According to Statista’s projections, the worldwide expenditure on digital transformation is expected to reach $3.4 trillion by 2026. But what does digital transformation truly have to offer?
Digital transformation is a key factor in the evolution of the organizational process and paves the way for further business development. Introducing an ERP system to your company would help organizations achieve the following goals: create a fully digital organization, have access to real-time data; offer system integration; lower costs because of higher system agility and efficiency; and lastly, increase customer and employee satisfaction which helps boost market share.
STEPS TO IMPLEMENT THE DIGITAL TRANSFORMATION PLAN:
1. PERCEPTION
According to a survey conducted in 2020, by Statista, one of the two main focus points that CEOs will use to their advantage to preserve their company’s positions in the market is leading digital transformation projects, at 37%.
This is the first step that guides the path towards an ERP systems implementation. It’s the recognition of a need coming from the CEO or senior managers of the organization. It is key to get these senior players on board, not only to support digital transformation but to also be active members and leaders in the process of change. When these managers perform an active role, they ensure cooperation and provide guidance when dealing with any unexpected or obstacles. And their input and influence is of key importance, considering the very complex nature of organizational change, meaning, the general resistance to change shown by middle managers and employees.
2. STRATEGY PLANNING AND FORMULATION
The second step is centered around identifying the project area and planning for its implementation. This is done by identifying needs, analyzing them and developing clear steps that eventually lead to implementation. Upon completion, this step produces the following: the scope of change required, the main processes that need to be digitized, an estimate of resources needed, planning the main stages and defining priorities and the project implementation strategy.
First, the organization’s managers and key stakeholders are interviewed in order to identify processes, ideas and needs at all levels. Then, interviews are followed by planning, which is built upon the identified requirements. The planning phase occurs for identification, analysis and design, strategy formulation, production, deployment, and optimization. Lastly, during strategy formulation needs are prioritized, resources needed are identified and the overall strategy of the transformation plan is drafted and ready to be implemented.
3. PLANNING, RECOGNIZING AND ANALYZING THE REQUIREMENTS OF MICRO-STRATEGY FORMULATION
This process occurs simultaneously with the production process as production begins with the preparation of the design of each system. Once all priorities and processes are identified, optimal processes are designed. What follows is the development of software systems and the design of the communication between them. The following steps provide a better explanation of the process:
- Interviews with senior and middle managers, as well as key employees coming from different departments, to understand the needs and processes of the organization. The output is expected to be the organization’s current documentation and processes.
- Formulation of the optimal process: All of the organization’s processes are reviewed and optimized to leverage the software. This aims to increase agility, and productivity and to incorporate a lean strategy which enables employees to focus on the main goals, rather than repetitive tasks.
- Development of a software design plan: The previously obtained information on the software system’s architecture and communication between systems is analyzed and designed. This stage produces the architectural documentation as well as the software pattern.
- Micro-strategy formulation: In this case, micro-strategy refers to specific smaller-scale strategies that are formulated based on the comprehensive analysis of an organization’s processes. In this stage, based on the previously prepared documentation, production, deployment and operation strategy, monitoring, support and upgrading are prepared.
SOFTWARE PRODUCTION STEPS
- Analysis and Design: the analysis and design team reviews and analyzes the prepared documentation and designs.
- Implementation: in this step, modern production begins.
- Documentation, where all the following, including analysis and design, data model, installation documents and API, are documented and updated over time as the system continues developing.
- Deployment and Support: the system is in operation and once it has been tested for defects, it is launched and becomes fully operational however monitoring continues.
4. IMPLEMENTING SOFTWARE SYSTEMS
Implementation can occur simultaneously with strategy planning and formulation. The ï¬rst stage of implementation is the preparation of the infrastructure and core services, which will be used in all software systems to follow. Next, based on the defined architecture and the previously set priorities, during the design phase, systems are produced and put into operation one after the other. Once the systems are established, they are continuously supported and upgraded to the latest versions. The key remains in implementing the software into the existing workflow and intertwining them together.
5. VALUE CREATION
Gartner claims that 56% of CEOs say digital improvements have increased their organization’s revenue. Therefore, value in software is not just about task completion but it involves factors like customer satisfaction, solution effectiveness, and business impact. By focusing on value creation, organizations can achieve significantly higher efficiency, cost savings, and improvements in overall performance. Once systems are launched, they are implemented on a trial basis in order to identify potential problems and resolve them. This phase involves rigorous testing and continuous monitoring of the performance of the system. All the necessary updates are made to ensure the system meets expectations and needs. After successfully passing the trial phase, the software becomes operational across the entire organization.
6. MONITORING AND MAINTAINING THE SYSTEM
This is a multifaceted process that extends beyond the initial implementation. It involves the ongoing monitoring and updating of software, in order to maintain productivity and ensure effectiveness while maintaining security. Having all systems thoroughly reviewed is a crucial part of any organization’s operation and must be considered as an ongoing and proactive process. Consistent software maintenance ensures full compatibility, increases the system lifespan, and increases productivity and revenue, while proactively reducing the risk of security breaches.
Software maintenance can be broadly categorized into four types:
- Adaptive: focused on keeping software up to date and fully compatible;
- Perfective: focused on improving performance;
- Preventive: focused on preventing failures;
- Corrective: focused on identifying and correcting failures.
DEVELOPING SOFTWARE SYSTEMS INTERNALLY
Many companies now produce some of the predicted systems in advance, and their systems are made available at a lower cost in terms of both money and time. This is an efficient way for small and medium-sized enterprises to implement an ERP system. On the other hand, when software systems are developed internally, which is more common for larger enterprises, they can be tailored to an organization’s needs. However, the downsides of sourcing existing systems from the market are the following:
- Obsolete technology: because the production of software systems is costly, not every company that provides them can afford to update the systems. If these companies were actually keeping up with the pace of the latest technology, they would be offering their systems at a higher price, which would inevitably destroy their competitive advantage in the market.
- Public instead of custom facilities: These systems are designed to cover a wide range of industries, which makes them lack flexibility and generally require organizations to undergo adaptations in order to ï¬t the software.
- Lack of integrated systems: Not all required systems can be obtained from one contractor, therefore procurement from different contractors is inevitable. This is difficult to support and maintain and makes the transfer of information between systems hard.
- Lack of sufï¬cient documentation: Considering that the priority of contractors is to provide software systems fast and at a low cost, many standard software processes are not implemented in them, including the correct documentation of the software. Therefore, even if the software code is provided to the employer, the employer can’t apply and develop the changes.
SUMMARY:
Digital transformation is becoming more and more appealing to organizations, providing real-time data access, system integration, cost reductions, improved customer and employee satisfaction and many more benefits. However, in order for it to be implemented, it should be supported by the organization’s stakeholders. On the other hand, a trade-off must happen between internal development which ensures tailored systems, providing flexibility, integration, and support, and sourcing existing systems which provides a faster and less costly service. Lastly, upon implementation, the system needs constant monitoring and upgrading which makes maintenance a crucial key to keeping it.
