Digitalisation – practical challenges for middle-market businesses

    The hosts for this Solent 250 roundtable were the advisory and accountancy firm RSM, law firm Irwin Mitchell, HSBC, and specialist recruitment company CMA Recruitment Group. It was held at the Ageas Bowl, Southampton and looked at the challenges digitalisation poses for middle-market businesses. Tim Wickham reports.

    The Roundtable team
    The Roundtable team

    Is digitalisation an overused and misunderstood term? Can it succeed without staff buy-in and a change in business culture? And how is digital transformation changing the way businesses work? Co-chairmen Neil Sharples, partner in the technology team at RSM, and Roland Emmans, head of technology at HSBC, asked the tough questions.

    Setting technology targets

    Sharples began by getting the panel to share their experiences of what digital transformation means. Daniel Hedley from Irwin Mitchell, said: “Digitalisation is about obtaining a set of technology tools your business didn’t have before. You can put them together in interesting ways to do things better. The success of a digital transformation depends on what you want to get out of it – it could be as simple as a new website. You must have a goal in mind about what you want and why you need to do it.”

    RSM’s James Tetley agreed: “The key thing is what the transformation aims to achieve, for example, giving you a better route to your customer or automating your supply chain. What is important is how you use your digital tools.”

    Digitalisation is enabling Colt Group, the designer and supplier of ventilation and climate control solutions, to do new things. Mark Oliver said: “At the moment, we send engineers out to site to maintain our ventilators. With a 5G chip in every ventilator, it could let you know where it is and how it is operating so it can be maintained more efficiently.”

    Technology saves time

    Digitalisation buys you time to be more efficient was the consensus from a number of participants. For Steve Porcher at performance improvement and business transformation specialists Revive Associates digitalisation is a means to “release human capacity in your business to do value-adding activity”.

    CMA’s Neil Phillips concurred: “Technology does the spadework. It gives our teams more time to meet clients and build relationships rather than spend it on administration tasks.”

    Like CMA, Irwin Mitchell increasingly uses technology to handle manual tasks. Hedley said: “There is value in computers being used to do tasks like due diligence work. Humans can get bored manually checking thousands of documents, whereas a computer can churn through the process quickly.”

    Onecom’s Ben Dowd added: “Digitalisation is about making it easier to do business through automating tasks, particularly using mobile devices that enable you to engage with staff and customers.”

    Similarly, digital and search marketing agency Click Consult is developing opportunities for its clients to adopt technology that automates online search activity. “Automating online searches is a big talking point, but you have to remember there are some aspects you shouldn’t always automate. You still need humans to code data if you want to create user-focused contents,” said Julie Sowa.

    Overused term?

    The question of whether digitalisation has become an overused buzzword drew murmurs of agreement. A broader outlook than technology alone is essential.

    “What is more important for companies than the technology is how they use it to transform. That depends on where you think you are. Business process transformation is equally important,” noted Dowd.

    Companies need to be more agile and build digital business into their DNA by changing their business processes, thought Sharples. “I work with many tech savvy businesses but am surprised at how much many of them still rely on spreadsheets rather than automating processes.”

    Destined to fail?

    The next question posed by Emmans related to the risk of failure. He quoted a report that found 70% of digital transformations fail to achieve 50% or more of their desired objectives and asked if the panel realised the failure rate was so high.

    Paul Sylvester at Taylor Made Computer Solutions wasn’t surprised. “When customers go through a digital transformation it usually forces them to upgrade lots of systems across their whole business and this can create new, unexpected issues to deal with. Digitalisation is a never-ending journey.”

    Hedley pointed to the problem of managing multiple legacy systems hampering successful digitalisation. “Often, the skills to understand legacy systems have left the business or the company is out of contract with the original vendors,” he said.

    Process and culture change

    Digitalisation isn’t just about the technology. Sharples asked the panel about another key element that influences the success or failure of digital transformation projects: your people. “If people are resistant to change then they can be the cause of failure, not the system. It takes careful management,” he said.

    Emmans said businesses need to consider three elements. “Technology, processes and people. Most of the time, digital transformation focuses on the technology side. Businesses rarely focus on all three and that can lead to higher digital transformation failure rates.”

    As a sports and entertainment business, the Ageas Bowl is eagerly embracing new technology to improve the customer experience. Like Simplyhealth, the company is making sure it brings its people along on the digitalisation journey. Mike Lashmar said: “We gained buy-in from our management team to make technology changes with our SAP system. We mapped out our processes and various key people ‘own’ their part of the system. Change wouldn’t have happened without the support of the management team.”

    At Colt Group, a priority is to change processes as the company goes through its digital transformation. Oliver shared the view of others that “there is often too much focus on the technology and not enough on process changes. You need to invest in re-engineering your processes before putting in your new IT. I think many businesses put in new IT and then try to bend their business around it.”

    Sowa observed: “Many brands come to us and say ‘these are our KPI objectives that we want technology to meet’. We tell them to first carry out solid due diligence work on their data. Often data crunching leads to changes in their KPI goals. Our advice is don’t dive into technological change if you don’t first understand your data.”

    Sharples noted the panel’s consensus that changing business processes was important but warned: “We find that often when technology deals are being negotiated the first part of the contract that gets ditched is the one about looking at business processes. The argument that ‘we’ve always done it like this and bringing in external consultants to do the work would be expensive’ usually wins out when it shouldn’t.”

    Staff buy-in

    Emmans asked the panel for their thoughts on getting communications right so you bring your people on the journey.

    Phillips highlighted the challenge of convincing everyone that change is good. “We’re currently going through a CRM upgrade. We experienced some resistance, especially from longer servers questioning why they had to change the way they work who couldn’t see the benefits. Our challenge was from a communications point of view, so everyone understood what was happening and why it was important,” he said.

    Porcher agreed: “Engaging with your people is key. You have to demonstrate that you are listening to them.”

    Getting your ‘A’ team on the digital transformation case is advisable, but doesn’t always happen. Oliver observed: “You want the best people in your transformation team, but their line managers might not necessarily want to release them to work on what could be a long-term project.”

    Snake-oil software salesmen?

    Sharples wanted to know if the panel thought data and the software that manages it is now so valuable that it was the “new oil” – or was it perhaps snake oil because it can fail to deliver its promised benefits?

    “Data can be a liability for businesses – the new asbestos,” said Hedley. “There’s a lot of data sloshing around businesses that is pointless. We had a client who produced paper catalogues and found 100% of sales came from only 25% of its database. So, the next time they only sent catalogues to this 25%. Sales were unaffected and print costs were much lower, so they got rid of a lot of their data.”

    Huw Williams at Southampton Cargo Handling warned about vendors hawking so-called ‘miracle’ software. “They claim it will transform your business but they only give examples involving new start-up companies and not those with long established IT systems. If you’re not careful you can end up with a project that either over spends or under delivers. I think the whole IT industry is at fault for creating this kind of problem. So yes, there are software snake oil salesmen out there who over promise on what their technology can do.”

    What’s next?

    In the mobile technology arena, it is 5G. Dowd said: “5G offers speeds up to 20 times faster than 4G and more capacity, enabling businesses to work more efficiently. 5G coverage is coming soon to Portsmouth and Southampton, although its impact to date in the UK has been minimal.”

    Data capture is important at Vail Williams. Russell Mogridge said: “We try and capture as much data as we can on buildings for valuation purposes, as well as for businesses to find properties. Mobile phone data is an exciting area. Surveyors can capture data on the move, rather than having to wait until they return to the office. We see the ability to input data in through an app, but we’re not quite there yet.”

    Improving the efficiency of its engineers is a priority at Taylor Made Computer Solutions. Sylvester said: “We are developing a booking system for our engineers so as soon as they finish one job we can move them automatically to the next one. That’s important on jobs that take less time than originally planned and it is revolutionising our customer service.”

    For Simplyhealth, it’s a question of reaching more customers. Rebecca Amiss said: “The user experience is a tough nut to crack. People tend not to look at our healthcare products when they are feeling fine, but expect us to be there magically when they need us. Ideas we are looking at include smart watches that monitor your health and provide us with data.”

    Hampshire was the UK’s first professional cricket club to have an app. “The Ageas Bowl has taken great strides with its technology but we can be even better. We’re looking at sending data to an app on a customer’s mobile that could improve their experience while they are at the ground, for example, with information about parking, queues and food outlets,” said Lashmar.

    It’s the small changes that can achieve the biggest transformation, noted Porcher: “At airports, informing passengers of when departure gates will be announced allows them to relax and makes them more likey to spend money in shops, bars & restaurants while they are waiting.”

    What technology most excites your business?

    A quickfire round on the positives about digitalisation generated an interesting range of responses…

    • AI and machine learning

    Sharples: “I’m passionate about AI for problem solving and automating the business. Natural language processing that turns speech to text will also be big.”

    Sowa: “Voice search is becoming more prevalent, especially for generation Z who are among the people most comfortable talking into their devices.”

    Sylvester: “AI is the big thing. We’re currently working on a project getting client devices to automatically tell us if they aren’t working properly.”

    Amiss: “We’re looking at opportunities to improve the way we communicate with customers using mobile and voice technology.”

    • Making business easier

    Oliver: “I’m excited about using technology to do things you couldn’t do before, like remote monitoring of our equipment and scheduling engineers in real time.”

    Tetley: “The ability for technology to take away mundane data entry of tax returns and free our team to spend more time with clients offering bespoke services.”

    Williams: “We’ll be communicating more using mobile technology with our largely agency staff and with dockside supervisors to update on things like rostering people for jobs as well as advising if weather conditions have delayed a ship’s arrival at Southampton port.”

    Mogridge: “We’ll be getting our building surveyors to use more technology, including drones for carrying out surveys.”

    • Better customer focus

    Dowd: “We’re excited about how 5G and business apps will deliver digital transformation, from a cost efficiency point of view and also how you engage with customers.”

    Lashmar: “We want to use technology at the Ageas Bowl so visitors say ‘wow what a great experience’ and tell their friends.”

    What stumbling blocks to digitalisation do you envisage?

    Participants ended the roundtable with words of caution…

    • Walk before you can run

    Porcher: “Organisations that get starry-eyed about technology and don’t think about how they are engaging with their people.”

    Sowa: “The idea that every aspect of online searches can be fully automated when they can’t yet. You still need humans for coding and fixing technical issues.”

    Oliver: “Our legacy systems will be a challenge because with various systems implemented over many years, we are not starting with a blank canvas. We also need to re-engineer our processes and invest in enabling behavioural changes.”

    Tetley: “Changing the business culture to accept digital transformation is a challenge. It can be a bit like turning a supertanker around.”

    • Gain employee buy-in

    Williams: “Not everyone is keen on change, especially older employees. We also face challenges with mobile signal coverage in the docks.”

    Phillips: “Internal communications and employee engagement are challenges.”

    Mogridge: “Our challenge is getting people to accept change with new technology.”

    Dowd: “The challenge is in bringing your staff and customers along on the digitalisation journey.”

    • Deal with your legacy technology

    Wade: “We have to sort out our data, so we don’t have ‘rubbish in/rubbish’ out in our digital transformation journey.”

    Hedley: “The technology ‘stack’ that we rely on is becoming larger and more complex. Each time you add a new layer you add potential problems and security issues.”

    All to play for

    Emmans summed up the discussion: “Listening to what’s been said today it’s clear that it is not just about technology but what you do with it, how you change your business processes, and how you take your people with you.”

    Sharples added: “We’re fortunate to live in times of massive technological change, especially in terms of computer power and the amount of data we use. This brings opportunities but also threats that businesses need to consider.”

    Participants

    Neil Sharples: partner, technology team RSM, co-chaired the discussion

    Roland Emmans: UK technology sector head, co-chaired the discussion

    Mike Lashmar: group finance director, the Ageas Bowl

    Graham Wade: managing director, Draper Tools

    Julie Sowa: business and client services director, Click Consult (part of Ceuta Group)

    Mark Oliver: CEO, Colt Group

    Ben Dowd: CEO, Onecom

    Steve Porcher: managing partner, Revive Associates

    Russell Mogridge: partner, Vail Williams

    Paul Sylvester: head of product development, Taylor Made Computer Solutions. A Peach Technologies company

    Rebecca Amiss: digital business partner, Simplyhealth

    Huw Williams: CFO, Southampton Cargo Handling (SCH)

    Daniel Hedley: partner, Irwin Mitchell

    James Tetley: tax partner, RSM

    Neil Phillips: operations director, CMA Recruitment

    Andy Farmer: deputy head of corporate banking, HSBC UK

    Neil Sharples
    Neil Sharples
    Roland Emmans
    Roland Emmans
    Mike Lashmar
    Mike Lashmar
    Graham Wade
    Graham Wade
    Julie Sowa
    Julie Sowa
    Mark Oliver
    Mark Oliver
    Ben Dowd
    Ben Dowd
    Steve Porcher
    Steve Porcher
    Russell Mogridge
    Russell Mogridge
    Paul Sylvester
    Paul Sylvester
    Rebecca Amiss
    Rebecca Amiss
    Huw Williams
    Huw Williams
    Daniel Hedley
    Daniel Hedley
    James Tetley
    James Tetley
    Neil Phillips
    Neil Phillips
    Andy Farmer
    Andy Farmer
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