‘Financial gains from IoT and AI won’t happen unless you start with people and change management’

Profile picture for user ddpreez By Derek du Preez October 30, 2019
Summary:
Aymeric Sarrazin, Siemens, CEO, IoT Services, explains how most AI and IoT projects fail because enterprises don’t think about the need for effective change management.

Image of Siemens IoT CEO

Too many companies are failing to see the benefits of their AI and IoT projects because they are not recognising the importance of bringing people along on the journey of changing business models and adapted job roles. This was the view of Aymeric Sarrazin, CEO of IoT Services at Siemens, who was speaking this week at IoT Solutions World Congress in Barcelona

Sarrazin gave a compelling presentation on the critical nature of change management in these ‘transformation’ projects, urging companies to think about the human or people perspective before they decide to invest in any technology at all. 

Sarrazin said: 

100% of the clients we are talking to are talking about digital transformation, are talking about the technology and platforms they’re choosing. 100% of them have issues with their implementations because of the people in the organisation. More than 60% of corporate IT transformations stall. The transformation is not actually happening. 

The reason why, is because of people. It’s very difficult for a business or an organisation to understand that this is true.

More than a ‘nice to have’

Sarrazin said that fundamentally people within an organisation have a hard time believing that technology, IoT and AI are not there to replace them, rather than provide them with an opportunity to adapt their job roles. 

Couple this with an ‘industry view’ that change management is still a soft topic - a ‘nice to have’ that you bolt onto a technology project - and it quickly becomes easy to understand why so many projects are stalling or failing. Sarrazin said: 

You usually define what platform you want, who will help you implement it externally and internally...and then you will do a couple of training things on the side. The realisation you need to have is that if change management is not there, the impact on the bottom line will not happen. Most of the transformation will not happen if that change management is not taken into consideration from the beginning, and is given the same level of importance as the technology.

Sarrazin urged that companies need to think about how they can help people understand what’s in it for them, when new technology is adopted. Why are you doing this? Why are you doing this for the future? 

Food for thought

Sarrazin saw evidence of this on a recent trip to China to visit a company that sells ramen noodles. He said that the company in question had invested heavily in automated or ‘smart’ factory technology and that the manufacturing operation was very sophisticated. However, when Sarrazin sat down to have a discussion with the CEO of the company, it was the Head of HR that wanted to do all the talking. He said: 

It was the first meeting I had ever had in China at a C-level where the Head of HR was sitting next to the CEO. That was telling for me. 

She said “I don’t know what to do”. We started talking and she explained that they have all the new technology to make orders as efficient as possible, but they haven’t seen any efficiency gain because the people aren’t using the technology.

In one example, the Head of HR explained that the plant manager had been trained multiple times to scan orders so that the AI could ‘understand’ what type of order it was and direct it to the most efficient/necessary line. However, that person refused to believe that the AI could do a better job than him, so didn’t use the tech provided. 

When returning to Germany, Sarrazin spoke to the plant manager of Siemens’ technology plant in Hamburg, which also uses sophisticated automation technology. Sarrazin wanted to understand how Siemens had got to a position where its people were using the technology. 

The plant manager told Sarrazin that Siemens had also made the same mistake as the ramen noodle company and initially underestimated the change management aspect. Recognising this, Siemens then embarked on a strategy to engage stakeholders before any technology decisions are made. Sarrazin said: 

It was a side project and the efficiencies weren’t being gained. But since Siemens started to integrate the change management plans *before* we actually decide to install anything - the implementation is quicker, the adoption rates are quicker and we get to the bottom line even faster. 

People need to understand, is it good for the job? Is it good for the company? And mostly, how is it not bad for anybody? 

Of course the innovation and technology are important. They’re extremely important, because this is how we change things. The question is, the way people are impacted is key in the realisation. 

New skills needed 

Sarrazin concluded by advising companies to take an integrated approach to change management. Integrate change management and people with the technology, processes and business results, he said. Secondly, change management needs to be carried out using an agile approach. Sarrazin said: 

Change is drastically fast. And from people to people, the perception of transformation is different. Saying something will be in place for three years will not work when people will change their minds and the perception from person to person will be different. It’s extremely important to take feedback as fast as possible to be able to pivot.

Finally, Sarrazin believes that we also need to be having a discussion - and to be planning for - how employees can be reskilled to adapt for the rapid technological changes that are happening in the workplace. Organisations need to invest in their people, he said. 

How do we reskill the workforce? And who invests in reskilling the workforce? In Europe, for example, the workforce is ageing and the pace of technology change is increasing. The fact is, we will have to reskill. This is something at a society level that really needs to be discussed and business has to play a major role. 

Not only to provide retraining and reskilling, but also to convince people that this is the way to go. We also need to have a ‘why’ regarding the transformation. And the ‘why’ cannot be” we need to make more money. That is not sustainable.