$900B was wasted last year in Digital Transformation

Pasi Nikkanen: Welcome to HappyToday podcast. This is a podcast for those who want to improve service experience of internal services. If you use ServiceNow or other enterprise service management system, then this is for you.

Today, in this episode we are talking about digital transformation. It's a really wide topic, but let's start by having a McKinsey study that said 70% of digital transformation projects fail.

Sami Kallio: Yeah, it's terrible numbers. There was also another one. Harvard Business Review said that last year a total of 1,3 Trillion was spent on digital transformation, and it was estimated that $900 Billion went to waste.

Pasi Nikkanen: $900 Billion?

Sami Kallio: That's about the same as 70% of all the investment that was done in that area. I didn't expect these numbers to be this bad. But, what did they say in the McKinsey report, what were the reasons?

Pasi Nikkanen: Well, I think it's kind of already in the title of Digital Transformation projects. I think it was what they were saying in the Forbes article that was referring to this study, saying that it's really how you measure it and how you think about it. You can't really think about it as an event that just happens once, because this whole digital transformation is a lot of things. It's a journey and it's something that I was talking with Oscar Berg in an earlier episode of HappyToday. And we were discussing this, that I think and he thinks it's just because they are measuring these projects from the project management point of view, not by the outcomes. So is it on time and on budget? But whatever it produced is not the driving force of the project team and the project manager. That's maybe what I saw from the Forbes study and maybe something that I also believe might be the case.

Sami Kallio: Yeah, I would say that one way of running your IT and project in a different way is to start to ask from the project managers and even the whole team one relevant question and that is - what is the target for this project?

I've done that several times and every time you get an answer, By 17th of September or 200,000 euros, you know that this will not be a successful process from the outcomes point of view. Everybody in the team should be knowing kind of why we are doing this. What is the target? What are we trying to achieve by whatever we are transforming.

And I think that digital transformation is a really lovely word, because it's telling about a trip. It's telling about change. It is not one project. But of course, that transformation in reality is shared to projects. But those projects should be having targets, not the traditional projects targets, which are time span and money. Of course, you have to have them as well. But the first thing in people's mind should be why. Why we are doing this.

Pasi Nikkanen: I think for us it's pretty clear you are doing it because of the employee experience. Making people happy and more productive.

Because you are totally changing the way people do work and that is what is happening nowadays. That's what you are after. It's not like you are deploying a system. It's not a system transformation. It's not a system migration project.

Sami Kallio: Yeah. You Pasi, know that almost as much as I hate SLAs, I hate the wording of digital transformation. It is relating to technology. No, it's work transformation or even human behaviour transformation that should be in your mind when you are making this kind of big change.

If you are only thinking about technology when making this change and only thinking about moving something to the 'cloud', without thinking about the reasons why we are doing it or how the changes will impact peoples work, I would say you most likely will fail.

Pasi Nikkanen: Yeah, I think for our listeners it might be quite a daunting task trying to affect the whole culture of the whole company. But like you were saying, I think bringing in the employee experience and actually measuring the employee experience. What are these different projects bringing? What changes are they making? And then make that as the measurement of all the projects, so all the projects will then also have the same measurements. I think from your past life you had a good example of how to visualise this productivity and happiness.

Sami Kallio: Yeah, I was earlier doing a lot of projects and doing service design. I was running a company doing service design in consumer and business to business world. We had one principal we never gave up and that was  the company didn't take any projects in if the customer, together with us, were not able to measure the end results in a sense of how happy the end users will be.

But there was a region, where there were more enthusiastic end users of the project, however that was not enough. We had to also have a business case, because let's say innovation as such, it's easy to get new ideas that you could implement in service management. 

But when you're thinking about it in a way that every idea has to have value for the end user, it has to also have value for business. And then prioritising things on the basis of these two very simple ways of thinking.

Then you have people in your team, and I think the digital transformation where you're thinking about how to run it right, you are running people. You are not running those servers, you are running people. And communicating these simple things, that in this projects we are doing it because we want to make people more happy in this area, for these reasons.

Pasi Nikkanen: So, you'd have good example from one of our customers, Virgin Trains, like how would they define the outcome of a project?

Sami Kallio: I love this. This was something they presented at one event in the UK. They said that every time they start something in the digital transformation program, they first use half a day to define. Let's schedule a news article. What would be populist after this project to the, let's say public or the employees. What was achieved? And that kind of thinking mindset is a totally different thing. And that helps you to kind of focus on the value.

Pasi Nikkanen: I think one of the important things is the fear that people have. And I think that's a really a good approach also that if you have already visualised "Hey, this will change it like this. This is how the work will be afterwards." Then you're kind of tackling all the fears. What happens to my work now when this is automated? What can I do next?

I think a good example was the interview we had with the Fujitsu and Tieto. How they use their agents to actually teach chat bots. So this different way of working, of automating and things. Part of the whole digital transformation is that I teach my routine work to be done by the bot. But it's not like the bot is replacing me. I just like all the relative stuff. I'll just teach that to the machine and then I can spend a lot of time on the creative things when I'm problem solving and those kind of things.

Sami Kallio: Yeah and I think this all comes again to people and those people who are doing these projects. If you really communicate to them these two things, experience and business case, they start to think about it. And not only that, the most creative people are then also thinking about the business case or the opposite.

The technical people are thinking about how they make people happy. That has value. But all these people, they now know what their meaning is and why they are doing this. This was something I discussed with one of our partners that said one of the biggest things when we work together that I haven't realised, she said to me that, "The point is that now my team is not just doing some service forms without understanding why they are doing it. Now they know that they are doing it because we want to make the end users happier and more effective."

And that's a different thing. You have more motivated people doing the task and they also understand why they are doing it. It's so simple to say, but still something that is in traditional IT project culture. It's not there yet, which is very sad but it's hopefully coming.

Pasi Nikkanen: Yeah. But I think as a summary, there was also the CIOReview.com article on the trends. And it said that the employee experience is more centre stage, but also that digital transformation is one of the biggest trends for 2019. I think we both agreed that you can do digital transformation without thinking about employee experience. And now on the other hand you can tie these things together. So, when you think about the business case, when you're thinking about justification for the C level managers, doing things together is why we are doing these projects. We are having this journey because we want to change the way people do work, which will improve the experience and the productivity.

Sami Kallio: Yeah. Maybe the last thing I want to say in this episode is that digital transformation is really heavily linked to service management and how service desks work. They are not a separate thing and we have seen this in several cases when customers choose to give out information. And measuring things from these service management perspectives; the happiness, productivity and all that, changes. You have to be able to follow, "Okay, now that application, we'll update it."

And when updated, it changes your perception of your services because it's not that we would be measuring service management or the service desk first layer. We are measuring the services, and that is what you are changing in the digital transformation. You should be kind of proud of your position as service owners or kind of a service desk, running the service desk. Because then, you can help everybody in the IT organisation to be able to work better if you kind of just take the role.

Pasi Nikkanen: Sure, sure. Hey, thank you. And if you love this episode, be assured to give us five stars on iTunes and all the other spaces where you do it. And also leave comments if there's topics that you want us to talk about, please. Use Twitter or use LinkedIn as we are happy to address different subjects.