Digital transformation has accelerated across the world’s enterprises in the past few years and has become a matter of corporate survival, making it a top priority for boards. Organisations know that digital transformation can bring huge improvements in operational efficiency and agility if correctly implemented, keeping them competitive.
Alcatel-Lucent Enterprise has been undergoing a digital transformation journey in recent times. We’ve learned a great deal along the way about how to get it right from the point of view of a long-established business with more than 100 years’ experience and innovation history. Our goal was nothing less than to move swiftly to Industry 4.0. By sharing these experiences, we believe we can help other organisations that are just embarking or that are facing challenges on their own transformational journeys.
So, where should such an organisation begin, armed with only the understanding that change is essential? ALE started by creating a ‘Digital Factory’ – an overarching transformation unit with teams assigned from each department. Our main goal was to figure out which processes required a technological transition and which tools, architectures, and frameworks were required to make it happen. Additionally, our Digital Factory was in charge of the ‘how’ of the change, implementing agile working practises based on the ‘Try-Fail-Improve’ model. As a result, we were able to learn quickly as we went along. Not everything will go perfectly the first time, but with this strategy, ALE could quickly implement lessons learned and find the best answers in a shorter period of time.
The fundamental tools of digital transformation are widely available, but putting them into practice is another story. They include best practice in transformation around data, a lean approach, agility, and continuous improvement. For ALE, our ambition in putting these tools in place was to transform our order management, supply chain, purchasing and industrial operations. The data we have collected along the way is something that we’ve leveraged to make all of our processes more efficient and increase customer satisfaction and sales. We’ve also seen huge improvements in delivery accuracy, reduced stock levels, and more secure shipments for high-volume transactions at the end of each successive quarter.
When faced with the global component shortage, the requirement for digitalising the supply chain wherever possible became clear. We witnessed a shift in procurement focus from cost to continuity, and accurate forecasting became essential in successfully navigating the ongoing components shortage. We harnessed the power of IoT and AI to collect and understand data which informed our supply chain decisions. Data gathered at multiple points in the supply chain could be collated to create a network of integrated planning systems with advanced analytics and smart procurement and warehousing. As the situation remains challenging, data will be key in maintaining a handle on the situation, with regular reviews of our process to ensure it is optimised to its full potential.
Overall, delivering a digital transformation requires a focused strategy, which includes identifying the essential pillars of transition and developing from there. At the highest level, ALE established five pillars in approaching our transformation. Let’s look at them in turn and explain why we believe they’re so important.
Blueprints for success come from taking a digital transformation approach, discovering what works (and what doesn’t) and then using this learning experience as an approach to replicate across departments. Blueprints are essential in ensuring success is carried over in each new stage of the digital transformation.
In building a blueprint, ALE started by targeting a specific department and transforming its processes until the outcome was successful. We then took the same approach and implemented it in other departments.
2.) Hybrid landscape
The long-term goal of so many businesses today is to move all of their data processing to the cloud. However, making this shift in one go can be fraught with risk. The possibility of short-term disruptions to operations can be very significant – enough to have a large impact on an organisation’s operations that ultimately is felt by the customer.
To mitigate against this high risk, ALE set about creating a hybrid landscape. We added a layer of cloud services on top of our on-premise communication system. This hybrid landscape allowed us flexibility to move from one model to another without any major losses or failed processes. This gradual rather than sudden shift to the cloud helped ALE reduce costs and reap the benefits that the cloud’s flexibility brings.
3.) Data management
How data is stored and used is of the utmost importance to large businesses. Good data management can mean the difference between data that is accessible and pivotal to operations and data that is simply collected and is of little use. ALE took the approach of installing a proper database to enable automation. Thanks to the analysis and merging of our databases and ongoing automation, we successfully increased our recurrent business through higher service contract renewal rates, more up-sales, and higher sales conversion, all powered by better knowledge of our installed technology base. We were also able to see more accurate forecasting thanks to better-organised data.
4.) Test and improve
Without a test and improve framework correctly established and implemented, all businesses are at risk of making the same mistakes repeatedly as they embark on their digital transformation journey. Our Digital Factory was at the centre of our effort at ALE to ensure that each iteration of our transformation built on the previous one’s lessons learned.
Collaboration must happen at every stage between transformed and pre-transformation departments to make the test and improve approach a success. This means making sure that skilled experts are given the freedom to transfer their skills across different teams. Fast implementation of learnings is also critical – if there’s a delay between lessons being learnt and then implemented, a business is wasting valuable opportunities to improve. Decision-making must be equally speedy and agile too, and thorough checking of outcomes ensures that the lessons are correctly identified.
5.) Company culture
Finally, we come to what is undoubtedly the most important pillar of digital transformation and one of the key learnings for ALE as we have embarked on this process. Put simply, digital transformation can’t be forced. It can only be successful if it takes place in the context of a change in the culture of the business. The transformation is not just digital: it is real, and building a mindset shift right across the organisation is as important to success as the changing and upgrading of technology.
So many digital transformations fail because of lack of adoption, and that adoption issue occurs because of the human factor not being fully taken into account. The importance of getting your teams engaged by helping them understand the reasons for transformation as well as the changing processes themselves cannot be overstated.
A journey with no shortcuts
Digital transformation does not take place overnight. For most organisations, it’s a journey that must be planned and executed with great care.
The rewards of digitalization are considerable, but so are the pitfalls if the planning stage is not meticulously executed. The imperative to stay competitive can sometimes lead to corners being cut, but at ALE we believe that detailed strategic planning is non-negotiable. Identifying the critical pillars of your transformation is essential to success, as well as ensuring that your whole organisation understands your goals, your implementation plan and the parts that they will all have to play.