Digital transformation could be worth $18 trillion globally in added business value, and analyst firm Gartner projects that it could account for 36 percent of total corporate revenue by 2020, according to ITPro.
This indicates that digital transformation is not only important, but big business. But what is digital transformation? The term conjures images of rummaging around in file cabinets for documents to scan into PDFs, which may actually be part of the process — the one thing we can be sure of is that transforming data so that it is usable is key to being a digital company. But what else is involved? Understanding how other organizations are preparing to do business is important to staying competitive.
To gain a broader perspective, we thought it would be valuable to see how others define digital transformation. We found that it is about finding ways to use data to drive efficiency, business insights, and revenue — but that there are a myriad of challenges to accomplishing that. Those challenges stem from one or more of the following common problems:
- A data problem, meaning that companies have more data than ever before and they’re going to use it in new ways to meet new challenges.
- An integration problem in which companies are moving from a world of siloed data to one with a unified view of their data and possibly even a view into the data ecosystem outside of the business.
- A cultural and organizational change problem, where data and technology demands new values and culture.
- An agility problem, where companies need to be able to constantly change or adjust course to take advantage of technological and industry advances.
- A change in business model problem in which business will be done in a new way.
- An imitator problem, where organizations strive to operate like Google, Amazon, Facebook, or Netflix, companies that have created new ways of working based on technology, data, and what they can do to create new relationships.
In addition, we found that a variety of articles focused on overcoming obstacles while others dealt with success stories.
Here is a guide to the most informative articles we’ve found on digital transformation, in no particular order.
A Data Problem
In a keynote presentation at Modern Data Management conference in 2019, Scott Taylor, aka The Data Whisperer, explains that since companies have more data than ever, digital transformation has to focus on how to put this data to use in new ways to tackle challenges that would have been unimaginable in the past. Additionally, this presentation focuses on how digital transformation requires relationships and trust networks to be built so that companies can move from multiple data silos to one in which the entire business is operating from the same set of master data.
A Need for Cultural and Organizational Change
These four articles maintain that digital transformation requires that companies adopt new cultures and values that spread changes across their organizations. The Enterprisers Project points out that as technology is integrated into every facet of an organization, companies have to adjust to a new reality in which failure is common and old methods are shed so that a better experience can be delivered to customers.
The McKinsey and Boston Consulting Group (BCG) articles observe that when companies adopt new technology, changing the culture within the business is just as important to ensuring the technologies succeed as the technology itself.
The McKinsey piece highlights that four of the five most important factors in making digital transformation successful are cultural: quality leadership, capability building, empowering workers, upgrading tools, and communication.
The article from BCG discusses four key areas companies need to focus on to succeed with digital transformation: digitizing customer relationships, building digital talent and organization, harnessing data and advanced technology, and digitizing operations and automating processes.
Finally, in the Inc. article Greg Satell says, failures with digital transformation “have less to do with technology and more to do with managing the cultural and organizational challenges that a technological shift creates.” He has four recommendations to get started: Start with business objectives, automate the most tedious tasks first, shift your organization and your business model, and digital transformation is human transformation.
An Agile State
In this article, Galen Gruman asserts that using new technologies isn’t enough to achieve true digital transformation. Digital transformation must involve “fungibility” or the ability to constantly adapt, change, and be agile. That means having systems and processes in place that have a high degree of adaptability so that when a promising new technology arises, it can be brought into your business processes. For example, many organizations rely on legacy applications that they refactor piece by piece into cloud-based microservices that enable further agility. Ticketmaster is a case in point.
As a New Business Model
The Forrester podcast from Martin Gill and the Guardian article by Martin King argue that digital transformation is about radically reshaping business models so that technology and data are always at the foundation of what the organization does. By crafting such new business models, companies can meet the new demands and wants of consumers and even alter the ecosystems in their industries outside of their businesses.
Overcoming Obstacles in Digital Transformation
Two articles we reviewed focus on the obstacles companies face when attempting to implement digital transformation. It’s clear that the human factor is at least as important as the technological, as leadership failures and cultural and organizational inertia are common.
Jabil had organizations rank their top challenges and segmented their results by size of the organization. Lack of expertise to lead digital transformation was cited as one of the top issues; this expertise is both strategic and technical. Incumbent organizational structures and employee pushback are also common obstacles.
An article from contributor Howard Tiersky in CIO cited similar issues with organizational resistance. He also delved into strategic obstacles such as the lack of a comprehensive vision for digital transformation. Ineffective use of customer data and inflexible technology stacks further hinder organizations in moving their digital transformation efforts forward.
Successes with Digital Transformation
Seemingly, more articles on digital transformation focus on problems rather than successes. However, this piece from IT staffing firm Brainbridge paints a rosier scenario of the benefits companies can achieve when they make progress with digital transformation. The article explores twelve case studies of successful digital transformation that show how companies that integrate cultural change with new technology can empower employees to better serve customers and reform the business going forward. For instance, the article points out how Subway, Capital One, and Walmart all redid their mobile apps to improve customer experience, which led to greater customer satisfaction and increased profits.
Trends in Digital Transformation
This article by Dion Hinchcliffe looks at the latest shifts in digital transformation. One key area is leadership. Once led by the CIO and more recently CDO, at digitally mature companies, digital transformation today is being led by the CEO. This leadership is also a key factor in successful transformations, as top-down communication increases success rates.
This top-down leadership also denotes another important trend: integration of digital transformation projects across the business. Large technology projects overall face high failure rates, and digital transformation to date has often been spearheaded by multiple departments. Hinchcliffe expects more integration of digital initiatives going forward.
Data is the fuel for digital transformation, and emerging regulations, including GDPR, are putting additional pressure on digital transformation initiatives.
Organizations face an imperative to transform or die, and strong pressure to make their employee and customer experience more like Google and Amazon. Learning all we can about digital transformation empowers us to assess our progress, set overall strategy, and determine next steps.
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