The term “digital transformation” may admittedly be ambiguous, but the symptoms and organizational impact of it are very real.
In this current age of disruption, organizations face pressure to become more competitive and deliver more value to their customers, and leading change through evolved digital capability is how it should happen. The biggest challenge, though, is that transformation does not happen overnight. To do it successfully, certain capabilities must be in place. Successful digital transformation relies on a combination of cultural strategies, business and IT process changes, and modern technology.
As with starting any project, it is important to have clear goals as the context for a transformational strategy. Whether launching an initiative to stay ahead of the competition or to deliver increased innovation and faster time-to-market for new products and offerings, your purpose should shape the actions that need to be taken.
However, defining a goal and executing against it are two very different things, especially when it comes to organizational change. And while digital transformation is certainly a mainstream buzzword, only a handful of companies cite their own transformation efforts as effective (13 percent, according to a recent survey conducted by my company, Red Hat and Harvard Business Review Analytic Services).
Let's dive deeper into what makes an effective digital transformation strategy, and how having the right combination of process, culture and technology is critical to digital transformation success.
Why Digital Transformation Relies on More Than Just Technology
Culture is frequently cited as the biggest obstacle to transformation, and according to Harvard Business Review Analytic Services, the culture of most organizations is not fit for change. Unfortunately changing culture isn't as simple as changing out computer systems or software.
Most organizations are highly structured with the intent of scale and efficiency, but this structure can often inherently restrict transformation. Instead, an organization’s design needs to encourage accountability and transparency, and give its people the flexibility to act, experiment and fail quickly. A very strict structure also results in siloed teams and functions, another major hindrance of transformation.
Leaders in digital transformation value the characteristics of an open culture and principles such as better collaboration. In fact, the biggest gaps between those who’ve been successful in their transformation efforts relates to their ability (or lack therein) to bring people together from a variety of different backgrounds, share tasks and work cross functionally. These adaptive cultures are better able to respond quickly to changing needs and demand from the business and their customers, something critical at a time when no one is immune from disruption and it often can’t be seen coming.
Before Diving Into Digital Transformation, Consider This
From a process standpoint, transformation essentially means you can’t operate the same way you did before. Your organization likely has a plethora of processes in place around development, securing data and systems, and running your business. Those who’ve been successful in their evolution have adopted changes that make it possible for them to quickly pivot as needed. Significant gaps exist between digital transformation leaders and everyone else around the adoption of agile processes to make this a reality. Methodologies such as continuous integration/continuous delivery (CI/CD), agile development, project management processes and DevOps are critical to have in place. It is not enough to simply introduce new technology tools and hope they magically work to create agile shifts across the enterprise, an operational framework has to be in place.
No one adopts technology just for the sake of having it. Outcomes, challenges and opportunities must be addressed through the technological environment, and IT leaders should have fairly clear goals they are trying to achieve. These objectives likely revolve around responding rapidly to customer demand, updating systems more efficiently, delivering new applications to market quickly, and controlling maintenance costs so there’s more time, budget and resources to devote to innovation. True digital transformation leaders have used their technology stack to become more efficient and agile, and to control their expenses.
Developing and delivering applications in new ways can be daunting. Before spending money on new tools or implementing process or cultural changes, the following considerations may be useful in your efforts to deliver more digital products and services:
- Standardize so that you and your teams can work in a more consistent and collaborative manner over time.
- Improve orchestration by integrating the systems you have into a single view.
- Utilize a management platform that makes it efficient to maintain and update systems
- Centralize and automate as many processes as you can.
- Develop a hybrid, multi-cloud capability that enables you to quickly build applications, and deploy and scale them at a rapid pace.
- Allow line of business users to participate in app dev efforts to help define business rules.
- Ensure you’re collecting data and analyzing it to improve business metrics and make decisions faster.
- Become more transparent, sharing information across teams and avoiding siloed insights.
- Break projects into smaller, experimental chunks with rapid feedback cycles, so that failure is a learning opportunity and doesn’t jeopardize entire projects.
Value of Digital Transformation
Establishing metrics for transformation can likely help change the mistaken perception of IT spending as a cost and not an investment. Legacy company or not, justifying an investment is now a cost of entry. When it comes to measuring cultural change or process improvements, combined with technology capability, there are ways to capture progress.
Of those polled in the survey, key performance indicators (KPIs) such as customer retention and loyalty, revenue generation, operational efficiency and employee satisfaction were all among those considered very important. Other significant KPI possibilities are market position versus competitors, and profitability. Notice that none of these are things software can address on its own? The return from digital transformation is about delivering business value.
When first starting out on a digital transformation journey, remember that other organizations are in the same position as you: struggling to align their culture, process and technology, or even just starting out trying to figure out their change strategy. Experimentation is a key part of starting a transformation initiative, and it requires an often painful shift in mindset, behaviors and structure. And while there is no completely prescriptive approach, there is universal belief in what needs to be addressed. The road there can be bumpy, but those who take the time will be rewarded.