Mahdis Mousavi
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Digital Transformation's Cultural Implications Must Not Be Underestimated

Aug. 13, 2020
New report shows impact of pandemic on manufacturers and how digital transformation contributed.

The pandemic has understandably created an interesting environment for manufacturers. An environment where business as usual has given way to the new normal with remote capabilities and a host of other digital technologies quickly climbing the ladder of significance.

According to TEKsystem’s updated State of Digital Transformation companies across the board have made organizational and cultural shifts. For instance, at least throughout the remainder of 2020, eight out of 10 organizations expect fifty percent or more of their workforce to be remote. As such, technologies including instant messaging (94%), video conferencing (74%) and file-sharing (56%) have each seen noticeable bumps in usage.

Of course, as companies embrace the new modern workforce reality, it has its own set of challenges. Specifically, training and development of workers is a challenge for 61% of organizations. “The vast majority of companies deploy training and development curriculums via digital platforms that can be tracked and monitored for completion,” says Jason Hayman, market research manager at TEKSystems. “The fact that this is so high is both surprising and concerning. Also, only 39% find onboarding new employees a challenge. Granted hiring may have slowed during COVID-19 but onboarding in a virtual environment is a huge challenge and one that could easily get overlooked. A poor onboarding experience typically leads to attrition and companies cannot afford to lose top talent.”

As previous IW posts have mentioned, the importance of digital transformation is only intensifying for progressive manufacturers – further driving a wedge between the haves and have nots. The report echoes this sentiment with 56% of digital leaders increasing technology spend as a result of COVID-19, while only 34% of digital laggards are increasing technology spend.

The data illustrate how the pandemic is widening the digital divide, Hayman tells IndustryWeek. “For digital leaders, technology and digital projects are not a luxury or nice-to-have, they’re a crucial component of their OpEx, required for the day-to-day functioning of the company,” he says. “This could also be illustrated in the fact that 50% of organizations identified, economic uncertainty affecting budgets as a top DX challenge. Yes, that’s very high but it’s a bit surprising with all of the doom and gloom around cost cutting and budget cuts. It shows digital transformation becoming foundational to how companies operate and function.”

Where is the money going? According to survey results, whether the workforce is transitioning back to the workplace or operating remotely, organizations must consider how they deploy, secure and support the digital tools that will enable fluid communication and collaboration. Digital leaders overwhelming identify implementing digital tools to make information more accessible across the organization (61%) and modifying standard operating procedures to include new digital technologies (51%) as the key focal points. As such, “organizations plan to increase their use of digital tools as they transition into the new normal. Success depends on the digitization of tools and processes that will facilitate agile ways of working,” writes Hayman.

Hayman also notes the disconnect with the number of organizations delaying projects and confidence in their ability to deal with technical debt. Specifically, 58% of organizations indicate they’ve delayed digital transformation projects as a result of the pandemic. “Even in the best of times technical debt is a serious problem and difficult to navigate,” he says. “Yet confidence is fairly high, 73% of digital leaders and 40% of digital laggards indicate they are well positioned to deal with accumulating technical debt as a result of project delays due to COVID-19. We can flip that to say 60% of digital laggards are NOT well positioned to deal with accumulating technical debt.”

Change management/implementation complications and a lack of senior-level support are seemingly less of a digital transformation challenge during COVID-19. According to Hayman, these are areas where digital initiatives frequently stall, and often the transformation efforts fail to deliver the intended results. “While it’s a positive that organizations weren’t getting bogged down there is a word of caution,” he says. “In their haste to react during the pandemic, organizations must not underestimate the cultural implications of digital transformation, which require a shift in mindsets, ways of working and ensuring employees adopt the technology tools designed to create business value.”

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