Digital Transformation, much like customer journey mapping, customer engagement, customer experience management, is all the rage at the moment. Everybody - and their dog - talks about it.
Including me ... but then I think the term is widely overused. The other ones, too.
Many companies strive to 'digitally transform' themselves. Because this is what one does. Everybody does it. But why? How? What does digital transformation deliver? Does it deliver? And what is digital transformation at all?
Lets start with the last question.
A transformation is a wholesales change of an organisation, e.g. a business. A transformation touches all departments of the business, its whole value chain.
Digital, in its broadest sense, refers to anything computer.
So, in combination 'digital transformation' means to change a business in order to take more advantage of computers and software, in all departments, along the whole value chain. It can even mean a change of the whole business model. Quite a tall order. Nothing that one just does just for the sake of it, one would think. This is an endeavour that an established business embarks on only if it faces the risk of failing, and one that usually takes quite some time.
What are possible triggers? I see three, two of them relate to the market place, one to technology.
- Changing customer demands
- New or changed competition
- Technological advances
OK, now we are talking. These days many businesses realise that all three of these triggers are set. Technology surely leapt forward in the past few years. E.g. the adaptation of mobiles on the consumer side is unprecedented. This got followed by drastically, and ever faster, changing customer demands, which often cannot be met by businesses easily. 'Cloud-', analytics-, machine learning, artificial intelligence and in-memory technologies have surged. They more and more commonly come in combination. This makes platform business and -services possible that create early mover advantages and, worse, often create competition out of unforeseen corners. Look at Tesla in the automotive market, Uber in the transportation market, AirBnB in the hospitality area, or Amazon, Netflix, Apple, Facebook, and Google who are competing with established players in new ways. And this is just listing the buzzword names. And then the 'usual' competition in these markets is already strong enough ...
That should be enough of a reason, I think. So, check on the why, at least globally. This also answers the what question: At its basic level it is survival of the business, or establishing a sustainable advantage for the business. For a starter it might just be more bottom line through efficiency gains or more top line by better customer engagement and improved customer experience.
In a nutshell digital transformation continuously provides the business with a competitive edge. Continuously, because successful businesses will be copied, which reduces the advantage. This holds true for superior execution on a strategy as well. Every advantage diminishes over time.
In consequence a digital transformation programme that implements the changes is something that does not have an end. Another consequence is that the overall setup of the transformation programme needs to support business agility and frequent change.
Does digital transformation deliver? Here we are at the heart of the matter! Often it doesn't. Why? There are several reasons, one of them being just jumping on the train instead of having a strategy and a plan; another one is that the digital transformation market is still driven by buzzwords, vendors, and consultants. The first one muddying the waters, the latter two taking a significant share of the possible gains if the business does not take enough care and falls prey to predators.
Can it deliver? Clearly yes! If some conditions are met. Here my advice:
- Have a strategy, better a customer centric one. Focus on customer experience throughout the business
- The pace of change will not decrease. Design your digital transformation strategy to make you nimble enough to accommodate for change.
- Position IT as an enabler of the business. This helps preventing isolated departmental point solutions.
- Think big, act small. Measure. Create a roadmap and a plan. Revise it frequently taking business and IT priorities into account; implement tactical priorities while following the overall strategy.
- Deliver often. Start with small initiatives that deliver measurable gains and continue to deliver benefits. This establishes credibility.