When it comes to digitalisation, George Westerman, MIT Sloan Initiative on the Digital Economy summed it up well when he said, “When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.”
Digitisation when done well can deliver speed and business improvements that transform our operations. Unfortunately, many digitalisation projects fail to deliver on their promised benefits. Here are three of the primary reasons why this happens:
- Third party contractual limitations
The contracts between the asset owners, suppliers, and operators can be both complex and restrictive. The areas that often significantly affect project implementation are around licensing and data ownership. Licensing in terms of what “products” you have purchased from the supplier. For example, do you have the appropriate licence for the software to enable you to automatically retrieve data. and ownership in terms of who owns the data and what you are allowed to do. You may be able to retrieve, analyse and store the data, but you may not be allowed to share it with 3rd parties, which can exclude parent or sibling organisations. Always check the small print!
The costs of retro-fixing any shortcomings in these areas can be time-consuming and annoying. They will almost always be expensive, eliminating any value the digitalisation project. There are also secondary costs to be aware of, often associated with IT infrastructure. Data storage costs can often be missed, but you can also be caught out on big ticket items, such as an extra WAN connection to enable data access for third parties.
These warnings apply even more so when there are complex ownership structures, such as JVs, or acquisitions that need the novation of contracts.
- Alignment of expectations
The stakeholders in a digitalisation project rarely have a shared understanding of the aims and benefits of the project. The data team could see the project in terms of improved IT infrastructure and processes> The asset team will assess success on the impact it has on asset performance, while the C-suite sponsor will focus on reduced costs or increased profitability. Even the same word can mean different things to different people. These different viewpoints do not necessarily conflict but must hold equal weighting and focus as the project progresses. This requires strong project management and a collaborative mindset. If one stakeholder’s view dominates short term decision making it rarely ends well for the project as a whole.
This alignment issue also applies to external stakeholders, particularly the solution providers you choose to deliver the project. The collaboration and communication between you and your suppliers is crucial. You need to ensure absolute clarity and alignment on all aspects of delivery – definitions, data pathways, user actions, and business processes. Rigid approaches from either side will increase the chances of a failure.
- Understanding your data and processes
Manipulation of data is at the core of any digitalisation project. Failure to understand where and what the data touch points are, how the data is to be QC’d, cleansed and edited, will result in a non-optimal solution.
You may not realise just how vague some of your processes are in terms of written definition – they work, so people must know what to do! The best test of this is to explain your processes to 3rd party (such as your solution provider). Chances are they will ask any number of “what if” type questions: “What if the data feed stops for two days?”; “What if you find that last week’s data was all wrong?”; “What if John leaves?”. And if they don’t ask these questions, I would worry that they are not doing their job. Before you start your digitalisation project, map everything out in detail. Flowcharts are great, but use whatever tool works for you. You may find this takes longer than expected, but it is effort well spent even if the project does not go ahead at all. I’ll bet you find all sorts of opportunities to refine and increase efficiency. If the project does proceed, these flowcharts (or their equivalents) will significantly increase the efficiency and accuracy of communications between stakeholders. They provide a common framework and language to maximise shared understanding and minimise risk.