What is digital for your business? What do you expect when you consider digitalisation of individual functions (piecemeal approach) within your business? What do you expect when you consider digitalization of your entire business (holistic approach)?
Are both expectations aligned or merge somewhere? Or are both miles apart?
It is important to ensure that the piecemeal approach for digital transformation aligns with the holistic approach somewhere. Else, it is easier for the large scale digital transformation efforts to fail.
The reasons why most businesses let functional departments adopt digital tools suited to their needs are various, including cost and lack of formal strategy. But jumping to implementation without big picture clarity can create roadblocks for the business digitalisation.
For instance, independent research by the Indian tech giant HCL Technologies reveals the divide when it comes to implementing new digital interfaces for customers (external stakeholders).
While, 70% of the respondents reported that they are using current technologies to improve Customer Experience (CX), only about a half report involving customers in the process.
What is digital & digital transformation?
Does it mean automation of processes, production, customer interaction? Or does it mean simply the use of technology to connect all internal stakeholders to drive innovation? For many organizations, it is a bit of both. But for most organizations, the first one sparks the other.
The digital leaders are those who are digitally mature and are driving results (ROI) from the digital integration of organizational ecosystem and technology. Although this segment is a minority (as per HCL’s latest research report), the statement “organisation’s systems are completely integrated with its ecosystem” is important.
This generally means not just the processes and interactions, but the entire work culture must evolve around the digital ecosystem. For example, McKinsey puts the following values together as the meaning of digital:
- Proactive decision making based on data (mostly real time omnichannel data)
- Analyzing contextual interactivity of customers to improve CX
- Real-time automation of customer interactions
- Customer journey-focused innovation in product/services offering
- A cross-functional mind-set for decision making
- A system and data architecture which connects people, devices and channels
Factors that can make digital transformation a success
There are many factors your formal digital transformation strategy must address for a successful implementation. The factors below are the essential driving force for a successful digital transformation strategy in the current environment.
Sense of urgency
Digital transformation isn’t something you can afford to undertake in the next five-year plan. Technology is driving startups to offer traditional services, offered by long established organisations, far more efficiently, at lower cost and in a more customer friendly manner (read UBER, Netflix).
Your next competitor is not going to be another traditional business, but a low cost, highly efficient disruptor. Something which can happen anytime within next few years.
Leadership and accountability
Leadership and accountability in digital transformation mean that this effort must be empowered from the top. HBR’s Tuck Rickards and Rhys Grossman even suggest that there should be board members who are experienced and have the mindset to lead and support digital transformation efforts. However, appointing a CIO and empowering CEOs as well been the trend among the organisations.
With the top-level leadership set up, the next step will be to establish and empower multiple stakeholders to implement and manage the change across the organization.
Prioritise goals & manage talent
An important part of formulating any digital transformation strategy is to define milestones and the timelines to achieve them.
The milestones will depend on the opportunities and challenges faced by the organization in four critical areas – Operations, CX, Product/Service development and new business models. These milestones define which steps to be taken first and which ones later.
Though, lack of talent is a major hindrance for most businesses on the road to becoming a digital organization. The HCL Technology report also validated the fact that about half of the organizations surveyed find lack of talent internally find a major roadblock to digital efforts. An insight which finds support in reports from other quarters as well.
Therefore, CEOs or any other CXO leading the transformation efforts will need to – identify, train and retain the
- Technology and
Factors that can derail the digital transformation efforts
While digital transformation is an industry buzzword, there are many pitfalls organizations have experienced when jumping on the bandwagon in haste. Some of the prominent ones are as follows:
Underestimating the change
As the term ‘digital transformation’ suggests, it literally is a transformation. Which affects not just the organizational processes and customer interactions, but also challenges the existing mindset, culture, internal power centers and communications. Underestimating the impact of digitization of processes can have dangerous consequences for the organisation.
Change management of any kind must have a holistic approach for implementation, encompassing departments, functions, employees and other stakeholders. Confidence building and setting up of new performance metrics form a major part of change management. Identifying and motivating people who can drive the process is important.
Ignoring cultural aspects
Organisational culture has been found as one of the most notorious hurdles on the way to digital transformation. Culture has been termed as a make or break point for digital transformation by the leaders in the arena. Also, something that leaders often fail to consider a factor.
The fact is that culture is known to drive any effort for change and innovation, and is a major influencer for an organization to be the disruptor rather than disrupted.
The factors of digital culture include:
- Customer focused
- Agile and flexible
Other factors you may consider while implementing digital strategy
Although books can be written on the factors for successful digital transformation, there are few important success factors which can be applied to all businesses in general. Here are additional factors on the way to the digital transformation from digital strategy:
Adopt a new approach: For effective digital transformation, businesses must be prepared to take risks and try new approaches. This could be done (just for instance) by assigning IT teams to specific business units. Also, hiring focused on millennials can bring in native digital skills to support the new processes.
Make it data driven: Digital transformation success largely depends on the data pipelines that flow in and out of an organization. Some organisations have even appointed a Chief Data Officer (CDO) to look after company data and its classification. CDOs look at the rules and regulations for various data classes to ensure they are used in the most appropriate way.
Data and analytics are two critical things. Data should be used for value creation and process optimization. Digitisation offers the capability to extract more value from data than ever before. Information can be sliced and diced information in new ways that could be used to enhance targeted marketing and digital customer experience.
Modernise your data center: This action requires a fundamental IT transformation. Choose cloud as a primary IT architecture model to manage devices and create large data lakes. Hybrid cloud infrastructure is indeed a key enabler of digital transformation for supporting mobile, cloud‑native workloads and legacy workloads. It is important that a business evaluates which workloads and data should be moved to the cloud for the benefits of scalability and agility.
Link IT and business innovation: Business innovation initiatives are often separated from the IT infrastructure, systems and processes. When business departments and IT aren’t on the same page, it becomes harder for IT to deliver exactly what is needed. Successful digital transformation requires an IT department to act as a strong partner with the rest of the business. This could be done by involving IT to provide the necessary tools and infrastructure to support innovation projects.
Choose the right tech provider: The final factor that makes a big difference to successful digital transformation is the selection of the right technology provider – someone who can match the scale of the business and equipped to be relevant in the long term. To be effective, technology providers must provide support for operating model, infrastructure and applications, delivering measurable results in each phase of digitization to subsequently transform the customer experience.