Although you may not think about digital transformation as a race, business analysts increasingly enumerate differences between Digital Age winners and losers. For example, Johan den Haan (@JohanDenHaan), Chief Technology Officer at Mendix, writes, “To compete in the 21st century economy, the success of digital transformation projects sort the winners from the losers.”[1] No one wants to be a loser. In business, being a loser means going out of business. Ernst & Young (EY) analysts note, “With banks, insurers and wealth and asset managers spending tens of millions of dollars on digital transformation programs, there is mounting interest in how they have managed success and the creation of value in vastly complex environments.”[2] While some business leaders view digital disruption with dismay, Sanchit Mullick (@sanchitmullick), Associate Vice President at Infosys, suggests they should view it as an opportunity. He explains, “The emergence of digital, disruptive competition poses nothing less than an existential challenge. Yet [visionary leaders] also recognize that digital disruption has opened the doors to unprecedented opportunity for digital transformation.”[3]
At the Starting Line
Every digital transformation process needs to start somewhere. According to EY analysts, the best place to start is with your customers. Yang Shim, EY Digital Enterprise Transformation Leader in Financial Services Advisory, states, “An unrelenting focus on the customer allows companies to innovate while satisfying customer needs and meeting financial criteria like increasing revenues and profitability, plus driving robust, sustainable growth. The performance gap is huge between companies that take a more comprehensive and customer-centric approach to digital enterprise transformation and those that focus solely on cost reduction.” Frankly, cost reduction should not be the finish line for digital transformation. Transformation is defined as a thorough or dramatic change in form. Simply reducing costs obviously doesn’t amount to a transformation. Digital transformation means aligning business models to the digital world. Katherine Lazarevich (@KatrinLaz), co-founder and managing partner of Digiteum, explains, “Companies are ready to aggressively invest into digital transformation strategies and change their technology infrastructure and ecosystems in line with the demands of the modern economy.”[4] If your company is not ready to do that, it’s not ready to step to the starting line.
If Shim is correct about the importance of focusing on customers during digital transformation, you must figure out how to accomplish that while adopting new technologies, infrastructures, and ecosystems as Lazarevich suggests must happen. The key, according to Lazarevich, is big data. “Many companies,” she writes, “build their transformation models around a newly discovered or acquired asset — big data.” Data by itself, however, is not enough. She goes on to explain, “Nowadays, developing IoT, data services and analytics help companies transform their business.” In a modern, connected business ecosystem, big data is generated by sensors then transmitted via the Internet of Things to advanced analytics platforms. Increasingly, the platform of choice involves artificial intelligence (or a subset of AI called cognitive computing). Salvi Mittal, Chief Information Officer at the Economic Times, notes, “Digital business has hastened the interest in Artificial Intelligence. … AI has the potential to influence their business and competitive landscape.”[5] With a good understanding of your customer (thanks to big data) and having embraced the technologies you will need, your company will be ready to develop a winning transformation strategy.
Running the Race
Since many analysts believe transformation is a never-ending process, running the race (i.e., constantly transforming) is one of the most important things your company can do. An EY commissioned study conducted by Forrester Consulting concluded, “Digital leaders employ a holistic, adaptive approach to meet evolving customer, marketplace and regulatory needs. The study found the most advanced digital organizations foster a symbiotic relationship between digital transformation and innovation: companies at the forefront of transformation create defined, repeatable and scalable innovation processes (83 percent), while laggards use a more fragmented approach with no formal coordination or mechanism to scale transformation.” By having a repeatable and scalable innovation process in place, a company is better situated to transform consistently. Cognitive computing platforms can play an important role in an innovation process as well as in other transformation areas. Jenna Hogue explains, “The types of problems [involved in cognitive computing] … tend to be much more complex and human-like than the average non-cognitive system. These problems tend to comprise multiple different variables included, shifting data elements, and an ambiguous nature.”[6]
If your business environment is complex, changing, and frequently confronts ambiguous situations, cognitive computing can provide you with actionable insights that improve processes and decision making. In an environment where transformation is a constant theme, leveraging an adaptive analytics platform is essential. Since cognitive platforms can collect, integrate, and analyze both structured and unstructured data, every part of the company can have access to a single version of the truth. This helps with corporate alignment and communication. It also helps ensure the innovation process remains connected with operational processes. Mittal explains cognitive technologies can help companies “avoid disconnecting the island of innovation and predict what can bring bigger value to business.”
Towards the Finishing Line
Because companies are always establishing new goals and setting new priorities, there really is no finish line in the transformation race. In other words, as you approach one finish line, a new one always emerges down the road. This can become problematic for employees. Kevin Koenig, EY Americas Advisory Data & Analytics Leader for Insurance, concludes technology can help employees remain adaptable. He explains, “While having access to information is important, if companies do not arm their workforce with the right tools and insights to enable employees to make impactful decisions, they will be at a huge competitive disadvantage.” Lazarevich also views technology as a key element in helping companies continually transform. She explains, “Connected technology and big data [are] the means for companies to rebuild themselves, reinvent their business strategies and enhance their competitive advantages.” Although Mullick doesn’t disagree with Shim that digital enterprises need to be customer-centric, he warns, “It would be perilous to characterize a digital enterprise based on its shiny, new customer experience, although that is important.” He concludes, “A truly digital organization is composed of a modernized and simplified digital core, along with optimized business processes that surround it, so it can then amplify great consumer experiences. It is an organization driven by data, secured by technology, and improved by AI-led automation.”
Footnotes
[1] Johan den Haan, “Empowering digital transformation from the inside out,” Gigabit, 30 May 2018.
[2] Ernst & Young, “EY Survey Shows How Leaders are Winning the Digital Transformation Race,” Cision PR Newswire, 25 June 2018.
[3] Sanchit Mullick, “Beating “Digital Disruption” with Digital Transformation,” Computer Business Review, 12 June 2018.
[4] Katherine Lazarevich, “IoT and Big Data at the Core of Digital Transformation Strategies, IoT for All, 14 June 2018.
[5] Salvi Mittal, “Role of AI in digital transformation efforts and beyond,” Economic Times, 3 June 2018.
[6] Jenna Hogue, “Cognitive Computing: The Hype, the Reality,” Dataversity, 12 January 2017.
