A step-by-step approach to success
Despite the need for digital solutions, far too many digitalization projects are still foundering. What is the reason for this and how can it be prevented? Steinbeis consultant Tobias Fischer has analyzed the causes of failed digitalization projects for TRANSFER and proposes potential solutions.
Tobias Fischer knows from experience that while most businesses realize the need for digitalization, their efforts to implement digital solutions don’t always meet with success. This can be down to a variety of factors. The discrepancy between awareness of the problem and successful implementation of solutions is confirmed by recent surveys about digitalization in small and medium-sized enterprises (SMEs) [1]. A survey of over 600 enterprises with 20 or more employees carried out by Bitkom Research in May 2022 found “a lack of time” (cited by 61% of respondents) to be the biggest barrier to digitalization. “A lack of specialist personnel” (53%), “data protection requirements” (45%), “a lack of financial resources” (29%), “no need for digital products or services” (5%) and “opposition from senior management” (1%) are other factors that can cause digitalization projects to fail.
In view of the above, it is vital to choose the right solutions providers and tailor implementation to each case’s specific requirements. This will help to overcome the lack of time and specialist personnel that were identified as the biggest barriers.
Starting at the beginning
In order to gain a better understanding of the barriers to digitalization projects in SMEs, it is worth taking a step back and thinking about the fundamental reasons for each project. Digitalization projects aren’t undertaken for the sake of it, they are driven by specific motivations.
A German Chamber of Commerce and Industry (DIHK) survey on the challenges of digitalization asked almost 4,500 businesses about their main reasons for carrying out digitalization projects [2]. The two most common reasons, both cited by 57% of respondents, were “strategic business development” and “realization of cost reduction potential”. Other important motives included “customer retention” (53%), “increasing business process/workflow flexibility” (52%) and “increasing product/service value” (49%). These responses are a clear indication that digitalization projects are mainly driven by the desire to refine business processes and reduce their cost.
However, a completely different picture emerges when the users of digital solutions in companies are consulted. A 2021 survey carried out by EY asked over 1,500 employees in Germany how digitalization has changed their workload [3]. 93% of those who took part in the survey said their workload had increased or remained the same. In view of the main reasons for digitalization projects reported above, this is both surprising and disappointing.
The same picture is seen in consulting practice. Symptoms of failed implementation of digitalization projects include demotivated employees who don’t see the point of the project and are confronted with an increase in their personal workload or changes to their work processes.
Potential solutions: continuous improvement and transparency
So how can digitalization projects be implemented in a way that delivers the company’s goals while also being effective from its employees’ point of view? This is key to creating a virtuous circle where the success of one project lays the foundation for the next, keeping employees permanently motivated. The basic principle embodied in the continuous improvement process (CIP) provides a useful approach. The CIP is more a mindset than a technical (production) principle. The key to a successful CIP is to include all of a company’s employees. This will help to allay their fears, challenge the usual way of doing things and address problems openly. If all of a company’s employees understand and take on board the principle of making continuous small improvements, they will be well placed to support specific digitalization projects and incorporate the improvements into their daily work.
The level achieved after the implementation of improvements/ digitalization projects becomes the new standard. This is then built on by the next project, resulting in the continuous improvement of processes over time.
The continuous improvement process (CIP) (author’s own illustration)
Rather than seeing each digitalization project as an isolated, individual exercise, the CIP approach treats them as an integral part of the company’s overarching digitalization initiative. Every specific digitalization project is thus a rung on the ladder leading to improvement/digitalization.
Introductory training and open discussion spaces form a key part of every project. This allows preconceptions and fears about digitalization to be addressed and ideally resolved. Digitalization projects are often accompanied by concerns about job losses that can leave employees fearing for their livelihood.
It is essential to be transparent about the reasons for digitalization projects and ensure that they are aligned with the needs of the affected employees. If any disagreements come to light at this point, it is advisable to return to the training and discussion space stage. This is because the further down the line a digitalization project goes, the higher the costs if it fails – due to the investments that have already been made in terms of time, internal or external consulting, services and licenses.
Once a new level of digitalization has been attained, it is vital to consolidate the success in order to create a solid foundation for subsequent developments. Digitalization projects bring about major changes in working practices by eliminating, automating or simplifying different tasks. The new processes must be consolidated as soon as possible. If they are not permanently consolidated, neither management’s nor employees’ goals will be accomplished and the success that has been achieved will not last. The company will inevitably return to previous digitalization levels, and the resources it has invested will be partly or wholly wasted.
In order to keep people motivated during the continuous improvement process, as well as consolidating success it should also be celebrated. It is important to transparently communicate and show appreciation for what been achieved. This is also the time to identify the lessons learned and engage in critical discussion of them as and when necessary [4]. The findings can then be fed into future digitalization projects, helping to create a learning curve.
Recommended approach for digitalization projects (author’s own illustration)
Think strategic – act together
A digitalization project’s successful implementation is obviously the main priority. However, to ensure that the digitalization measures can be sustained over time and secure the company’s future, various other important aspects must be addressed both before and after a project’s implementation.
It is vital to embed individual digitalization projects in an overarching strategy. This requires management and employees to share the same motives and understanding. After implementation, consolidating and celebrating the success achieved are key to the success of subsequent projects.
Contact
Tobias Fischer (author)
Freelance project manager
Steinbeis Consulting Center Business Start-Up (Stuttgart)
www.steinbeis-exi.de
References
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Bitkom Research: “Digitalisierung der Wirtschaft”, 2022 company survey on barriers to digitalization, published June 2022
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German Chamber of Commerce and Industry: “Digitalisierung mit Herausforderungen”, IHK survey, published February 2021
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EY: “EY Jobstudie 2021 – Digitalisierung im Arbeitsleben”, published October 2021
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Project Management Institute: A Guide to the Project Management Body of Knowledge, 5th edition, 2013