Prevent a machine uprising. What do you need to consider when carrying out digital transformation?

Digital technologies make people’s lives and businesses easier. Physical and simple intellectual human labor are becoming a thing of the past; more and more tasks are being transferred to smart machines and computer programs.

Ten years ago, digitalization was on the agenda of business, especially large ones. Digitalization is the restructuring of business models and business processes to use new technologies. Nowadays, the topic of digital transformation is becoming more and more popular for medium-sized and especially large businesses. Digital transformation involves changing not the software, but the organizational structure of the company, management processes, and control for the purpose of ‘adjusting’ to previously implemented technological solutions. In fact, during the digital transformation, the entire corporate culture, the very consciousness of all employees, from the ordinary specialist to the CEO, changes.

It is clear that such a transformation is not an easy task. It is not surprising that many companies, even market leaders in the most developed countries, make many mistakes that require long and complex elimination. Let’s look at some of them.

1. Let the tail wag the dog

Any technology, be it CRM systems, oil and gas accounting systems, electronic document management systems, robots, artificial intelligence and others, should work for the benefit of people and not interfere with them. Machines and robots should help a person solve those problems and implement the ideas that a person came up with, but in no way determine what a person can do and what he cannot do. Unfortunately, at the previous stage of the technological revolution, which is usually called ‘industry 3.0’, many companies forgot about this simple rule. As a result, the tail begins to wag the dog: people cease to perform creative intellectual tasks, become nothing more than an appendage of ‘smart’ machines, their daily work consists only of entering data into programs and printing reports.

In real life, this problem manifests itself, for example, in situations when you are denied service at a bank or are not paid on time under an agreement because the ‘database is out of service’. It is especially common now in the work of ‘electronic government’. The trick is that when this happens to us, we get annoyed, but when we ourselves do this to clients or partners, it seems natural to us and, on the contrary, we demand ‘to understand and to be sympathetic to our dilemma’. Although it seems quite obvious that a business interested in long-term cooperation with its clients and mutual trust cannot behave this way, and no ‘failures in the database’ that cause negative emotions among partners are unacceptable.

It’s just one thing to understand, and a completely different thing to put a lot of effort, time and money into ensuring that this doesn’t actually happen. But it won’t work without investment.

2. Outdated approach to budget planning

Actually, about investments. Errors in calculations during financial planning are rare. Kazakhstan, after all, has excellent education system, especially in mathematics and technology. Almost everyone can calculate the economics of projects without errors. Another thing is that numbers themselves do not create success. There may be global errors in the source data, which can make all further calculations laughable. And this is the kind of error I mean.

Since Soviet times, it has been customary to think that human labor is almost free, and only the employer has the opportunity to choose and, as a result, the employer can, by directive order, retrain and adapt workers for himself at least every day. ‘If he doesn’t like it, let him go, I have a line of people wanting to take his place’, – it is a (unfortunately) a common approach in modern Kazakhstan. Because of such beliefs, at the stage of calculating the economics of a project to introduce new technological solutions, such parameters as the convenience of the solution for people, the need to retrain employees, losses due to inevitable errors in the first years of a new solution works, staff turnover due to reluctance or the impossibility of adapting to new technological requirements may not be taken into account at all! When a business owner sees seven or eight zeros in a commercial proposal for the integration of advanced software, it seems that the costs of finding new employees to replace those who refuse to work with the new ‘wonderful solution’ are ridiculous and not worthy of attention. But this is a mistake, because these will not just be new expenses, but also the efficiency of the technological solution itself will decrease and the payback period for investments in the project will increase. This means that all the initial calculations were incorrect, although methodologically everything was done perfectly.

Strengthening fundamental analysis at the planning stage will help you avoid such annoying mistakes. It is necessary to study existing processes and adapt a technological solution to them instead of entrusting consultants-integrators to do everything ‘like in previous cases’, thereby leaving everyone dissatisfied. Employees will be dissatisfied with the fact that the processes, procedures and rules that they have become accustomed to over the years of work are breaking down, management with the resistance of employees and the fact that this leads to changes in the economics of the project, integrators with the client’s dissatisfaction and constant demands to ‘fix everything, so that it works normally’, of course, without any additional fees…

3. The desire to ‘delegate’ everything

The implementation of technological solutions cannot be done without the involvement of subject matter experts: integrators of certain technological solutions, IT companies, business analysts, data analysts. The experience and competencies of specialists are vital for the successful implementation of any project. However, sometimes a business owner or top management has a false feeling that there can and should be some kind of ‘silver bullet’ – some unknown secret knowledge that an external consultant should have and which will help you start earning a hundred times more without any effort.

Of course, consultants who have implemented technological solutions at dozens of enterprises have unique experience, unique knowledge about the processes, patterns, principles of operation of a particular solution in a given situation. However, there is no silver bullet. No one knows and cannot know more about specific processes in a particular company than its own employees. Ideally, top management should have the most reliable information. But in reality, this does not always happen. There is a whole range of psychological, organizational, and technological reasons for this. We will not consider them in detail now; this is a topic for a separate large analysis. For now, let’s just note that for the successful implementation of IT solutions, detailed and up-to-date information about the affairs and processes in the company is necessary. And in order for such information to be properly collected, processed and analyzed, it is necessary to involve as many people as possible in the implementation process, who will then have to work with such a decision every day. And, of course, top management that should be the most involved team.

4. Reluctance to “delegate” anything

There is another extreme point – the desire to do everything yourself. “If you want something done well, do it yourself”, – some people take this approach too literally. Instead of attracting experienced integrators, they are trying to hire narrow specialists, who are very expensive, but within a year or a year and a half, after the end of the project, they will be completely unnecessary. Instead of attracting professional business analysts, they are trying to draw process diagrams as is and to be via free tutorials on YouTube. Such attempts to save money can be very expensive: first, they will entail huge costs for hiring specialists, their training, then errors in process and data analytics, then a headache on what to do with more unnecessary, but terribly expensive employees… In the end, as popular wisdom says, you get what you pay for.

Lawyers often have to deal with errors that simply cannot be corrected due to the fact that they were originally built into the mechanism of operation of certain programs. For example, deciding which response to a buyer’s complaint to provide requires the approval of several responsible persons in the electronic document management system. The system does not provide any reminders and does not count the processing time for requests, which is why approval takes at least a week. At the same time, according to the Law on the Protection of Consumer Rights, a response to a consumer’s request must be sent no later than three working days from the date of its receipt. A consumer who does not receive a response on time files a claim in court. And, of course, this litigation is hopeless, because the violation has already occurred. When such cases become numerous, the losses for the company can be very significant. But this could have been avoided if, at the stage of setting up the program, external or internal lawyers had been involved, who would have explained that the settings should ensure compliance with the law.

Any issues that require professional expert knowledge, including legal ones, should be analyzed at the planning stage, and not resolved in an emergency mode after the introduction of new technologies. Any costs incurred by professional consultants will be less than the subsequent losses caused by the lack of information.

When undertaking and carrying out digital transformation, it is necessary to understand that after the introduction of smart technologies there will be no turning back. The implementation of technological solutions will require a restructuring of not only the IT infrastructure, but also many, if not all, business processes, organizational structure, work procedures, and even a corporate culture. When entire enterprises are run by smart programs, people can afford to perform more creative tasks, direct their efforts to business development, generating and implementing new ideas, rather than endlessly ‘patching of holes’. Technology should be implemented in a way that makes people’s daily work easier, rather than hindering them.