The Digital Transformation Imperative

Stephen DeAngelis

April 17, 2018

The Digital Age is characterized by the enormous amount of data being generated in very short timeframes. In order to keep up with the pace of change, most pundits insist businesses need to transform into digital enterprises in order to remain relevant. The staff at CIOReview notes, “Over the years, digital transformation has penetrated through every industry sector and has helped organizations garner enormous business success in the course of adoption.”[1] Digital transformation laggards should view that observation as a shot across the bow and as motivation to speed up transformation plans.

 

Developing a digital transformation strategy

 

Robin Gareiss (@RGareiss), president and founder of Nemertes Research, asks a great question, “What do you need for a digital business transformation strategy that will actually work to boost business value and change the enterprise operations model?”[2] Implied in that question is the reality that it takes more than digital technologies to transform an organization into a digital enterprise. Gareiss suggests a digital business transformation strategy includes four key attributes. They are:

 

1. The innovative application of technology. “This could be the application of existing technologies or entirely new ones. The key is the organization is using technology in an innovative way.” Transformation is not just about being novel. Transformation means “a thorough or dramatic change in form or appearance.” Utilizing digital technologies is required, but not sufficient, to ensure digital transformation.

 

2. Improvement or creation of a process, product or experience. “Partly because of that technology implementation, something changes and, indeed, improves.” As noted above, the resulting change or improvement must be dramatic; otherwise, transformation has not taken place.

 

3. Measureable business value. “Organizations expect to deliver multiple, measurable values to the business.” Obviously, there is no reason to transform if business value is not created. Pundits wouldn’t be pushing businesses to transform if they didn’t see value in doing so. McKinsey analysts, Jacques Bughin, Laura LaBerge, and Anette Mellbye, conclude, “Bold, tightly integrated digital strategies will be the biggest differentiator between companies that win and companies that don’t, and the biggest payouts will go to those that initiate digital disruptions.”[3]

 

4. Quick strategy implementation. Gareiss asserts, “A digital business transformation strategy must happen quickly — within six months, based on our research. This doesn’t mean the entire transformation project must be complete within six months; it means there must be a checkpoint with measurable changes. Without this firm deadline, competitors may come out with something faster, stakeholders may lose interest or budgets may dry up.” Scott Stone, Advertising and E-Business Manager at Cisco-Eagle writes, “The speed of business is fast, and companies that aren’t successful in adopting, implementing, and optimizing new technologies run the risk of being left behind. However, the key — and challenge — with digital transformation is it involves more than an investment in a new technology, that investment must be part of an overall cultural shift within a company.”[4]

 

Cultural shifts generally take longer to achieve than the installation of digital technologies. Ravi Kumar S, president and deputy chief operating officer at Infosys, insists, “A true digital enterprise will digitize the core, which means digitizing every aspect of your enterprise. It powers and amplifies the experience for all stakeholders. Investing and reinventing the business from the core will be done with the same level of intensity as it was for the customer touchpoint journeys and experiences in the past.”[5]

 

What can go wrong?

 

No one should begin a digital transformation process believing it will be easy. Change, especially transformational change, is never easy. Numerous challenges and obstacles will confront any enterprise during its transformation journey. Steven ZoBell (@StevenZoBell), Chief Product and Technology Officer for Workfront, believes two challenges are common to every transformation effort: Lack of teamwork and dealing with legacy systems of record. He explains:

 

Lack of Teamwork: “Teamwork is forgotten in business transformations. Transformation success is completely dependent on employees working together to achieve the program’s goals. The whole company, not just a few people on the same team, must unite to drive success. Unfortunately, most organizations are siloed, with functional areas and business units struggling to communicate, coordinate and collaborate in relation to transformation initiatives. It gets worse. The diverse tools, data repositories and workflows across disparate functions exacerbate enterprise disorganization, resulting in a work ecosystem that is largely analog and siloed. Hence, a relatively small portion of a knowledge worker’s time — 39% according to our study — is dedicated to their primary job duties. Too much of the workday is swallowed up by email, administrative tasks and meetings. Substantial time is lost in the frustrating ‘shadow work’ of trying to navigate the seams within and across silos while doing cross-team work.” Silos are indeed a challenge for almost every company. That’s why many digital transformation strategies will be built upon a cognitive computing foundation. Cognitive computing platforms can help eliminate silos by integrating data from disparate databases and providing a single version of the truth accessible by all departments as needed.

 

Dealing with legacy systems of record. “All enterprises have systems of record for critical functions,” ZoBell writes. “SAP and NetSuite provide financial systems of record. Salesforce provides a customer (or sales) system of record. There are systems of record for other functions as well, such as IT and HR. However, ask any executive what their organization is working on at the moment and they’ll struggle to tell you the what, who and how much of a significant amount of corporate investment (i.e., their initiatives tied to digital transformation). Enterprises lack an operational system of record that acts as the authoritative source of truth for the organization’s work investments, progress and results. This siloed, inefficient, late-20th-century approach of tracking work across thousands of spreadsheets, emails and point solutions is common across organizations of all sizes and industries. The problems with this approach are numerous, chief among them that centralized reporting on critical initiatives is impossible. This means course corrections cannot be applied to in-flight work in real time because there is no visibility. The result? The organization’s financial performance for the fiscal year is a lagging indicator instead of an actively managed outcome.”

 

As noted above, a cognitive computing platform can help with the challenge of corporate silos. ZoBell opines, “We spend a quarter of our time looking for information. To add insult to injury, we typically search for files we created, archived in some data silo under a folder name we have forgotten. It is time to start consolidating (or at least pointing) these data sources into a single place where teams can access the data they need to do their jobs, in a self-service, real-time fashion.”

 

Concluding Thoughts

 

Too often the focus of digital transformation is on technology. As a result, people and processes get the short shrift. Lisa Morgan (@lisamorgan) writes, “Digital transformation is enabled by people, processes and technology, although few businesses are placing the proper emphasis on all three elements. While getting the technology right is important, the people and process issues are often underemphasized. As businesses use digital technologies to intelligently automate more business processes, they also need to contemplate how, where and why talent should be repurposed.”[7] ZoBell adds, “We must rethink how our teams work together across the enterprise and apply a modern approach to work with new systems and models, enabled by the right tools. Only then can we fully exploit our massive investment in digital transformation and get the expected return on [investment].”

 

Footnotes
[1] Staff, “Unraveling the Significance of Digital Transformation,” CIOReview, 8 March 2018.
[2] Robin Gareiss, “What exactly is a digital business transformation strategy?TechTarget, March 2018.
[3] Jacques Bughin, Laura LaBerge, and Anette Mellbye, “The case for digital reinvention,” McKinsey Quarterly, February 2017.
[4] Scott Stone, “Digital Transformation: An Imperative for Industrial Manufacturing in 2017,” Cerasis, 24 March 2017.
[5] Lisa Morgan, “Digital Transformation Is Advancing,” InformationWeek, 19 March 2018.
[6] Steven ZoBell, “Why Digital Transformations Fail: Closing The $900 Billion Hole In Enterprise Strategy,” Forbes, 13 March 2018.
[7] Morgan, op. cit.