The convergence of the physical and digital world today is uniquely positioning the consumer to demand (and expect) a heightened speed of service. Organizations across industries, from banking, retail, and healthcare are all merging old concepts with new technical capabilities to meet this demand.
Despite the fact that cutting edge enterprises are looking now beyond digital transformation and at managing digital businesses rather than transforming their business, many other enterprises are still looking for a way to transform their business or risk becoming irrelevant in the new digital workplace, and to their customers too.
While the current health pandemic has added an impetus to this drive to transform, many organizations are still unsure what to do or what to be aiming. If we already pointed out that digital transformation will lead the charge to rebuild enterprises after the coronavirus has passed, the basic problem of what this transformation entails must be clarified for many. “Organizations that want to avoid being left behind need to adopt and refine their digital strategy and that won’t necessarily hurt your business model — in fact it will enhance it,” Bart Van den Daele, general manager of worldwide infrastructure services at Armonk, New York-based IBM Services, said.
Updating your digital strategy to include flexible and secure tools, such as cloud infrastructures, make it easier for businesses to merge or cross collaborate with their older business models. Outdated applications are at the heart of today's most significant businesses challenges and digital transformation can help overcome threats that already exist inside of an organization. “Inherently there is a reluctance in digital adoption, business leaders often want to avoid upsetting complex mission-critical systems that could hurt the business. However, these systems are often the backbone for many crises, and because of this, there is a responsibility to consider digital upgrades,” he added.
Updating workplaces to include digital tools such as increased security, AI, automation, or cloud-based applications that offer deeper customer insights often open up additional revenue streams and offering that didn’t exist before. Digital tools also give organizations stronger tools to better serve their own teams and end customers. While digital transformation encompasses how work gets done and how results are generated for the organization across distributed teams, it also encompasses how buyers and sellers interact and transact in a digital medium.
Both aspects of the digital transformation — distributed teams and digital commerce — are of heightened urgency right now given the likelihood of an extended recession in the wake of the COVID-19 pandemic, Jake Sorofman, president of Indianapolis-based MetaCX. But there are other aspects of digital transformation — competing on a digital customer experience, rethinking business models and value propositions, finding new sources of differentiation, business advantage and monetization — that are also important, but may not take on the same immediate existential urgency.
Citing Clayton Christensen the American business consultant and academic who popularized the idea of creative destruction, Sorofman adds that every company needs to learn to disrupt itself or else face the reality that it will eventually be disrupted.
Pushing Digital Transformation
Despite evidence to the contrary, many leaders of traditional business believe that their long-standing traditional business practices would triumph in the face of digital disruption and that they could force the consumer into old engagement methods with brands. “The evidence continues to prove them wrong; while consumers still want these products and services, they want new ways to engage that are more efficient and conducive to their current lifestyle,” said Al DiGuido, president and CRO at New York City-based North 6th Agency.
The shift in media consumption and purchasing patterns has been ongoing for decades, with the rise of the internet putting a serious dent in the traditional business. He added that the growth of e-commerce platforms only accelerated this digital intersection between consumer, content and commerce.
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Businesses have lagged behind when it comes to making the substantive changes they should have because of their romantic relationship with legacy methods. Now they are at a point where they either completely upend their [business methods] — and fast — or risk going out of business. “In today's world, just because you build it, does not mean they will come. You have to engage with consumers in the way they want to be engaged; if you don't, the business will fail,” he said.
Transformation Initiatives
It is important to keep in mind that digital transformation involves changes that impact the main engine of an enterprise and it is not a once and done change-event. It should be approached from the perspective that changes, even to the fundamental underpinnings, should not hold up progress, Roger Elwell, vice president of strategic partners and alliances at Irvine, Texas-based SNP Transformations.
Risk needs to be evaluated carefully and mitigated using mature transformation processes that shorten the critical path, establish meaningful checkpoints, and reduce downtime during the transition. But these major transformation initiatives are required to contain costs, increase competitiveness, and stay in compliance including:
- Modernizing core systems (i.e., ERP, HR, CRM) to the latest software generation, infrastructure, and platforms (i.e. Cloud, etc.).
- Consolidating functionally similar systems siloed (from past acquisitions, different technologies, etc.) into singular environments
- Implementing new technologies to improve productivity (AI, RPA) and competitiveness (analytics)
On top of this, transformational leadership skills are most successful in helping companies adapt to change. Those leaders who look for the best ways to improve, work to change existing behaviors and culture, eliminate political influences, and inspire teams to high performance are an asset on digital transformation projects, he said.
Continuous Transformation
The result is that as CEOs tackle digital strategies, contrary to “bet the farm” moves, a better approach is to either make incremental changes or address change as it relates to a specific department or business function, San Francisco-based FortressIQ CEO Pankaj Chowdhry, told us. Different lines of business will have different needs — there is no one size fits all strategy. And, not all are digital. “As businesses look to improve, there are several possible outcomes that we typically see, including: enhanced experiences, system optimization, process redesign, value engineering, and intelligent automation,” he said. Companies looking for the best return will not sink a bulk of their budget into RPA, for example, but will identify the function that could be best improved with automation.
The biggest challenge enterprises have is identifying which strategies should be applied where; without a solid understanding of current state operations, there is no way to successfully improve at scale. “Organizations that have seen some success also know that it’s as much about the journey as it is the destination. The right digital strategies should open up additional opportunities for both people and more traditional business models as well, but in unexpected places,” he said.