Digital Transformation Accelerated – Trends & Implications
Digital Transformation is viewed differently by technologists and economists. For a technologist, it means:
• Computational power
• Technology modularisation
• Annotated data
• Algorithm advance, and
For an economist, it means lower cost to make previously unimaginable steps possible. In addition to this, personal behaviours have changed significantly because of digital. Many of them have become irreversible.
What Are the Challenges?
• Digital adoption across sectors varies significantly. It is much low in public sectors.
• Only 16% of the digital transformation has led to value. Some of the reasons for this are:
Most projects are done on a pilot basis and not scaled thereafter.
Cost savings from Cloud are not very clear.
Digital needs a different set of talent. Digital natives must gel with others in the organisation.
How Do We Derive Value from Digital Transformation?
This needs to be addressed on three levels by any business attempting digital transformation.
• How can we transform the core?
• How can we build new businesses?
• How do we modernise technology?
Even before we attempt digitisation, the application areas must be stacked up based on business value. For example, for a manufacturing firm, one can think of using digital skills for capacity forecasting, forecasting of cost function, inventory forecasting and so on. Then the areas must be prioritised. The agile model, which talks about co-locations and creating functional teams, has to be used. Agile teams must be fully empowered to make decisions. These teams must have top-notch and differentiated talents.
Key shifts in successful implementation cases are:
• Driving business improvement
• Building capability internally rather than outsourcing
• Realising business opportunities; having pragmatic implementation.
Of the new businesses built by corporates, only 16% have been blockbuster successes. There are various reasons for failure, like having no unfair advantage, misaligned expectations, revenge of mothership, cultural contamination and so on.
Some digital success stories from legacy businesses include SBI Yono; Service Mandi of Ashok Leland and Apollo’s 24 x 7 omnichannel ecosystem focussed on healthcare.
The Big Learnings Are:
1) Have big aspirations.
2) Put the user at the centre.
3) Adopt the Agile approach where Business and Technology teams have to work hand-in-hand.
4) Do not compromise on talent.
5) Have partnerships for enhancing value and ensuring faster time to market.
6) Go for cost-effective (frugal) customer acquisition and at scale. n
Raghavan: Your initial thoughts on digital transformation?
Ravi: For supply chain industry, the head room is huge for digital transformation. We are at very early stages of putting digitally enabled solutions. We need to transform this into digitally-led solutions. On one side, it is happening on the infrastructure front. On the other, we need to give power not only to internal users but external customers as well. If we combine the tools available with tools like social media, it’s going to be very powerful. The key to success is to believe that technology is the spine of the business. Business transformation happens around technology.
Anantha: We first heard the word digital in 2014 or 15. We had IT for 30-40 years. At that time, we heard of digital bytes. Again, we heard of digital from 2014 because a bunch of new technologies appeared on the horizon. We had faster network, computing became more powerful, storage became more available and Cloud became an option.
All this led to delivering of a reliable and consistent performance that businesses could bank on while changing business models using digital technology. A year into the pandemic, all of us have seen the power of digital, not just limited to virtual meetings. Businesses have realised that hundreds of things that they thought could be done only face-to-face could now be done through digital. You can buy, sell, manufacture or pay through digital. Businesses and Technology must come together to make it a success.
A year into the pandemic, all of us have seen the power of digital, not just limited to virtual meetings… ~ Anantha Sayana
Raghavan: Do you think that without digital transformation organisations can survive today? How central is this topic for organisation’s competitiveness?
Anantha: In a large construction company like L&T, how do projects succeed? Projects have to be delivered on time and within budget. That is success. Doing a very complex project at a certain level and scale gives us competitive advantage.
Digital transformation in other industries has happened through interaction with customers like in travel, banking and insurance by giving alert to customers and improving touch points with customers. These are all B2C and we have had thousands of success stories in B2C.
At L&T, we looked at digital to improve our operational efficiency, right from the start of a project like studying the geography of the land followed by engineering, procurement, execution of the project, monitoring, improving quality and safety and doing O & M after completion of the project. In every one of these areas, we could use digital.
We could use LiDAR, geo-spatial survey, satellite imaging and drones to get data about the terrain and complete survey in less than one third of the time and 10 times more accurate than conventional methods. That enables us to do engineering better. In engineering, we use 3D modelling and we are able to see virtually the construction even before the first brick is put in place. You can walk through the building virtually, detect problems and rectify it then and there.
All these help us deliver a project on time. Digital technology is not an add-on. If properly implemented, it can impact every function of the way we do business. At L&T, we started digital transformation in 2016. Now we have got every project site of L&T covered through digital solutions. We have over 40 to 50 solutions and are used by thousands of our employees. So digital transformation is core and it affects everything we do.
Raghavan: What does digital mean in a B2B context?
Ravi: At TVS, we have taken it as the core of the business. For instance, as a partner with L&T, I need to know how they move from point A to point B. It’s about getting the right material, in the right time, giving that visibility to the customer. If my system can correctly pick up this information, I can plan for the number of vehicles and right size of vehicles based on the equipment size.
I can provide information to L&T about the vehicles moving to their sites in real time. They can view these in their system. So digital transformation gives an end-to-end path. Competitors who don’t have the baggage of legacy, challenge you. If you don’t invest in technology, you will become outdated and lose out on competition. Organisations have to look at their processes and see what can or cannot be digitised. It requires change management.
Our customers are consumer product companies. Real time information about our logistics helps them immensely. We need to look at our business and see which problems can be solved using technology. That is where the buy-in becomes stronger. ~ Ravi Viswanathan
Raghavan: How did you evangelise the concept of digitisation in your organisation? How did you rally support?
Anantha: Software like ERP focussed on the office: Balance Sheet, Trial Balance, P&L Account, Purchase Order, Sales Order and so on. They automated office functions. When we started digital transformation in 2016, our focus was project sites and not office.
My team and I travelled extensively to the sites. Every solution originated from discussions in the project site. We used technology by deploying highly advanced equipment. We also used IoT. Without manual intervention, we could get enormous of amount of information and visibility. Problems could be solved by discussions and collaboration.
Digital was a passion for our CEO and MD; in every forum, he mentioned that digital is our core. We also sent the message that digital is not just for experimentation and that people will have to master technology.
Ravi: It is very important that the messaging is constant and continuous. It has to go down to the last person in the chain, which in logistics is, the picker and packer. They need to understand that this is the new way to do things and that they cannot go back to old ways. Communication with customers is also critical. It has to be followed up with execution. Youngsters have a real-time mindset and are tech-savvy. In digital, work gets captured at the point where it is done. Once a consignment is received, we label it. Once it is labelled, it can be tracked on a real-time basis. You may use a barcode or QR code scanner. We have used vision technology using AI in our warehouses and the returns from investments are almost immediate.
Our customers are consumer product companies. Real time information about our logistics helps them immensely. We need to look at our business and see which problems can be solved using technology. That is where the buy-in becomes stronger.
Raghavan: What are the challenges that business leaders driving digitisation should take care of?
Anantha: The first digital solution that you’re going to roll out will be the toughest. Don’t keep it on the table as blue print for a long time, but go and implement, so people can see and experience. Be alive to maturing and agile solutions. Tune them as you go along, making use of feedback. Digital implementing teams must have empathy.
Digital solutions must make the work of people easier, faster and more efficient. The solutions have to be user-friendly. There must be focus on UI (User Interface) and UX (User Experience).
Ravi: The trick is to get early wins and buy-in from the people who are going to use it. If they see the benefits of technology, 50% of our roadblock is gone. The biggest challenge is the mindset of the people who think, “How is it different from what we are doing?” They will say that it cannot work in their area. We can’t push it on them either. We need to cull out the commonalities across the organisation and build a platform. Only then, we can scale it. It is easier to get customers on a customised platform. In a B2B, the buy-in of a supplier or customer is very critical.
The first digital solution that you’re going to roll out will be the toughest. Don’t keep it on the table as blue print for a long time, but go and implement, so people can see and experience. Be alive to maturing and agile solutions. ~ Anantha Sayana
Raghavan: How do you attract and retain digital talent? What are the challenges?
Anantha: In L&T group, we have many technology companies. For us, getting the work done using one of these companies is not very difficult. I have a great relationship with the technology companies in the group. I feel that very often, we are looking for more talent than what the job calls for. I may know multiple machine learning techniques and algorithms but finally what matters is the one that I am going to use. If you are clear about the problem that you are going to solve and the value that you are going to provide, you just need to fit that with the right technology and skills. Another motivating factor for our employees is that they are able to solve real life problems within the group companies. They are able to see what impact their solutions make.
We created a bunch of films on safety using virtual reality. This gave our workers a visible and immersive experience. We have distributed VR glasses to all sites and more than 10000 workers have seen the two minute films in virtual reality, delivered in their local language. The developers get immense satisfaction at the results.
Ravi: There is so much talent in our country. We are blessed to be in a country which got onto the digital bandwagon quietly early. At TVS, we have global operations. We have created a very strong back office. 80% of our global operations get executed from India. We have centres in Madurai and Coimbatore apart from Chennai and Bangalore. The nerve centre is Madurai.
I did Cobol programming and managed with it for 15 years. Today, you can’t be wedded to a technology for more than two years. You need to get the talent which is able to very quickly assimilate new developments and apply them as required. We also have a strong brand, so we are able to attract and retain talent. People understand the value systems of TVS group.