“There are decades where nothing happens, and there are weeks when decades happen” said Russian President Vladimir Lenin over one century ago. If only he had a crystal ball to foresee the enormous challenges the year 2020 presented us with, namely the COVID-19 global pandemic that closed international borders and forced countless millions from our offices into months of remote work with very little notice!
The sharp, sudden disruption of COVID-19 and the health response of governments around the world in limiting physical gatherings has also acted as an accelerant for existing trends, compressing a decade’s worth of organisational change into just a few frenetic months.
Digital Transformation, as witnessed by organisations shifting to mass remote work and developing new contact-less ways of serving clients and customers from ‘anywhere at anytime’ has been a defining feature of the COVID era we’re currently living through. However, more than just the use of digital technology to replace inefficient manual processes across an organisation’s operations, true Digital Transformation goes much deeper than that.
What is Digital Transformation? A practical definition
The term “Digital Transformation” has become a popular buzzword over the past decade and like all things ‘Digital’, its intended meaning can vary from person to person. Yet it all comes back to harnessing the power of digital technology which continues to develop at a truly dizzying pace, even more so today in the shadows of COVID-19.
From AI driven chatbots that instantly answer a customer’s questions to Machine Learning programs that can remember their personal preferences from previous conversations and make highly informed recommendations in the future, Digital Transformation can be defined in practical terms as integrating digital technology into all areas of your organisation’s operations, to empower your employees and deliver truly exceptional customer value.
We particularly like this description below from the Enterprisers Project – a global community of CIOs and IT professionals:
As you may have noticed, the authors also stressed the importance of cultural change, not only the technology itself, which is essentially the means to an end. This point is crucial and often overlooked in discussions surrounding Digital Transformation. First you should begin with your organisation’s end goal in mind – which might be to design beautiful, seismically resilient buildings in the case of an earthquake engineering firm. Armed with a clear mission, you can then confidently invest in the vast array of digital technology tools to help you achieve your goals.
Diving straight into the admittedly exciting world of sexy new technologies and not being led by an underlying goal or strategy helps explain why more than 70% of all Digital Transformation projects ultimately fail to reach their full potential, according to a 2015 McKinsey & Company study.
It’s also why in a 2018 study by Wall Street Journal, C-Suite executives and company directors listed Digital Transformation risk as their number one concern for the year ahead. These risks from not getting a transformation project right have no doubt increased as the rapid, unrelenting pace of COVID-induced change continues to reshape industries across the world.
What’s the Difference? Digital Transformation, Digitisation and Digitalisation
Just as important to understand are the definitions of closely related terms that often get confused with ‘Digital Transformation’ itself, although both fall under its broad umbrella. Keeping in mind that Digital Transformation refers to a systemic approach whereby digital technology is incorporated into all aspects of an organisation’s operations and culture to transform its ability to deliver superior customer value, the following processes all support this overarching goal:
Digitisation | “Moving from analogue to digital technology”
Digitisation in its simplest terms refers to an organisation moving from laborious, time-consuming analogue (or manual) technology to highly efficient digital technology. For example, a small business moving from keeping pen and paper records of their sales in an exercise book, to recording all sales instantly via a powerful, cloud-based accounting platform like Xero.
Digitalisation | “Using digital data to simplify how an organisation works”
If Digitisation represents the fundamental shift of moving an organisation’s data and processes from the analogue world into the digital world, ‘Digitlisation’ refers to the continuous pursuit of simpler, more efficient ways to make use of that digital data to serve customer and employee needs. For example, think of a company’s Intranet which brings together news, events calendars and recently opened documents into a personalised feed for each employee – saving them time they’d otherwise spend seeking that data from multiple sources whilst fostering a greater sense of belonging to their employer.
The 5 Types of Digital Transformation
Whilst the underlying principles of successful Digital Transformation are universal, the way this time consuming and disruptive process is approached will naturally vary from one organisation to the next. Factors ranging from an organisation’s size, its unique challenges, the industries in which it plays and its digital maturity all have a bearing on how its transformation journey unfolds. With that in mind, the ISG (Information Services Group), a US-based global technology and advisory firm have identified five digital transformation archetypes that most organisations fall into, plus the challenges and opportunities each face:
1. Ad-hoc/Legacy Transformers
As the name suggest, ad-hoc or legacy transformers are organisations that have built up large, legacy IT systems over a long period of time that are often siloed and have difficulty “talking to each other”. They are often slow to change and late adopters of new technology. Think cumbersome government bureaucracies attempting to consolidate multiple databases into one and adopt a customer-first approach to serving citizens via seamless online services.
- Siloed, legacy IT systems that don’t “talk to each other”
- Slow to change/organisational inertia
- IT is viewed as a cost centre, not a value generator
- Often adopt digital transformation due to external pressures, not by choice
- A coherent digital transformation process and digital strategy would be a significant improvement from their status quo
- Opportunity to change organisational mindset through external consulting on digital strategy and roadmapping
2. Strategic Transformers
These organisations are well aware of the benefits digital technology can bring to their operations and often already have clear plans to embark on a digital transformation project to advance their goals. They are strategic, long-term focused and seek best-in-class solutions from trusted providers. However, changes to their external environment may be forcing them to accelerate those plans. Think a mid-sized engineering firm adopting a long-awaited CRM system to provide a single customer-view across their entire business.
- Can rely too heavily on IT to implement digital solutions
- Forced to accelerate digital transformation plans by external pressures
- Motivated to change and improve their business through digital technology
- View IT as an organisational enabler, not a cost
- Often already have a cloud-based system
- Opportunity to involve all their organisation in the transformation process (not just IT) to achieve enduring value for customers and employees
3. Cloud-first Transformers
Cloud-first transformers as their name implies, are organisations that already have their operations hosted on cloud-based servers and are therefore experienced in undergoing large IT projects. Their IT teams are typically agile and empowered, with digital transformation seen as an extension of what they’re already doing. Think a mid-sized graphic design agency that wants to enable its staff, spread across multiple, cities to access full-scale video editing tools from anywhere, that would otherwise require a physical studio.
- Information overload – these organisations already have their operations in the cloud, but risk generating data for data’s sake
- Heavy reliance on IT for support and implementation
- Already have their IT systems hosted on cloud-based servers; digital transformation is an extension of what they’re already doing
- Early adopters of new technology, open to change
- Agile, empowered IT teams
4. Digital Native Transformers
‘Digital Native’ organisations have grown up with digital tech at the very heart of their operations and culture. Intensely customer-centric, they consider IT a strategic asset and are enthusiastic adopters of new technologies including AI, Machine Learning and other cloud-based solutions to deliver customer value. Think a growing online fashion retailer with a robust e-commerce platform that would like added functionality to allow its customers to co-create their own personalised clothing designs.
- Enthusiastic about new technologies, but must ensure they do their homework before embarking on a digital transformation project
- Need to guard against the risk of overspend on IT projects and ensure rigorous testing of digital solutions is carried out before implementation
- Digital technology is already at the heart of their operations and culture
- Fast-moving, early adopters of new technology, unencumbered by the legacy IT systems that can hold more traditional organisations back
- Digital transformation can deliver them to the frontier of their industry
5. Disruption Embracers
The true explorers of the digital transformation world, Disruption Embracers are organisations that lie comfortably at the frontiers of their industry. They are enthusiastic experimenters, eager to embrace new technologies and methods to build a competitive advantage they can defend from other disrupters. Think start-up fintech firms, such as Buy Now Pay Later (BNPL) providers who are directly disrupting the finance sector and building an entirely new market category.
- Fast moving and fond of experimentation, disrupters sometimes need to think before they act to achieve the best outcomes
- The sky’s the limit – Disrupters view digital transformation as one big adventure!
- Open to experimentation and change, they test new products and methods with speed, quickly discarding solutions that don’t work for those that do
- Would benefit from more structure to their digital tech approach
Digital Transformation at work: Bringing it to life for your organisation
For many of us, 2021 so far has been just as challenging as 2020. Offices remain closed to staff across countless cities worldwide and the in-person events and gatherings of our pre-COVID lives are still limited by lingering health concerns. The good news is the disruption of the past year has brought out the best in many people and organisations, with the forced move to Remote Work en masse a perfect example of digital transformation in practice.
So, what else can your organisation do to advance its digital transformation journey towards happier, better engaged employees and a superior customer experience? To help IT teams prepare for the year ahead – one which will be defined by hybrid work practices split between the home and office, the LiveTiles team has put together a free ‘Digital Workplace Trends 2021’ report with practical tips to kickstart your thinking or planning process.
These key Digital Workplace trends include:
- 1. Focusing on the frontline
- 2. Ramping up collaboration
- 3. The hybrid workplace
- 4. Wellbeing gets an upgrade
- 5. Moments matter even more
- 6. Communications reimagined
- 7. The effortless workplace
- 8. Rise of the intelligent workplace
- 9. The new analytics
More than just the adoption of sophisticated, exciting new technologies, Digital Transformation if done right and grounded in a clear idea of your organisations goals and culture can take your employee experience to the next level, leading to superior customer service and organisational performance. Given the challenges COVID-19 continues to pose, we all need continuing resilience, efficiency, community, clarity, continuity, inventiveness, intelligence and empathy as we navigate our way towards the better times which will arrive. Digital technology can be a powerful enabler for all the above!