Digital transformation is leveraging the opportunities brought about by emerging digital technologies, to transform business activities and models, in a strategic and coherent way.
The world of digital has advanced leap and bounds. Organizations weighed down by several considerations, however, have not kept pace, forcing them to indulge in digital transformation programs from time-to-time, to catch up. At another level, enterprises, mainly upstarts, unleash new digital based business models, which become paradigms others seek to emulate or better. IBM’s use of Watson for new AI challenges, GE leveraging IoT, AirBnB transforming hospitality, Uber changing taxi transportation, and more, are all examples of companies having indulged in successful digital transformation. Several other companies strive to seek synergy with such path-breaking business models. Steve Young, VP of IT at the VIA Metro, for instance, aligns digital transformation with metro rider experience, positioning itself to leverage the changing consumer needs brought about by services such as Uber and emerging technologies such as self-driving cars.
However, such instances of successful and seamless digital transformation are rare. Most companies struggle to define their digital strategy and kick-start their digital transformation program. A recent SAP survey reveals while 97% of businesses are onto some form of digital initiatives or other, only 21% have actually gone on to implement a firm-wide strategy.
In companies where digital transformation has been successful, it is mostly the CIOs that herald the change. About 52% of companies reported that the CIOs and CTOs were responsible for creating the organization’s digital vision, but that they faced roadblocks.
The CIOs have their task cut on successfully heralding a digital transformation in enterprises.
Establish a Technical Backbone
The first step towards digital transformation is establishing the technical backbone. This translates to becoming cloud-ready, redesigning networks to update security, and acquiring remote monitoring capabilities in today’s wi-fi and IoT age. Paul Krueger, CIO of Stewart and Stevenson adopted such an approach to good effect.
Companies cannot reasonably expect to develop everything in-house or even have exclusive services for everything. Cost, time, and other considerations make it impossible, and in any case looking for developing everything in-house may be akin to reinventing the wheel. There is a need to leverage common platforms that offer shared services, as well, and also try and develop solutions out of existing services, as advocated by Ross Tucker, CIO of Texas United.
There is also a case of overhauling the ERP program, making it agiler and primed up for today’s highly competitive and fast-paced business environment that requires flexibility, speed, and nimbleness. Rusty Kennington and Walter Meyer of Commercial Metals Company leveraged agile management practices to deploy its e-commerce solution and succeeded in selling its rebar and other metals exemplarily well. The company expanded its agile practice when rolling out a global ERP program, to an equally successful effect.
A successful digital transformation makes it easy for customers to do business with the company. The very raison–d’-etre for any business being satisfying customer wants, businesses that do not keep the customer at the heart of their digital transformation initiatives are bound to falter. Rusty Kennington and Walter Meyer of Commercial Metals Company applied this precept to good effect, aiming their digital transformation initiative to make it easy for customers to do business with them, by including customers in defining what the digital transformation exercise looked like. The results paid off as Commercial Metal Corporation saw a spurt in market share.
Understand the Nature of the Transformation
Having set up the basic infrastructure, the next basic requirement in rolling out digital transformation initiatives is fixing the context in which digital transformation is to be applied in the enterprise. Digital-savvy CIOs understand how emerging technology can impact different aspects of the enterprise, both operational and customer-facing, and make a strong case for implementing the most relevant solutions.
John Varkey of Direct Energy makes a case for lowercase digital and the uppercase Digital. Lowercase digital is about technologies such as websites, mobile, and e-commerce while upper case Digital is about “accelerating business change” in aspects such as customer experience, new business models, and more. Each type of transformation initiatives requires a different approach. Lowercase digital, for instance, is transforming front-end customer facing digital assets, whereas uppercase digital runs deeper, seeking to change digital technologies that impact underlying behaviors and influences that often keep the business running.
In today’s highly competitive environment, businesses are always on the lookout to cut costs, boost revenues, and create efficiencies. To further such ends, innovation is inseparable from digital transformation. Without innovating solutions and innovative new business models, there is no case for digital transformation. Often, such innovation boils down to taking calculated risks.
Bruno Ménard of Sanofi says “ “If I look at the expectations of my board members, they are really around innovation. What does digital mean for my business, how can I create competitive strengths, how can I create resource from digital, how do I manage a digital transformation? How do I help my business teams to really shift or integrate digital in what they do?” A big part of the challenge, according to Ménard, is developing organizational structures to deliver such innovation on a consistent basis, or in other words, improve the maturity of IT governance vis-a-vis innovation.
7 out of 10 digital-ready CIOs consider themselves responsible for driving the adoption of disruptive technologies within their organizations, especially in mobile, analytics, and cloud. These CIOs are comfortable driving innovation throughout the business, rather than simply in IT itself, and research on developing new products and solutions.
Manage Change Effectively
Digital transformation is also a change and comes with all the complexities associated with change. There is a need to unfreeze existing culture and paradigms, implement the new culture and paradigms, and freeze it. Simultaneously, there is also the ever-pressing need to overcome resistance to change and iron out the teething troubles and glitches that invariably come to pass during the transformation. Transformative enterprises often take on a significant number of parallel initiatives, and the CIO becomes the hub that integrates everything together.
As a study by Forrester Research concludes, it requires somebody who is both adept in the technology and has clout across the enterprise to lead the change. The obvious candidate who fits the bill is the CIO.
As the in-house, IT team is saddled with pressing routine tasks, and anyway may not be too conversant with the in-thing, make sure you co-opt a technical partner for your digital transformation initiatives. The world of technology is fast changing, and a focused technical partner, abreast of the latest cutting-edge technology would help you roll out robust apps and other solutions essential for the digital transformation initiatives.