When you think of words that often creep into business meetings without much context or substance, Digital Transformation is probably top of the pile. Here, Tom Needs, COO, Node4, demystifies Digital Transformation and explains what yours might actually look like, as well as how to find the right path for your business.
The words ‘what’s our Digital Transformation strategy?’ are enough to strike fear into the heart of many an IT leader.
One of the biggest challenges of Digital Transformation is the fact that the term has been so widely applied. It’s now something of a cliché, or as Forrester suggests, has ‘come to mean so many things that it’s almost meaningless.’ Nevertheless, it has become the driver of so much change in the global economy that it takes a brave business to not have a Digital Transformation plan.
Digital Transformation is very real – figures from Gartner reveal that 79% of corporate strategists say it is ‘reinventing their business’. But what it actually means will be different for every organisation and therefore plotting the right path to achieving a shared understanding within the business and getting buy-in to a Digital Transformation plan depends on being clear on definition, purpose and constraints.
Stepping back briefly from the technology helps. As the Enterprisers Project CIO community says, ‘love it or not, the business mandates behind the term – to rethink old operating models, to experiment more, to become more agile in your ability to respond to customers and rivals – aren’t going anywhere’.
By adopting these three core principles, businesses can begin to refine their approach and discover what Digital Transformation means for them – not for everyone else – and how to find the right way forward. That’s no easy task, but here are five further steps to think about.
- Digital Transformation is business transformation
Before embarking on any Digital Transformation strategy, it’s vital to start by understanding your key business drivers and strategic priorities. Digital Transformation is not a technology box-ticking exercise and any strategy must focus on business objectives and explain how Digital Transformation will benefit the business.
More broadly, you also need to gauge what level of change your organisation can effectively resource and drive. This is important because change brought about by Digital Transformation is so much more than technology upgrades or increased IT investment. Research published by McKinsey illustrates the considerable effort required, arguing that technology is ‘only one part of the story’. Success depends on some radical activity, from re-imagining the workplace and upgrading the organisation’s ‘hard wiring’, to changing the way you communicate. Not only do businesses need to have the ‘digital savvy’ leaders, but they also need to build relevant talent and skill-sets throughout their organisations.
Looking at the bigger picture also requires a willingness to learn lessons from those who report success, to ensure that Digital Transformations do not ‘fall short in improving performance and equipping companies to sustain changes’. This has happened to many a digital project as, for example, an organisation has been unable to sufficiently update entrenched, analogue business processes to support a whizzy new digital customer interface.
2) Understand your broader business environment
Businesses need to identify external pressures and challenges covering key areas such as their markets, processes, regulatory environment, competition and supplier and customer ecosystems. Time and effort should be put into researching where to invest and how Digital Transformation strategies are being applied in relevant businesses and industries.
This underlines the need to focus Digital Transformation more broadly than tech procurement because, as Gartner argues, ‘the non-technological aspects, if not addressed, can mask the depth of organisational transformation required and become serious inhibitors.’ Industry inertia, for example, can lead to the failure of Digital Transformation projects. You might have a shiny new customer-facing process, but if it relies on a partner who can’t support digitally transacting in this way, it will never achieve its promise.
3) Consider your technology options
Often, IT departments don’t have the skillset or time to develop a comprehensive roadmap for change and transformation. Add to this the bewildering choice of technology providers out there pushing the Digital Transformation message and the resulting complexity of a Digital Transformation project ‘can be a killer’. Before you start making technology choices, consider your current IT estate carefully and map out both current and ideal future states for core infrastructure and applications. There are important decisions to be made about legacy business applications and this map will help you to research the options for modernisation. There is a lot of noise in the industry about being ‘cloud-first’ and for many, the idea is to plan for everything eventually being in the cloud. However, it’s worth noting that it’s not the only option for legacy applications and some of the first movers into the cloud have not seen the cost and performance benefits they planned for.
4) Set performance measures
KPIs offer IT leaders the chance to set a shared understanding of Digital Transformation within the business and maintain an ongoing dialogue. The temptation is to evolve existing IT focused metrics, but with an objective as broad as business transformation there is a good case for starting again. Consider what it means to your organisation to be a digital business; can you demonstrate and measure the impact on customers, speed of operations, data exploitation and the rate of innovation?
There are many Digital Transformation KPI lists available on the Internet, but this is another temptation best avoided. Your KPIs need to be both industry specific and organisation specific. IDC has created a helpful digital scorecard for CIOs thinking about how to best fashion their KPIs. With shared understanding as a goal, your metrics need to interest and engage your organisation’s leadership team. They also need to reflect the fact that Digital Transformation is a long-term programme.
5) Find the right partners
Few, if any, organisations will be able to make the Digital Transformation journey alone, so tech partnerships can ensure your approach is future-proof and flexible to adapt with changing demand and technology. Look for partners who, in Forrester’s words, can ‘define Digital Transformation’. The right partners should be able to demonstrate an understanding of your business, markets, competitive pressures and opportunities. When you’ve started narrowing down your options, ask for evidence that they can successfully apply technology to deliver genuine transformative change. Otherwise, you risk missing the target by simply moving from one set of technology vendors and service providers to another, without addressing your wider objectives.
Digital Transformation brings with it a broad spectrum of risk and reward. Wherever you are on the journey, if you’re establishing and evaluating objectives, progress, challenges and benefits, it can pay huge dividends
