Eng. Alejandro Méndez Rincón, MSc.
Consultant in Reliability Engineering and Technological Tools at PMM Innovation Group
Dr. Luis (Luigi) Amendola, Ph.D
CEO & Managing Director PMM Innovation Group, Europe; Managing
Director Center for Innovation & Operational Excellence (CIEx), USA
Dr. Tibaire Depool, Ph.D
Managing Director PMM Asset Management | Lead Auditor Asset Management | ISO 55001
How to Prioritize Actions to Capture Value
“Digital transformation is a key element in business transformation strategy and is no longer an option—it must be done, making it a critical change process in any transformation initiative.”
Over the past two years, the role of the digital world has become even more visible. Overnight, organizations were forced to transform key processes, adopt new technologies, and change their way of working to ensure business continuity. Digital enablers are here to stay, but there is a high risk that organizations will overlook a critical part of the digital transformation process. PMM Innovation Group clients had digital transformation plans with a 2-year horizon before the pandemic and had to execute them in 6 months. Other companies internationally agree on executing this strategy not only to improve productivity but to survive.
The first question to answer is: What is digital transformation?
It seems obvious, but it’s not when many companies still consider that digital transformation focuses solely on implementing a technological tool. Digital transformation takes different definitions. SAP, the German company dedicated to designing IT products, defines digital transformation as “Digital transformation is as much a cultural and business transformation as it is technological. It is a fundamental rethinking of customer experience, business models, and operations. It’s about finding new ways to deliver value, generate revenue, and improve efficiency.” Luis Amendola, PhD and Tibaire Depool, PhD in their publication Tips for Digital Transformation in Asset Management, define digital transformation as “Digital practices that involve a change in leadership thinking, fostering innovation and new business models, incorporating and digitizing assets, and the increasing use of technologies to improve the complete operations of an organization.”
Digitization: converting information and documents from analog to digital formats.
Digitalization: integrating digital technologies within existing business processes.
Digital transformation: a fundamental rethinking of customer experience, business models, and operations. It’s about finding new ways to deliver value, generate revenue, and improve efficiency.
The second question is: why is it urgent and why seek to begin a digital transformation process?
Digital transformation is a key element in business transformation strategy and is no longer an option—it must be done, making it a critical change process in any transformation initiative. In many organizations, the mistaken idea persists that integrating an IT tool is sufficient for digitalization. However, true digital transformation requires a prior analysis of the entire organization and managing change across the entire team. This is why it’s necessary to establish a reference framework, seeking to identify the organization’s strengths and weaknesses and establish the key aspects on which to focus efforts. For this, digital transformation maturity assessment tools are used.
As stated in the definition of digital transformation, it seeks to “find new ways to deliver value, generate revenue, and improve efficiency” and “the increasing use of technologies to improve the complete operations of an organization.” That is, digital transformation seeks to provide the following advantages:
- Sell cheaper or sell more.
- Obtain clear benefits from process optimization.
- Clear benefits due to business efficiency.
This optimization and business efficiency, in value terms, translates to:
The importance of having a diagnostic methodology is that it allows analysis, based on a contextual framework, dimension by dimension, of which aspects offer the greatest opportunity to generate value. This enables the consultant, based on their experience, or the client, to establish the roadmap to begin the digital transformation journey and define actions or projects to develop for digitalization in asset management and change management.
Where to start?
Our recommendation based on experience is to start with a diagnosis. It is here, within the context of asset management, that the Digital Transformation Maturity Model (DTM2) was born. DTM2 is a methodology developed at PMM CIEx Innovation University. Based on consulting experience accumulated in recent years, this methodology has been implemented in companies, some large-scale, in the food and beverage and electricity generation, transmission, and distribution sectors. The objective of the diagnostic methodology is to identify the benefits an organization can capture by implementing digital solutions in asset management.
To assess the level of maturity an organization has regarding digital transformation, the DTM2 methodology evaluates 7 dimensions:
- Digital strategy: The use of technology both at the customer user level and internally for process management. Criteria must be clear for prioritizing how to improve the system.
- Digital organization: How the company will organize digital improvement, where it’s important to define roles and ensure necessary resources are available.
- Digital technology: The business’s level of knowledge regarding what technology it has or needs and identifying them—those it has and those it lacks.
- Digital culture: Set of values and practices of people to act and interact digitally, which involves valuing staff knowledge or seeking new talent that has it.
- Digital processes: Involves the degree of knowledge of the responsibility role of processes to collect, analyze, and apply data effectively in the company.
- Innovation: Establish whether it’s something fostered in the company because a high-maturity organization shows that researching ideas with potential is important.
- Sustainable digitalization: Consists of using available resources without compromising the company’s future. An example of this is when energy efficiency is sought.
How does this become something tangible and sustainable?
With the diagnosis completed, the implementation plan is generally structured in the following phases:
1. Change Management, this phase encompasses the entire implementation process and is fundamental in the digital transformation process.
2. Key Processes 1 to N, implementation of key processes is developed where weaknesses or value capture possibilities were identified, and associated supporting technological tools following an End-Beginning model.
3. Internal Audit, to ensure implementation sustainability, audits are conducted periodically for monitoring and controlling the implementation.
It can be observed that digital transformation is a comprehensive process that involves a complex ecosystem of organizational capabilities, and this is where the DTM2 methodology is capable of generating differential value in the organization, providing the following benefits:
- Better customer experience
- Agile processes
- New business models
- Cost reduction
- Employee performance
- Data security compliance
- Competitive advantage as ROI generator
- Sustainable digitalization implementation
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