How does the real digital transformation land?

Author: Tang Jun 丨 Source: CMKT Consulting Circle, this article is reprinted with permission

Author's Note: After the last time I published my thoughts on the success story of digital transformation, I would like to thank you for your encouragement and questioning, and I am also exploring the methodology of digital transformation like everyone else. Our digital transformation has taken an unusual path and is looking to be working well so far, and this time we will summarize the specific implementation and hope to inspire entrepreneurs and executives engaged in digital transformation.

In addition, if you have any questions, you can also write a message, and I will try to reply this time.

First, last year's digitized transcript

1. Order dry goods and post the report card:

Last year, more than 40 systems were done, more than 270 projects were carried out, and more than 90% of the projects were landed in more than 50 factories. That is to say, the average system can be rolled out to 6-7 factories (270/40) and the average plant has 5 projects (270*0.9/50). This shows that we are not promoting a grand strategic plan according to a unified schedule, but arranging digital work according to the business needs of the factory, and have achieved multi-point attack and full blossoming.

2. Briefly review the background information mentioned last time:

We are the leading enterprise in the industry, with more than 50 factories in China and many factories overseas. The headquarters is located in a quasi-first-tier city, and the first 5 years of the human resources market are still good, and the two years are relatively tense. The corporate culture is better, the working attitude is very serious, and similar to all manufacturing enterprises, the professional ability of digitalization is relatively weak. The number one attaches great importance to digitalization and has made digital transformation one of the four major corporate strategies.

We have gradually built a digital team of about 200 people in 3 years, and our professional capabilities cover basically all the fields of Internet technology and some areas of industrial intelligence: business process transformation, product design, software development, AI, industrial control automation, cloud computing, big data, etc., and gradually open up IT and OT, and realize the upgrade from traditional ERP to Internet + ERP mode (without falling into the pit of business middle office), and the quality of core projects has reached the leading position in the industry. And it's all in control.

A team of 200-300 people is often considered a relatively awkward size: small is not small (the way of outsourcing projects is generally less than 100 people), and it is not big (the way of independent research and development is generally more than 1,000 people). Not only did we control the size of the team, but we also achieved a commando-like effect.

3. Typical project analysis

Let's start with a typical case of information technology helping business. As we implement a new strategy this year, we need to quickly roll out a new business. The biggest problem the business unit encounters is the lack of people with business experience (about 700 people, spread across more than 20 new business points), and the method of cultivating new people is far from quenching the thirst. The original system they purchased was full of holes, and the business management system was only 20% of the industry practice, mainly relying on human experience to make up for the loopholes in process and management. As a result, we have reinvented a new system that not only standardizes business and solidifies best practices, but also connects directly with production equipment, improving production efficiency and quality. We have correspondingly completed 80% of the institutional system, improved the original business processes and management systems, and solidified in the system. This reduces the requirements for the knowledge and experience of business personnel and supports the rapid landing of business. In fact, the volume of business at the new business point easily exceeds that of the old one, and there is no confusion that everyone is worried about

In addition to informatization, there are also many achievements in automation. Our self-developed intelligent production system has surpassed the operating rate of competitor systems. The original use of the same foreign platform as the competitors, but the effect is not good, the supplier said that the industry is like this. We first developed our own improvement plan, and the effect was good, but it was not the best. Later, after spending a lot of effort to continue research, it was found that the difficulty of rewriting the useful parts of the platform was not so great, and it was planned to jointly develop a domestic alternative product of the platform with a large factory, but it was questioned by its R&D department and gave up. Later, another big factory just developed its own platform software, but could not find users who dared to try. After we looked at it, we found that the risk was controllable, the POC was done, the system was smoothly docked, and the effectiveness of the system was much higher than that of competitors. It is planned to be fully rolled out this year. The R&D department of the latter large factory has benefited greatly from joint research and development with us and is being promoted in the industry. The first big factory regretted it.

There is also the automation of cranes. It turned out to be picked by a well-known enterprise halfway, and only the remote control was achieved, and it could not be automatic. I reckon that several teams within them were poorly coordinated, and they had been unable to advance, and the factory was in a hurry to jump. We took the initiative to unveil the list and completed the prototype development in 1 month. Later, we not only realized the automatic crane, but also opened up with the upstream and downstream production business, and the routine work basically did not require human intervention and ran intelligently.

The OT project has touched the company a lot. Many people have always thought that we can develop some software at most to improve management efficiency, and as a result, we can not only do automation of equipment, but also surpass competitors and achieve industry-leading levels. Slowly, more and more factories took the initiative to find us to do projects.

There are many honors and awards at the provincial and ministerial levels, which have become a model for intelligent manufacturing and digital transformation in the province, and I have also been invited to speak at a national forum, and I have also received the praise of many academicians who have come to investigate, etc., not much to say.

Second, summary and experience

1. Digitalization is difficult to plan in advance.

60% of our projects last year were not planned 2 years ago. 80% of the key projects were planned only last year. 90% of the projects are not the same as the original plan.

Projects are basically implemented while adjusting the project content: either to open up related businesses and achieve combined innovation; or to expand the scope of implementation and promote business improvement more broadly.

This situation is the nightmare of third-party suppliers: projects are often changed to scope, sometimes even torn down, the rear team has low resource utilization, and the accounting workload when collecting is inevitably quarrelsome. If you can't develop independently, you need a good temper, high trust, strong partner, otherwise there is no next time.

2. Independent research and development to improve cost performance is an important factor in the extensive promotion of digitalization.

Because of independent development, most of the project costs less than 200,000, research and development is generally within 1-2 months, the implementation cycle is within 2 weeks, can be regarded as agile, welcomed by business units.

• Our self-developed cost-effective advantage is obvious, especially in AI.

  We have an AI team, including autonomous core personnel, a team of university co-architects, and an outsourced data calibration company. When comparing AI solutions, user units are often full of surprises: more than 400,000 systems sold outside, we can get it within 10,000, but it may be recognized as slow for 10 seconds, but it is completely acceptable in the application scenario; or more than 200,000 systems, we achieve within 2000, the effect is better.

• Combined innovation is another way to improve the cost performance.

  Third-party systems tend to be independent, and other third-party systems are either unavailable, costly, or long-lasting. Our self-developed system can easily carry out combined business docking, improve the standardization of business docking, and of course improve efficiency.

• Agile supports the development of the business and also improves the cost performance ratio.

  Business changes often, especially new businesses and new strategies. The self-development team can agility to support the adjustment of the business system and avoid the embarrassment of the project approval process or the small requirements being shelved when using a third-party team.

3, digitalization to improve the core competitiveness of enterprises as the goal, to reduce costs and increase efficiency as the goal of digitalization is not far away.

• Digitalization can reduce costs and increase efficiency, but digital strategies should focus on solving business problems.

  Automation can reduce people, but the effect is limited, and automation is not optimal. After the realization of intelligence on the basis of automation, it is possible to be on par with top-level labor. Therefore, the more critical thing about automation is to achieve the stability of production and the stability of quality, and should not aim at reducing people. (This is inconsistent with my last point of view, and I am adjusting my opinion.) But the account still has to be calculated, and the value of stable production, stable quality or avoiding poor management of workers should be equivalent to the input.

• Digitalization should pay attention to supporting the implementation of corporate strategies. The above examples have been given, so I will not say more.
• Be honest with yourself and realistically assess the effects of digitalization. Many non-digital native companies talk about how digitalization can increase turnover and increase profits, as if the development of enterprises is the credit of digitalization, and it is appropriate to demonstrate the high investment in digitalization. In practice, this is impossible, and to some extent, even devalues the role of digitalization. Digitalization can empower enterprises and provide enterprises with more cost-effective ways to solve business problems than traditional methods, but the final result still requires the joint cooperation and concerted efforts of various business departments and functional departments. This is also why the Chief Digital Officer (Chief Digital Officer, not the Chief Data Officer) is positioned as a senior executive abroad, and they are all experienced business operation veterans. The president of our company also agrees with this view, emphasizing that the role of digitalization is to improve the competitiveness of enterprises, rather than evaluating digitalization in terms of direct economic benefits. With the endorsement of a leader, we have now directly publicized this view, emphasizing the solution of business problems, not for the purpose of reducing costs and increasing efficiency.

There are many people who make a living from digitalization, and it is not easy for everyone to make a living, and each has its own difficulties. We are no exception. Although it seems to be successful at present, it has actually grown step by step. There are many things that are difficult to say thoroughly, and you can think about it more. For example, how to solve the resource problem by developing so many systems? How do you work with business units in product design? How does the cost process adapt to the changing nature of digital projects? I think everyone is a smart person, many situations in the enterprise are similar, and more thinking can find a solution. This article only tells you that digital transformation can be successful, the cost is not to dozens of small goals, and the specific ways and methods still have to be adjusted according to the situation of the enterprise.

Finally, three suggestions to review last time: 1) Courage! 2) Make predictions and take the digital cognition of the number one as the core. 3) Build the right digital team. These are the foundations of our success. Digital work must be patient, the victorious army must win first and then seek battle, plan and then move. Do not be impetuous, sports-style construction of digitalization, in the end will only be counterproductive, thunder and rain points are small, and seedlings are encouraged.

There are still a lot of strategic and tactical details in the process of digital transformation that we need to be careful about, so I will not elaborate on them here. I hope this article is helpful to you and wish you a successful digital transformation!

Thirdly, the p.s

By the way, let's clarify the question of whether the CDO is the Chief Digital Officer or the Chief Data Officer.

The Chief Digital Officer is often responsible for IT and digitalization, and some also manage OT (such as me), which belongs to the board of directors and supervisors. The position in our major shareholder, the French company, is also Chief Digital Officer, alongside the CIO, and reports to the CEO.

Chief Data Officer tends to be at most a senior technology management position in a non-digital native enterprise, but not at the senior level. I found that only in digital-native ecological companies, it is possible to set Chief Data Officer as a middle executive or a high director, because these companies have naturally achieved digital construction, do not need to do digital transformation, but need data leaders.

But I don't know why, many domestic media like to think that CDO is Chief Data Officer. The CDOs in domestic non-digital native companies are often CIO concurrently, belonging to executives or close to executives, so I recently found that many Chief Digital Officers are renamed CDO & CIO (CDIO), or Chief Digital Transformation Officer (Chief Digital Transformation Officer), I also changed my name to CDO and CIO, it is estimated that I do not want to be mistaken for Chief Data Officer, emphasizing that he is an executive, emphasizes that the company attaches importance to digital transformation.