Digitalisation is all about not thinking about digitalisation!
In the last year the increased focus on digitalisation, robotisation, artificial intelligence (AI) and Internet of Things (IoT) has led me to think about where this will all end up?
I see major companies still talking Big Data, says Baard Eilertsen, which is a forbidden expression with me but more about this later, and they desperately try to capitalise on the opportunities ahead. Nothing wrong with that but I have a serious issue with companies trying to ‘fool’ customers and scaring them to run down an uncertain and costly road to digitalisation.
It is time that we try to get away from the hype and start to focus on the real world, not made out of 0s and 1s but actually adressing the real issues customers are facing when the understanding of digitalisation is either limited or they have been stuffed full of Big Data stories.
Let’s start with Big Data…
The issue I have with this, after listening to hundreds of consultants and ‘experts’, is that (which I agree, too) all companies have a vast amount of data that in the best of worlds can be capitalised. The problem with this is that very often it is unstructured data we are talking about and that means that some bright consultant will apply his or her magic to extract value out of this data. Very often not even understanding the source of the data or even understanding the processes that rely on the data.
This is the major problem with Big Data, that you try to create value out of nothing. Better to start with the data that actually can make a difference and where value can be built in further on. One good example is the electricity grid. Why on earth would I like to have all the data from the grid if the most valuable data would be a simple voltage quality that tells me what I need to know? Focus on the things that makes a difference and do not embrace the whole value chain, anyway this will become part of it further on in the digitalisation process.
This is exactly what I did for my latest customer, focusing on the exact data, and then building a value-driven development where the most important issues were not technology but the processes the company relied on. If we could make the processes slightly more efficient we could save and make massive amounts of money.
Killing Big Data initiatives
It all started with me killing all Big Data initiatives within the company before doing a deep dive into the business-critical processes that we identified to be targeted.
Besides this I also made sure that we had a world class IoT platform which we licensed. When the IoT platform was up and running it was an easy task to connect and develop the needed algorithms to increase both the information management around the assets providing data as well creating a new layer on top where we explored the potential business value. The latter became a big success where from starting to look into an IoT solution we had a commercially viable product we were able to sell to a customer within seven months of starting the project.
The project itself uses all the industrial buzzwords, but in short you could say it is a fully automated and self-learning solution that optimises itself constantly to meet ever-changing environments in the power supply of a waste water plant. From the go-live date to today the system has been running by itself without any interference from any humans, constantly creating value for both the waste water plant as well as my customer.
Find new data sources
If we then look further we see that by focusing on the process instead of the data we could find new data sources that we could more efficiently use and through this create a structured Big Data environment where all data was categorised and stored in a manner that increased the availability to impact different processes in different ways.
We could use basic data to lower the sensitivity of calculating price curves, we could use data from one asset to increase the quality of forecasts massively and we could use the same data to lower the threshholds to develop one of the most advanced trading systems there is, including some advanced thinking around Blockchain.
Am I unique? No, but I am humble in front of the challenges that lie ahead of every single company that wants or needs to start their digitalisation process. I have listened to thousands of stories of how companies should digitise, but I have heard only a handful of stories how we, within the industry, have actually helped companies increasing their digitalisation rate as well as increasing either profits or net sales.
It is not about technology, it is not about people, it is all about changing the processes we rely on to make them better and more efficient. Through focusing on the right things, at least in my experience, the result will come faster and will surpass your expectations.
Did you know that in the last project in nwhich I participated we had a return on investment (ROI) of less than eight months for investing in a full fledged IoT platform? We focused on the real things and not on utopia!
So what are the keys to succeeding?
You have to understand the business processes, because that is what it is all about. Whatever you decide to digitise it will impact your business processes and you have to allow it. I actually told a customer that the most critical issue I see is that the company should focus on business process re-engineering as a key competence going forward.
Secondly, you should not be afraid of failing because every failure will teach you an important lesson. And, who knows, it might not be a failure after all just a different way to think.
Thirdly, I will point to something that is extremely important and that is that digitalisation is not about technology. It is about the willingness to question the status quo and wanting to change. The technlogy is just the tool with which to achieve this, but without questioning there is no point in paying for technology.
Last but not least: Companies usually want to hire consultants to do their digitalisation process. Trust me when I say that withouth having your own competences in place you will fail every single time. As I said earlier, you are changing the business processes and without the understanding in-house you will spend more money to maintain and develop than you could ever potentially get back.
Relying on external resources and not having the resources internally is the single biggest reason why digitalisation projects fail. By having the resources internally I do not mean the IT department, but actual business owners who can benefit from digitalisation.
Baard Eilertsen is Founding Partner and CEO of Truebase AB and an IoT Global Network Ambassador