Digital transformation is about integrating digital technology into all areas of an enterprise, changing the way it operates and delivering value to customers. Digital transformation requires an organization that needs to transform its culture to continuously adapt to change, be willing to experiment and be comfortable with failure. This Tech Town article will provide businesses with information on all issues surrounding digital transformation, help CIOs and technology leaders grasp the situation, be ready to face challenges, and increase prices. value the organization brings to customers.
What is digital transformation?
Digital transformation is different for every business, so we won’t or won’t have one definition that applies to all. But in general terms, digital transformation is the integration of digital technology into business activities such as business, human resource management, production, etc. to make those jobs more efficient and bring more benefits. to much better value for the business. Above all, this is a common global trend in the 4.0 era, it helps businesses adapt and keep up with the strong development of technology as well as survive in the market.
Digital transformation should begin with a problem statement, a viable opportunity or an aspirational goal. Jay Ferro, CEO of Quikrete recently noted, “A business’ digital transformation goals can revolve around improving customer experience, reducing conflict, increasing productivity, or enhancing profits. Or, if it’s an ambitious statement, it could hinge on being a well-run business using digital technologies that weren’t available years ago.”
For leaders, what digital transformation will mean. Jim Swanson – CEO of Johnson & Johnson said: “Digital is a word that has many meanings, for many people”. So when discussing digital transformation, try to explain what it means.
Before joining Johnson & Johnson in early 2020, Swanson served as CIO at Monsanto – an American agro-biotech and agrochemical corporation. Here, he discussed customer-centric digital transformation. “We talk about automating operations, people, and new business models,” he said. Deeply detailed within those topics are data analytics, technology, and software – It’s all about triggers, not drivers.”
“At the heart of it all is leadership and culture. We can have all these things like customer views, products and services, data and amazing technologies… but if we don’t put leadership and culture at the heart, that will lead to failure. lose. Having digital literacy is essential and significant for a company, whether it is a financial, agricultural, pharmaceutical or retail institution.” – Swanson added.
Melissa Swift – Head of Digital Consulting at Korn Ferry – a management consulting firm headquartered in Los Angeles, California, also agrees with Swanson on how the word “digital” means a lot to many people. She notes that: “When talking about ‘digital’ to one person, they might think of going paperless, others might think of data analytics and artificial intelligence, others might think about it. imagine agile teams or open plan offices”. It causes chaos, or even pain, in organizations.
Why is digital transformation so important?
In the past, a business decided to go digital for a number of reasons. However, at present, they have to do it without having a choice because it is a matter of survival. During a pandemic, it is most important for a business to quickly adapt to supply chain disruptions, market pressures, and changing customer expectations.
According to the International Data Corporation (IDC) investment guidance for digital transformation in May 2020, spending on digital transformation in business forms, products and corporate organizations will still increase strongly, despite challenges of the Covid-19 pandemic.
At one event in the MIT Sloan CIO Symposium, IT leaders agreed that consumer behavior has rapidly changed in many ways since the start of the pandemic. . Sandy Pentland, a professor at the MIT Media Lab, describes the collapse of optimized automated systems in areas such as supply chain management in the face of rapidly changing supply and demand. bridge. This is the reality that every individual must face during the pandemic season.
Rodney Zemmel, McKinsey Digital’s global leader, said of consumers: “Digital is accelerating across all categories, an important factor to ‘watch’ will become ‘the degree to which it needs to change. “. McKinsey’s data shows the rapid change of streaming and online exercise, both of which are likely to last forever. Especially in the field of food delivery / catering (this field previously resisted the transition to online) is now forced to change to online to reach customers. Cashless transactions are also on the rise. On the B2B side, McKinsey data also shows that remote sales are expanding.
Dion Hinchcliffe, Vice President and Analyst at Constellation Research wrote, “IT executives in today’s rapidly evolving organizations must adapt to the pace of change, fall behind or lead, that is it. problems at stake in today’s digital transformation landscape, where bold actions must be actively supported by experimentation and the search for available solutions. manage day-to-day operational issues, provide service, and avoid the unpredictable, such as a cyber attack or information breach.”
Improving customer experience has become an important goal, and an important part of digital transformation. Hinchcliffe calls a seamless customer experience “the most important factor in how a business works.”
What does the digital transformation framework look like?
While digital transformation will vary widely based on the specific challenges and needs of the business, there are a number of recommendations in existing case studies and published frameworks that all stakeholders should be aware of. Business and technology leaders should consider when embarking on digital transformation.
For example, these numeric conversion factors are often cited:
- Customer experience.
- Agile operation.
- Culture and leadership.
- Workforce support.
- Integrated digital technology.
While each guide has its own recommendations and different processes, CIOs should seek shared recommendations when developing their own digital transformation strategy.
The role of corporate culture in digital transformation
In recent years, the role of technology has changed. CEOs increasingly want CIOs to help them generate revenue for the organization. According to the 2018 Harvey Nash/KPMG CIO Survey of more than 4,600 CIOs, their priority activity is “improving business processes”. But among them are “digital leaders” whose top priority is “developing truly innovative new products”.
Instead of focusing on cost savings, IT has become the main driver of business innovation. To achieve this change, every member of the organization must rethink the role and impact of information technology on their daily experiences.
Equifax CTO Bryson Koehler said, “Build and create new capabilities like never before. If you look at the majority of startups, they don’t start with giant, bundled software packages. underpinning their company If you’re trying to create innovation inside a big enterprise don’t start like that You’re not here to run mainframes anymore You’re not here to run servers. You’re not here to run the data center, the network, or the operations. That’s what you can outsource.”
While IT will play an important role in driving the digital transformation strategy, the human element will still be equally important. It can be said that digital transformation is a human problem.
IT leaders find themselves working in cross-functional teams. Digital transformation initiatives often reshape workgroups, job titles, and perennial business processes. When people fear their worth and maybe their jobs are at risk, IT leaders feel stymied. Therefore, the “soft skills” in leadership will be promoted at this time.
Mattel EVP and CTO Sven Gerjets says that the greatest transformation begins with empathy. “When your empathy is correct, you will begin to build trust,” he said. Without an organization dedicated to supporting and accompanying transformation efforts, success will not be possible. You need leaders who act in the common good and who are motivated to help members understand why you are doing it.”
Korn Ferry’s Swift – Digital Consulting Leader for North America and Global Accounts found that in his consulting work, three groups of employees tend to slow down the transformation: Seniors, ‘nerds’ and ‘lone wolves’.
Companies must not be ignored but must join these three groups – otherwise they will face dangers. How? Think of your membership in terms of segments and work to accommodate different segments in their niche.
“Many organizations have launched their digital transformation journey in a highly unified manner with the same messages and techniques deployed throughout. Reskilling for all members! New teams! Welcome to the new world! From a change management perspective, and capitalizing on investment money that could be more strategically spent targeting smaller teams. Companies should consider both the digital experiences and behavioral preferences of different small groups within their organizations, and leaders should create messages, programs, and even environments to achieve realistic starting and ending points for different groups”.
Measure ROI in digital transformation
To demonstrate the success of digital transformation efforts, leaders need to quantify return on investment. Easier said than done, especially for projects that cross functional and business boundaries, change the way a company goes to market and fundamentally reshape interactions with customers and employees.
A project like mobile app improvement may yield short-term profits but other projects will provide more long-term business value.
Furthermore, digital transformation efforts are ongoing and evolving, which can make traditional business values and old financial management methods less effective.
However, successful quantification is critical to continued investing. Brian Caplan, director of management consulting firm Pace Harmon, said: “It’s not enough to just deploy the technology – it needs to be tied to tracking key performance metrics for company insights. customers and business process efficiency”.
Choose to accept the risk or not
Cecilia Edwards – Partner of digital transformation research and consulting firm Everest Group said: “When determining the performance level of digital transformation investments, it is best to look at the portfolio, not the focus. at the project level. Just as a mutual fund manager or venture capital firm would look at overall performance to determine how well things are going, digital transformation leaders must take the big picture. on digital change efforts.
This is especially important to reflect from the performance of a particular project to the overall efforts of IT. It also builds tolerance for the risks required to achieve true digital transformation.
Let’s look at best practices regarding digital conversion metrics:
- Pre-determine initial indicators
- Develop micrometrics for agile experiments: The goal is to learn and tune.
- Integrated business results: Consider strategic impact (revenue growth, lifetime customer value, time to market), operational impact (improvement of productivity, scale, operational efficiency) motion) and cost impact.
Hopefully the information Tech Town brings will be useful to businesses.
Contact us if your business has any technological challenges.