Listening to every keynote, panel discussion or reading articles relating to business sustainability through technology, one message is repeated over and over again – Digital Transformation is imperative for all businesses!
Although this message is coming through loudly, is it not always clear to business leaders and the workforce, exactly what digital transformation really is and what it means for their organisation.
In explaining digital transformation as the benefit and value that technology can enable within the business through technology innovation including IT buzz words like: Cloud, Automation, Dev-Ops, Artificial Intelligence (AI), Machine Learning, Internet of Things (IoT), Single Sign-On, Data Mining & Big Data, Bit Chain – does not really make the need for digital transformation any clearer.
One thing is clear though – we are living in a hyper-connected world where technology and more specifically, digital devices, are the glue linking together people and information in new ways we can hardly comprehend. In this statement, is the clue of what digital transformation entails…
What is digital transformation?
We can define digital transformation as the fundamental changes in the manner in which business and organisational operations are conducted, to adapt to the changes and to leverage the opportunities, caused by the use of digital devices and their accelerated impact on the way we live.
Digital devices, operate on digital signals running through electronic circuits to collect, store, manipulate, interpret and display information. These digital electronic integrated circuits (ICs) evolved since 1947, when the functional transistor was invented, into what we know today as computers. All digital devices are, at its core, a computer of some sorts used by humans to interact with information.
Transformation on the other hand implies a fundamental change in the way things used to be (converting something from one state to another) – it enables new creativity and innovation inspired by technology evolution, bringing change that introduces a new way, a different way to do things, rather than just enhancing or improving an old or current way.
To simplify it, you could say that digital transformation is the profound changes in the way business is conducted, to adapt to the changes in society caused by the continuous evolvement of computers.
A typical example of digital transformation is the “paperless office” – fundamentally changing the way we preserve information by storing it in digital format rather than writing it down on paper. This concept has profound implications in our commerce interaction expectations if you are comparing the speed in which information can be recalled and processed through digital means vs paper files, archives and libraries…
Who should lead the Digital Transformation?
Computers are hardly breaking news anymore as it is widely used within business where technology has become an integral enabling part of any organisation. Modern digital devices i.e. tablets, smart phones, the IoT, smart watches and other smart wearable devices, are changing the way we live and interact in commerce and hence the way we, as the consumer society, expect business to be conducted. Digital transformation is thus more about the change in business operations – processes and systems – than just the adoption of new technologies. Due to the importance of technology in organisations and the key role IT plays in the organisation’s ability to adapt to the society’s changing needs, it is the role of the CIO to lead the Digitial Transformation initiatives.
Digital Transformation matters because…
Any business change is costly and businesses might avoid change, for that very reason. Howard King of The Guardian, (Nov’13) puts it this way: “Businesses don’t transform by choice because it is expensive and risky. Businesses go through transformation when they have failed to evolve.” He continues in saying that evolving businesses never necessarily need to transform as they are continually focussed on their clients. This evolution ensures the key drivers of transformation namely: changing customer demand, changing technology and changing competition, never coincide in such a way that the business operating model can no longer service it’s customers. When it does, the business reaches a tipping point that requires transformation within the business, to adapt and re-align or tip over the edge.
The pace, at which digital devices have evolved, changed the way we interact with information and has become an intrinsic and material part of daily live. This has left organisations, which did not evolve with the technology, at a tipping point. For businesses approaching or reaching this tipping point it might be too late to evolve and hence Digital Transformation becomes a necessity for survival.
Emerging, disruptive technology driven, companies are changing industries leaving competitor companies with one choice – adapt, through digital transformation, or face the consequences of slowly loosing market share and eventually…
What does a typical Digital Transformation strategy involve?
As every organisation delivers their products and services (the value proposition to it’s clients and customers) in a different way, so will the digital transformation within one company differ from the other.
To define a transformation strategy and the associate change programme, one must look at the value chain of the organisation. Each element within the value chain can, and in most cases must, contribute to the scope:
- People – Leadership and the overall Workforce
- Supply Chain
- Manufacturing (Engineering)
- Service Delivery
- Business Market (Client’s & Customers)
For each of the business value chain components, one must question the impact of the key transformation drivers:
- Change in Customer Demand
- Change in Technology
- Change in Competition
Understanding these impacts will outline what needs to change, which generally comes down to:
- Transform the Customer Experience
- Transform the Operational Processes
- Transform the Business Model
Note that IT is not singled out in the above – this is because IT is the catalyst that should overall enable these transformation initiatives.
The following examples of Digital Transformation Frameworks can also be helpful in defining the strategy:
Change brings uncertainty… Address it!
Transformation, by definition, brings change and a typical digital transformation programme will dramatically change the organisation. This change will especially affect a key business asset within the value chain – the people working within the business – “Success?.. People come First!”.
It will also dramatically effect, if not completely change, the organisation’s culture. Culture comes from the top – make sure that the board and executives are promoting the transformation and are willing to change themselves, as change is always desired until it is required of one-self.
Empower the workforce to understand the reasons why transformation is needed. Involve everyone to actively contribute to the innovative rethinking of their roles – how does digital technologies impact their daily work experience? Articulate the core business focus (what is the value proposition to the clients and customers) and ask, how can enabling digital technologies be used in support of achieving value excellence?
Find ways to make the necessity of the change a positive win for everyone, as supporting the people through the transformation is just as important as the digital technology you are trying to embrace.
Digital organisations outperform organisations doing digital – making Digital Transformation the last survival action for organisations that have not evolved with digital technology.
Transformation is a dramatic change and hence must the people aspect and business culture be treated with extreme care and sensitivity. A strong CIO is needed to drive the transformation programme with full buy-in from the rest of the executives and the whole workforce.
A well executed digital transformation strategy will re-align the business with the growing digital demands of it’s customers, by addressing the needed adoption of technology innovation across the business value chain resulting in an agile business ready for a fast evolving digital future.
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