In Italy alone, over 60% of large companies hinge their strategies for success on digitalization, indicating a lack of awareness and perspective of what digital transformation actually means. Investment isn’t the issue, but there’s a culture of thinking that technological change alone, rather than organizational change, creates digital transformation, which is a big first mistake to make on a path to evolution and modernization.
“Whatever your needs are, the technology is there; that’s not the problem,” says Tommaso Pagnini, CIO of global aluminium processor Profilglass. “You might evaluate which type of cloud to choose or whether an AI application is useful, but the real issue is management and process, and how to effectively address challenges by putting the focus on people.”
For Marco Foracchia, CIO of AUSL, thelocal health authority that administers services in Italy’s Reggio Emilia province, the biggest mistake is not thinking strategically. “Taking many unrelated steps without an overall vision gets you nowhere,” he says. “You risk buying ICT systems randomly and accumulating technologies, and losing the possibility of grafting wider logic into strategies for cybersecurity, privacy, cloud, and AI. These aren’t individual purchases, but transversal elements of a broad strategy.”
Knowing what’s at stake, here are some key mistakes and misconceptions to avoid in order to help ensure digital transformation success.
1. Transformation is an entirely technological issue
Don’t let tools drive digital transformation, says Giuseppe Pitarresi, CIO of railway component manufacturer Omer. “It’s fine to follow current trends, but we must avoid piling up products without a reasoned plan,” he says. “Digital must be supported with organizational changes.” So to succeed in transformation, there must be people in the company who are oriented toward change. Pagnini of Profilglass suggests identifying change agents who aren’t necessarily IT specialists but identified and cultivated among people in the business who show a proclivity to digitalization processes.
“They must also have the ability to abstract because this allows them to understand not only how things work today but how they might work tomorrow,” says Pagnini. “This will help to bring concrete proposals to IT on products to select and implement.”
Foracchia says that AUSL Reggio Emilia has a strategic planning group made up of non-IT people with a business mandate that defines the ICT strategy. Of course, ICT is part of this planning group as well, but has a strategic rather than a technical role.
“We also have key users we identify to establish continuous contact and feedback between the healthcare users and the IT team,” he says. “If they have a question, a problem, or an evolutionary vision, each internal user must know what channel to communicate them through.”
2. Entrust turnkey skills to third parties
Some CIOs say vendors don’t adequately facilitate the cultural shift that drives transformation because they emphasize technology as a one-size-fits-all solution. So it’s important to avoid relying entirely on the supplier for know-how. Many CIOs, even if they use cloud software and services, tend to bring some strategic skills back in-house.
“This needs to be taken into account when evaluating the vendor,” says Pagnini. “For example, will it train internal staff? We don’t want to entrust the vendor with a turnkey task. It’s more useful if the supplier works alongside the company and does knowledge transfer.”
Charismatic figures and experts, usually company veterans who possess tacit knowledge, is another risk related to skills. This refers to issues of knowledge management in the enterprise, so when these people leave the company, a dangerous skills gap is created and many IT products remain hidden. They could be people who’ve actively participated in the development or customization of a platform without having written down all the procedures, or who have a direct line to the supplier based on a personal relationship. They can also be external consultants from the software house. Many CIOs underline the need to monitor where skills reside so the company doesn’t suddenly find itself deprived of know-how.
3. Force change from above
Underestimating communication and sharing of IT objectives and strategy with users, and imposing solutions from above, is another mistake to avoid.
“Forcing digital innovation is a mistake; change management is essential,” says Fabio Mattaboni, CIO of port operating company FHP Holding Portuale. In a previous role at a multinational organized with local branches with autonomous relationships with customers, he saw the CEO introduce a CRM that was the same for everyone to provide a homogeneous and comprehensive vision. This choice was perceived by the various branches as a corporate control tool and was opposed to such an extent that it wasn’t used. The commercial functions rowed against it and kept the data for themselves. The CEO then forced each person to demonstrate they had carried out their activities on the CRM.
“It was an extreme and unpleasant case,” says Mattaboni. “Here the error occurred upstream, and we should’ve proceeded differently from the beginning. Digital projects must be preceded by rules of engagement, teams must be involved, and people must be rewarded for results. And then people must be constantly informed between work groups about what the progress and objectives are.”
According to Mattaboni, if imposing a change can’t be avoided, those in charge must at least convey the message that stakeholder involvement in the project is advantageous, and it’s done through an adequate remuneration policy.
“A common mistake is to invest in technology but not think about the end user,” adds Flavia Marzano, digital transformation consultant and VP at Caffè della Scienza Livorno, the Italian cultural association that promotes knowledge of science and technology. “When designing a site, for example, the requirements that should be foreseen by the design team are ease of use and accessibility, and this doesn’t always happen.”
Moreover, imposition from above reinforces a natural resistance to change, Marzano adds. “Employees are afraid of losing their roles, if not their employment itself, with technologies like AI,” she says. “But this happens in a rigid organizational culture, where it’s not understood that people can do something else when the use of automation and AI is increased.”
4. Not measuring the resources available
Avoid not adequately evaluating both money and skills resources. It’s not always possible to proportionately hire people as digital projects increase. So the IT director must play a delicate role to mediate between the needs of the business, which sets the budget and demands certain financial results, and the need for skills to allow digital projects to succeed.
For example, Massimo Bollati, director of digital transformation at the State Property Agency, Italy’s public economic entity responsible for managing real estate assets, was in need of data management skills. In the Agency’s transformation journey, a crucial step was data preparation and cleansing, yet the difficulty wasn’t finding the technologies, but defining the processes and training people.
To equip himself with the resources he needed, Bollati implemented three actions: investment in internal training, not only in the classroom but on the job; ad hoc hiring to fulfil roles not yet present in the Agency; and maximum access to universities and research centers by sending internal people to shadow students, or bringing PhDs to the Agency.
“It was the initiative that brought the greatest benefits,” Bollati says. “Today, the Agency has a very innovative, modern, and proactive digital direction thanks to the mix of these three actions.”
5. Don’t think long term
A trap that companies risk falling into when they digitize is to proceed with a day-by-day perspective, filling single and specific needs. Instead, it’s necessary to define a broad strategy, with a long-term view.
“As soon as I joined Profilglass, my first task was to define the medium-term development plan, which then translated into a series of projects classified by priority,” says Pagnini. “The general design of the company’s evolutionary strategy is essential. Initiatives must be placed in a grid that evaluates and compares impact and value, for example, and costs versus results.”
6. Neglecting software integration needs
In modern IT, monolithic systems no longer exist, which helps agility and speed to the company. But this also requires integration between software.
“IT needs to have people who know how to work on integrations,” says Omer’s Pitarresi. “It’s not just about technological integration, but functional integration. In practice, these people are internal business partners within IT who have full visibility of the solutions that integrate with the different functional areas.”
Software integration, in short, is an IT-business dialogue, because if solutions arise from IT and are imposed from above, people mistakenly impose change. If they arise and remain in the business, it risks creating many non-communicating silos.
“IT oversees and harmonizes the functional requirements in the integration plan,” Pitarresi adds. “All the systems must talk to each other. It’s a problem of organization rather than technology, and there’s no shortage of technologies. The real point is to apply technologies to the processes.”
This is an aspect that Marzano also touches on.
“A major obstacle to digital transformation in public bodies is that interoperability is often lacking,” she says. “Departments have different, unrelated software and are unable to share data and cooperate. Another mistake often made is not realizing that, when you buy new software, you need to re-engineer the processes. The new software doesn’t automatically replace the old one.”
7. Underestimating the power of mindset
The evolution of mentality is a fundamental part of the change.
“Our business started well before the digital revolution, and even if we were pioneers in the use of modern applications, even in the factory, we have a multi-generational workforce and it’s difficult to change the way of working among those used to doing things a certain way,” says Nicola Marra, IT manager of cured meat producer F.lli Veroni. “Digital transformation must start from a new mentality and IT is helping to change the mindset.”
The cultural element is also crucial in public administration. So for Marzano, it’d be very important to lighten the bureaucracy.
“The Digital Administration Code is 20 years old and has been changed so many times that it’s become a monstrous text,” she says. “We need clear and streamlined guidelines. The same goes for tenders, which are so complex that they require long and cumbersome decision-making processes. In the end, too much time passes between the choice of a technology and its actual adoption, and there’s a risk the technology is already outdated.”
IT as a business partner
To mitigate problems, communicate and manage change, Pagnini says. “It’s like building a new lane on a highway,” he says. “There’s work in progress that creates inconvenience, so you need to put up signs to inform about progress, and expected times and benefits. So internal communication on projects and managing escalations is essential.”
Change management is recognized by CIOs as key to digital transformation because it must guide people to the new operating mode, accompanying them to overcome natural resistance. Mistakes are also reduced when the CIO is a figure within the C-suite and participates in defining strategies, and grasps the needs and priorities of the business.
“I’ve often worked in companies that were going through strong changes and it’s essential to understand the business and help its people build the requirements for digital tools,” says Pitarresi. “Ultimately, IT must be a business partner, otherwise, it’d be enough to have a consulting firm instead of internal IT and buy the technology products.”
Read More from This Article: 7 common transformation mistakes and how to avoid them
Source: News