"The Appearances and Realities of Digital Transformation"
In today's era, we often see a deluge of publicity in various media, and numerous successful cases of digital transformation keep emerging. There are so - called smart manufacturing lighthouse factories and benchmark enterprises in digital transformation, making it seem as if successful digital transformation is an easy and ubiquitous thing.However, when we turn our attention to our own enterprises, we find the reality is depressingly harsh. When implementing ERP or MES systems, enterprises encounter failures time and time again. Even if they manage to get the systems up and running, there are numerous problems in actual use. Many functions simply cannot be enabled normally and are just for show.
This huge contrast gives enterprises an illusion that everyone else is having a smooth journey on the path of digital transformation, while only they themselves are constantly struggling in the quagmire of failure. But is this really the case? In fact, the success stories we see and hear are probably just what others want us to see and hear.
A project manager from a service - provider company, who has been deeply involved in the Oracle product portfolio for 20 years, once quipped: "Success is accidental, while failure is inevitable." On second thought, the so - called successful cases that are hyped up often follow a similar pattern, and the truly effective and successful cases in real - world scenarios are actually one in a hundred. Although this statement is somewhat of a jest, it also reflects to a certain extent the real situation of digital transformation, and the actual situation is indeed far from optimistic.
Analysis of Global Digital Transformation Statistics
To gain a more comprehensive understanding of the current status of digital transformation, let's take a look at the relevant statistical data on a global scale. These data are from the public survey reports of three well - known consulting firms.
In 2017, Bain & Company conducted a survey on 1,000 companies. The results showed that only 5% fully achieved their digital transformation goals, 75% partially achieved them, and the failure rate reached 20%. In 2018, McKinsey surveyed 1,793 samples, finding that 16% fully achieved the goals, 7% partially achieved them, suggesting that the failure rate was as high as 77%. In 2020, Boston Consulting Group's study of 895 samples indicated that 30% fully achieved the goals, 44% partially achieved them, and 26% failed.
In addition to the data from these three consulting firms, the research of some other companies also deserves attention. A survey report from Forbes shows that as many as 84% of enterprises fail in their digital transformation. A study by Everest Group indicates that 73% of enterprises claim they haven't gained any business value during the digital transformation process, and the fatigue caused by continuous changes is one of the key factors leading to the failure of transformation. A survey by Gartner found that 84% of the respondents believe that digital experiences such as submitting retail orders, submitting service requests to banks, purchasing life insurance, paying government bills, and checking the status of medical benefits fail to meet the expected goals. In a 2017 survey of 400 senior American executives by Wipro Digital, half of them thought that their enterprises had not successfully implemented even half of their strategies, and one - fifth of them said that their enterprises' digital transformation was a waste of time.
From these data, it can be seen that the failure of digital transformation is not a phenomenon unique to China but is widespread globally, with a rather high failure rate. Of course, some may question that the data from consulting firms might be exaggerated. After all, it is a common practice for consulting firms to drive business development by creating anxiety. However, even if there is exaggeration, the margin won't be significant. If the success rate of digital transformation were high, consulting firms wouldn't spend a great deal of effort and funds on these survey reports. They have spotted the business opportunities in it and want to use the data to prove their findings and highlight the value of their consulting services. In fact, many consulting firms are not only actively exploring the digital consulting market but also getting directly involved in implementations for third - parties and even developing software on their own. For example, PwC has 1,700 IT professionals in China.
In addition, when a company's digital transformation fails, unless the two parties (Party A and Party B) completely fall out and end up in court, both sides will choose to handle the situation discreetly, hoping that as few people as possible will know about it. After all, a failed transformation is not a glorious thing for either party. Failed cases usually only circulate within the industry, and it's difficult for outsiders to learn about them. This also explains to some extent why most of the cases we usually see are successful ones, and we know very little about the failed ones.
Enterprises are generally more rational in their purchasing behavior than individual consumers. They have invested a great deal of effort in digital transformation, but why do most of these efforts end in failure? As Tolstoy said, "All happy families are alike; each unhappy family is unhappy in its own way." Perhaps the successful digital transformation models are similar, but the unsuccessful ones each have their own reasons. Next, let's analyze this from the perspective of the chaotic situation in the industrial software market supply.
Analysis of the Chaos in the Industrial Software Market Supply
A Hothouse Flower: Lessons from the Failure of GE Predix
When discussing digital transformation, GE Predix is a topic that cannot be avoided. Especially when exploring failed cases, it is a typical example. GE is a giant enterprise with diversified businesses. As a client, it has extensive operations in multiple fields such as aerospace, locomotives, household appliances, plastics, water treatment, leasing, and re - insurance, and its businesses are distributed all over the world. Meanwhile, GE has always been an advocate and practitioner of digitalization. It has accumulated rich experience in digital transformation and can be said to be battle - hardened.
Moreover, GE itself is also a service provider. Its business units in areas such as aircraft engines, railways, and wind power all have their own software development departments. In 2012, GE was the first in the world to propose the concept of the Industrial Internet; in 2013, it launched the Industrial Internet platform product Predix; in 2015, it introduced Predix 2.0 and established a new business unit, GE Digital, under which the original software departments were placed. Jeff Immelt, the former CEO of GE, personally took charge and invested billions of dollars to vigorously develop the Industrial Internet. It can be said that GE has unique advantages in terms of funds, human resources, customer resources, and experience. The support from the management is also unparalleled. For a while, it was at the forefront globally and became an object for many enterprises to emulate.
However, GE's original IT departments were like lions in the zoo. Although they were large in scale, they lacked the ability to survive in the wild. These departments were accustomed to the internal work model and were good at gauging the needs of the company's internal management, but they were not good at "grabbing orders" and "taking on business" in the external market. The products they developed had poor adaptability and were even inferior to those of some startups, yet the fees for customized development were not low. As a result, most of the revenue of GE Digital came from GE's internal business units rather than external customers.
Worse still, the top management was eager to turn GE Digital into a profit center and set overly high business targets for it. In the fiscal year 2015, the software business revenue was $3.1 billion, and the target was to reach $15 billion by 2020, which required a five - fold increase within five years. To achieve this goal, GE Digital was required to report its operating income and losses on a quarterly basis. This led to its business focus being concentrated on short - term revenues while neglecting long - term strategic goals. Even when working on internal development projects, it pursued quick and easy results. By 2018, the number of employees at GE Digital had swelled to 28,000, but the business quality did not improve correspondingly.
For example, in projects like detecting the vibration of aircraft engine rotors, GE simply transplanted a mature solution from the motor industry and added a remote transmission function, then claimed it as a brand - new high - tech aviation solution. This approach is just an integration of the IT "workshops" from various departments, with a seemingly dazzling new name. In essence, it's like old wine in new bottles, which is completely contrary to the real goal of digital transformation.
Impure Motives: The Chaotic Phenomena of Some Industrial Internet Enterprises
In China, there are also quite a few industrial internet companies that learn from GE. Similar to GE Digital, most of their revenues come from affiliated companies. For example, a certain industrial internet company reduced its staff from nearly 2,000 in 2021 to less than 1,000. However, its per - capita sales were only 200,000 yuan, which is even lower than that of some traditional manufacturing enterprises. Moreover, it doesn't meet the requirements for IPO. It is estimated that it will have to continue to lay off another 50% of its employees.For such industrial software companies aiming at IPO, the so - called industrial internet is just a gimmick for listing. It's hard to expect them to develop software that truly meets the needs of customers. This kind of impure - purpose approach not only hinders the development of the enterprises themselves but also has a negative impact on the entire industrial software market. It is an important factor leading to the failure of digital transformation.
The Truth Can't Be Hidden: Initial Signs of Chaos in the Industrial InternetThe truth can't be hiddenIndustrial Internet Initial signs of chaos initial signschaos、
In the business world, there is an iron - clad rule that cannot be broken, which is that you can't hide the truth forever. No matter how meticulously the truth is covered up, it is like a treasure buried underground. Sooner or later, it will surface under the excavation of time. It's time for the executives of those industrial Internet companies to calm down and conduct a profound self - examination.
Look at the current situation of the enterprises they operate. The losses amount to as much as 2 billion, while the sales are only 1 billion. This huge gap is like an endless pit, constantly devouring the enterprise's resources and future. What's even more incredible is that these companies themselves don't have any core products. Most of their business needs have to rely on subcontracting to other companies. This kind of business approach is like building a high - rise building on the beach. With an unstable foundation, how can it be sustained in the long run?From the perspective of business logic, the absence of self - developed products means a lack of core competitiveness. These companies can only linger on the fringes of the market, barely surviving on subcontracting business. This model not only fails to ensure the stable development of the enterprise, but also may fall into a crisis at any time due to changes in external cooperation partners. As market competition becomes increasingly fierce, this unsustainable business model will surely be phased out.
A blatant act of theft
Currently, in the wave of business transformation, some manufacturing enterprises have chosen to venture into the field of the industrial Internet. However, in pursuit of so - called rapid development and to achieve "Great Leap Forward" - style goals, all sorts of strange things have emerged one after another. These enterprises claim externally that they have a large number of demands and projects, using this to deceive various industrial software suppliers (the so - called "second - party companies"). They invite these second - party companies to the site and have them elaborate on key information such as system logic details and business processes. The participants in the meetings are mainly from the IT department, with the business department playing a supplementary role. On the surface, it seems to be a normal business exchange, but in fact, the true intentions of these enterprises are not so pure.
After these enterprises developed the so - called systems, they found that the application scope of these systems was extremely limited. Usually, these systems can only be used within their own enterprises or forced upon affiliated enterprises through coercion. Even worse, when they encountered difficulties during the development process and tried to plagiarize the technologies and solutions of professional manufacturers again, they were often directly rejected. At this time, they had no choice but to turn to third - party companies that lacked expertise and mainly focused on outsourcing. This behavior of stealing others' intellectual achievements seriously violates business ethics and legal norms.
In China, this phenomenon is not an isolated case. The actions of these enterprises have seriously undermined their business credibility, and their future development in the digital field will also become extremely difficult. It is foreseeable that in the future, they will have to rely on their own strength to struggle forward.Moreover, within the industry, there are also some unscrupulous enterprises, including competitors or potential future entrants, who use more covert means to plagiarize. They may pose as customers or ask enterprises where their friends work to pretend to have projects, don various "disguises", and spare no effort to obtain the systems and solutions of similar software manufacturers. Even more, some directly copy the system interfaces of similar software and blatantly include them in their corporate promotional PPTs, pretending that they have these functions, and even copy the typos exactly as they are. Such despicable behavior not only harms the interests of other enterprises but also undermines the healthy development environment of the entire industry.It is worth mentioning that this phenomenon is not limited to domestic enterprises. Foreign enterprises, including some well - known large companies, have also engaged in similar behavior. This shows that in the face of the temptation of interests, some enterprises have lost their basic business ethics and bottom line.
The Woes of Lying and Data Falsification
The involvement of venture capital is originally a beneficial thing for enterprise development. However, in the field of industrial software, a contradictory phenomenon has emerged. Industrial software is characterized by slow development. It requires long - term investment and accumulation to develop mature products. On the other hand, venture capital pursues quick entry and exit, hoping to obtain high - returns in a short period of time. This mismatch between the two is like planting wheat in a paddy field, which is doomed to fail to achieve the desired results.
Many entrepreneurs in the industrial software field are jokingly referred to as "To VC entrepreneurs" in the industry. Without the support of venture capital, they simply can't survive. Some companies have received several rounds of investment, with the total amount reaching hundreds of millions of yuan. They claim to be product - oriented, but in fact, they still operate in a project - based model. To make the company's cash flow look good, they spare no expense to win orders. There have even been some absurd situations. For example, a single order only has a sales volume of a few thousand yuan, but to secure this order, the company sends several people to visit the client by plane, incurring costs as high as tens of thousands of yuan. This upside - down approach not only wastes the company's resources but also reflects the blindness in the company's development process.
If these enterprises didn't have overly burdensome KPI indicators and could spend several years calmly refining their products, they might also be able to develop quite good products. However, in reality, entrepreneurs are facing tremendous performance pressure. If the performance is poor, there won't be the next round of venture capital. Therefore, as soon as they receive one round of venture capital, they immediately start thinking about getting the next round, and simply can't devote their precious energy to product R & D.Under such circumstances, entrepreneurs are busy meeting various venture capitalists. Salespeople, in order to meet their performance indicators, grab any order they can get. IT staff work overtime to write codes, and customer service staff just answer customers' calls and endure customers' scolding. The whole company seems to be extremely busy, but the progress of the products is negligible. In such a chaotic situation, if a good product can still be developed, it would simply go against the basic laws of business development.
There is a serious shortage of effective supply in the market, and there are very few suitable industrial software options for Party A to choose from. Many unqualified companies have smelled the chance to profit in the chaos and have flocked into this market. This has laid a hidden danger for project failures. During the project implementation process, different companies and different projects lead to a wide variety of failure reasons. Except for a few special cases where a third - party company takes the responsibility, in most cases, either Party A or Party B is responsible, or both parties are jointly responsible. Next, we will analyze the reasons for project failures from the perspectives of Party B and Party A respectively.
Analysis of Project Failure Caused by Party B's Factors
The dilemma of lack of abilities
Many clients (Party A) hope that the service providers (Party B) can offer full - scale solutions, preferably the "all - in - one" type. However, it has been proven that such a requirement is unrealistic. With the development of the market, vertically segmented solutions are increasingly accepted by the market. This is not a denial of the clients' needs. Instead, it is because the clients' needs vary greatly and are constantly changing. Different business departments within the same enterprise have different needs, and even different users in the same department may have different requirements. Based on the current level of IT technology, no service provider can fully understand the business needs of all industries, transform them into software products, and make each business unit competitive enough.
This is just like when someone is renovating a new house and buying household appliances such as TVs, refrigerators, air - conditioners, coffee machines, vacuum cleaners, etc. It's unlikely that they will only choose products from one brand. Industrial software is a highly complex system. We can't expect a single software enterprise to meet all the customers' needs. The vertical segmentation of To B software is very prominent. Taking e - HR software as an example, it has been divided into various sub - fields such as recruitment, salary, performance, and scheduling. Even international giants like Siemens, SAP, and Oracle, which have acquired a large number of software companies, can only meet some of the enterprises' needs. It is quite common for large enterprises to use hundreds or even thousands of software to meet their operational and management needs. For instance, Boeing uses about 8000 kinds of software. Around 20 years ago, GE had about 3000 kinds of software across the company. A large supermarket has about 400 software suppliers and 2000 kinds of software. In a single Volkswagen vehicle manufacturing plant (a branch factory, not the group company), the quality department alone uses about 35 kinds of software.
Faced with such complex and diverse requirements from Party A, many Party B companies choose custom development in order to survive. However, custom development comes at the cost of sacrificing the depth of the product. It's like "building chicken coops". There can be many types of chicken coops, and they can cover a large area. You can even decorate them with cool large - screen displays, but they lack a solid foundation.Custom development is characterized by numerous bugs, high costs, long development cycles, and high project risks. Moreover, it is impossible to design the product architecture reasonably from a long - term perspective. For example, some Party B companies develop software worth millions of yuan for their clients, but they write the logic in the database. There may not seem to be any major problems when the system is first launched, but it brings a lot of trouble and potential risks to future operation, maintenance, and upgrades.What's more, some Party B companies demand a high down - payment from Party A, with the proportion even exceeding 60%. However, they don't actually have the ability to meet Party A's requirements. Once the down - payment arrives, they start to make excuses and don't care whether the system can be launched or not. Although these Party B companies list many client cases on their PPTs and websites, these projects are usually unfinished.
Product adaptability challenges
Currently, many contractors on the second - party side have realized that products need to be vertically segmented, and large - scale and all - encompassing systems are unreliable. However, vertically segmented products also face the dilemma of adaptability. Take the QMS in the automotive industry or the MES in the injection - molding industry as examples. Although they belong to vertically segmented fields, they have encountered numerous troubles in the real world.
The automotive industry has requirements such as FMEA, APQP, and hierarchical audits that are different from those of other industries, which can be regarded as key areas for research. However, automotive parts cover a wide range of categories, including castings, sheet metals, SMT (Surface Mount Technology), injection - molded parts, wiring harnesses, adhesives, rubber products, machined parts, motors, glass, etc. Moreover, enterprises vary greatly in scale, and their production methods are also extremely diverse. For example, some MES (Manufacturing Execution System) vendors claim to specialize in injection molding. But a manufacturing enterprise may have not only the injection - molding process but also multiple processes such as SMT, assembly, and machining. Does an enterprise need to purchase multiple systems like SMT MES, assembly MES, and machining MES respectively? Even if an enterprise has sufficient funds, this will bring many troubles to the enterprise's operation. For instance, production workers will move between different workshops according to order changes. Do the workers need to remember the operation methods of multiple MES systems? This issue is worthy of in - depth discussion among industrial software professionals.
The drawbacks of the agency model
Many software companies expand their sales channels through the agent model. We do not deny the positive effects of the agency system, but this model also has some drawbacks. Agents usually have extensive local network resources, but their team sizes are generally small. To survive, they usually represent multiple software products, which results in their insufficient and incomplete understanding of the software they represent.Take an ERP product as an example. It is very difficult for an implementation staff member to master all its modules. If they are involved in multiple or different types of products and even have to take on multiple roles, their service capabilities will inevitably be greatly compromised. This lack of service capabilities not only affects customers' experience of using the software but also damages the brand image of the software company.Therefore, when selecting agents, software companies need to consider carefully and strike a balance between expanding sales channels and ensuring service quality.
Agent problems
In business cooperation, agents play an important role, but there are significant differences in the capabilities of each agent. Many agents perform poorly in project management, and their management processes are chaotic and disorganized. During the project implementation process, they often only report the positive situations to the Party A, and choose to conceal the problems that arise in the project. Once the problems can no longer be covered up, they will resort to means of obfuscation, trying to blur the essence of the problems, and even deceive the Party A without hesitation. This kind of behavior seriously affects the smooth progress of the project, making the project encounter numerous difficulties during implementation, and a series of problems such as schedule delays and cost overruns may occur.
In addition, many agents lack the ability to conduct independent development and rely heavily on software manufacturers for support during the development process. When a project involves customized development or interface development, the situation becomes extremely complicated. It is a highly challenging task to accurately convey the professional requirements of Party A to the manufacturers through the agents. We can imagine that even a simple message can be miscommunicated in daily life, not to mention the complex professional requirements of Party A. The likelihood of information deviation increases significantly during the process of the information being passed from the agents to the manufacturers, which will undoubtedly bring more uncertainties to the development and implementation of the project.
Even if Party A realizes there are problems with the agent and directly contacts the software manufacturer, hoping that the original manufacturer will provide services directly, it may still encounter obstacles. Due to various agreements between Party B and the agent, Party A may have to continue to accept the services of this agent, which puts Party A in a relatively passive position during the cooperation process.
In the domestic business environment, there are some undesirable phenomena. Some second - party contractors euphemistically refer to under - the - table operations as business public relations. They focus on risk isolation and use agents to conduct public relations activities with the first - party clients. Once problems occur, they shift all the blame onto the agents. Although this behavior has no direct causal relationship with the success or failure of a project, it causes a portion of the funds paid by the first - party to end up in the pockets of certain individuals. This part of the expenditure makes no actual contribution to the project itself, resulting in a waste of the first - party's resources.
Problems caused by software features
There is an essential difference between software and hardware. One important difference is that the standards for software are rather vague. This characteristic gives rise to two major problems.Firstly, there is a large fluctuation in the procurement price. Due to the lack of clear standards, the price of software has a great deal of flexibility. In theory, the price of a software could be marked at 1 million, but in some cases, it could reach 10 million. This provides room for price manipulation.Secondly, in the acceptance process, human factors have a significant impact. Acceptance personnel may deliberately relax the acceptance standards according to their own wishes, or they may deliberately make things difficult and raise the acceptance threshold. The acceptance threshold can be flexibly adjusted based on personal subjective judgment, which seriously challenges the fairness and objectivity of software acceptance.
Due to the vague software standards, some second - party contractors choose to sell software through gray channels, while some first - party personnel attempt to obtain gray income from it. Driven by this common interest, the two parties hit it off, but in the end, it is the first - party and the person who put forward the requirements that suffer losses.
The issue of re - outsourcing
In the process of enterprise development, transforming into intelligent manufacturing is the goal of many large enterprises. For example, a certain large enterprise also has such a transformation idea. However, it doesn't want to spend huge sums of money on acquisitions like giants such as Siemens, Honeywell, and Hexagon. So, it chooses the path of self - research.However, after a period of hard work, the results of self - research are not satisfactory. The products they developed are of poor quality, and they haven't even built the basic framework as expected.
Under the pressure of KPIs, these enterprises have to seek external assistance. They approach the service providers in the industry, asking them to develop the products on their behalf and hoping to obtain the source code. Then they claim externally that it is their own product. Subsequently, they use this imperfect result to create a cool PPT for external promotion. However, in reality, the probability of the success of such projects is extremely low, almost as rare as seeing a ghost in broad daylight.
Unprofessional question
In the software industry, specialization is a common phenomenon. Some software performs excellently in specific fields. For example, it may be highly professional in financial management, but relatively weak in other areas such as quality management.
A software vendor whose main business focuses on ERP and MES intends to expand its business by developing QMS software. On the pretext of easier system integration, it convinced its old customers to use its unfinished QMS product at an extremely low price. During the development process, which lasted for two years, there were several personnel changes, and the requirements were sorted out again and again with countless rounds of communication. However, the final result was far from satisfactory. It only achieved the function of inspection data entry, and many fields were fixed without any flexibility. It couldn't even meet the current basic requirements, let alone the future development needs.
In addition, we have also found that some software vendors (including well - known software companies) have problems with their sampling standards. Their sampling standards violate the national standard GB 2828, yet they are completely unaware of it. As a result, the quality management of the customers using these software also violates the national standards, which brings potential risks to the operation and development of enterprises.
In many cases, what Party A provides to Party B is not requirements but solutions, and Party B simply writes code according to the solutions. Without professional planning from Party B, Party A may not even be aware that there are better solutions. For example, sometimes having too many query conditions in a system may lead to memory overflow, but this problem is easily overlooked during system design. After the software has been delivered for some time, it may malfunction. In addition, some systems may become slow after being used for a while. It may take several minutes to open a data entry interface, and eventually Party A has no choice but to abandon the system and select a new one. Moreover, a well - known software stipulates that the number of defects during inspection cannot exceed the number of samples. Such unreasonable regulations are common in the software industry.
Problems with the implementers / Implementation personnel issuesProblems with the implementers Implementation personnel issues
The implementation personnel of Party B's project team lack work experience in the manufacturing industry and are not familiar with Party A's business processes. During the project implementation process, they often adopt a one - size - fits - all approach. Many software vendors, in order to reduce costs, recruit newly graduated students. After only a few days of training, these students are sent to implement projects for enterprises. When these students arrive at the customer site, they may not even understand Party A's requirements, let alone conduct effective implementation training by combining the business and the system. This seriously affects the implementation effect of the project.
Before Party A starts using the system, it is very difficult for them to list all the requirements or fully understand the entire logic. For example, if Party A puts forward the requirement for combining inspection orders, a software company without relevant experience may not realize that there could be many other implicit requirements behind this single requirement.For instance, sometimes order combination is needed, while at other times it isn't; some materials require order combination, while others don't. If there is order combination, there may also be order splitting. Moreover, both order combination and splitting can affect batch - skipping inspection or periodic testing.Only a software company with an overall architectural mindset and years of industry experience can proactively consider these aspects for Party A's customers and consciously explore such potential requirements.
There is also another situation. The project manager of Party B has no factory experience and simply arranges the material numbers under the columns of incoming materials, in - process production, and outgoing goods according to the requirements of Party A. Problems occurred just a few days after the system was launched. The reason is that the enterprise outsourced some of its own processing procedures to suppliers, and the semi - finished products became incoming materials. This is a stupid mistake caused by Party B's complete failure to understand the underlying logic of the enterprise's operation.
The problem of subcontracting at multiple levels
During the project acceptance process, there is a phenomenon of subcontracting at multiple levels. Usually, an individual or a company learns that Party A has a certain need and secures the project through strong public - relations capabilities. However, since they lack the ability to complete the project themselves, they subcontract it out. In some cases, the project may be subcontracted four or five times, and each time it is subcontracted, a certain amount of profit is extracted.Party A originally invests 1 million yuan, expecting to receive corresponding services and products. But after multiple levels of subcontracting, by the time it reaches the final provider of services and products, the available budget may be reduced to only 100,000 yuan. The final Party B can only provide corresponding services based on this 100,000 - yuan budget, which leads to a huge gap compared with Party A's initial requirements, seriously affecting the quality and effectiveness of the project.
Reasons for failure caused by Party A's factors
There is a shortage of digital multi - skilled talents
In today's digital age, talent is the core competitiveness for enterprise development. However, outstandingtalents (it seems the original text didn't define a specific English term for "", here we can use "interdisciplinary" or "composite") who understand both business and digitalization are extremely scarce. According to the survey data from McKinsey, nearly 70% of the respondents said that the senior teams in their organizations had changed during the transformation process. The most common scenario was that new leaders familiar with digital technologies joined the management teams.
Professional digital compound talents play a crucial role in the development of enterprises. For example, a business leader plans to expand into foreign markets in the future based on the current situation of the enterprise, which requires the system to have the function of multi - language support. In the case of quality inspection, employees in factories in different countries can choose their own languages. Not only should the system interface support multiple languages, but the content options also need to support multiple languages. In this way, no matter what language employees use to fill in information, the headquarters can statistically analyze the global quality status in real - time. However, if the client's staff is not familiar with digitalization and fails to clearly and explicitly express their requirements, the service provider may misunderstand that only the system interface needs to support multiple languages, ultimately resulting in the system failing to be smoothly implemented globally.
Arrogant attitude
Although digital composite talents are crucial, the working attitude of the project leaders on the client side is even more important. Client-side leaders should uphold the realistic attitude of "acknowledge what you know and admit what you don't know". However, some client-side leaders pretend to know what they don't and give blind instructions.
System docking is a very common requirement in enterprise operations. For example, when Party A receives incoming materials, the ERP needs to push an inspection application form to the QMS, and the QMS will return whether the order is qualified and the quantity of non - conforming products. However, the person in charge of Party A's ERP proposed that the ERP only needs the final quantity of qualified and non - conforming products, and the result of batch non - conformity should not be written back to the ERP. The reason given is that the data volume of the batch non - conformity result is too large, which may cause the system to crash. This statement is as absurd as saying that adding a single grain of sand to a building will cause the building to collapse. Moreover, this person in charge lacks a holistic view and doesn't consider at all that the company's finance and procurement departments need to know the status of purchase orders and future needs. When someone puts forward reasonable suggestions, he still adheres to his own view, simply citing the reason that he is the customer and his requirements should be respected. This arrogant attitude has seriously affected the smooth progress of the project.
The absurdity of unreasonable demands
In the scenario of business cooperation, there was once such a ridiculous situation. As we all know, in normal business interactions, customers' demands should be reasonable and in line with common - sense logic. Just like in the catering industry, most normal customers would order common dishes like "scrambled eggs with tomatoes". However, there were individual customers who made the request for "scrambled tomatoes with chicken droppings". From the chef's perspective, this is completely beyond common sense and difficult to achieve.This is similar to the cooperation between Party A and Party B. Some requests made by Party A are as absurd as the "scrambled tomatoes with chicken droppings". For example, some Party A requires Party B to conduct on - site development at Party A's location, expecting the supplier to revolve around them all day long. This approach may seem like an emphasis on cooperation, but in fact, it is just a form of formalism. Because on - site development by Party B may incur a large amount of human and material costs, but it may not necessarily improve the actual efficiency of the project, ultimately resulting in wasted efforts and resources.
The attitudes of different clients determine the success or failure of a project
However, not all clients are like this. Some clients are very honest. When they encounter something they don't understand or have difficulty making a decision about, they will have in - depth discussions with the service providers. In this process, both parties will analyze the pros and cons of the matter, evaluate it based on various factors, and then determine the specific approach. This way of cooperation reflects equality and respect between the two parties and also enables the project to progress under a scientific and reasonable plan. Facts have proved that most of the digital projects carried out by such clients can achieve success.It can be seen that a person's attitude towards work is the primary factor determining the success of a digital project. A positive, rational, and responsible attitude can lay a solid foundation for the success of the project.
Conflict of interests: The hidden reefs of digital transformation
The process of digital transformation is essentially a corporate change. As long as it is a change, it will inevitably affect the interests of different people, resulting in a situation where some are happy while others are sad. The real reason for the conflicts triggered by digital transformation lies in the transfer of power.Under the traditional model, some departments or individuals hold the control rights over data and can adjust the data according to their own needs. However, digital transformation makes processes more standardized, systems more transparent, and decisions subject to supervision. This means that after the change, these people will not only lose the power to control data, but some previously unknown truths may also be exposed.
Even an ordinary inspector may try every means to prevent the implementation of the system. This is because in previous work, clear inspection standards were not established for many materials, and quality control experience was stored in individuals' minds. This inspector seemed extremely important in the company and even threatened suppliers on the pretext of non - compliance from time to time to seek personal gain. When the system is implemented, these "privileges" of his will be threatened, so he will come up with various ways to cause trouble, including extreme actions such as unplugging the network cable. This is just like in ancient times when the emperor wanted to check the accounts, the treasury and granary would inexplicably catch fire. It is a means taken by vested - interest groups to safeguard their own interests.Moreover, the contractor (Party B) can actually perceive this situation more acutely than the client (Party A). This is because those trouble - makers will not openly oppose the digital transformation within Party A. They may even appear to be high - sounding advocates actively supporting it on the surface. They usually make things difficult for Party B, create chaos, or refuse to cooperate under various seemingly reasonable pretexts, ultimately leading to the failure of the project. After all, it is far easier to destroy a project than to build one.
The impracticality of pursuing an all - powerful system
In digital projects, some personnel from Party A have unrealistic pursuits. They hope that the system should be comprehensive and all - encompassing, with perfect and flawless functions. Some people even demand the introduction of artificial intelligence right from the start to achieve various levels of intelligence and automation. There are even more extreme cases where they whimsically propose that inspection data should be automatically generated just by thinking about it. This kind of thinking is as absurd as giving Party B 20 yuan and asking the medicine they buy to take immediate effect, cure all diseases, and even make people immortal. It is inevitable that such projects will fail, because which reliable Party B would take on such an unrealistic project?
Hidden dangers of a dominant contract、dominant contracthidden danger Hidden dangers of a dominant contract
Since Party A is aware that the proportion of digital transformation projects ending in failure is relatively high, in order to prevent such a situation from happening, it will draw up a very strong - worded contract. However, if the contract is overly biased towards one party, when a conflict arises, if the party in a favorable position reaps excessive benefits, the disadvantaged party will inevitably adopt a strategy to cut losses in a timely manner. As a result, it will be very difficult for the two parties to sit down calmly and negotiate to find a compromise solution.For example, the contract may contain clauses such as "Party B shall not reject Party A's requests, and Party B shall not increase the development fees". It may seem that Party A has a sure - win situation, but in fact, it is not. A responsible Party B will never sign such a contract, while those who dare to sign it must have other plans. If Party A makes excessive demands based on such a contract, the two parties are very likely to end up in court. In fact, Party A is digging a hole for itself. No matter how strong the contract terms are, they cannot withstand Party B's attitude of slacking off.On the contrary, a contract with a relatively balanced division of responsibilities, rights, and interests between Party A and Party B can better ensure the smooth progress of the project. It can restrain the personnel of both parties from going too far in their actions.
The negligence of the person in charge of Party A
In digital projects, the responsibilities of the client's project leader are of crucial importance. However, in reality, some client project leaders only focus on the needs of their superiors and are solely intent on pleasing them. They do not collect business requirements in a unified manner, nor do they analyze whether there are contradictions among these requirements. They fail to prioritize the requirements and make no efforts to coordinate resources or adjust the project plan in a timely manner. Instead, they simply keep their eyes on the schedule, demand a bunch of project documents for show, exert pressure through emails, and even create conflicts over trivial matters. Such irresponsible behavior seriously hinders the progress of the project.
Lack of requirement communication
During the project implementation process, requirement communication is a very crucial step. However, in many cases, the client fails to conduct necessary internal requirement communication. The project seems to be heading in one direction when the contract is signed, but then shifts to another during implementation, resulting in inconsistent requirements before and after. Moreover, the project leader fails to fulfill the obligation of notification, and colleagues from other departments are unaware of the scope of the contract and the project. From the perspective of their own needs, the business department naturally hopes that all their requirements can be met. Maybe the requirements that have been mentioned multiple times before were not satisfied in other systems, so they hope to bring them up this time. This kind of confusion and inconsistency in requirements has brought great difficulties to the project implementation.
Unreasonable demands beyond the scope of the contract
Some Party A clients hold a wrong view. They believe that as long as they have paid, Party B should solve all their problems, even if these problems are beyond the scope of the contract and have nothing to do with Party B's services. Such unreasonable requirements undoubtedly increase the burden on Party B and are likely to lead to conflicts between the two parties.
Impure motives led to the failure of the project
Some enterprises launch digital projects purely to apply for government subsidies. Their goal is not to ensure the long - term operation of the software. Driven by such impure motives, it is no wonder that these projects fail. After all, they never really valued the quality and sustainability of the projects from the very beginning.
The importance of specializing in one's fieldspecialize in one's field 、 、importance The importance of specializing in one's field
Some enterprises choose to have their in - house IT staff conduct development during the digital transformation process. However, this requires the user departments to sort out the requirements and business logic, which is a very time - consuming and labor - intensive task. Even if the user departments manage to sort them out, the IT staff may not be able to implement these requirements well. Many functions may not be met, or there may be a lot of problems when using the system. After a period of time, the system will become inoperable. This fully demonstrates the principle that different people have different areas of expertise. Enterprises should choose professional teams to develop digital projects.
The perils of perfunctory planning schemes
Many Party A's ask Party B to prepare plans without providing Party B with sufficient information. For Party B, it is very difficult to come up with a feasible and implementable plan without enough information. Moreover, if Party A doesn't pay, Party B may just modify a generic plan by changing the client's name and present it as a quick fix. If Party A uses such a plan for its planning, the final outcome is predictable. If Party A doesn't treat Party B sincerely, Party B won't serve Party A whole - heartedly. Therefore, making hasty and careless decisions in the early stage of plan selection will bring a lot of hidden dangers and troubles later on.
Problems caused by communication barriers
During the process of communicating requirements, when the second - party raises questions, the first - party may, from their own cognitive perspective or for reasons such as confidentiality, directly tell the second - party statements like "This is not important", "This doesn't matter", "You don't need to know this", etc. This way of communication is very likely to miss certain requirements or logical details, which may result in the product being unusable or some important functions having to be abandoned.
The reasons for the failure caused jointly by both parties
In addition to the problems existing in Party A and Party B respectively, the two parties may also jointly cause the failure of the project. For example, the two parties did not fully communicate and sort out the requirements and signed the contract muddle - headedly, which ultimately led to the inability to make the delivery. Moreover, if the requirements of Party A change, and Party B is unable to meet the new requirements due to reasons such as technology or cost. Additionally, if the project team members of at least one party are unstable, after several rounds of personnel changes, no one may be clear about the situation of the project.
Thoughts on Avoiding the Failure of Digital Transformation
In the process of digital transformation, in addition to the various reasons that may lead to project failure listed above, there will definitely be a variety of other factors. Although more than 50% of digital transformation projects have failed, it doesn't mean that every project of an enterprise has a 50% probability of failure. It's like a novice sprinter competing in a 100 - meter race with Usain Bolt. The probability of failure for the two is completely different, and the novice's failure probability is far greater than 50%. If an enterprise wants to avoid the failure of digital transformation as much as possible, it needs to carefully analyze these potential problems and take corresponding measures to solve them.
The signs of success and failure of digital projects
In today's business world swept by the digital wave, the scenario of enterprises launching digital projects is like a fierce race, showing a polarized situation. Some enterprises' digital projects are like shining stars, successfully shining in the market and bringing efficiency improvement, cost reduction, and enhanced competitiveness to the enterprises. They may have achieved the automation of business processes and accurately captured market trends, thus standing out in the fierce competition. On the other hand, the digital projects of some other enterprises are like failed military expeditions, failing before they can fully exert their potential. The large amounts of capital, manpower, and time invested have gone down the drain, and they have even imposed a heavy burden on the enterprises.
The success of the project requires the joint efforts of both parties
The success of an enterprise digital project is not achieved overnight, nor can it be realized by the efforts of a single party. It requires the joint efforts of both Party A and Party B in multiple aspects.As the initiator of requirements and the leader of the project, Party A should clearly define its own business needs to set the direction for the project. Meanwhile, it also needs to provide full - fledged support in resource allocation, internal coordination and other aspects.As the provider of technology and services, Party B should give full play to its professional advantages, customize solutions for Party A, and offer high - quality technical support and after - sales service during the project implementation process. Only when both parties have the same goals and closely cooperate with each other can a solid foundation be laid for the success of the project.
Gain insights into the causes of failure and seek countermeasures
As the saying goes, "Know your enemy and know yourself, and you can fight a hundred battles with no danger of defeat." For enterprise digital projects, it is crucial to understand the reasons for failure. Only by thoroughly analyzing the root causes of failure can corresponding countermeasures be formulated in a targeted manner.There may be various reasons for project failure, such as inadequate requirements research, unreasonable technical solutions, poor communication and coordination, and ineffective project management. After knowing these reasons, enterprises can take preventive measures in advance. For example, if the requirements research is inadequate, a comprehensive and in - depth requirements analysis should be carried out before the project is launched; if there are communication and coordination problems, an effective communication mechanism needs to be established to ensure the timely transmission and sharing of information.Through these targeted countermeasures, enterprises can strive for project success to the greatest extent.
The Wise Approach to Software Selection
In digital projects, the selection of software is a crucial step. When choosing software, enterprises should not blindly trust the promotion of a single vendor but should explore multiple options. There are numerous vendors in the market. Although it can't be said that all vendors will tell the whole truth, through extensive comparison and understanding, the truth will naturally come to light. Different vendors may have different technological advantages, product features, and service levels. Enterprises can conduct a comprehensive evaluation from multiple aspects such as functionality, performance, price, and user reviews.Moreover, one should not judge the quality of software solely based on the vendor's PPT presentations. Practice is the sole criterion for testing truth. Enterprises must conduct trials, just as you need to run a horse to know its quality. Through trials, enterprises can personally experience the software's operation process, functionality practicality, and stability, thus making a more informed choice.
Project leadership and docking of Party A
During the project implementation process, Party A shall assign a person with strong execution ability to lead the project and communicate with Party B. This person needs to have good communication, coordination and decision - making abilities. He should be able to accurately convey Party A's requirements and expectations, timely understand the progress of the project, and coordinate all parties' resources to solve the problems arising in the project. Meanwhile, when communicating with Party B, he should maintain a clear mind and a firm stance to ensure that the project progresses as scheduled. A leader with strong execution ability is like a "commander" of the project, who can lead the team to efficiently complete the project tasks.
Initial planning and continuous review
Pre - project planning is the cornerstone of the success of digital projects. Before launching a project, enterprises need to conduct detailed planning on the project's goals, scope, schedule, cost, etc. They should clarify the project's direction and key points, formulate a reasonable schedule and budget, and provide clear guidance for the project implementation.However, the plan is not set in stone. As the project progresses, various unexpected situations may arise. Therefore, continuous review is even more important. Through regular reviews, enterprises can promptly identify problems and deviations in the project, analyze the reasons, and take corresponding measures for adjustment. A review is like a "physical examination" for the project, which can ensure that the project always moves in the right direction.
Take small but rapid steps forward and correct mistakes as soon as they are recognized
During the implementation of digital projects, enterprises should adopt a strategy of "small steps, high frequency". Instead of trying to complete all tasks at once, break the project down into multiple small phases, and set clear goals and tasks for each phase. This can reduce project risks and enable timely identification and resolution of problems. Meanwhile, once errors or deviations are detected, corrections should be made immediately. Just as when running, if you find you're going in the wrong direction, you need to adjust your steps promptly. This flexible approach allows enterprises to continuously optimize and improve during the project implementation process, thereby enhancing the project's success rate.
Value practical results and allow mistakes
The ultimate goal of enterprises in launching digital projects is to gain a competitive edge and achieve tangible results. In this process, mistakes should be tolerated. Since digital transformation is in itself a process of continuous exploration and experimentation, no one can guarantee that every step will be flawless. As long as the mistakes do not have a fatal impact on the project and lessons can be learned from them, these mistakes are valuable. Enterprises should encourage innovation and experimentation, adopt a positive attitude towards failure, and ultimately achieve the goal of digital transformation through continuous improvement and optimization.
The PDCA Cycle Path for Digital Transformation
Digital transformation is a complex and long - term process. It is like a never - ending marathon, which requires enterprises to continuously explore, practice, and summarize. This is a typical PDCA (Plan, Do, Check, Act) cycle process.First, enterprises need to formulate a digital transformation plan, clarifying the goals and directions. Then, they should implement the plan and ensure that all measures are put into place. During the implementation process, continuous inspection and evaluation are necessary to understand the progress and effects of the project. Based on the inspection results, problems should be addressed and improvements should be made. After that, new plans are formulated to enter the next cycle.Through such continuous cycles and improvements, the digital level of enterprises can be gradually enhanced.
Key measures to support enterprises' digital transformation
For those enterprises truly intending to carry out digital transformation, they need to have a discerning eye. On the one hand, they should identify all kinds of chaos mentioned above that may lead to project failure and understand the potential factors causing the failure. When selecting a service provider (Party B), comprehensive investigations and evaluations should be carried out to choose partners with strong technical capabilities, good reputations and considerate services.On the other hand, enterprises should strengthen internal management and conduct targeted preventive management. Establish a sound project management system, strengthen team building and training, and improve employees' digital awareness and capabilities. At the same time, it is necessary to ensure that the digital transformation progresses steadily on the track and make timely adjustments and optimizations according to the actual situation. Only in this way can enterprises ride the waves in the digital wave and achieve sustainable development.