Companies across industries have embarked on digital transformation initiatives for several years. The Covid-19 pandemic didn’t spur this movement, but it certainly accelerated the need for digital transformation across the enterprise. As a result, it now seems that every company has a toe in this water.
The pandemic also marked a moment of truth for many organizations, forcing them to assess if what they were doing was truly transformative and driving anticipated results. True digital transformation is about much more than throwing money at technology upgrades. It involves using technology as an enabler to change business processes, cultures and strategies. It requires an ecosystem comprising myriad technologies ranging from cloud computing, artificial intelligence and machine learning, data engineering, QA automation, DevOps/MLOps, AIOps, and a constant need for cross-functional dialogue between various stakeholders.The process is disruptive, and it can be discomforting for sure. It also demands a good mix of talent, supportive culture and, above all, an ability to make decisions under ambiguity to push forward. It is not surprising that a study from Boston Consulting Group suggests that nearly 70% of digital transformation efforts fail.
What that means is after an organization invests large sums of money, staff and time into the effort, there are no real gains to show for it. The organization hasn’t reduced time to market, boosted revenues, streamlined processes, increased productivity or improved efficiencies as anticipated.
Initiatives that aren’t predicated on business goals will generally fall short. Success requires that business and technology act as partners. The engineering and technology side needs to understand the business side—how it makes money, what the business operating model is, what technology foundation support operations and what the business can gain from digital transformation.
On the flip side, the business depends on the engineering team to make sound recommendations on what technologies it should invest in and what to realistically expect from those investments. The initiative should improve the ability of the organization to respond to market forces with agility and speed by leveraging accurate data, descriptive, predictive and prescriptive capabilities using AI/ML in the business processes, and cloud archetype to spur innovation, reduce time to market and scale swiftly across geographies.
In too many cases, digital transformation projects fail because business and technology aren’t aligned. The business side doesn’t understand how technology can be used as a competitive advantage or how technology investments can improve overall operations. Meanwhile, the technology side does not fully understand how the business operates and is therefore unable to be a trusted advisor.
Adding insult to injury, many organizations lack the skills and talent required to build needed platforms that take advantage of advanced and emerging technologies.
It is also critical that a digital transformation effort has support from senior management. Employees often fear change, and many might believe their jobs are at risk. Top management must clearly articulate the business goals and the expected benefits from the effort.
Another cause of failure is budget-based scenario planning, where the organization allocates a certain amount of funding for the effort and makes purchasing decisions based on that. The ideal approach is to determine the capabilities you need to become digitally enabled and the technologies that will enable those capabilities and then set your budgets accordingly. Key questions to ask during this process include:
• What is our business strategy?
• What are our business imperatives?
• What is the competition doing different or better?
• What technologies will allow us to bring quality products to market faster, better and at a lower cost?
It is important to understand if digital transformation initiatives are headed in the right direction. The best way to gauge that is through judicious use of metrics. These include but are not limited to:
• The speed with which business can bring new products to market cost-effectively without sacrificing quality.
• Improved staff productivity and efficiency (accomplishing more with the same or smaller workforce) by relying on autonomous processes using AI or through process automation in general.
• Reducing overall technology sprawl and strengthening the organization’s risk posture in the process.
Other pertinent metrics include the increased use of automation, reduction of product defects, reduction of rework needed, heightened customer loyalty and increased revenue-per-customer-segment.
One of the best ways an organization can align its digital transformation efforts with its business strategy and goals is with cross-functional teams. The business should involve technology groups, and the technology groups should involve key business stakeholders in discussions around major digital programs and investments.
Equally important is the culture of the organization and how it views the benefits and competitive advantages that technology can offer. In leading organizations, senior leaders tend to be digitally savvy. They understand the importance and capabilities of technologies and are more likely to support new investments. These leaders have a process lens on everything and often ask, “How can process automation, AI or cloud make a difference?”
Every department must also have digitally savvy talent that should percolate across every functional group of the organization.
Finally, organizations must understand that true digital transformation will change every aspect of a business—from streamlining operational processes to enhancing customer and partner engagements to fostering greater communication/collaboration and even re-creating the company’s culture.
There is no silver bullet for digital transformation—and there is no one-size-fits-all approach for every company. Each organization must create a unique strategy based on its industry, market position, competitive pressures and customer demands. With the right road map, digital transformation can help technology be a primary driver of business innovation and success. When combined with a greater focus on communication, cross-functional collaboration and exponential talent, any organization can truly transform itself over time.