford or multinational conglomerate General Electric (GE) have found this out. So how to make a successful digital business transformation?
Slovak companies are digitalizing production and administration six times. According to a survey of small and medium-sized enterprises, the number of those that do not operate in the field of technology and at the same time have embarked on digitisation was around fifteen percent last year and has more than doubled in the last five years.
The introduction of new procedures and tools affects entrepreneurs and their companies from almost the entire spectrum of industries. Farmers, builders and logistics companies are all getting into it. “The continuous development of technology and the pressure to reduce costs on the part of customers are contributing to the gradual introduction of digitalisation,” says Přemysl Lukeš of the logistics company Der Kurier. Most recently, the need for digitisation became apparent in the context of covid-19. Companies that digitised their operations early on were able to let at least some of their employees work from home and thus had an advantage over their competitors.
However, manufacturing companies are not lagging behind either. According to a study by ECCC Research, a company that looked at the engineering industry, only three out of ten firms were implementing Industry 4.0 technologies three years ago. However, 56 percent of respondents will do so within the next five years. “With the development of the fast Internet and the Internet of Things, the flow of information between manufacturers and users of engineering products will increase significantly in volume and speed up,” commented Oldrich Paclik of the Association of Engineering Technology.
The reasons for the changes are obvious. Above all, it is technological progress and significant cost savings. According to the five-year statistics of the Slovak branch of Konica Minolta, for example, only manual processing of an invoice costs companies about 50 cents, with computerisation the costs drop to 21 cents.
But even careless digitisation costs something. And if companies are not careful, they can lose tens or hundreds of millions of euros because of it.
Billions “in the dust”
Similar things happened the year before last to the world’s big companies. Only their losses were substantially higher than most others. According to Keith Kitani of GuideSpark, GE, Ford and other major players poured $1.3 trillion (about €1.1 trillion) into transformation activities in 2018, nearly three-quarters of which was wasted on failed programmes.
“Of those businesses that did not directly fail, only 16 per cent saw improvements in their performance and ability to sustain change over the long term. Even among firms in digital industries such as high-tech, media and telecommunications, only 26 percent saw success,” Kitani stated in an article on CNBC.com. He was referring to a study by the world-renowned consulting firm McKinsey & Company.
There are several reasons why these and other firms have failed to achieve digital transformation, according to Kitani. They are people, the company’s culture, and the mistakes of its leadership. Mostly, however, it was a failure of communication within the business. “It is true that people are not the problem. It is the inability of the organisation to communicate effectively with its people,” he says.
Six steps to success
According to Kitani, there are six options to help bridge these communication gaps. Companies should apply most of them. The first is to explain sufficiently to employees why the change is being approached and what it will do for them. At the same time, how the digitalisation is communicated should be adapted to these employees, as well as to potential clients.
Communication should then be multimedia where possible to engage everyone in the target group. “Everyone absorbs and retains information differently,” Kitani notes. The fourth piece of advice, then, is to communicate the news in a way that doesn’t confuse employees. In other words, being too surprising is detrimental. “If you want to get individuals to pay attention to something, you need to address them in the context of the work and the tools they’re already using. They need to be part of their everyday work experience. Otherwise, they’ll just ignore it,” is Kitani’s fourth piece of advice. But even then, the people who manage the whole process shouldn’t rely on employees and other company associates to understand everything. That’s why it’s important to monitor what messages they open, what content they view, and how their reactions vary by subgroup. “In addition to tracking interaction metrics, do simple and quick surveys to ask for real-time feedback. This will allow you to make adjustments on the fly before the message is completely lost,” Kitani says, adding that his final piece of advice is for companies to continue to embrace any changes if possible.
Attention employees
Kitani is not the only one to point out that employees and their skills are key in the digitalisation process. “I consider the ability to receive and give feedback to be a key soft skills skill, which is essential for the learning process and the growth of an organisation”, believes Vratislav Kalenda, Director of Image Lab consultancy.
In the transition of a company to Industry 4.0 technologies, then, employees with soft skills play at least as important a role as those with technical knowledge. “Industry 4.0 is not just about introducing technology, but perhaps most importantly about bringing about a change in processes and adopted standards. Here you need to be able to communicate the changes, explain why and what changes are being made, and communicate these changes in the right way. Failure to do this can completely undo the investment in technology,” explains Jiří Bavor of Siemens.
František Boudný, director of the staffing company Předvýběr, considers the best method to be a school through play. People need to feel things, he says, and when they understand that new technologies and approaches are not against them, but on the contrary help them, they accept them very easily. To do this, they need to not be ashamed to admit that they don’t know something, nor should others push them away because of it. In a functional team, one employee then learns from another.
The same experience has also IT Sales Expert Konica Minolta Milan Libuša.
“With customers, we have found it useful to identify so-called ambassadors among our employees. These are people who are not afraid of change and see that it is needed.”
News will then be presented to them in priority. “We discuss their experiences and opinions with them, show them everything in practice and together we look for ways in which these tools could simplify their work,” he adds. As a result, the selected employees see that digitalisation makes sense and advocate it. They serve as an excellent example to other colleagues and naturally implement changes in their own departments at a pace that others can handle.
Having the right people
The need to involve employees in the digital transformation is also highlighted in the aforementioned McKinsey & Company analysis. However, you need to start from the head. That is, from management. “Nearly seventy percent of all respondents report that they have changed the top teams of their organizations during a transformation – most often when new leaders familiar with digital technologies joined them,” describes the company’s research and analysis. A similar approach should be taken at the lower rungs of management.
Another key to the success of the transformation should be the introduction of new ways of working. For example, an open working environment or continuous learning. Recruitment also needs to be innovated. “Success is at least twice as likely in organisations that run innovative recruitment campaigns (such as recruitment games, gamification or finding hidden messages in source code as part of the recruitment process) or organise technology conferences or ‘hackathons’,” says the analysis.
Milan Libuša concludes everything:
“When introducing change, we often encounter initial caution from employees. At the beginning, change can be difficult for some of them. They are getting used to new procedures, and they may not be comfortable with some new things because they are out of their working habits. But it’s a natural part of the digitalisation process.”
His experience is that within two to three months, employees cannot imagine going back. It’s just a matter of explaining everything to them in the initial phase and patiently and understandingly showing them again if necessary.
