Most people have a fuzzy idea of what digital transformation means and how to go about it. Digital transformation is about redesigning your business using technology and creating new business opportunities. It enables you to do things in new and innovative ways, allowing you to improve customer focus, the delivery of products and services and business process efficiency.
The ability to respond to customers providing them quicker, better and cheaper products or service has become tremendously important. It is what differentiates truly digital companies who adapt in an evolutionary way to the changing needs of the customer from the old transactional style companies of the past. Oft quoted digital companies include Burberry, Asian Paints, Nike, Codelco, Starbucks and Caesars Entertainment.
The transformative aspect of digital is not the technology itself but the transformed experience of the customer and being able to engage with the customer on their terms. Digitisation should be driven by the needs of the customer and then the organisation and not the digital technology which underpins it. It is really easy to get carried away with the technological possibilities and it takes discipline to make sure the focus remains on truly value adding activities that enable your business to work better.
In the past computer related projects were often 'big bang' in nature, this has given way to a more Agile experimental and continuous learning approach. Such an an incremental approach allows you to learn as you go and helps accommodate the ambiguity and uncertainty experienced when breaking new ground. It also recognises that digital transformation is a continuum and that transformation in a fast moving world is something that never stops. It also helps with the programme resource required and capacity for change which are always a challenge in busy organisations.
Digital Transformation Technologies:
There are a few core technologies which under pin Digital Transformation:
- Cloud computing
- Ultra-mobile computing
- Social media
- Advanced data analytics
These are further supported by:
- IT security - because these technologies are almost all Internet facing
- Digital marketing tools - to analyse client engagement and automate client communication
- Customer Relationship Management systems - to record all client engagement and drive associated marketing and client engagement
- Document Management Systems - for real time exchange and serving of documents and digital approval and signature
- Straight through processing systems - provide back-end automation and responsiveness
- Integration Tools - Enterprise Service Bus or ETL tools
- Improved business processes - e.g. faster more efficient and compliant on-boarding processes
- Data warehousing and cleansing - to drive robust reporting and analytics
- Executive Support
Get your top executives to 'buy in' to the new way of doing things. Trying to reform an existing company is a challenge. Digital Transformation can be just as 'disruptive' within an organisation as outside it, and this can be very unsettling. For an organisation to accept new ways of thinking and doing things the changes need to be protected. Without protection the organisation will 'fight' the change or continue to do things the old way, resulting in failure or a poor outcome. The change needs to be seen to be coming from the top.
- Digital Culture
Embed a digital change culture into the organisation by putting in place an education programme. This should cover what digital transformation is, how it is to be embraced and why it is important to the affected business areas. Make it personal and outline what might change in the employee's world and why their contribution is important.
- Digital Leadership
Appoint a Czar up front to get the process started and to act as overall sponsor and guru. The reality is that we are just at the beginning of the next generation of computing and companies need someone to keep reviewing the technological landscape to see what is emerging. They then need to evaluate how the company can exploit it to open up new opportunities and be able to share this with their colleagues so momentum can be maintained.
- Digital Team
It is critical that business areas are properly represented in the transformation team and own their transformation changes and adoption. Create a fully cross functional team probably with a core staff of digital experts and staff from the business rotating in and out of the team as different initiatives emerge. This team will also have a holistic view of Digital Transformation and will coordinate overall activities. This team may be mobile or have mobile working space and be separated from the main business. The programme could also be a 'greenfield' set up with the company moved over to the new business model once it is up and running.
- Digital Governance
A governance framework should be established to make sure everything is moving in the right direction, and provide overall programme structure and will include many features of an traditional programme.
- Digital Skills
Build new skills and capability in mobile, digital marketing, social media.
- Creative Thinking
Allow all engage parties the freedom to think 'out of the box' . Encourage experimentation and accept that failures are normal, but find ways to fail fast and risk free and most importantly use failure to learn. Work against a vision and build iteratively in an Agile fashion and then see what has emerged to inform the next step. Although this feels like an 'act of faith' with good governance in place this approach works well.
- Work With IT
Sometimes business areas for cultural reasons try to avoid working with their IT department and set up their own 'Shadow IT'. This can lead to unconnected solutions, limited in their use which are also expensive and do not have the required resources to support them either technically or commercially. In some cases solution providers encourage this approach to their own ends to open up addition budget and avoid IT governance and rigour. IT and the business should be brought together to work in a collaborative and responsive manner, but this may need some re-education. It is also essential to get the basic IT sorted out first of all before putting anything more on top of or alongside it, An example is creating a single view of the customer. All of this need careful co-ordination and leadership.
- Baseline and Ideal State
Understand your existing business, its processes and performance and develop a model of what an 'ideal state' would look like.
- Customer Focus and Feedback
Establish what the customer really values. Do not assume you know better, ask them and confirm once your solution is up and running and continue tweaking iteratively until it is perfect. Use appropriate tools to do this such as A/B or split testing for web design or rolling surveys.
- Be Disruptive
Actively seek out new ways of providing services and optimise the way that you engage with the client. Do this early, perhaps even before they thought about buying or engaging with you and create the data to provide the supporting analysis.
Drivers for Digital Change
- Competition - from non-traditional or start up sources who have the advantage of no previous ‘baggage’.
- Profitability – the need to reduce cost in an ever more efficient and cost sensitive world with margins are dropping in most areas
- Blurring of boundaries - more competition as competitors seek to widen their offering and geographical spread. A worldwide market has opened up and is no longer locally constrained, an example is international e-commerce.
- New technologies – enablers allowing things to be done in entirely new ways
- Changes in consumer behaviours – universal access to smart phones customers - users expect an end to end experience on line and want all their services to be available immediately and at their finger tips.
- Expect to be self-directing and want to be able to interact on their terms using online or mobile channels
- Are looking for value and are far more likely to switch services if they are not satisfied
- Expect to be able to transact at any time they want to
- Social media now seen as an important way communicate. Many people no longer use email or even phone to communicate and prefer social media tools such as Facebook.
Successful Digital Transformation Steps
- Set Vision
- Build a Vision
- Assess current situation
- Build a Digital Road Map
- Develop the business case – getting from current situation to the road map and vision
- Set up Governance
- Engage the business
- Set up programme and signal the change to the organisation
- Mobilise the Digital Transformation
- Build a change culture
- Build technical capability
- Build technology infrastructure
- Monitor and measure
- Continue to iterate and evolve
- Reward innovation