Digital Transformation – What has Changed Since 2016?
In The 2016 State of Digital Transformation by Brian Solis, respondents reported that digital transformation was led by the desire to improve customer experience.
• only 54% had fully mapped out the customer journey
• just 19% said that “fear of disruption” was a major reason for change
• less than a third of respondents (29%) said that their company had a long-term digital transformation roadmap
• only one in five said they were studying customer behaviour on mobile.
What is the Business Landscape like in 2018?
Reviewing the current state of digital transformation in 2018 reveals recent technological advances have unlocked new ways of working and have given companies an unparalleled ability to cut costs while scaling – hence enabling challengers to disrupt markets and to undercut incumbents.
Given the existential threat posed by disruption, it’s hard to question the fact that digital transformation is critical for enterprise businesses today. At stake is their capacity to remain competitive and relevant; the alternative is to see their margins and their markets collapse. By putting business agility front and centre, organisations can evolve, ensuring that they are responsive to changing market demands and open to new opportunities.
The Aims and Ambitions of Digital Transformation Projects Have Changed
In the 1990s, simply having an online presence might have been seen as being innovative; today, organisations are deploying IoT and blockchain technology along the length of the supply chain; and, in the coming years, machine learning algorithms will start to direct the full spectrum of business strategy, forecasting demand and identifying efficiencies across the organisation.
Digital transformation is not an end state to be reached, but an ongoing process to be set in motion – and it’s about far more than deploying hardware. “Successful digital transformation isn’t just about adopting new technology, such as cloud, IoT or AI,” notes Paul Denham, the Founder and Director of Research at InsightBrief. “It’s about rethinking strategy, culture and processes from the ground up.”
And in that regard there’s been a perhaps surprising degree of change in the last two years.
How Business Strategies Have Changed by 2018
• 89% of organisations have adopted or plan to adopt a digital-first strategy, according to IDG
• 38% of enterprise businesses have already implemented a digital business strategy
• 62% use customer satisfaction as their key metric to defining digital success.
Priorities also change as businesses progress through the digital transformation process. “In the early stages, the business drivers are reducing costs and improving the customer experience,” says Paul. “As digitisation matures, value-added benefits such as creating new services or revenue streams and increasing competitive differentiation become key drivers.” Naturally, as digital transformation programmes extend into the medium term, more and more organisations are making this jump.
But not everyone is on the same page. Forrester found that 22% of firms are either not transforming at all or are still at an exploratory phase, while a further 21% of firms think that their transformation process is already completed – suggesting that they may be set for a rude awakening.
Understanding the “How” of Digital Transformation
The defining commercial dilemma of our era may very well be just how much harder it is to transform a business than it is to work from a blank slate – and executives are not necessarily unaware of this.
“[In 2018] companies understand the ‘why’ and the ‘what’, but many are still struggling with the ‘how’,” notes Barney Loehnis, CEO of Gig Economy Networks – and the ‘how’ can come with a great deal of friction.
“In 2016, most businesses were faced with decisions relating to the shift to the cloud; how to address security issues; realising value from big data; and streamlining operational processes,” said Barney, speaking on the subject of how perceptions of digital transformation have changed in the last two years. “The misalignment has been in underestimating the scope of changes that need to happen in order to achieve a stated goal – especially when it comes to working across siloed teams that are not used to working with each other. So the naive expectation, from CEOs, that ‘we’ can execute on the simple stuff [whether designing better platforms or ensuring compliance]… is now textured with a reluctant acceptance that to do some of these things requires large scale change.”
How can Businesses Implement Digital Change?
“I think the classic mistake,” says Barney, “Is still that companies identify an area of weakness that is caused by a broad range of structural deficiencies… and they expect a single individual or a small team to ‘fix the problem and fill that gap’… [Organisations must ensure that issues are]looked at from a holistic, structural point of view and that every leader across an organisation can then see the part they need to play to fill the gaps.”
Have a clear vision
Barney adds, “The biggest need, as ever, is a clear vision, a strategy broken down into a series of programs that will deliver the vision over time; and a prioritised set of programs with aligned resources, communicated frequently across the organisation and regularly reviewed, optimised and tweaked.”
The challenge is not new technologies but the implementation of processes
As organisations are increasingly appreciating, the key challenge of digital transformation is that it is not limited to the deployment of new technologies but is about the implementation of agile working practices and processes. Organisations must treat their staff with care in order to foster collaboration, knowledge sharing and innovation – both getting the best people and getting the best from their people. Fundamentally, change has to come not just from the board but from the very top, with the CEO.
Is Digital Transformation Simply Business Transformation?
In the grand scheme of things, ‘digital transformation’ might be better described as wholesale ‘business transformation’, considering the scale and importance of what is required. As Barney says, “The process is not about ‘digital business’; it is the re-imagination of the business.”
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