Technology is a tool, not a strategy. When a company undergoes a digital transformation, they are embedding technologies across their businesses to drive fundamental change, often resulting in increased efficiency and greater agility. But that change doesn’t just happen on its own overnight, and a big reason why only 30 percent of transformations are successful is that CIOs, CDOs and CTOs might be losing the forest for the trees.
No longer is the goal of digital transformation to become digitally native, but instead to drive real, tangible value for the business. Charting a clear path towards that value and executing on it is the differentiator between companies that maximize their strategy and the ones that embrace digital transformation just because everyone else is.
The pace of change in the digital world is dizzying, and it’s easy to get caught-up rubbernecking the competition to spot the latest trends. Digital enthusiasts move in the same circles, read the same articles, and attend the same industry trade shows hyping the hottest tech. The result can be a Frankenstein monster of a digital strategy, cobbled-together tech that might not actually be valuable for their business. The fact is, every organization’s digital transformation is unique, and its success or failure depends on its own specific level of optimization.
At its most basic, digital transformation is a combination of two things – digitization, and optimization. Digitization has been around for a while, and just means digitizing information or making data available in a digital format. Optimization (also referred to as “digitalization”) is more process-focused, and involves using those digital technologies to operate systems more efficiently. A company’s ability to marry digitization with optimization will determine the value of their transformation.
Real change occurs by listening, not talking. Oftentimes, CIOs, CDOs and CTOs get swept up in the excitement of a transformation and simply pass down edicts that the company is “going digital” without first determining the strategy or creating KPIs that can properly measure impact. The result? Conflicting plans, varying timelines, and splintered focus. (And a lot of wasted time and money.)
Instead, a digital transformation needs to start by defining business goals and expectations across the leadership team and aligning those goals and expectations with department heads to ensure their vision matches reality. From there, rather than attempt to change an entire organization at once, it’s best to view a digital transformation in layers – what are the areas of importance, how do they stack up against each other, and how can you condense operational needs across departments?
Imagine you’re the CIO of a large consumer packaged goods brand with approximately 50,000 employees across 40+ departments offering hundreds of products to millions of customers. Your technology ecosystem would be a mess of legacy mainframes, aging document storage systems, disparate processes, overloaded IT teams, off-the-shelf systems with low user adoption, and an unstable suite of customer-facing digital channels. How do you encapsulate all of this onto a whiteboard and create a digital transformation roadmap?
This is where layers factor in. Trying to find tactical solutions to each of these individual issues would lead to silos, multiple bespoke systems, and fragmented processes. By grouping common issues into layers though, you’ll develop a much more manageable, strategic framework.
LAYERS & PHASES
There are six layers to any digital transformation, each condensing key focus areas:
Data – How do you store and retrieve data securely? How do you scale? How do you ensure data integrity and avoid redundancy/duplication?
Application – How do you apply data to run your day-to-day business operations? How do you democratize data access by providing a centralized abstraction and distribution layer?
Process – How do you streamline your business processes?
Experience – How do your internal (employees) and external customers interact with the processes and systems? (UI/UX)
Collaboration – How do cross-functional teams collaborate more effectively to get work done faster?
Intelligence – How do you derive insights from data and apply intelligence into the work that you do?
Each layer must go through its own distinct phases of digitization and optimization to result in a successful (and holistic) transformation. How a company defines their own transformation depends on multiple factors unique to the organization, including budget, available resources, and the capacity for innovation over time. This is what makes true transformation a never-ending journey, the same way customer satisfaction is a never-ending pursuit.
PLAYING THE LONG GAME
Those looking to embark on their own digital transformation journey should be prepared for the realities of working without a finish line. It’s a process of continuous learning, but one that will ultimately create a more cohesive, efficient, and modern operation. By using the layers and phases of a digital transformation as a framework, CIOs, CDOs and CTOs can build a system that works across their entire organization and truly adds long-term value.