For now, digital transformation projects are reinvigorating innovation
Two years ago, numerous digital transformation projects were put on hold as the economic and labor realities of the COVID-19 pandemic began to sink in.
CIOs refocused their IT resources to support suddenly remote employees and migrate applications from internal data centers to the cloud. These bridging efforts are now waning. Signs of an impending phase of innovation emerged in late 2021 and have accelerated since then. Consider the following:
Gartner in January forecast healthy year-on-year growth of 5.1% for 2022, citing high expectations for digitalization. At the time, John-David Lovelock, research vice president at Gartner, predicted a trend toward a return to innovation and longer-term projects this year, noting that AI and hyperautomation could see a resurgence. In a follow-up interview, Lovelock said Gartner had no plans to make any changes to its 2022 forecast in light of the Russian invasion, but added that new projects could pause for a few months.
A study released in February by Insight Enterprises-IDG found that nearly 90% of the 400 IT decision makers surveyed are pursuing digital transformation. Respondents said they expect IT infrastructure to play the most important role in enabling innovation. According to the study, data and analytics capabilities such as AI, machine learning and IoT are the highest-rated enterprise IT goals for 2022.
And in a February report, Boston Consulting Group (BCG) pointed to the emergence of digital incumbents, traditional companies that have adopted hyperscaler and digital-native characteristics. These companies are in the process of shifting from strengthening their core business systems to innovation, the management consultancy noted.
Patrick Forth
“Digital incumbents are starting to shift their focus from what I call digital reengineering – laying the groundwork and moving workloads to the cloud – to focusing on innovation,” said Patrick Forth, managing director and senior partner at BCG. Companies are asking themselves, “What can we do differently in the core and outside the core?” he noted.
It remains to be seen whether digital transformation leaders will be able to withstand future shocks and stay at the forefront of innovation. Russia’s invasion of Ukraine, a human catastrophe and a threat to economic stability, is the latest global development that could trigger a cycle of austerity and recovery.
AI Project: Turning on a Digital Cent
Companies’ shift from urgently needed COVID-19 projects to pioneering innovations may seem incredibly fast. However, some companies had a head start – digital transformation never quite stopped. IT leaders are building new projects on a foundation created during the pandemic.
This is the case at MultiCare Health System, an 11-hospital network based in Tacoma, Washington. The healthcare provider’s CEO council urged managers to increase efficiency to offset lost revenue due to the postponement of elective surgeries. Bradd Busick, CIO at MultiCare Health System, had previously explored the use of AI in managing expensive medical equipment. The first results were promising. The IT team received the green light to move forward with their project in the second quarter of 2021.
Many things were put on hold during the Corona crisis[-19]. We went full throttle here to actually make it faster.
Brad BusickCIO, MultiCare Health System
“During COVID, a lot of things were put on hold[-19]Busick said. “We went full throttle here to actually make it faster.”
MultiCare Health System hired Glassbeam Inc., a predictive analytics startup in Santa Clara, California, for the AI effort. The technology collects event logs from medical devices such as CT scanners and MRI machines. This data is piling up in a hurry. A Siemens CT scanner can generate 10,000 events every day, said Puneet Pandit, CEO and co-founder of Glassbeam. Glassbeam’s analytics platform uses machine data to create a mathematical model that predicts when a key component is likely to fail.
The cost of replacing a defective part is sobering enough. The X-ray tube of a CT scanner can cost more than $100,000. But lost revenue due to unplanned downtime and the inability to charge for services compound the issue. A CT scanner could take three days to repair, resulting in a $150,000 loss in sales, Busick said.
However, using predictive analytics, the MultiCare Health System can automatically alert technicians before an X-ray tube’s filament burns out or an MRI machine’s radiofrequency coil malfunctions. The health system can schedule the majority of this maintenance work over a weekend to minimize lost revenue and disruption to patients.
This cost avoidance, a welcome message for hospital presidents, has made AI a firm favorite at MultiCare Health System – so much so that MultiCare’s venture capital division in December participated in a $10 million investment in Glassbeam. Additionally, MultiCare and Glassbeam now plan to bring the technology to market and offer predictive analytics to hospitals outside of the healthcare system.
The AI project went from a COVID-19 measure to a potential revenue generator within 12 months.
“We have taken our eyes off COVID[-19] to more exciting things,” Busick said. “I think we’re just scratching the surface.”
Expansion of process automation
Southern Illinois University (SIU) Carbondale followed a similar innovation path built on COVID-19. The SIU School of Medicine began experimenting with bringing paper-based forms online in January 2020, working with Laserfiche, a content management and business process automation company in Long Beach, California. Jennifer Washburn, IT manager at SIU School of Medicine, said her group, the process automation team, identified employee timesheets as an area of process improvement.
Jennifer Washburn
Two months later the pandemic struck. Washburn faced an urgent need to move timesheets online as 2,000 SIU School of Medicine employees suddenly became remote employees. The process automation team was able to leverage their recent Laserfiche experience to automate the unsustainable paper-based timesheet process.
“It was a good opportunity not to let a crisis go to waste,” said Washburn.
With leadership support, SIU School of Medicine piloted online time tracking in a non-clinical department and its largest clinical department. This approach allowed the process automation team to test Laserfiche technology for different types of timesheets – the school uses six forms for different employee categories – and associated workflows. The latter can vary significantly: an IT employee may only need to notify a supervisor to approve a leave of absence, but a faculty member or clinical staff member must also consult with the staff who manage the academic calendar and clinical schedule.
The technology rollout expanded from the pilots and by October 2020, all departments were using the online time tracking process. The widespread use of online forms and process automation sparked interest across the company and opened up more opportunities for using Laserfiche.
“We have people lining up who really want us to get their projects started — part of that is getting everyone familiar with the product first,” Washburn said.
Another early automation project that placed an absence request form online went live in April 2020, but has been expanded to include vacation and sick time accounting. Launched in December 2020, this process allows employees to check their fringe benefit balances online. The HR department’s performance reviews are now automated via Laserfiche, and over 300 reviews have been submitted so far. The school’s finance department is testing online purchase requirements.
Other projects in the queue: The marketing department has asked for an automated process for processing event sponsorship requests and the Student Affairs office is interested in digitizing a package of paper forms for new students.
Washburn’s team has grown to meet the demand for process automation. A full-time developer joined in October 2021 to expand the group to four members. Washburn said she is recruiting for a support position; This team member answers questions from users and assists with quality testing and account maintenance.
“We have a long list, a small team and high demand,” Washburn said.
Maintain the momentum?
Companies are transitioning from the demands of COVID-19 to a wave of more creative IT projects. But will their digital enhancements help them deal with events beyond their control? Will the resurgent innovation lose momentum?
At SIU School of Medicine, the Laserfiche platform provides the flexibility to deal with unforeseen circumstances, Washburn noted. For example, the tool helped her team set up and manage processes for recording COVID-19 vaccination status, collecting copies of vaccination cards, and helping staff request medical or religious exemptions from vaccinations. “Since we already had the application, there was no cost to our organization,” she added.
BCG, in his February report“The Rise of the Digital Incumbent” claims that such digital capabilities build resilience and “the ability to adapt to adversity and changing market conditions.” According to Forth, the successful companies of the future will reach a “bionic end state” where technological and human capabilities combine to create high-performing companies.
Achieving the bionic goal does not pave the way for innovation – it depends on it. To get there, companies must invest in large-scale innovation. “If you’re a big company and you only have real innovation in one part, it might not make a difference,” Forth said. According to BCG, other essential requirements include leadership with a targeted digital strategy, agile processes, the ability to attract and retain top digital talent, and open architecture technology and data platforms.