What I learned about digital business transformation after ten years of developing IT systems for companies

What I learned about digital business transformation after ten years of developing IT systems for companies

Business owners do not consider the financial effects, employees sabotage, and some do not need digitalization at all. Collected mistakes of companies thinking about business transformation and examples of how to deal with it.

I have been working in the IT field for more than ten years, where I develop and implement web services, mobile applications and industry CRM systems for business. During my work, I had many clients and several beliefs appeared about why the company fails to make a digital transformation. I will tell you about them – I invite you to discuss them in the comments.

Digital transformation always goes hand in hand with automation, but they are not the same thing. Automation – improvement of a specific business process due to the digitization of information or the introduction of digital technologies. It is usually a part of digitization. Digitization is generally aimed at improving individual processes, but also at changing the product, relationships with customers, contractors, and even the positioning of the company.

1. If the business owner is not ready for transformation, it is unlikely that anything will work

The founder of the company, when starting a project, has to broadcast the goals of the business and charge the top management with the idea. Not to impose, but to motivate to introduce a new system, technology or process. Charged managers pass the idea further down the chain to line employees.

If the founder believes in the idea, he can inspire the team, change the business model and organizational processes. But it happens that the founder or manager started implementing changes on the advice of a partner or mentor and was not ready for it. He begins to internally resist changes: he postpones decisions, he is constantly distracted by some small things. Self-sabotage leads to cessation of use, which sometimes stops.

The founder must approach digitalization consciously and believe in the idea – then the transformation will be successful.

For example, we developed and implemented an ERP system for one of the major players in the outsourcing market. The company works in the areas of accounting, personnel and labor protection. The system is a complex solution that combines the work of specialists of various profiles and specialties, departments and entire divisions. The ERP system is a competitive advantage for this business, and the owners put a lot of effort into making it stick: systematically working with the team, being fully involved in the process, and gathering feedback. This helped to implement successfully.

2. It is not possible to change all processes at the same time

Suppose the founder believes in the idea so much that he tries to change all the processes at the same time. It is usually not possible to do this due to a lack of attention, and sometimes – a lack of resources.

One of my favorite tools for avoiding distraction and organizing processes is Goldratt’s Theory of Constraints. The essence of the theory is that business works as a single mechanism and cannot be stronger than its weakest element. So, you need to find this element and strengthen it – then the whole system will work more efficiently, and the team will be able to step by step identify bottlenecks and optimize processes in them, identifying and removing restrictions.

The theory of system constraints helps businesses change processes, eliminate bottlenecks, and earn more with the same resources.

For one of our clients, a chain of medical centers specializing in professional examinations, we developed a system that helps optimize the workload. As a result of the implementation of the project, many bottlenecks were discovered. Example:

  • The administrator spends a lot of time on the registration of the patient. The specificity of professional examinations is that the administrator, when registering the patient at the registration desk, forms the scope of the comprehensive services examination. It includes examinations by doctors, analyses, and functional studies. And the amount depends on the age and gender of the patient, the presence of harmful and dangerous factors at work. The administrator at the registration desk spends about five minutes to register one person — for a medical center where extensive examinations are held, this is very critical.

  • High load during peak hours. At a certain hour, usually in the morning, the load at the registration desk is enormous. People come and expect to be accepted immediately, but instead there is a queue.

  • The workload on specialists is unevenly distributed. Patients, having received directions, build a route through the medical center as convenient for them, which is why queues gather in some offices, while others are idle.

Our system forms the volume of patient examinations automatically, and also allows you to sign up for examinations online. In this way, it was possible to reduce the registration time at the registration desk to two minutes (at the same time, reduce the number of errors) and balance the overall workload in the medical center. Now patients make an appointment for examinations ahead of time and do not gather near the offices thanks to a smart electronic queue that creates an individual route through the offices for each visitor. We closed the most problematic areas and can develop the system further.

3. Some believe they need automation, but they don’t

Often, our customers, who apply for the implementation of their idea, are fully charged and ready to invest any resources in the development. At the same time, they do not always notice that the project may turn out to be untimely, financially unprofitable or unsuitable for their business.

Thanks to our extensive experience and expertise in the IT niche, we can qualify such projects before the start of development: for example, in the initial stages of the Discovery phase, when we conduct research and determine the product’s market potential.

I tend to be honest with customers: if the potential is objectively questionable, that’s the first thing the customer will hear from me. I noted several obvious signs, by which I notice that it is too early to start automation:

  • The company does not have systematic processes. If the manager comes for automation and does not know how the processes in his business are organized, he must first deal with them: describe each one and find the most frequent problems. It is impractical to automate a process that is used very rarely.

  • Small turnover, staff or number of clients. Automation in this case is unlikely to pay off. Money is better spent on advertising to increase the flow of applications and increase the customer base.

  • Development will do more harm than good. In any business, there is usually a point of restriction – the so-called bottleneck, which does not allow to increase profits. If automation doesn’t help address this limitation, it won’t be good for the business.

The fire in one’s own eyes is another reason for action. We turn clients away from projects that seem attractive if we understand that automation will not bring benefits and the project will be unprofitable.

We had a case when a small consulting company asked for the development of a mobile application. In it, clients could order services and receive consultations.

We discussed the results, and the customer decided to abandon the implementation: the flow of requests was too small, and the development investment would not pay off. Despite the good opportunity to earn, we honestly told the owners about it, and they decided to postpone the development of the program for a while.

4. You cannot invest in qualitative changes, but wait for a direct financial effect

Digitization costs can be divided into two areas: investments, when investments are returned, and costs to satisfy your desires. In the second case, the company may undergo qualitative changes, but there will be no financial effect.

The owner’s mistake is to invest in quality changes and wait for financial results.

For example, the owner of a company, whose sales department works in a CRM system, decides to add a convenient module with a designer of commercial offers to it. At first glance, it’s a cool idea that will help simplify the work of the department. But it is necessary to analyze how much time the manager spends on the preparation of commercial proposals now, without a designer:

  • if it is done in ten minutes, and after implementation this time will be reduced to five to seven minutes, the financial effect should not be expected;

  • if he spends two hours drafting proposals, and after implementing the designer, the time is reduced to five minutes, the investment in development and use will pay off.

Business automation should provide return on investment (ROI). Any decision must have a managerial and financial justification.

We try to manage customer expectations at the planning stage. The Discovery phase helps here – research during which we conduct interviews with future users, collect functional requirements and development ideas, and formulate hypotheses. Then we analyze the input data, the market and competitors. We prescribe scenarios, test hypotheses and only then say whether it makes sense to invest in changes.

We conducted the Discovery part for one of the clients. This stage includes a huge number of tasks related to processes, as well as external and internal communications at the customer

5. The main opponent of digitization is people, but they can always be brought to your side

When a company implements a new process or solution, the first people to sabotage it are the employees. They are always loaded with operational tasks and are ready to allocate even five minutes to learn a new process, change a habit. To turn things around, the owner needs to pitch the team as their internal customer and sell them the idea.

Consider the implementation of a CRM system in the sales department of a fast-growing company. An experienced team works there, which exceeds the plan every month. One employee of the department manages a dozen clients, and he has so many operational tasks per day that he rejects all proposals for innovations under the pretext of “not enough time”. In his eyes, the manager simply adds new steps to an already difficult job.

The first thing to do is to offer people something that will make their work easier. And this is where internal Discovery helps – researching the needs of employees.

For example, we need to train managers to fill out customer cards in CRM – this is a super important step in the process. But if managers are forced to do this, most likely, the manager will face sabotage. Therefore, it is necessary to start with convenience for the employees themselves:

  • Offer them a designer of commercial offers. The manager fills in basic information about the potential client, opens the designer and very quickly creates an offer for the client based on ready-made templates. You can stop there or go further.

  • Configure the system so that the commercial offer opens via a link, like a web page. It is better than a PDF file because you can put a pixel on the page – it helps track the user’s actions on the site. When the customer opens the offer, the manager will see it and can “randomly” call the customer and comment on the services. Conversion from online offers is usually higher.

  • Offer to form contracts in CRM. If the client’s card is filled out, and the contract template is loaded into the system, the manager will not have to fill it in manually – the data will be pulled automatically. Right here, we can form the stage of agreeing the contract and sending the contract by EDO.

It turns out very cool: we involve managers of the sales department in the process of forming this tool, we make them team members, we allow them to make their contribution. And now the manager himself acts as an evangelist of our project.

Conclusions: how to carry out a digital transformation of a business and not regret it

In just five simple steps… In reality, digitization is much more complicated, but there are really five main steps:

  1. Describe internal processes and ensure that digital transformation is required.

  2. Choosing the business process that you want to automate first is the narrowest place.

  3. Conduct the Discovery phase, understand user needs and analyze the project.

  4. Calculate the cost of ownership of the system and the payback of the development.

  5. To develop the habit of using the new solution among employees due to convenience and bonuses for them.

I talk about the work projects in various branches of business that I implement in the Telegram channel.

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