Business should drive digitalisation, but IT has a role to play

Date of recording: 19.01.2022.

In this podcast episode we talked to Sándor Mester about the role of business and IT in digital transformation.

Participants

Sándor Mester - Moderator Mester Sándor
András Tresch - Quattrosoft ügyvezető Tresch András

Note that the podcast is in Hungarian.

Summary

This episode is part of the IT Business podcast, the third episode in the 25-year-old Quattrosoft mini-series, where we discuss the role of corporate IT organizations in digitalization processes with Sándor Mester.

The success rate of digital transformation projects

Both international and Hungarian data show that the success rate of digitalization projects is relatively low. According to international data, it only ranges between 5-30%, while based on our Hungarian research, it's around 26%. It's worth looking at this from the opposite perspective: 70-95% of projects don't achieve their set goals, or at least not in the originally planned form.

In our own research, which reached approximately fifty thousand employees, representing more than one percent of the labor market, we found that only 26% of the surveyed large companies are satisfied with their digitalization developments. This means that 74% of organizations haven't achieved the goals they wanted.

What causes the failure?

Several factors contribute to the failure of digitalization projects:

  1. Many think that digitalization is exclusively an IT project and doesn't require business support. This is a fundamental misconception.
  2. Companies use too many different tools that aren't properly integrated.
  3. Some companies want to digitalize everything at once, which poses an enormous risk.
  4. Digitalization fundamentally changes how an organization operates, which can trigger significant resistance from employees.
  5. There's often a lack of management level interested in the efficient operation of the entire organization, not just their own department.

The silo problem

It's an interesting phenomenon that while organizational silos are beginning to disappear, new silos are emerging from a technological perspective. In many large companies, for example, numerous small task management systems operate side by side. These systems are often isolated and don't connect to each other.

According to our research, large companies have an average of two document management systems and one and a half process support solutions in use. Physical document management support is a particularly problematic area - half of the IT managers couldn't even say which systems deal with this area.

Tracking paper-based documents isn't solved in many places, yet it would be important to know where these documents are, especially if only a single copy exists. Think about employment contracts or other important documents.

System integration

In our research, we found that 86% of companies have loose or no integration between different systems (document management, process support, and physical document management). This results in people spending 50-80 minutes daily searching for information to do their job.

Efficiency could significantly improve if people could immediately see what they need to do and have the necessary information and tools readily available. This alone would improve efficiency by 10-15%.

Use of file servers and emails

Surprisingly, 89% of large companies still use file server functions for document storage, with 70% using local file servers. This means that more than 50% of documents aren't in electronic document management systems but on file servers.

The use of email to support workflows is also a problematic area. 20% of large companies stated that email is an important workflow support tool for them. This makes processes and information flow difficult to track.

The changing environment of digitalization

The coronavirus pandemic accelerated digitalization, as traditional workflows requiring personal presence didn't work during remote work. Additionally, labor market changes are also putting pressure on companies toward digitalization.

Previously, many companies thought it was cheaper to hire people for administrative tasks than to digitalize processes. Now, however, it's harder and more expensive to find suitable workforce, which encourages digitalization.

How can digitalization be successful?

Business leadership support is essential for the success of digitalization projects. The role of IT leaders has become more valuable since the pandemic, as traditional operating methods were no longer sustainable.

For successful digitalization, it's worth proceeding in smaller steps:

  1. Start implementation with an innovative, open group within the organization.
  2. Consider the existing toolkit and the possibilities offered by the tools.
  3. Proceed in 2-3 month steps, so the business always gets what it desired.
  4. Pay attention to facts, don't base the project on assumptions.
  5. Use tools for which expertise is available in Hungary.
  6. Strive to create strongly integrated systems, especially in terms of processes.
  7. Exclude emails from both document management and task management areas.

Pitfalls of digitalization

Unsuccessful digitalization projects have two main problems:

  1. They spend a tremendous amount of money on the transformation, which then goes to waste.
  2. The problem that initiated the project doesn't get solved, and additional cost increases or operational uncertainties remain.

However, with successful projects, we find that after initial resistance, users come to love the new system, and efficiency significantly improves. Those clients where we successfully launched BürOffice implementation generally continue working with us, we fine-tune the system to their needs, and involve new areas.

Conclusion

Although the success rate of digitalization projects is low, there's no other path but digitalization. Success requires close cooperation between the business and IT sides, appropriate leadership support, and gradual, well-planned implementation. The goal can only be to create integrated systems that truly support work and increase efficiency.

It's important to emphasize that digitalization isn't simply an IT project but a business transformation that changes how an organization operates. This requires commitment at all management levels and must consider organizational resistance. However, the result of successful digitalization is worth the effort: more efficient operations, more satisfied users, and better business results.

Note that the podcast is in Hungarian.