Digital Transformation – What's In a Name?
January 27, 2020
The following article is from CIO Review
What's in a name? When it comes to digital transformation, a great deal.
Digital transformation is the application of digital technologies to reshape business models or processes significantly, usually impacting customer experiences and requiring changes in business culture. The term is often overused to represent the digital activity of any magnitude but without clarity on what and how something is being transformed, and with the potential of causing missed expectations and jeopardizing future initiatives. Since CIOs play an integral role in leading transformation efforts, here are some key success factors to keep in mind.
Start with a clear understanding of the business problem or opportunity: The end goal is always business transformation, with digital technology as the enabler. Hence, a clear definition of the desired business change, with metrics to gauge success, is a critical precursor to understanding how technology could aid that outcome.
As an example, Delta Airlines recently defined a digital transformation outcome as 'Cancel Cancellations,' referring to a goal of dramatically reducing canceled flights due to circumstances within their control – a clear connection to the problem and the solution.
Several years ago, I was employed by a B2B technology company whose products were embedded with those of the customers. We needed to materially reduce the high cost of new product development to stay competitive. This led to the development of a technology-based collaborative design platform with our key customers that reduced development cycle times and, ultimately, cost.
Approach transformation holistically: Technology is one of the components of a People/Process/Technology triumvirate that must be collectively transformed to ensure success. For CIOs leading the charge, this has several implications.
First, it is imperative to have line-level executive championship to endorse and sustain the case for action. This championship needs to be visible in action, whereby the initiative is given priority; resources and funding are made available, and there is executive involvement along the way to reinforce its need and value.
Second, the core team driving transformation should ideally have a majority of 'future-thinking' members, enlisted from within or externally recruited who see this as a growth opportunity and are rewarded for helping drive the change.
Third, the organization as a whole needs to understand how their work will transform through this initiative, and receive training and support to adjust to the new ways of working. This is a critical change management element for every transformation project.
Fourth, a roadmap with tangible but incremental outcomes has a better likelihood of success than an attempt to deliver the ultimate win in the shortest time. For CIOs to be successful, educating their audience on the value of such a step-wise approach is an important factor in ensuring the changes will eventually stick.
At my current company, ECMC Group, we are orchestrating a wholesale move of all applications to the Cloud in multiple stages; a 'lift and shift' phase that has been completed and yielding savings, followed by an application tuning phase, currently underway. Segmenting scope in this manner is helping us deliver results without risking unnecessary complexity.
Hire Digital Natives: A technology team can uniquely contribute to transformation by introducing the art-of-the-possible using technology. In my experience, such ideas typically come from individuals who are inherently wired to seek out digital applications to business needs and operate in that mode on an everyday basis. In the ideal situation, they can find relevant use-cases from other industries and adapt to their organization. Digital Natives live at the confluence of technology and business value but are not easy to find. However, having an appropriate level of such thought leadership on a technology team greatly facilitates transformation outcomes.
Remember, all transformation is relative: News media and the cyberspace usually showcase attention-grabbing transformation initiatives, which may prompt CIOs to believe that anything less dramatic is not worth pursuing. It is worth reminding ourselves that the magnitude of change completely depends on such factors as the organization's competitive situation relative to the marketplace and its existing level of maturity in absorbing change. What may appear to be a small win in one company could be a huge win someplace else.
In a prior B2C organization, we introduced digital marketing to offer our customers guidance on buying decisions. This significantly lifted e-commerce revenue and was considered a major success within our industry. In the retail marketplace where the idea was borrowed from, that capability has been de rigueur for many years and would not be considered transformative.
Digital transformation that yields material business impact is hard to do and takes time. Many of these struggle because they emphasize on technology alone, without due consideration of the other success drivers. For CIOs, it means that building coalitions with their organizational peers and approaching transformation as a business initiative rather than a technology project will be the key to success – now and into the future.