Success through Digital Transformation in 2020, Part 1
Just over a decade ago, the world was mostly offline. While business was still coping with a catastrophic recession, the technology sector made certain hardware introductions which would lead to an explosion in the software development field. For traditional businesses, many of the things that were previously seen as unimaginable were about to become foundational; A catalyst for providing products and services to customers at lower costs and at a higher velocity than ever before.
What is digital transformation?
Digital transformation has become a bit of a buzzword, meaning different things to different people, as every company sees it through the prism of their own case. It is very common for businesses to refer to modernizing and migrating their applications and systems to the Cloud as digital transformation. The pioneers in digital transformation, however, quickly recognized that implementing modern tooling in a stagnant organization won’t do the job, and the IT-related piece of the transformation is just the tip of the iceberg.
Digital transformation is as much a business problem as it is a technology one: customers are already digital and are becoming much more sophisticated, demanding that businesses respond to their needs. Customer experience is a catalyst in shaping the business vision and has an immediate impact on organizations’ bottom line.1
Looking inside as well as out
Legacy business models, stale company culture, and the overall reluctance of management to undergo a radical change in the way they perceive their market dynamics, competitors, and what technology can do for their operational model, is where the transformation should happen in order to clear the way for the new technology advantages. Digital transformation efforts oftentimes fail before they even start. Here’s a quick list of the main reasons why:
- A little less talk and a lot more action is needed
While organizations claim to recognize that changing customer behavior is among the top drivers for digital transformation, less than 50% invest in understanding digital customers, meaning over 50% are often just talking and not doing.
- The siloed approach has a flaw
True success in digital transformation can only be achieved through a company-wide, cross-functional endeavor. Siloed efforts can, and often do, directly compete against collaboration because they create a possibility for department-specific alignments that hinder overall success. While CIOs and IT departments are an important player in digital transformation, the rest of the executive team would need to be hands-on, too.
- Seeing transformation as a cost center rather than an investment
Change agents can often have the unique role of debunking the myth that digital transformation is a black hole in which executives pour in excessive amounts of cash with little to no return. When seen as a cost center instead of as an investment, change agents will not be able to get stakeholders’ buy-in for their pursuit of digital transformation.
- Lack of digital talent
While companies recognize that employee experience today is a critical element of a successful digital transformation, investment in both modernizing employees’ skillsets for the new digital economy as well as new digital talent is still lagging behind. 2
Succeeding with digital transformation. What does it take?
In the end, the point of digital transformation is to create added value for customers by rethinking the way business is done by utilizing modern practices and technologies. We’ll comment on practices first and talk more about technology in Part 2.
There are a few high-level yet proven methods that can make the difference between a successful digital transformation effort and another dismissed initiative:
- Stay laser-focused on your customers
Creating customer value should be a foundational principle and a top priority for every business when embarking on a digital transformation journey. Communicate cross-functionally and transparently to maintain alignment and preserve a customer-first mindset.
- Remember that it’s not all about technology
A common practice for most organizations on a quest to digitally transform their business is their technology-first approach. Companies often zero in on a specific technology and how it can benefit their organization instead of looking at the technology within the bigger picture. Strategic digital transformation discussions should not start and end with technology only. Remember; Customer-first.
- Develop as leaders
Ensure the organization’s leadership possesses the necessary qualities to execute, oversee, and communicate the vision and strategy in a time of change. Not only should they be able to lead with their example, but also empower teams and individuals to have the autonomy to make decisions and experiment, rather than micromanage.
- Be creative in acquiring the necessary skillset
Assess your goals and address skillset shortages first. Focus on investing your company’s future by creating an environment of continuous learning. Be proactive about hiring new digital talent when you don’t already have the expertise in-house and time-to-market concerns arise. If hiring proves to be a difficult or lengthy process, focus on developing strong partnerships with trusted consultants instead, especially in areas such as emerging technologies, design thinking, and modernization.
- Create a culture of innovation
It’s critical to link customer experience to employee experience, especially with regard to digital transformation. According to Gallup, the cost of productivity loss totals $7 billion globally and is directly associated with poor employee engagement. Leaders who address company culture as a component of the customer experience and exude positivity around innovation realize 10% higher customer metrics, 17% higher productivity, 20% higher sales and 21% higher profitability compared to those who do not. 3
- Measure results
Like any other digital initiative, digital transformation can be tracked, measured and bound to KPIs and tangible results. Follow the revenue, not shiny promises.
Succeeding with digital transformation. What does it take?
To help companies navigate the digital transformation journey, we at Resolute Software have developed a digital modernization assessment that examines and evaluates a company’s existing systems and workflows. The service provides an objective look at the current digital state vs. ideal future state while identifying major perceived gaps and opportunities that can be pursued as part of the digital transformation journey.
Originally published at https://www.resolutesoftware.com on March 31, 2020.