What does digital transformation really mean?
Digital transformation is the integration of digital technology in all aspects of the business and by doing this, fundamentally changing the way the business operates and the way it provides value to its clients.
Apart from this, it’s also about cultural change. It is about the necessity for organizations to constantly challenge the status quo, to experiment and to think out of the box. This often means walking away from long-standing business processes in favor of relatively new practices that are still being defined.
The concept/term is quite overused these days which inherently creates some false expectations or misunderstanding. Some of them listed below:
- The focus on digital creates the impression success is mainly realized via injecting technology whilst technology should not be the main starting point
- The transformation should not be seen as a one-shot project but should be about culture change, new ways of working and continuous improvement
- Some companies use the hype to market e.g. paperless office tools or transition to public cloud or… mainly zooming in on one specific aspect while in reality it could mean anything or could look different for every company
What are the challenges of embarking on a digital transformation journey?
Resistance to change in the organization: digital transformation, by its very nature brings quite some change. Resistance can come for various reasons: concerns about cannibalizing revenue sources, difficulties justifying, or funding projects as normal project cycle and approach does not apply, fear for job loss or job change, etc.
Lack of a clear vision and digital strategy. You need to start from a business perspective, set clear business objectives. Develop a digital strategy. Experiment broadly with technology but don’t do digital as an objective in itself
Speed: the speed with which some digitally enabled experiences thriving in consumer space are creating a new normal has an impact on all industries and is impacting expectations in B2B market. This is pushing companies to go fast and to respond quickly and as such rushing into high investments without a proper objective and approach
Scaling initiatives from experimentation to real transformation: it is rather easy to develop a good approach to incubate ideas and test them. Scaling up these best ideas up to a level that they are integrated across a broad international organization, with legacy IT systems with an important partner channel is sometimes challenging
What are the benefits of digital transformation?
Organizations are aggressively pursuing digital transformation to gain efficiencies, lower costs and increase profitability with the ultimate goal of gaining a competitive advantage by delivering the very best customer experience.
Digital transformation allows organizations to be the 1st disrupters in their given markets. Whether they are in finance, manufacturing, retail, healthcare or transportation, why let an Uber, Amazon, Airbnb like competitor come into their space, why not be the digital disruptor amongst their competitors?
A big part of that is delivering to the heightened expectations of the new demographics made up of millennials, gen x and z’ers as well as the elevated consumer expectations across all demographics and that is about delivering an exceptional customer experience whether that is an internal customer – an end user, or an external customer buying a product or service.
The expectation is a personalized experience – anytime, anyplace, any device…simple, intuitive and secure.
So how does digital transformation help facilitate this exceptional user experience?
- Rapid innovation allowing companies to quickly respond to the ever-evolving requirements of their internal or external customers.
- Increased mobility connecting users to the information and applications they require easily and seamlessly.
- Enhanced agility to help companies response faster to changes in their market or business conditions.
- Faster decision making starting with big data analytics to deliver actionable intelligence and informed recommendations to the business.
How to do digital transformation right
Establish a compelling change and transformation story, based on a clear outside-in vision and digital strategy. Start from the business model or the customer experience instead of starting from an inward goal like digitizing the existing operating model.
Stimulate and embrace digital experiments and initiatives that focus on information sharing, self-serve technologies etc to start feeding thoughts and building more tech capabilities in the company.
Embrace partnerships for important skills gaps e.g. in the fundamental aspects like journey mapping, process design and data and analytics.
Digital transformation projects leadership
- Do not treat this as a standard project. Need for iteration, openness for experimentation.
- Do not use traditional KPIs and ROI mechanisms to measure success and set objectives.
- Integrate a “management of change” and culture track from the beginning focussed on people empowerment and attitude and on skill and capability development.
- Foster collaboration, create cross-functional teams.
Why does digital transformation matter?
No choice. Consumers will simply turn away from companies that aren’t keeping pace in favor of a brand that can provide a connected experience across digital channels.
Will new roles have to be created?
Many of the roles that are required to tactically execute a digital transformation plan already exist, application developers, DevOps managers, cloud specialists, process automation engineers, business data analysts, e.g. The challenge that organizations will have is attracting and retaining some of the more specialized roles in a very competitive labour market.
Many of the new roles that will be essential to the success of a company’s transformation will be leadership roles to drive digital initiatives within the organization, titles like Chief Innovation officer, Chief Digital Officer or Chief Experience Officer for example.
What are the best digital transformation companies?
The companies that are going to experience the best results around digital transformation in 2019 have the following traits:
- They talk to their customers about what their competitors are delivering today regarding mobile enabled client applications and portals
- There is a strong statement from executive leadership that states the company’s 3 – 5 year goals around digital transformation
- Initiatives are evaluated based upon their impact on the user experience
- They have the philosophy that everything can be mobile and take it to the extreme, for example even legacy custom apps running on a mainframe
- They actively engage their top vendor partners in the process
- They are not afraid to fail and when they do, they fail fast
Common questions you have to ask yourself
- Has there been a formal announcement or communication from executive leadership and/or at the board level stating your 3 – 5 year goals around digital transformation?
- What percentage of your applications are accessible to users on mobile devices?
- Do you need to create a separate group within IT to accelerate your digital efforts (e.g., a bimodal – mode 2 group) or can you reach your goals based upon your existing structure?
- How web enabled are your customer facing applications?
- Are you actively engaging your vendor partners in your digital transformation plans?
- Is the time to launch new applications the same now as it was 5 years ago?
- Do your competitors have mobile applications that customers can access to conduct business?
- What percentage of your efforts are internal facing to create efficiencies and lower costs versus external facing to enhance your customers’ experience?
- Are you already using or in the process of rolling out a collaborative suite, e.g., Microsoft Teams, WebEx Teams, Spark, e.g., as a part of the tactical execution of your plan?
- Is creating an environment that attracts and retains millennials/gen x’ers a driving force behind your digital transformation plans?