Digital transformation: 5 reality checks before you take the plunge

Effective transformation requires a clear roadmap and established groundwork prior to implementation. Consider these practical guidelines to define your strategy
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CIO digital transformation

Digital transformation (DX) can mean just about anything and everything in the business and technology spectrum. Starting with the transition from analog to digital, the term has evolved to refer to the adoption of social and mobile technologies and more recently, to the implementation of any of a plethora of digital technologies.

With so much focus on digital, enterprises risk losing sight of what really matters: the actual transformation.

Transformation is the key, but what about it?

Nearly all enterprises recognize the need to transform. The key, however, is to concretely define what this transformation means to the organization in question.

For the last decade or so, any organization undertaking DX has almost ritually picked out their goals from the usual suspects to define their DX needs: customer experience, operational efficiency, employee productivity, and compliance, among others.

[Also read Digital transformation: 3 ways a culture of innovation can drive your strategy. ]

However, amidst all this transformation, something novel – and perhaps fundamental – has changed: where and how companies create value has shifted. Increasingly, value creation comes from outside the firm, not inside, and from external partners rather than internal employees.

Consequently, it is not enough to improve the conventional business parameters. If your organization is looking for a significant transformative impact, the business as a whole must transform – internally as well as externally.

And that is easier said than done. The crux of effective DX lies in the planning and the preparation that goes into it. Of course, the execution matters, but that comes later.

DX reality check: Establishing readiness and groundwork for DX

A well-defined roadmap and comprehensive groundwork go a long way in achieving DX goals. This groundwork involves asking introspective questions and following some guidelines.

1. Define the context: Ask what is unique to your organization

The first step involves letting go of the temptation to look at what others are doing and where they’re succeeding. Instead, focus on identifying what uniquely defines your organization’s context.

For instance, a traditional bank or an insurance firm with a 30-year legacy will have a drastically different set of leverages and challenges than a fintech startup born in the digital age. What your organization wants to achieve, even if it’s transformative, cannot be at odds with the organization’s context. What might sound transformative could end up disrupting the organization itself more than the industry it targets.

[ New research from Harvard Business Review Analytic Services identifies four focus areas for CIOs as they seek more flexibility, resilience, and momentum for digital transformation. Download the report now. ]

2. Look outside-in: Holistically define your transformation goals

Redefine the value chain and explore business models that go beyond your immediate organization.

An effective transformation is multi-faceted. This means that the outcome, too, is a combination of multiple goals that must be synergistically linked. Consider the following examples:

  • Launch five new products in the next year driven by merchant partnerships, with x% additional revenue, all from digital channels
  • Expand mobile application base by y%, go touchless/branchless in M locations with N self-service kiosks across the identified list of regions
  • Establish distributed, digital, omnichannel frontline and customer support in six months across products and services, and move from SLA-based metrics to customer satisfaction-driven metrics

3. Assess the “to-be” organization fabric and technological architecture: Establish a roadmap to get there

Identifying holistic goals is one thing; the ability to transform into an organization that delivers them is another. Often, enterprises get stuck in their transformation initiatives due to the baggage and inertia of their years of existence.

Such challenges, including technical debt and legacy technologies, are real and difficult to tackle. However, a well-defined blueprint of how the to-be organization looks and behaves – structurally and technologically – goes a long way toward the success of such initiatives. It throws light on the gaps and helps establish a clear roadmap for transformation.

This roadmap must detail how the various aspects of your business would change: organization structure, functions, roles, people, processes, systems, and technology. At the same time, identify the secret sauce from your historical existence and use it as intrinsic strength in the roadmap. For instance, in an insurance company, this might be the value of content gathered through decades of relationships and interactions with policyholders and the endless possibilities of harnessing that content to derive additional business opportunities for cross/up-sell.

4. Explore opportunities to become a platform company: Establish and implement platforms

The digital age is the age of platforms. However, the term “platform” here has a different connotation from the traditional technology platform (although these also play a role).

A platform company leverages assets outside the organizational boundaries to create value that has a multiplier effect. A quick glance down the list of the largest market cap organizations today reveals that a majority are platform companies in the way they leverage resources – including customers – to create revenue opportunities and, in essence, change the way people live and work.

The path to a business model that leverages the platform principle starts with establishing a technology platform. A technology platform approach is essential. This is because an organization that intends to behave as a well-synchronized entity across all the external stakeholders in the ecosystem cannot afford internal silos – whether in the form of processes, functions, systems, or people.

A digital transformation platform enables organizations to connect their processes, systems, and people. This involves multiple technological ingredients, of course. Process automation, contextual engagement, omnichannel communication, seamless mobile and social integration, and artificial intelligence/machine learning-driven intelligent automation provide the needed digital capability to build a boundary-less platform company.

5. Think big. Start small. Build and expand as you go. Be agile

The platform approach is a great way to fast-track digital. However, an ambitious big-bang approach is daunting as well as risky. It is also important to consider that DX is not a one-time exercise but a journey. Speed and agility are critical.

Identify early focus areas for quick wins. Early wins help gather momentum and broader acceptance of the impending changes across the organization. Also, a technology platform that can help deliver business applications fast (through low code, for instance) can be a great enabler for speed. It helps the organization build as you go and achieves agility in the process without jeopardizing the long-term technology architecture.

Digital transformation: not just for today, but for tomorrow

While these are the initial steps, they go a long way in establishing the long-term capability of a continuously transforming organization. An organization supported by a robust digital transformation platform focuses on outcomes and behaviors more than the “how” part of the technology. And that defines an agile and future-ready enterprise, where digital transformation becomes an ongoing habit.

[Where is your team's digital transformation work stalling? Get the eBook: What's slowing down your Digital Transformation? 8 questions to ask.]

anurag-shah-headshot
Anurag Shah is Vice President – Head of Products and Solutions, Americas, Newgen Software. He also leads GSI relations as well as the consulting and pre-sales in the Americas. He has been with Newgen for over 22 years. In his previous role, he led and managed delivery and professional services for enterprise customers.