Digital transformation is a change or transformation in the running of organizations at two different levels. At one level, organizations incorporating digital technology in every sphere of their operations, to deliver value to their customers is Digital Transformation. On another level Digital Transformation is a cultural change in the organizations requiring a continuous challenge to the status quo. This second level of transformation requires organizations to get comfortable with the ideas of experimentation and failure.
In an increasingly digital world every panel discussion, keynote, study, or article on how businesses can stay competitive focuses on Digital Transformation as one of the key requirements to stay relevant. However, Digital Transformation is often a source of confusion for business leaders. They are not sure what exactly the term means, encompasses or entails. Thus questions remain like whether moving the business to the cloud is the same as Digital Transformation or what steps need to be taken to be a Digitally Transformed organization. Other questions that plague leaders of businesses are around the changes in Human Resources, Strategy and the Value proposition of such a change.
According to some leaders the overuse of the term Digital Transformation has diluted its effectiveness and meaning. However, even if you dislike the term the business ideas that the term requires you to follow cannot be ignored away. The ideas of rethinking older models, of experimenting more and of becoming more agile in responding the customers and competition are here to stay.
The common questions that plague CIOs and IT leaders around digital transformation are many and we will attempt to answer those questions as far as possible in this article. CIOs play a very important role in digital transformation of a company because it involves technology that can play an important role in the evolution of organization in staying up to date with the market and increasing their value to customers continuously.
Currently, different organizations find themselves at different places in the route to digital transformation and face anxiety in terms of how far they have reached the goal in comparison to their peers and competition. The initial bottlenecks are far more important and difficult to overcome than the latter ones and many CIOs are also worried by this.
Other ongoing hurdles faced by organizations on the path of digital transformation are budgeting, talent struggles and culture change.
It is difficult to find a definition for something that is as diverse as digital transformation as it looks very different from organization to organization and between the levels achieved in each organization. However, to make a definition that will work in general, we could say that digital transformation is the integration of digital technology to businesses resulting in improving and changing basic business operations and business value delivery models. Other than that digital transformation is also a cultural change where businesses are required to challenge the status quo, increase experimentation and get comfortable with the idea of failure. This might mean changing long standing processes that have worked well to practices that are still being defined and established.
Various definitions of digital transformation touch upon various aspects of it like, what it will achieve, what adjustment the organization might have to make, what the effects of digital transformation are and how they extend to the society, and in terms of customer cenricity. Leaders like to focus on what digital transformation means in practice for their organizations and how to finely define the detailed aspects of it to avoid confusion.
There might be many reasons egging businesses to take on digital transformation, but the mose compulsive of those is survival. Businesses rarely choose to transform themselves but are forced to change when faced with the issue of staying relevant.
Compared to the late 1950s, when companies stayed on the S&P 500 index for an average of 61 years and for 18 years by 2011, today a company is replaced every two weeks. It is a result of speedily evolving technology and only the organizations that can merge tech and strategy will be able to stay relevant.
The message is loud and clear. IDC forecasts on worldwide spending on technology and services is pegged at $1.97 trillion in 2022 with a CAGR of 16.7% between 2017 and 2022. Advanced analytics has been the number one digital domain for investment as of 2018 with planned increases as high as 75% in the next one to one and a half year with special emphasis on data visualization tools and machine learning.
In spite of organizations being at different levels of digital transformation what is imperative is that they adapt speed and agility as part of their business culture as a result of digital transformation. As a result, improving and making customer experience seamless is the newest crucial goal of digital transformation.
There has been a shift in the operational priority of CIOs from “improving business processes” to “developing innovative new products” in the recent years and the latter definitely impacts revenue generation of businesses. This is also a shift from a cost cutting approach to a revenue generation approach. Making IT the primary driver of innovation means that everyone in the company needs to rethink the role and impact of IT in their everyday lives.
Even though digital transformation is led by IT, it is very important that the people are in sync with the massive implementation and adaptation changes that they will have to bring about in order to make digital transformation a success. In that way, digital transformation is also a people issues.
As a result of digital transformation IT groups are constantly working in cross functional teams and often face the pressure when digital transformation reshapes workgroups, job titles and work processes and people fear losing their value or their jobs. This requires that leadership and soft skills are nurtured and honed in IT teams.
According to Melissa Swift, who leads Korn Ferry’s Digital Advisory for North America and Global Accounts, 3 groups of people slow down the momentum of transformation: old-timers, by-the-book players, and lone wolves. Instead of ignoring them and facing stalling she suggests that organizations engage with them as segmented populations and meet each population where they are in the journey of digital transformation.
Technology is obviously a very important part of digital transformation but often it is less about adopting new tech and more about letting go of outdated processes and legacy technology. In 2017, 70% of IT expenditure in government was for operating and maintaining legacy systems rather than adopting and innovating new technology.
Examples of a very high percentage of people in industries sticking to paper based systems despite the prevalence of smartphones and mobile devices show that people have a tendency to adhere to legacy technology and acts as a big hindrance to CIOs mapping and launching a digital transformation strategy. Research also suggests a disproportionate spending of about 72 percent on existing IT concerns and only about 28 percent on new innovations in IT.
To keep up with the pace of innovation today CIOs must increase efficiency with the help of technology wherever possible with the help of agile business practices. Agile technologies also help organizations to gain speed and reduce technical debt.
As most CIOs fear being far behind their competitors in the journey of digital transformation, it is heartening to know that it is only a misconception created because of all the extra press received over fast transformation and not enough on how long it takes or how hard it is to transform. For businesses starting their digital transformation journey the lessons learned by CIOs and IT leaders that have already begun their journeys are hugely beneficial and should be referred to in order to make their own digital transformations less bumpy and more fulfilling.
We at Incepta Solutions specialize on digital transformation consultancy and services for organizations across industries and verticals .
API and Integration Consulting and Strategy
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