Digital technology has opened up new ways of doing business and has transformed the way enterprises manage their operations and create customer interactions across the value chain. From selling books to selling financial services – every business is now a technology-led business. It’s no surprise that more and more enterprises are launching digital initiatives to realize business model innovation and topline revenue growth. In fact, analysts have predicted that around $2 trillion dollars will be spent in 2019 worldwide on digital transformation technologies.
According to a study by Harvard Business School, leading digital companies generate better gross margins, better earnings and better net income than organizations in the bottom quarter of digital adopters. The stakes are high in the race to achieve digital leadership. But dig a little deeper and cracks start to appear. Digital initiatives undertaken by many organizations are often in response to narrowly defined issues and exist in isolation from any comprehensive digital transformation strategy.
The Struggle with Holistic Digital Implementation
In a recent survey of large organizations, 78% of the respondents said they are implementing discrete digital projects and, amongst those that have a formal strategy, 46% encompass the business partially. In other words, initiatives are isolated which do not result in transformational innovation. With such piecemeal projects, enterprises often fall short of the desired outcomes and instead must contend with minor digital upgrades. The result- no discernible gains for the organization. Imagine an airline company’s mobile application, which provides a great user experience and is used by customers to book tickets. But when the same customer goes to complain about his/her missing bag, the airline executives don’t have an answer. This is a classic example of a company that couldn’t recognize the holistic implication of its digital initiative and as a result, failed to digitize its end to end processes.
For organizations to truly transform themselves digitally, they cannot have pockets of brilliance intertwined with legacy applications, processes and old ways of working. So, the million-dollar question is- how can companies scale digital transformation across the enterprise whilst dealing with the challenges and the complexities of the journey?
Culture Propels Digital Change
I’ve always believed that scaling digital adoption is as much about reimagining technologies and processes as much as it is about cultural transformation. Digital leaders around the world are characterized by embracing technology as a driver of business success pivoted around a culture that enables innovation and reinvention. Suffice to say, cultural change lies at the very heart of a successful digital journey and is often larger in magnitude than the seemingly complex technology transformation. To adequately capture value from the digital investments, a flexible and open-minded culture must spearhead the technology and process transformation. Such an approach often yields new and innovative business models unheard of before.
For instance, a pizza company wanted to engage with its consumers not just at the time of delivery but before and after that as well. So, they created an algorithm using video analytics and graymatics to involve customers in quality grading the pizza, where users upon delivery took a picture and the algorithm graded the pizza on toppings, its placement, quality of cheese and other dietary parameters.
There are many such examples of companies leveraging digital technology to create game-changing innovation. But that’s not to say that scaling digital is unchallenging or straightforward. Enterprises must have in place the culture, the tools and the execution engine to be able to move beyond barriers to digital change and execute on their digital strategy.
The Prerequisites to Scaling Digital
Having led multiple large scale digital initiatives spanning organizations and industries, I’ve noticed that even the best implementations tend to overlook some essential areas. I believe that while it is easy to get started with digital, getting them right requires business leaders to keep a few critical points in mind during their digital transformation journeys.
Reimagine the supply chain of digital talent: Digital talent deficit is a major reason why enterprises fail to realize their digital strategy. Demand far outstrips supply, and most enterprises find it hard to bridge the talent gap. Our survey indicates that 44% organizations see ‘lack of internal skills’ as the biggest barrier in digital transformation. Scaling digital requires new talent, including full-stack engineers trained in new and emerging technologies and product managers who understand what customers want. The war for the top digital talent can only be won by reimagining the acquisition strategy and leveraging innovative practices such as hackathons, and programming challenges as well as cloud-based technologies & platforms to identify, evaluate and train the right people, at scale.
Embrace an Agile-first, DevOps-led approach: Many traditional organizations are unable to break-free from the gravitational pull of their legacy roots and often struggle to ‘cross the chasm’ to digital reality. It takes experimentation, an assumption of risk and a change in approach to turn around the digital fortune. That’s where an Agile and DevOps driven approach makes the difference. The changes fostered by Agile and DevOps methodologies ensure a strong, flexible, and dynamic reformation of the organizational culture and leads to holistic transformation from the top-down.
Create composable and insights-led platforms that scale digital execution: It’s not a stretch to say that digital platforms and applications are what make digital-led business transformation a reality, through the power of platform innovation and application modernization. As markets and digital technologies continue to evolve, API-first, microservices-driven, modular, highly available and business-ready platforms have become a prerequisite. Another key consideration must be infusing data-driven insights into the overall digital platform design. Only by giving data its due importance can enterprises fully unlock the potential of digital platforms and create unified experiences to realize digital-led outcomes.
Fully leverage the digital eco-system: Digital disruption can come from anywhere today and business leaders are under tremendous pressure to get transformation projects right. That’s where expert partners can bring in a huge amount of experience, quality, and resources to a digital transformation initiative, in capabilities which enterprises find hard to source within the organization. That’s why investing in a meaningful partnership strategy is beneficial and cost-effective in the long run.
Digital is the ‘new normal’ for global enterprises and an opportunity to continuously improve the organization in innovative new ways. But scaling digital is not without its challenges and pitfalls. It may be worthwhile for CIOs and digital leaders to consider some of the above strategies as they continue to evolve on their digital journeys.