A recent headline grabbed my attention: “Why Are We Still Talking About Digital Transformation?” The implication was clear — the time for talk is over and now it’s time for action. In the article, Annee Bayeux, Chief Learning Strategist at Degreed, explains, “Today, we face another Sputnik moment. The fourth industrial revolution — the introduction of technologies such as AI, robotics, cloud technologies and IoT — is leaving thousands of companies and millions of workers ill-equipped to compete in a reinvented world.”[1] Too many companies think only about implementing new technologies when contemplating their digital transformation journey. That’s a mistake. Any good consultant will advise business leaders to focus simultaneously on people, processes, and technology.

John McEleney, Vice President of Strategy at PTC, asserts that the pandemic drove home the importance of focusing on all three business areas. He writes, “[During the pandemic,] businesses that pivoted fast, thrived; while those less agile, perished.”[2] The lesson to be learned, he insists, is: “We have an opportunity — and a responsibility — to redesign how we work together, in what we hope will soon be a ‘post-pandemic’ world. We also need to reimagine the workplace, the processes, and platforms we adopt to get work done, to create a more innovative and better future.” Ali Nooraii, Director of Digital Transformation for Operations at Alcoa, agrees. He writes, “Just as critical as why companies are executing on digital transformation is how. The technology itself is only part of the story. Integrating innovative new technology into a company culture and ensuring that new, digital tools and processes are delivering efficiencies and value is critical.”[3]

Moving from Talk to Action

Glenn Landmesser, digital transformation practice lead at RiseNow, explains why we shouldn’t be too surprised there has been more talk than action when it comes to digital transformation. He writes, “We’ve all seen the statistic that, according to McKinsey, BCG, KPMG and Bain & Company, the risk of digital transformation failure falls somewhere between 70% and 95%.”[4] Who wouldn’t be hesitant to undertake digital transformation given those odds? Let’s examine expert suggestions about how to improve the odds for achieving a successful digital transformation in the areas of people, processes, and technology.

People

Maria Orozova, founder of MODintelechy, writes, “Automation, optimization and other software implementations are only as effective as the human strategy around them.”[5] According to Bayeux, “The new reality for all workers is the need to upskill continuously. Learning must include every worker from C-Suite offices to factory floors.” She goes on to note, “In the United States, the potential gain in GDP from upskilling could be $900 billion by 2030, equivalent to 3.7% of GDP, according to the World Economic Forum’s ‘Upskilling for Shared Prosperity‘ 2021 insight report.” Bayeux asserts, “The new employee needs to be not only a great learner, but also an expert knowledge worker. This means they need foundational skills that support their daily performance and also need to be experts in navigating the information and opportunities within their wider ecosystem.” She insists people need to develop the following set of skills:

• Power skills: “Formerly known as soft skills, agile skills such as change management, communication and team building are at the forefront of the new power skills. These human and interpersonal skills remain durable over time and can be portable into newly created roles.”

• Functional skills: “Core subject matter skills that are required to perform a specific job but can be transferred to perform other jobs in the right situations. Here, think of project management skills that can travel from function to function with small tweaks.”

• Transactional and hot skills: “These high-demand skills are required to perform critical jobs related to a business strategy but often have a short shelf life. Ten years ago, being a data scientist was the hottest thing in IT. Today, analysts are predicting that AI will soon be able to do most of what data scientists do today.”

Bayeux concludes, “Combining these skills will improve overall job performance and success at strategic priority projects while increasing organizational agility and creating greater business value.”

Processes

How people work (i.e., the processes they use) is probably more important than the tools they use, although discriminating between processes and tools can be difficult. When it comes to digital transformation, however, understanding, refining, and implementing the right businesses processes is essential for success. The transformation needs to be complete. It needs to become part of a an enterprise’s DNA. Tricia Wang, a self-described Tech Ethnographer & Sociologist, 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.”[6]

Don’t assume your processes are as good as they can be. Analysts from Quandary Consulting Group insist, “Every organization has processes that could be improved.”[7] Get your processes right and then see how technology can make them even better. As Bill Gates once noted, “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” To learn more about how to improve your processes, read the Quandary Consulting Group article.

Technology

According to Bayeux, “Two years ago, 73% of all companies did not have digital roadmaps to guide them through this process. Today, half of those companies have digital roadmaps.” Such roadmaps need to be constantly updated as new technologies emerge. Although I have deliberately listed technology last, the fact that we’re discussing “digital” transformation means data and technology play a central role in any enterprise’s future. Analysts from Huawei observe, “Data remains the core of digital transformation, and the fuel behind any technology adoption strategy. If data is the new oil, [it] needs to be refined, before it can power any digitalization efforts. In other words, the data have to be collected, transmitted, stored, analyzed, and processed before it’s usable. … Any improvement in this data processing cycle, no matter how small, can make great strides in helping businesses unlock new opportunities.”[8]

The challenge, of course, is deciding which technologies are best-suited for a specific enterprise when collecting, transmitting, storing, and analyzing data. Not every technology suits every business. However, one technology that every digital enterprise will leverage is artificial intelligence (AI). Deloitte analysts, Nitin Mittal, Irfan Saif, and Beena Ammanath, report, “Leaders across industries consistently report how important this technology is to their future. According to The Deloitte AI Institute’s fifth annual ‘State of AI in the Enterprise’ survey, 94% of business leaders report that AI is critical to success over the next five years.”[9]

Concluding Thoughts

Orozova concludes, “Some see transformation as a buzzword — a name denoting a specific effort relevant only to technology. That might have been the case in a previous era, but not today. Digital transformation is in service of everything — your business goals, your infrastructure, your people and, more specifically, executives who are ready to think big.” Mittal and his Deloitte colleagues reinforce what has been stated above — that people, processes, and technology are all important. They suggest four key actions to improve outcomes of digital transformation efforts. Those actions are:

• Invest in culture and leadership. “The workforce is increasingly optimistic, and leaders can do more to harness that optimism for culture change, establish new ways of working, and drive greater business results with AI.”

• Transform operations. “An organization’s ability to build and deploy AI ethically and at scale can largely depend on how well it has redesigned operations to accommodate the unique demands of new technologies.”

• Orchestrate tech and talent. “Technology and talent acquisition can no longer be considered separate. Organizations need to strategize their approach to AI based on the skill sets they have available, whether they derive from humans or prepackaged solutions.”

• Select use cases that can help accelerate value. “Selecting the right use cases to fuel an organization’s AI journey depends largely on the value drivers for its business, influenced by its sector and industry context.”

Despite the woefully bad historic track record for digital transformation efforts, there are myriad reasons for optimism today. The time for talk is over. It’s a time for action. Start your digital transformation journey today.

Footnotes
[1] Annee Bayeux, “Why Are We Still Talking About Digital Transformation?” Spiceworks, 17 January 2023.
[2] John McEleney, “Mandate for 2022: Rethink People, Processes, and Platforms,” DesignNews, 13 January 2022.
[3] Ali Nooraii, “A People-Led Approach to Digital Transformation,” CIO Review, 28 November 2022.
[4] Glenn Landmesser, “Does Your Digital Transformation Need An OTA?” Forbes, 9 January 2023.
[5] Maria Orozova, “The Human Problem (And Potential) Of Digital Transformation,” Forbes, 22 November 2022.
[6] Trevor Miles, “Let’s be clear: Digitization is not the same as Digital Transformation,” Kinaxis Blog, 8 December 2017.
[7] Staff, “Process Improvement: Cut Waste and Improve Business Efficiency,” Quandary Consulting Group, 2021.
[8] Huawei, “Finding the Right Technologies for the Right Scenarios,” CIO, 22 September 2022.
[9] Nitin Mittal, Irfan Saif, and Beena Ammanath, “Harnessing AI Transformation: 4 Actions to Take Now,” The Wall Street Journal, 18 October 2022.