Creating Digital Value

With the concept of digitizing everything becoming a reality, and the addition of artificial intelligence (AI), machine learning, Internet of Things (IoT) and other technologies, we are creating a crushing amount of digital data. But how to create value from this data?  We need to start at the beginning, otherwise it’s just a huge pile of bits and bytes that are consuming a lot of resources unnecessarily. The fourth wave, the Information Revolution, is upon us, but we are not all actively participating, or more importantly, benefiting from it.

What is digital value?

The digital transformation is now upon us and we are scrambling to be part of it and gain the envisioned benefits. Often without a transformation plan, organizations are simply scanning all their paper and hanging on to all their digital files. The promise is that existing and newly introduced systems will be able to not only handle all this information but make sense of it. And by “making sense of it” we are told we will get new and useful insights and numerous recommendations to improve productivity and efficiency.

This may be true, but is there real “value,” especially in light of the costs involved?  There is certainly some low hanging fruit, like digitizing production floor routers and incoming invoices, but the extension of these efforts without a transformation plan can lead organizations down a long, winding and costly road. One organization, in its notion that scanning all incoming documents would allow for better handling of invoices and customer requests was scanning direct mail advertisements. Another company was digitizing equipment drawings that were over 20 years old, because you never know when that customer may need replacement parts.

Getting the most value for the buck

Because the landscape of digital transformation projects is vast, the plan should first focus on those initiatives that allow existing workers to do their existing tasks faster and better using new digital technologies. We have observed existing workers having issues with new and changing technologies, especially when their training (both operational and cultural) is inadequate. To get the return on implementing these new digital systems requires not only getting the implementation right, but also ensuring employees are helped in adapting to the new system, and perhaps more importantly, to the new world of digital transformation.

Often there is little attention paid to the “negative value” associated with new technologies that are applied to operations and workflows. New technologies not only upset the “status quo,” but can create tremendous frustration, and significant uncertainty (e.g., is my job still needed, is this the first step in automating my job, am I going to be expected to reach new higher goals?). This reduction in value can be mitigated to an extent, but it is important to consider in evaluating the total value of a new digital opportunity.

Not all value is good

New digital technologies certainly will change how businesses operate, and even their business models. They will enable new methods for product development, delivery and how organizations capture value. Analyzing feedback data from customers will allow companies to better understand their customers and better predict future shifts in demand and even allow whole new products to be developed.

To transform the organization and start to get to this level requires some heavy lifting, both in terms of capabilities, resources and culture. For example, companies will need to either hire analytical employees comfortable with reviewing large amounts of digital files and seeing patterns and trends or have to outsource the skill. If outsourced, existing employees will need to learn how to communicate and collaborate with the data analysts. This change in culture has severe blowback consequences if not planned for and adequately introduced.

New digital technology initiatives also need to be accomplished so as to prevent uneven implementation. If departments, locations, and even divisions are not appropriately included in system rollouts, there can be considerable negative impact, especially when the organization’s culture kicks in—as one division of a large manufacturer found out when it implemented a data collection system while another division was left out. A key element needed to analyze the data capture was best developed by the left-out division, but because it was “left out” in the implementation, its management felt slighted and became unhelpful after the fact. The situation was resolved at the CEO level, by edict – not the best way to have progressed the effort.

The future value

The information revolution is not slowing, and the future brings bigger and better technological solutions dealing with data capture and the information embedded in the data. A potential obstacle to the speed of the progression, however, is the increasing security issues associated with the data. As more and more of the data is associated to specific individuals or companies, the need for systems that are built for security becomes more paramount. NIST has issued guidelines in its Special Publications alongside FIPS and DFARS publications that begin to outline the stringent requirements all systems will need to observe and the goals they need to achieve. Make sure your shiny, new digital technology systems meet these guidelines; a NIST Compliance Assessment is a good way to ensure the additional value you’re getting is not at the expense of security vulnerabilities.