Take a step back and look at how the last decade has changed the manufacturing industry. The pace at which technology marches forward is both exciting and staggering to behold. Disruption is everywhere, and businesses are struggling to keep up. This has led to a common term used by innovators in the industry: “Digital Transformation.”
On the surface, it sounds simple, but the reality is far more complex. Adopting digital solutions sounds easy, but the process does indeed involve a fundamental transformation. Studies show that over 68 percent of organizations see a positive ROI from their efforts, but getting there requires you to move past obstacles in your way. It’s time to face these bumps on the road to success and move past them once and for all.
7 Barriers to Digital Transformation (And How to Overcome Them)
If you’ve ever had a conversation with the leaders in your organization about digital transformation, odds are they are probably somewhat receptive to the idea. It’s easy to see the positive aspects of embracing disruptive technology and harnessing tools that benefit the bottom line, after all.
Understanding and implementing, however, are two very different things. Here are seven common obstacles on the road to digital transformation, and how to move past them:
1) An Aversion to Change
The supply chain industry is already unpredictable and in some aspects, fragile. Sudden changes or shifts are not welcome in this kind of ecosystem. Not only that, but many organizations lack the proper organizational structure to quickly implement large scale changes.
Without a culture that embraces change and continuously seeks ways to improve, digital transformation will be next to impossible. When you approach this type of change, you need to win over hearts and minds just as much as budgets and management.
To solve this problem, leaders need to think like a fledgling startup. These types of companies live or die based on innovation. They can’t afford to become comfortable or set in their ways, and neither should you. Focus on real, attainable, and reasonable goals. The goal is transformation, but it doesn’t happen overnight. Move forward, one step at a time, focusing on consistent and continuous progress.
2) Old Technology and Legacy Systems
Despite technology being the solution, it’s also part of the problem. Older legacy systems, combined with thin budgets are forcing organizations to run in place. The average enterprise organization spends 82% of their budget on maintaining existing systems. That leaves very little room for growth and innovation.
When asked about this statistic in an interview, João Baptista, president of Eastern, Central, and Southern Europe operations at CGI, said there’s no universal rule, but it’s important to dedicate resources to this cause.
Specifically, he referenced companies like Amazon and First Direct in the UK. These companies left their legacy systems behind and invested heavily in front-end systems that enabled new functions. They also integrated new platforms all the way down to the logistics level.
While these are special cases, there’s a lesson to be learned from their leap of faith. Specifically, organizations should take a hard look at the budget and see if that 80 percent average is really required. Baptista recommends “doubling the step-up investments,” and moving your investments in digital transformation up to 40 percent of the budget.
Ultimately, the goal is to spend as little as possible on legacy, which will free up your efforts to focus on the transformation you need.
3) An Unclear Focus and Foundation
The idea of digital transformation is great, but many organizations don’t know where to start. This leads to an avalanche of failed initiatives. Start on the right foot by first establishing what you’re looking for from the transformation. The bottom line is a great place to start.
How will these changes make your life and the lives of those in your organization easier? What tasks will it automate, and how will the increased efficiency translate to a measurable ROI? These kinds of questions will help you establish what you want and what you need from the transformation.
With these things in mind, establish a clear budget and roadmap for success. Outline your steps and goals and make them clear to others. With collaboration in mind, let’s move on to our fourth obstacle.
4) Rigid Silo Structures
The term “functional silo syndrome” was introduced by Philip Ensor in 1988. Organizational silos in a business refer to a structure the separates and walls off different departments, much in the way that farmers store grain in massive silos.
This type of structure leaves a major gap between your departments, and it’s ultimately holding your organization back. Sharing information across departments and embracing collaboration is key to a transformation that shows real results.
Since this organizational structure has been a problem for 30+ years, breaking them down is not going to be easy. Here are a few tips to help you get started:
5) Lack of Executive-Level Support
Digital transformation begins at the top and trickles down through the organization. Without the support of leadership, it’s not going to work. A study done by McKinsey found that 70 percent of change programs fail because of employee resistance and lack of support from management.
In many cases, engagement only comes from the CTO, which again, limits the ability for the entire organization to transform. Risk aversion and resistance to change often fuels the lack of support from top-level management, but it’s important to acknowledge and move past these biases.
The best way to tackle this obstacle is to work towards a culture where challenging the status quo is not only encouraged, but common in your organization. Gather input from your teams and encourage a diverse selection of perspectives or opinions.
Incorporate all levels of the organization in decision-making. Not only will this keep everyone on the same page, but it also allows you to create a roadmap towards your ultimate goal.
6) The Digital Talent Gap
Taking stock of the talent across your organization may reveal that you’re lacking individuals who are equipped to drive a digital transformation. Indeed, the next generation of STEM professionals is dependent on closing this talent gap.
The solution to this issue lies in making a STEM career exciting and promising. Students are pursuing degrees within industries that appeal to them, so how can you make your career prospects speak to these up-and-coming individuals?
Start by partnering with local universities to sponsor programs or offer internships for those pursuing a degree manufacturing or logistics. Wear your organization’s unique culture and working environment on your sleeve.
Most importantly, showcase your willingness to transform in the digital age. Millennial prospects gravitate towards the latest technology and the ability to do their job as efficiently as possible.
7) Too Much Data
The age of big data has led to unfathomable amounts of information everywhere. Organizations can see the potential in harnessing this data, but they have no platform to do it. Without the proper tools, they simply let the opportunity pass them by as there’s just too much of it to manage.
This is where Findchips Pro offers a powerful solution. With immediate access to market data, analytics, and our proprietary Risk Rank algorithm, the world of big data is suddenly at your fingertips. Not only that, but the real-time inventory data also empowers your teams to make data-backed decisions.
In addition to harnessing data, collaboration is simple as well, with access to sharing links that immediately connect your disparate departments. As we knock down each of these obstacles, it’s easy to see how Findchips Pro offers a strong foundation for your organization’s digital transformation.
It’s Time to Take The Leap
Digital transformation is no longer an option. Your organization’s long-term success depends on the ability to constantly improve, grow, and harness the potential in modern solutions. Discovering the power of Findchips Pro is certainly a good start.