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Digitalization, Transformation and Other Four-Letter Words: that are actually costing you money - MagikMinds
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Digitalization, Transformation and Other Four-Letter Words: that are actually costing you money

As we all know, data and information are useless in silos. They are the lifeblood of an organization and must flow accordingly. I have worked as a consultant to the utility industry for over 20 years, first as a software developer working with GE’s Smallworld GIS (before GE owned it), then becoming an expert in integrating peripheral applications with the GIS. Initially, my thinking was very much technology oriented. However, over the years I have had the good fortune (or misfortune depending on your perspective) to witness the failure of numerous technology-centric project efforts.

And recently I have come to realize why.

Technology Doesn’t Drive Transformation

There, I said it. If you want to transform your business, technology is not THE answer. It may be a piece of the solution, but it is never THE answer.

Looking at our industry today, we have a lot of ‘new’ and ‘exciting’ words permeating the lexicon: Digitalization, Transformation, Data as an Asset, Agile, Enterprise Information Management, Information Asset Management, on and on. I am not suggesting that these concepts are bad or wrong, it’s just that they are often just that – concepts that ultimately fall short of delivering real value beyond another piece of technology to manage.

As a ‘customer intimate’ organization, if our customer wins, we win and vice versa. So, it became our company’s mission to wade through this morass of terms and acronyms and get down to the practical details of how we can make our customers as successful as possible.

My assertion is, that in the utility industry, ‘digitalization’ and ‘transformation’ are overused terms that are mainly implements of vigorous marketing efforts to sell huge technology packages and years of costly consulting.

Let’s look at the actual definitions of these overused terms:

  • Digitalization – According to Gartner, this is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities. It is the process of moving to a digital business.
  • Transformation – This is more than just change. The Webster definition is: to make a thorough or dramatic change in the form, appearance, or character of. A metamorphosis.

Most utilities are not ready to sign up for this kind of organizational disruption, whether they need it or not. More likely, they will engage in a technology project that promises these outcomes – yet fails to deliver. Often after technology projects fail to produce the promised outcome, utilities become guarded and suspicious of ‘new’ technology. They know they must make decisions and move forward but they spend so much time and effort maintaining or fixing what they already have that there is no ability to see beyond the immediate, emergent issues.

Transform Your Thinking to Transform Your Business

Changing your business model to create new revenue and value-producing opportunities is necessarily an introspective exercise. True transformation can’t be imposed by an external technology solution. Technology might help you get to where you want to be, but the catalyst for change comes from within. It is a strategic endeavor that helps you see beyond the daily grind of your current operations to create new opportunities.

So, what does that look like?

As it is the lifeblood of a utility, the information provides a natural starting point for transformation. Currently, “organizations don’t spend enough time thinking about the value and importance of Information Assets.”[1] This seems to be largely cultural as “culture shapes what a group defines as relevant knowledge, and this will directly affect which knowledge a unit focuses on.”[2] Utilities generally operate under the paradigm that IT will solve their information related problems. Worse yet, in many cases, they are not aware that the problems they face are in fact information related.

Before a utility can think about transforming their business, they must transform the way they think about their business. By looking at how information flows across the organization, it becomes much easier to spot opportunities for change and improvement. With a clear handle on the information that is needed to support the most critical business outcomes, identifying and prioritizing the technology investments needed to produce and manage those Information Assets becomes straightforward.

Said more simply, business transformation in the utility industry must be a paradigm shift from technology-centric activities to information centered activities that achieve digitalization.

You might say, “Yeah, fine. Easy to say but how do we do that?” The answer: putting a value on your information assets.

Putting a Value on Your Information Assets

Imagine the possibility of being able to visualize the way information moves across your organization and attaching a value to every action and piece of information along the way. By essentially putting a price tag on actions and information, it becomes quite easy to see the activities that are creating real value in your organization versus those that are impeding your objectives.

We call this ‘Information Flow Modelling’. I know, it sounds like another buzzword, but trust me, this is the real deal. Companies like Amazon, Uber, and AirBNB have transformed entire industries by mastering information flow. And make no mistake, this is NOT BPM. An Information Flow Model is a conceptual enterprise data model which assigns business value and measures cost at every point in the chain. The flow model helps you discover and mitigate information waste through the assigned values. It also provides a clear view of the areas where technology can be judiciously applied to create more value.

To fully understand how information flow modeling works, we need to define a few more terms (more terms, I know, I have a strong sense of irony):

  • Information Supply Chain – An Information Supply Chain is a model of your organizations information flow. It connects every asset (information, process, system, person) to the purpose it is supporting. It is the flow of data and information through your business in support of business outcomes.

The Information Supply Chain view is typically unknown within organizations. It can be misconstrued that it is only about databases. So, if I know where my databases are, I know where my data is. The reality is that business data is everywhere, and it is more fundamental in crossing the Digital Divide than most appreciate. More importantly, it is not static, it is always in motion and being touched and manipulated by people, systems, and processes.

  • Information Waste. Information waste occurs when resources (i.e. costs) are expended on the low value or inefficient activities. Information waste is created by rework, duplication, de-duplication, paper-based processes, and so on.
  • Low-value activities. These are the activities which are not contributing to important purposes and points where cost could be reduced without impacting value.
Once you know where and how your data flows and what it does for your business, you are immediately provided with deep organizational insights allowing you to invest accurately and save money. Investing in the wrong area at the wrong time, without knowledge of the benefit to business outcomes prevents transformation, at best, and causes project failure at worst.

Information Flow Modelling provides the following critical advantages to utilities:

  • You will see all the activities that people perform as they use data and information to create new data and information – you can understand which activities are necessary, and which aren’t. The result – people stop performing tasks which add no value to the business and use their time where it adds value.
  • You will see the role of systems within the business, as providers and stores of data and information, but also as the tools people use to perform their daily work. Now you can see which systems are fundamental to meeting your business outcomes, and which aren’t. The result – better investment prioritization and strategies for integrating key platforms or migrating systems to take advantage of technology innovation.
  • You will understand the efficiency (or lack of efficiency) of your business processes as well as the data needs of each process. What you do becomes contextualized against everything else you do. The data that is enabling business processes are exposed – against who and what is involved in enabling the outcomes. The result – you can now begin to understand the value of your data and information assets and monetization of your data becomes a possibility.

Once you have a clear view of the current state of your information ecosystem, opportunities for transformation become clear. The next article will provide more details on and examples of the Information Flow Modelling process and illustrate why this is such a powerful tool of actual transformation.

So, stay tuned…

Bibliography

Evans, Nina, and James Price. “Barriers to the Effective Deployment of Information Assets: An Executive Management Perspective.” Interdisciplinary Journal Of Information, Knowledge & Management 7 (2012).

[1] Evans and Price, “Barriers to the Effective Deployment of Information Assets.”

[2] Evans and Price.

http://www.linq.it.

 

By- David Cottrell