The traps of digital transformation: it’s a tool, not a target
Companies are focusing too much on reacting to digital transformation, rather than how the technologies can really improve their business or provide a competitive edge
Short of time?
Digital transformation is one of the biggest buzzwords right now. But too many companies are focusing on reacting to the technologies, the competitive forces and the process of transformation, instead of outcomes and the end goal.
So what’s going wrong? Many established companies are keen to understand how digital technologies – social, mobile, analytics and cloud (SMAC) – can improve their operations and rejuvenate their business. They’ll be surprised to hear that SMAC is dead.
That may sound a little harsh, but companies that want to ‘go digital’ need a much broader approach. With SMAC now joined by the Internet of Things (IoT), API-enabled ecosystems, virtual reality/augmented reality (VR/AR), and artificial intelligence (AI), it just isn’t good enough to focus on building a mobile-ready e-commerce platform, set up a Twitter feed, bolt on a cloud solution, and get a weekly analytics report.
To succeed, a company needs a comprehensive but clearly defined digital operating model that boosts its competitive strength and financial performance through a truly agile business model that is constantly being optimised.
Technology needs to be adventurous enough to meet the expectations challenge: delivering a revolution in how a company operates, while also being conservative by making as much use of legacy systems as possible.
Here are nine pillars that should support any digital operating model, each of which has specific target outcomes.
1. Brand and culture
A company that goes digital needs to review its brand and culture, so that they are ready for a digital first approach that presents the right image. Outcome: attract and retain the right customers, employees and business partners.
2. Products, services and markets
Products, services and markets need to be examined bottom-up, to understand what different customer segments and markets demand and how digital will help to deliver a better stakeholder experience. Outcome: best products and services for your customers
3. Organisation and processes
A company does not necessarily need to completely reinvent itself, but digital transformation will transform and turbocharge its organisation and processes. Outcome: constant evolution of the organisation
4. Digital transformations strategy
This, however, is just the starting point. Going digital requires a digital transformation strategy that integrates these operational changes and technology drivers to ensure that there are no crunch points between the digital and the analogue moving parts of a company. Outcome: confidence, reduced risk and maximised digital ROI
5. Digital experience
Just as the user interface is arguably the most important feature of any smartphone, the digital experience must be the central pillar of any digital operating model. Strong digital experiences will create “sticky” lifetime relationships for staff, customers and partners. Outcome: a digital experience that is emotionally empathetic and engaging.
6. Sophisticated analytics and data
The power of digital is not just outbound experiences – it’s also the ability to deliver increasingly actionable insights. Sophisticated analytics and data have to be built into any digital model. Outcome: highly personalised experiences for customers, employees and business partners
No digital operating model works without close attention to a company’s technology infrastructure. In an increasingly mobile first world, every digital experience involves both public and private infrastructure, which raises critical issues of security, availability and performance. This is the most difficult element of the digital operating model to get right – after all, infrastructure is the technology backbone of any digitally enabled company. Outcome: trusted digital technology platform
Digital transformation should not be an ‘out with the old, in with the new’ approach. After all, legacy systems carry huge value and have proven reliability. Digital transformation done right is an integration of the known capabilities of existing systems with new digital capabilities that takes you to the next level. Plus digital business models are increasingly ecosystems of digital capabilities, where the API economy revolutionises business. Outcome: responsive business models
9. Technical architecture
Finally, the success of a digital operating model rests on its complete technical architecture: the applications, databases, infrastructure components devices and APIs, spanning both legacy systems and new digital technologies. Outcome: digital ROI maximised for the long term.
Done right, a good digital operating model will improve a company’s competitive positioning, profitability, and agility, and will help to ensure customer loyalty.
The wins will be not just be customer-facing, but deeply affect the performance of employees and business partners. Both new and existing digital operations will improve.
No organisation can do this alone. Every business now needs websites, mobile apps, digital devices and analytics driven models – from the largest western corporation to a mobile dim sum vendor in Shenzhen, China.
Just as organisations need digital business partners in this API-enabled ecosystem, they also need digital experts to help them realise and sustain your vision for the business.
Focusing only on the digital transformation would be a trap. Today, the ability to continuously deliver digital transformation has to be table stakes. Digital is ultimately just a collection of business and technology tools.
Don’t be blinded by process – focus instead on outcomes, competitive positioning, improving operating efficiency and agility, and most importantly on people’s experiences. By focusing a digital transformation on meeting and exceeding how customers, employees and partners experience the company, it can unlock the true power of digital.
Sourced from Graham Clark, EVP and global head of digital services, NIIT Technologies