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Digital transformation can be considered as a series of sum of small yet disruptive changes that are meant to re-define the way an organization functions for the better. This can mean refining traditional processes by introducing technology that supports them; or instituting new work policies that require employees to function a certain way.

Whatever form digital transformation may take, the end goal is usually the same: improving productivity and efficiency, optimizing operations, and increasing profit. When done right, digital transformation brings both valuable and transformation changes for the organization. But when done wrong it bring disaster and ruin.

In this article we will be doing a deep dive into 2 companies that failed at digital transformation. So, without further ado let’s get started

 Haribo:

Haribo, a German candy manufacturing company lost out more than 25% of their yearly sales due to a digital transformation initiative gone horribly wrong. How did this happen?

In 2018 Haribo decided that it was high time they began overhauling their supply chain systems and do away with their legacy enterprise resource planning systems. After some deliberation, they began transitioning to SAP HANA, converting 16 candy factories spread across 10 countries.

The transition from this decades-old technology required a great deal of manual effort to overhaul both the business processes and workflows that were specifically sculpted for the legacy systems of a long-gone era. The company understood that continuing to operate on legacy technology is not a viable strategy, but what they did not understand that attempting to modernize age old systems without having a proper plan in place can create a system rife with problems. This is what exactly happened and Haribo immediately began experiencing supply chain disruptions not long after the systems were in place. This ultimately led to the company facing production constraints and missed deliveries to supermarkets leading to the company’s revenue taking a big nosedive.

Unlike some of the more highly publicized and dramatic failures, the problems that led to Haribo’s failure are in some ways much more commonly faced by organizations all over. For this reason, here are the key lessons that resulted in the digital transformation failure of Haribo:

1. Failure to Re-Evaluate Existing Business Processes: The fact that business processes were broken after the company went live with their new ERP system meant that Haribo did not focus enough time and energy on revamping existing business processes. In order to avoid failure and ensure success, organizations need to clearly map their future state business processes to ensure alignment with their overarching operational model.

3. Plan for Operational Disruptions: In any digital transformation project, it is important to take a proactive approach towards mitigating significant operational disruptions. Haribo was unrealistic to expect every system component to perfectly function on day one resulting in their project becoming a resounding failure. Instead, if Haribo had developed a proper risk mitigation plan to address supply chain setbacks, it may have been able to weather the shaky initial rollout.
4. System testing was overlooked: Before going live with a new ERP system, it only makes logical sense to first test it to see everything runs as right as rain. For Haribo to only discover problems after the rollout suggests that there were major flaws in its ERP system testing strategy or lack thereof. Haribo should therefore have performed system checks in a designated testing environment that would have had the bandwidth to simulate real-life operations.

MillerCoors:

MillerCoors is a beer brewing company in the United States. In 2013, MillerCoors made an investment of $100 million on an ERP implementation that was supposed to speed up procurement and accounting while streamlining the company’s supply chain operations. They chose HCL as their technology partner to help see the project through.

However not long after the project was awarded, problems started to immediately arise as MillerCoors began to question the direction that HCL was taking on the project. There were concerns regarding the blueprint, as well as the assigned resources to the new project endeavor.

To address these concerns, HCL issued a new work order, which increased the total price of the ERP implementation to $62 million. However, despite the increased budget to rectify issues that may arise, the first rollout was marked by 8 “critical” severity defects, 47 high-severity defects, and thousands of additional problems were recorded

By March 2017 the project had gone so far south that MillerCoors attempted to sue HCL for $100 million claiming HCL had inadequately staffed the project and failed to live up to its promises. The lawsuit was settled out of court in 2018.

Why did everything fall apart?

3. Re-using existing contracts: The leadership team of Millet Coor should have thoroughly researched to discover exactly what they wanted out of an ERP system instead of simply publishing a request for proposal. MillerCoors and HCL used an existing master services agreement to define the terms of the new contract. While this might have been convenient at first, it ultimately complicated efforts and ended in a lawsuit.
4. Choosing the Wrong Technology Partner: Secondly, it appears Millet Coors made a mistake in their choice of an implementation partner that failed to carry them a sense of commitment to ensure that the project became a resounding success. Millet Coors should have more carefully evaluated their requirements and should have partnered with an organization that adopts a product centric mindset to their craft.
5. Letting Outsiders Drive the Project and Not Employees: Thirdly, it’s important to have employees drive the change, no matter the degree. A company of Millet Coor’s size should have taken feedback from its employees to better assess the organizations needs and requirements before hiring an army of outside consultants to oversee the project and expect them to deliver something which they cannot truly comprehend.

How Adtech will ensure the success of your digital transformation initiatives:

Adtech can help you succeed in your digital transformation endeavors by accurately assessing the process and taking ownership of all stages of the project to ensure its success. To improve the chance of digital transformation success, the team at Adtech will:

• Ensure skills and resources are properly allocated and all roles are clearly defined.
• Ensure all stakeholders understands the project outcomes.
• Future-proof and protect project outcomes using our product mindset
• Ensure agility throughout the project’s lifespan.
• Ensure best practices are put in place.
• Consistently monitor and effectively manage the digital transformation points

 Reach out to us at info@adtechcorp.io to book a free 30-minute consulting session 

70% of all digital transformation projects end in failure. This is because organizations either exceed their allotted budget, fail to properly define and meet end goals, or the company decides to cut their losses and abandon the project. In certain situations, it also comes down to improper planning or a  ith that in mind, we’ll be looking at 2 other industry titans that experienced failure in their digital transformation initiatives:

Hewlett Packard (HP)

In the year 2004, HP set out on a mission to streamline their disparate ERP systems across its North American division into an integrated supply chain management system. But the company did not expect things to go awry as they had a history of successfully completing 34 projects that were similar in nature. However, the 35^th project was marred with operational problems and project missteps which would prove costly. The digital transformation failure at Hewlett-Packard can be attributed to three primary causes:

1. Project Silos: Before the company wide migration took place, every sector that came under the North American division of HP had its own ERP system. This made it difficult for leadership teams to bridge the gaps between departments. Ultimately this proved detrimental because extensive changes were required to both the existing processes as well as employee mindsets, both of which failed to take root.
2. Data Integrity Compromised: Orders by the ton were becoming lost as HP moved from their old ERP software to the new SAP platform. Faced with angry customers and lost sales, HP was forced to temporarily direct orders through its channel partners and expedite orders through air-shipments. Despite these preventive measures, the backlog of orders totaled around $120 million.
3. Failure to keep up with Increased Demand: At the time of the project, demand for HP products was at an all-time high. While normally this would have been good news for business, it was bad news for the new system that was improperly integrated. Naturally, the new SAP platform struggled to keep up with the influx of orders and resulted in the organization losing $400 million dollars’ worth of revenue.

To summarize if HP had established collaborative business processes before combining disparate systems into one central platform, this catastrophe could have been avoided. When planning your digital transformation project, it may seem natural to choose a shorter timeframe but rushed ventures absent collaborative practices often result in failure.

General Electric (GE)

The General Electric Company (GE) is one of the largest industrial conglomerates based in Britain that is involved in consumer and defense electronics, communications, and engineering. The organization makes a whopping $74 billion dollars a year in profits.

General Electric wanted to make its mark on the industrial internet and to bring this endeavor to fruition, they created GE digital in 2015. GE Digital aimed to not just centralize all of the company’s IT operations but also sought to become one of the top ten software companies by 2020.

Centralizing IT for a company the size of GE and building an entirely new class of software-hardware integration is an immense undertaking, one that requires massive engineering talent, huge amounts of input from thousands of people across dozens of time zones, and should take account of every business in GE.

Initially making GE Digital its own business unit definitely was a step in the right direction, but it also meant inheriting the roles and responsibilities of GE Software despite the fact that the unit’s objectives were strikingly different than the company’s expertise.

The hurried transitional effort from huge machinery to cloud-based software solutions was a recipe for disaster and backfired on the company, leaving GE in an economic quicksand. The quarterly P&L requirements were the primary focus of the digital transformation efforts and this effectively prevented GE digital to invest in long-term strategies and limiting themselves to pursuing short-term goals that failed to add exponential value to the overall business. This resulted in GE digital’s stock prices taking a plummet and falling as far as $11.60 a share in trading, breaking past its previous low of $11.94.

What went wrong:

• Despite having a clear vision, driving the digital transformation at a large scale meant trying to do everything at once instead of charging a small team with developing a sustainable yet scalable solution.
• Despite making heavy investments in tech and hiring the talent available in the market, the digital transformation initiative of GE Digital failed to succeed due to their inability to balance between their business needs and capabilities.

In the end, once it was clear GE digital did not perform as it was originally envisioned, parts of the business were sold off while the rest was wrapped up into GE power.

Embarking on the digital transformation journeys depends on an organization’s foresight to accurately assess their capabilities and meeting them using the power of technology. Small steps may be obsolete but on the other hand giant leaps may be overkill.

If you’re unsure about the next steps that need to be taken for your digital transformation initiatives, reach out to Adtech. At Adtech, you will find a team of seasoned technologists, expert developers, and thought leaders who can help your organization find great success in its digital transformation efforts.

Throughout the history of digital transformation, there have been always been more losses than wins, 70% to be exact. This is because many organizations reflect a lack of vision, understanding and commitment to their digital transformation process. This leads to organizations making ill-informed strategic decisions that will put them on a downward trajectory. In this article we will be taking a look at 2 industry titans that experienced failure in their digital transformation initiatives:

Hershey:

Hershey is a prominent confectionery company with more than 90 brands around the world that drive over $4 billion in annual revenues. Despite their success and popularity today, the Hersheys brand has experienced its fair share of losses, one of it being a major legacy modernization initiative launched way back in 1996.

Hershey at that time needed powerful ERP system to replace their patchwork of legacy IT systems that were staring to become detrimental. The company decided to replace its legacy systems with an integrated ERP environment that consisted of three main components:

1. SAP R/3 ERP software
2. Oracle Seibel’s CRM
3. A new SCM solution by Manugistics.

All in all, the modernization costs came to a whopping $112 million. The transition to the new ERP systems was slated to last 48 months but Hershey’s leadership team decide to rush the project by reducing timeline for the project to under 30 months.

In order to accommodate the shorter timeline, the IT team were left with no choice but to cut down on the testing phase. More importantly, the final switch was slated for July 1999, which coincided with Hershey’s busiest seasons. This was recipe for disaster because over $100 million worth of orders were left unfulfilled despite Hershey having the inventory due to problems that arose with the ERP system. This travesty caused Hersheys to lose out on 19% of their quarterly revenues resulting in company’s stock dropping by 8%.

To summarize Hershey’s experience is a cautionary tale for leadership teams aiming to implement legacy modernization journey initiatives within an unreasonable amount of time.

Revlon:

Revlon is an American multinational company dealing in cosmetics, skin care, fragrance, and personal care. They had begun implementing SAP S/4HANA and other ERP solutions without properly taking into account the risks associated with a digital transformation initiative. The implementation in February 2018, not long after they had acquired Elizabeth Arden. This meant the company was balancing an SAP implementation as well as an acquisition which most experts would consider the perfect recipe for disaster. And they were right.

On February 2018, soon after the company launched its new ERP system in the U.S, the damage was instantaneous. Their manufacturing facility located in Oxford, North Carolina began to experience service level disruptions that effectively crippled the organization’s ability to manufacture large quantities of finished goods and fulfill shipments to several large retail customers in the U.S. Furthermore, the company began to incur expedited shipping fees and other unforeseen expenses in accordance with the remedial actions taken by the company to mitigate the decline in customer service levels, which continued for quite a while.

When the dust finally settled, Revlon had lost over $64 million in unshipped orders, suffered a 6.9% drop in its stock price, and worst of all got sued by its investors for financial damages suffered as a result of this debacle.

How choosing the right tech partner can help your digital transformation efforts?

Working with a tech partner can help your company in its digital transformation journey by providing access to expertise and resources that you may not have in-house. A good tech partner can help you assess your current technology infrastructure, identify areas for improvement, and can help you develop and implement a comprehensive digital transformation strategy. Additionally, a seasoned tech partner can provide guidance on the latest technologies and best practices to help you seamlessly navigate the complex and constantly changing landscape of digital innovation. For a quick consultation, please contact our digital transformation experts at info@adtechcorp.in and learn how our team can assist you in walking the right path.

The global healthcare industry has never been one to actively pursue digital transformation. But the COVID-19 pandemic changed all that. According to the HIPAA Journal, the year 2021 witnessed more data breaches than previous years. Between the years 2009 to 2021, healthcare data breaches have resulted in the loss or exposure of over 314,063,186 medical records.

Although many great industry initiatives such as the FDA Digital Health Innovation Action Plan was created, the question remains on how healthcare companies can implement digital innovation at manageable costs without compromising on security.

The Use of DevSecOps in the Healthcare Industry

Healthcare providers are still reeling from large implementations of Electronic Medical Records or EMR platforms. To be strategic, CIOs need to concentrate on acquiring high quality data and feeding it into their systems for analysis. DevSecOps can help in this regard as it has been at the helm of digital transformation initiatives and is quite capable of curbing these issues.

Here is how DevSecOps can maximize business value in the healthcare industry:

Improved Software Quality: DevSecOps helps deliver high-quality software applications by driving automation to deploy applications consistently and avert system outages. Its principles focus on ensuring consistent software delivery, averting major bugs, and maintaining excellent customer experience.

Compliance Requirements: Any healthcare system (including EMR systems) is complex when it comes to security and compliance requirements. Automated security testing of DevSecOps applications ensures compliance and addresses security concerns.

Cost-Effective and Efficient Development: Healthcare costs continue to escalate, along with the costs of developing high-quality applications. DevSecOps ensures that high-quality software does not translate into a time-consuming and expensive development process. DevSecOps development practices deliver improved efficiency and a faster time-to-market.

How DevSecOps Can Overcome Data Security Challenges in Healthcare

Data security is a continuous and not a one-time activity. DevSecOps implements data security with the productive “everyone is responsible for security” mindset — precisely why its market is expected to reach $23.42 billion by 2028, up from $2.55 billion in 2020.

Here is a closer look at how healthcare organizations can overcome security-related challenges using the DevSecOps practice:

1. Build Security Expertise

Often, product developers do not understand the customer’s security requirements. Lack of security expertise ranges from the top management executive to the junior development team members.

To overcome this challenge, the solution is to create a dev-op centric organizational culture. A culture surrounding DevOps demands cross-functional collaboration and buy-in to ensure security considerations are integrated into the entire product development lifecycle. DevSecOps will entail embedding governance and cybersecurity functions such as identity and access management (IAM), privilege management, code review, configuration and vulnerability management throughout the DevOps workflow.

When done right, organizations will be able to enable efficient product releases, while avoiding costly recalls or the creation of additional patches after products are released.

2. Create a Secure and Automated Development Pipeline

With evolving demands of the healthcare industry, organizations need to release applications regularly and quickly. But security-related practices take time to implement. This includes procedures like penetration testing and threat modeling.

Healthcare companies can overcome this challenge using DevSecOps automation that begins with building an efficient CI/CD pipeline with the right business tools. An automated pipeline with built-in security can successfully scale across all business operations with proper implementation.

Here are a few ways to improve data security during the DevSecOps process:

• Execute application security testingat every stage of the DevSecOps process. This includes vulnerability scans and code analysis during application deployment (before the production stage).
• Container hardeningis essential if the CI/CD pipeline is built using containers.
• Network hardening, which includes host-based firewalls, data loss prevention, and firewalls at the operating system level.

Conclusion

In summary, the DevSecOps approach serves to “prevent and cure” data security-related challenges in the healthcare industry. Favorably, DevSecOps is best designed for faster market releases and enhanced security.

As a technology expert, AdTech has worked with customers across the healthcare industry with a focus on solving even the most complex of business problems. We go beyond technical expertise to acquire extensive domain knowledge and imbibe a product-centric approach to help clients achieve their business vision.

Looking to innovate your healthcare systems? Contact us now.

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