Two years ago, many digital transformation projects were put on hold as the economic and workforce realities of the COVID-19 pandemic began to take hold.
CIOs refocused IT resources to support suddenly remote workforces and migrate applications from internal data centers to the cloud. These palliative efforts are backsliding. Signs of an upcoming innovation phase began to appear in late 2021 and have accelerated since then. Consider the following:
- Gartner in January predicted 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 trend back to innovation and longer-term plans this year, noting that AI and hyperautomation could experience a resurgence. In a follow-up interview, Lovelock said Gartner wasn’t looking to change its 2022 guidance in light of the Russian invasion, but he added that new projects could see a break for a few months.
- An Insight Enterprises-IDG study released in February found that nearly 90% of 400 IT decision makers surveyed are pursuing digital transformation. Respondents said they expect IT infrastructure to play the most important role in innovation. According to the study, data and analytics capabilities such as AI, machine learning and IoT are the company’s top IT goals for 2022.
- And in a February report, the Boston Consulting Group (BCG) highlighted the emergence of digital incumbents, traditional companies that have embraced hyperscaler and digital-native characteristics. These companies are moving from strengthening basic business systems to innovation, the management consultancy noted.
“Digital incumbents are starting to focus on what I call digital reengineering — fixing the basics and putting workloads in the cloud — to focus on innovation,” said Patrick Forth, chief executive and senior associate of BCG. Businesses are asking, “What can we do differently in-core and out-of-core? he noted.
Whether the leaders of digital transformation will be able to withstand future shocks and stay at the forefront of innovation remains to be seen. 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 retreat and recovery.
AI Project: Lighting a Digital Penny
The shift of companies from urgently needed COVID-19 projects to forward-looking innovation can seem incredibly fast. But some companies had a head start – digital transformation never completely stopped. IT managers are building new projects on an established foundation during the pandemic.
This is the case at MultiCare Health System, a network of 11 hospitals based in Tacoma, Washington. The health care provider’s CEO board challenged managers to increase efficiency to make up for 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 got the green light in the second quarter of 2021 to accelerate their project.
Bradd BusickCIO, MultiCare Health System
“A lot of things have been put aside during COVID[-19]”, Busick said. “We put the gas on this one to make it go faster.
MultiCare Health System tapped Glassbeam Inc., a predictive analytics startup in Santa Clara, California, for the AI effort. The technology ingests event logs from medical equipment such as CT scanners and MRI machines. This data accumulates hastily. 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. The X-ray tube for a CT scanner can cost upwards of $100,000. But revenue losses from unplanned downtime and the inability to bill for services compound the problems. A CT scanner can take three days to repair, which will result in $150,000 in revenue, Busick said.
But predictive analytics allows MultiCare Health System to automatically notify technicians before an X-ray tube filament burns out or an MRI machine’s radiofrequency coil malfunctions. The healthcare system can schedule most of this maintenance for a weekend to minimize lost revenue and disruption to patients.
Such cost avoidance, a welcome message for hospital presidents, has made AI a favorite of MultiCare Health System — so much so that MultiCare’s venture capital arm participated in a $1000 investment in December. $10 million in Glassbeam. Additionally, MultiCare and Glassbeam now plan to bring the technology to market, bringing predictive analytics to hospitals beyond the healthcare system.
The AI project went from a COVID-19 measure to revenue-generating potential in 12 months.
“We took our eyes off COVID[-19] to more exciting things,” Busick said. “I think we’re just scratching the surface.”
Extension of process automation
Southern Illinois University (SIU) Carbondale followed a similar path of innovation based on COVID-19. In January 2020, the SIU School of Medicine began experimenting with bringing paper forms online, in collaboration with Laserfiche, a content management and business process automation company in Long Beach, California. Jennifer Washburn, IT manager at the SIU School of Medicine, said her group, the process automation team, has identified employee timesheets as an area for process improvement.
The pandemic hit two months later. Washburn faced an urgent need to put its timesheets online as 2,000 employees at the SIU School of Medicine suddenly became remote workers. The process automation team was able to use their recent Laserfiche experience to automate the unsustainable paper-based timesheet process.
“It was a good opportunity not to let a crisis pass,” Washburn said.
With management buy-in, the SIU School of Medicine piloted online timesheets in a non-clinical department and its larger clinical department. This approach allowed the process automation team to test Laserfiche technology on different types of timesheets (the school uses six forms for different categories of employees) and associated workflows. These can differ significantly: an IT employee may only need to notify a supervisor for leave approval, but a faculty or clinical staff member also needs to consult with staff who manage the academic calendar and the clinical calendar.
Deployment of the technology expanded from the pilots and by October 2020 all departments were using the online time and reporting process. This widespread use of online forms and process automation has sparked interest across the organization, opening up more opportunities for Laserfiche deployment.
“We have people lining up who really want us to tackle their projects — part of that is getting everyone exposed to the product first,” Washburn said.
Another early automation project, bringing an absence request form online, went live in April 2020, but extended to accounting for leave and sick leave. This process, launched in December 2020, allows employees to view their benefits balance online. HR department performance reviews are now automated through Laserfiche, with over 300 submitted to date. The school’s financial affairs department tests online purchase requests.
Other pending projects: The marketing department has inquired about an automated process for processing event sponsorship requests and the student affairs office is interested in digitizing a set of paper forms for incoming students.
The Washburn team has grown to meet the demand for process automation. A full-time developer was added in October 2021 to bring the group to four members. Washburn said she was hiring for a support position; this team member will answer user questions and assist with quality testing and account maintenance.
“We have a long roster, a small team and high demand,” Washburn said.
Businesses are shifting from COVID-19 necessities to a wave of more creative IT projects. But will their digital enhancements help them deal with events beyond their control? Will resurgent innovation lose momentum?
At the SIU School of Medicine, the Laserfiche platform provides the agility to deal with unforeseen circumstances, Washburn noted. For example, the tool helped his team create and manage processes for collecting COVID-19 vaccination status, gathering copies of vaccination cards, and enabling staff to request medical or nuns. “Since we already had the app in place, there was no cost to our organization,” she added.
BCG, in its February report titled “The Rise of the Digital Incumbent,” says these digital capabilities build resilience and “the ability to adapt to adversity and changing market conditions.” Successful businesses of the future will reach a “bionic end state,” in which technological and human capabilities combine to create high-performing businesses, according to Forth.
Achieving the bionic goal does not pave the way for innovation, it depends on it. Companies must invest in large-scale innovation to achieve this. “If you’re a big company and you only have real innovation in one part, that might not move the needle,” Forth said. According to BCG, other must-haves include leadership with a focused digital strategy, agile processes, the ability to attract and retain top digital talent, and open-architecture technology and data platforms.