Is Time Running Out for Organizations to Transform into Digital Enterprises?

Stephen DeAngelis

June 9, 2021

Prior to the pandemic, a number of studies concluded organizations only had a short-period of time to begin their digital transformation journeys. Back in January 2020, as the first news reports about the pandemic were making headlines, Bob Violino (@BobViolino) reported a survey conducted by Kong found 39 percent of respondents expected their companies “to go under or be acquired by 2023” if they failed to transform.[1] At the same time, Birger Thorburn, Chief Technology Officer at Experian, reported that a survey conducted by Forrester Consulting and Experian found 81% of executives believe “traditional business models will disappear in the next five years due to digital transformation.”[2] Thorburn also cited an IDC survey that found “85% of enterprise decision-makers say they have a time frame of two years to make significant inroads into digital transformation or they will fall behind their competitors and suffer financially.” We know the digital transformation timeline was thrown off by the pandemic; however, analysts aren’t sure by how much. Some analysts believe the pandemic hastened digital transformation efforts while other analysts believe the pandemic paused those efforts. Regardless of who is correct, the timeline to begin digital transformation is short. Aater Suleman, Vice President of Cloud Transformation at NTT DATA, insists, “Last year’s social and economic upheavals illustrated clear disparities between digital transformation progress among companies and industries. Businesses that once had multiyear digital transformation plans quickly realized they must expedite change.”[3]

 

The Digital Reinvention Imperative

 

Suleman cites a survey conducted for his company by Longitude Research which found, “7 out of 10 organizations [indicate] they would have been more resilient today if they had invested more in digital technologies prior to the pandemic.” Eight out of ten respondents also indicated the crisis accelerated their digital transformation plans.[4] Suleman asserts the term “digital transformation” fails to capture the full extent of what must be achieved. He prefers the term “digital reinvention.” He explains, “More than digital transformation, digital reinvention is about reconceiving business models, processes and operations.” Suleman is not alone in his concerns that companies don’t understand the extent of change digital transformation or reinvention requires. Jim Tompkins (@jimtompkins), Chairman at Tompkins International, also believes the word “transformation” fails to capture the urgency he feels about the need for supply chains to reinvent themselves. He explains:

 

I think people are underestimating the magnitude of what is happening today. Transformation was a great process to move a company forward five years ago. But are you telling me that for us to deal with digitalization, digital commerce and the pandemic all we need to do is change the way we do business? This is what I have read in many articles and blogs, but just changing what you have done in the past is woefully inadequate. As we try to put 2020 behind us, we need to grasp that it is a whole new game. You will not be successful going forward if what you do is transform your business, supply chain or logistics processes. Simply changing these processes is totally inadequate. You must throw out how things have been done in the past and reinvent your business, supply chain and logistics processes.”[5]

 

Updating old processes to incorporate digital technology is what Tricia Wang (@triciawang), a self-described Tech Ethnographer & Sociologist, calls “digitization at its worst.”[6] She explains, “A lot of companies treat digital as if they are ‘doing digital’ — this is ‘digitization’ at its worst — as if it’s some checklist of things to do. It’s very transactional, and people are so busy doing digital they don’t even know WHY they are doing it in the first place! Whereas [some companies] embrace ‘being digital’ — this is ‘digital transformation’ at its best — it’s a total paradigm shift in the culture and operations — it’s not just about buying the latest digital tool, but about creating a new system, new cadence, new mindset.” I believe Suleman, Tompkins, and Wang are saying the same thing; they are looking for a total paradigm shift in how organizations function.

Suleman adds, “Notably, technology is only a tool that enables digital reinvention. [Transformation] leaders in the survey were able to uncover new ways of working supported by technologies like cloud and AI that helped them adapt quickly to customer and market changes. Underscoring the point, 96% of leaders said they plan to further reinvent their organizations digitally in response to Covid-19 compared to only 47% of laggards.”

 

Moving Forward

 

With so many experts expressing an urgency for organizations to transform, one would think companies would rush to change. Surprisingly, Andrew Spanyi, President of Spanyi International, reports, “A recent New Vantage survey reported that just 24% of respondents they thought their organization was data-driven, a decline from 37.8% the prior year.”[7] Perhaps the pandemic proved to be a wake-up call to the fact that they were misleading themselves into thinking they were further along in their transformation efforts than they actually were. Spanyi continues, “Just as analytical tools are becoming in widespread use, requiring even more reliable data, it’s becoming increasingly difficult to be a data-driven company. Puzzling, isn’t it? What is the reason for this plunge in becoming data driven? The same New Vantage survey reported that cultural challenges — not technological ones — represented the largest impediment and as many as 92.2% of mainstream companies reported that they have struggled with issues such as organizational alignment, business processes, change management, communication, skill sets, and resistance to change.”

 

Centuries ago Niccolo Machiavelli, in his classic The Prince, wrote, “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things, because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new.” As difficult as change is, it is also unrelentingly necessary. Tech writer George V. Hulme (@georgevhulme), explains, “While having a mature digital enterprise helped organizations to better survive — and even thrive, in some cases — the pandemic, that’s not the primary reason why organizations will continue to invest in their digital transformation efforts. According to new research from consultancy Deloitte, businesses will continue to invest in their digital transformation capabilities to innovate rapidly and to survive competitive battles in the marketplace.”[8] He concludes, “Whether enterprise business and technology leaders want a world with such rapid change doesn’t matter: it is the world in which they must compete. And those enterprises that succeed in the next few years will be those that not only make the right investments in digital transformation, but those that figure out the best ways to innovate and connect with customers by leveraging those investments.”

 

Concluding Thoughts

 

Stephanie Woerner, research scientist at MIT Sloan Center for Information Systems Research, insists “future-ready” organizations will dominate the competitive landscape in the years ahead. She recently told a conference audience, “A future-ready company is one that adapts and succeeds in any environment. … It’s built on agility, resilience, standardization and leveraging partnerships to create the solutions that anticipate business and customer needs. Future-ready enterprises undergo a digital business transformation to create the digital experience customers expect.”[9] Like other experts, Woerner notes that, in many cases, a cultural shift is required. “Future-proofing is a mindset, not a technical goal,” she told conference participants. “The core efforts rely on a culture shift to sustain them, starting with accepting risk.” In sports, there is an old adage that states, “No pain, no gain.” Change can be painful; however, as most experts insist, transforming industrial age organizations into digital enterprises will be worth the pain.

 

Footnotes
[1] Bob Violino, “Digital ‘window of survival’ only three years for most firms, says study,” Information Management, 15 January 2020.
[2] Birger Thorburn, “Three Ways Digital Transformation Is Changing How We Do Business,” Forbes, 9 January 2020.
[3] Aater Suleman, “The Time For Digital Reinvention Is Now,” Forbes, 22 April 2021.
[4] NTT DATA Services, “NTT DATA Study Shows Lack of Timely Technology Investments Hindering Businesses from COVID Recovery,” Business Wire, 5 January 2021.
[5] Jim Tompkins, “Transformation is Inadequate: Why Reinvention is the Only Option for Business Success,” Tompkins Blog, 15 September 2020.
[6] Trevor Miles, “Let’s be clear: Digitization is not the same as Digital Transformation,” Kinaxis Blog, 8 December 2017.
[7] Andrew Spanyi, “Data, analytics, and digital transformation,” Venture Beat, 13 May 2021.
[8] George V. Hulme, “Successful Digital Transformation: It’s About Strategy,” DevOps.com, 30 April 2021.
[9] Katie Malone, “5 foundations of a future-ready enterprise,” CIO Dive, 27 April 2021.