Adopting Digital Transformation
The practical application of data storage, data transmission and computer processing to transform business processes started in the mid-80's. These capabilities have advanced over the last 30 years to the point that the power and cost of digital technology has pushed the movement of digital transformation forward. I define digital transformation as "comprehensively changing business processes and or experience journeys by integrating digital technologies, processes changes and people skills, with the intent to create competitive advantages and accelerate profitable growth."
Digital Transformation today can mostly fall into the following three key buckets:
- Product Innovation - enabling existing products, integrating 3rd party product features, and creating new products.
- Customer Experience - this includes capabilities that touch any part of the product purchase life cycle ACTR, which includes awareness, consideration, transaction and retention/service phases.
- Operational Efficiencies - automating business processes that would provide differentiation or efficiencies. This is a broad range of middle and back office processes.
These buckets have grown as ROI's have evolved to support the investment into digital technology. In the 90's the focus was on customer experience at the basic level. Product innovation started to gain traction in the mid-2000's and operational efficiencies has become a bigger focus since 2010. What started as the tip of the iceberg with customer facing brochureware has widened to include automation of key business processes.
In terms of digital transformation adoption, many businesses are committed to digital transformation, though they are fluid in their adoption of new digital technologies. Digitally mature businesses are constantly watching the radar for new applications that might provide a competitive advantage, though it might take some time to fully adopt until proven. On the other hand many businesses are not fully committed to digital transformation though testing and rolling out capabilities in one of the buckets.
In terms of core digital technology adoption I would say we are in the "Conservatives" phase. This is based on mature digital capabilities including "owned" assets such as websites, Facebook and Twitter pages; proven paid advertising including desktop display ads and PPC search; and some earned media including Facebook and Twitter. When looking at mobile we are on average in the "Pragmatists" phase and with IoT in the "Visionary" phase. The point is that digital technology will always be in various phases of adoption.
Those businesses adopting digital transformation should include projects focused on digital technology infrastructure, in addition to the operating model buckets described above. Businesses wanting to become more advanced in maturity should ensure digital technology platforms are agile and scalable. Many businesses are focused on bi-model architectures, one focused on legacy and the other on digital. Advanced maturity businesses will have activity in all three model buckets, where Focused and Emergent businesses will activity in one or two buckets.
Unfortunately, many companies don't realize the complexity of digital transformation delivery. According to PwC's Global Digital IQ Survey, more than 50% of executives say their businesses are not focused on executing their strategies, and few are able to bring their digital ideas to market in line with their vision. See my article Digital Delivery: Closing the Business-IT Gap
In this article I talk about the gap between business and IT, and the lack of an enterprise view and lack of detailed use cases. The lack of a change management plan is the third reason why companies are not able to bring their digital ideas to market. The recommended enterprise view provides vision for the technology, and use cases provide detail around processes and people. A change management plan that parallels a digital transformation effort is critical to put it all into action.
Digital transformation is a complex undertaking, but with a good framework adoption can be more direct and possibly quicker to execution. The visual below provides a high-level view into the pieces to consider and develop. Create your digital vision and quantifiable goals based on business drivers. Evaluate product, experience and operations models for the best value to the organization. Align business and IT strategies with the digital strategies and operating models. Develop planning for the digital architecture and infrastructure, which includes data handling capabilities too. Digital IT needs agile capabilities, including design, development and deployment.
Digital Transformation might be the current catch phrase in digital evolution, but adopting digital transformation is critical for businesses who want to remain competitive and accelerate competitive growth. Select and test opportunities in product, experience and operations. Look at both digital operating models and technology infrastructure. Use the flexibility of digital technology to prove out transformational opportunities before making larger long-term adoption investments. Realize that adopting digital transformation is not the same as adopting digital technologies. If you want to become a digitally mature business and remain competitive for the future, then you need to fully adopt digital transformation as a practice today.