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Digital transformation projects rekindle innovation, for now

IT leaders began the year with the wind at their backs, building on investments made during the pandemic and focusing anew on innovation. Can it last amid the fog of war?

Two years ago, numerous digital transformation projects were put on hold as the economic and workforce realities of the COVID-19 pandemic began to sink in.

CIOs refocused IT resources to support suddenly remote workforces and migrate applications from in-house data centers to the cloud. Those stop-gap efforts are now receding. Signs of a coming innovation phase began surfacing in late 2021 and have accelerated since then. Consider the following:

  • Gartner forecast in January a healthy 5.1% year-over-year growth for 2022, citing high expectations for digitalization. At the time, John-David Lovelock, research vice president at Gartner, predicted a back-to-innovation trend and longer-term projects this year, noting AI and hyperautomation could experience a resurgence. In a follow-up interview, Lovelock said Gartner isn't looking to make any changes to its 2022 forecast in light of Russia's invasion, but he added that new projects could see a pause for a couple of months.
  • An Insight Enterprises-IDG study published in February found nearly 90% of the 400 IT decision-makers polled are pursing digital transformation. Respondents said they expected IT infrastructure to play the most significant role in enabling innovation. Data and analytics capabilities such as AI, machine learning and IoT are the top-rated enterprise IT goals for 2022, according to the study.
  • And in a February report, Boston Consulting Group (BCG) pointed to the emergence of digital incumbents, traditional enterprises that have adopted hyperscaler and digital-native characteristics. Those companies are transitioning from shoring up core business systems to innovation, the management consultancy noted.
Patrick Forth, Boston Consulting GroupPatrick Forth

"Digital incumbents are starting to shift their focus from what I call digital reengineering -- fixing the basics and putting workloads in the cloud -- to focusing on innovation," said Patrick Forth, managing director and senior partner at BCG. Enterprises are asking themselves, "What can we do differently in the core and outside the core?" he noted.

What remains to be seen is whether digital transformation leaders will be able to resist future shocks and stay on the front foot with regard to innovation. Russia's invasion of Ukraine, a human catastrophe and a threat to economic stability, is the latest global development that could spark a cycle of retrenchment and recovery.

AI project: Turning on a digital dime

The enterprise shift from urgently needed COVID-19 projects to forward-looking innovation may seem incredibly rapid. But some enterprises had a head start -- digital transformation never completely ceased. IT leaders are building newer projects on a foundation set during the pandemic.

That's the case at MultiCare Health System, an 11-hospital network based in Tacoma, Wash. The healthcare provider's CEO council challenged managers to boost efficiency to offset lost revenue due to the deferral of elective surgeries. Bradd Busick, CIO at MultiCare Health System, had already been exploring the use of AI in managing expensive medical equipment. Early results showed promise. The IT team got the go-ahead in the second quarter of 2021 to accelerate its project.

A lot of things got shelved during COVID[-19]. We poured the gas on this one to actually make it go faster.
Bradd BusickCIO, MultiCare Health System

"A lot of things got shelved during COVID[-19]," Busick said. "We poured the gas on this one to actually make it go faster."

MultiCare Health System tapped Glassbeam Inc., a predictive analytics startup in Santa Clara, Calif., for the AI effort. The technology ingests event logs from medical gear such as CT scanners and MRI machines. That data piles up in a hurry. A Siemens CT scanner can generate 10,000 events every day, said Puneet Pandit, Glassbeam's CEO and co-founder. Glassbeam's analytics platform uses the machine data to create a mathematical model that predicts when a key component is likely to fail.

The expense of replacing a faulty part is sobering enough. A CT scanner's X-ray tube can run upwards of $100,000. But lost revenue from unscheduled downtime and the inability to charge for services compound matters. A CT scanner might take three days to fix, resulting in a revenue hit of $150,000, Busick said.

But predictive analytics lets MultiCare Health System automatically notify technicians before an X-ray tube filament burns out or an MRI machine's radio-frequency coil malfunctions. The healthcare system can schedule most of that maintenance during a weekend to minimize the revenue hit and patient disruption.

Such 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 arm in December participated in a $10 million investment in Glassbeam. In addition, MultiCare and Glassbeam now plan to take the technology to market, offering predictive analytics to hospitals beyond the healthcare system.

The AI project went from a COVID-19 measure to a potential revenue-generator within 12 months.

"We've turned our eyes from COVID[-19] to more exciting things," Busick said. "I think we're just scratching the surface."

Expanding process automation

Southern Illinois University (SIU) Carbondale followed a similar build-on-COVID-19 innovation path. The SIU School of Medicine in January 2020 began experimenting with putting paper-based forms online, working with Laserfiche, a content management and business process automation company in Long Beach, Calif. Jennifer Washburn, IT manager at the SIU School of Medicine, said her group, the Process Automation Team, identified employee timesheets as one area of process improvement.

: Jennifer Washburn, SIU School of MedicineJennifer Washburn

The pandemic struck two months later. Washburn faced a pressing need to get timesheets online, as 2,000 SIU School of Medicine employees suddenly became remote workers. The Process Automation Team was able use its recent Laserfiche experience to automate the untenable paper-based time sheet process.

"It was a good opportunity to not let a crisis go to waste," Washburn said.

With executive leadership buy-in, SIU School of Medicine piloted online timesheets in a nonclinical department and its largest clinical department. That approach let the Process Automation Team test the Laserfiche technology across different types of timesheets -- the school uses six forms for different employee categories -- and associated workflows. The latter can differ markedly: An IT employee may only need to notify a supervisor for time-off approval, but a faculty or clinical member also needs to consult with personnel who manage the academic calendar and the clinical schedule.

The technology rollout spread from the pilots and, by October 2020, all departments were using the online time-and-reporting process. That widespread use of online forms and process automation piqued interest across the organization, opening more opportunities for Laserfiche deployment.

"We have people lining up and really wanting us to tackle their projects -- part of that is initially having everyone exposed to the product," Washburn said.

Another early automation project, putting an absence request form online, went live in April 2020, but expanded to vacation and sick time accounting. That process, which launched in December 2020, enables employees to check their fringe benefit balances online. The human resources department's performance evaluations are now automated through Laserfiche, with more than 300 submitted to date. The school's financial affairs department is testing online purchase requisitions.

Other projects in the queue: The marketing department has asked about an automated process for handling event sponsorship requests and the office of student affairs is interested in digitizing a package of paper forms for incoming students.

Washburn's team has been growing to meet the demand for process automation. A full-time developer was added in Oct. 2021 to bring the group to four members. Washburn said she is recruiting for a support position; that team member will field questions from users and assist with quality testing and account maintenance.

"We have a long list, a small team and high demand," Washburn said.

Maintaining momentum?

Enterprises are transitioning from the necessities of COVID-19 to a wave of more creative IT projects. But will their digital improvements help them deal with events beyond their control? Will resurgent innovation lose momentum?

At SIU School of Medicine, the Laserfiche platform provides the agility to deal with unforeseen circumstances, Washburn noted. For example, the tool helped her team build and manage processes for collecting COVID-19 vaccination status, gather copies of vaccination cards and enable staff to request medical or religious vaccination exemptions. "Since we already had the application in place, there was no cost to our organization," she added.

BCG, in its February report, "The Rise of the Digital Incumbent," contends such digital capabilities build resilience and "the ability to adapt to adversity and changing market conditions." The successful businesses of the future will reach a "bionic end state," in which technological and human capabilities combine to create high-performing companies, according to Forth.

Achieving the bionic goal doesn't pave the way for innovation -- it depends on it. Enterprises must invest in at-scale innovation to get there. "If you are a big company and have a genuine innovation only in one part, that may not move the needle," Forth said. Other must-haves include leadership with a purposeful digital strategy, agile processes, the ability to attract and retain top digital talent, and open-architecture technology and data platforms, according to BCG.

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