Essential ingredients for digital transformation
“Buying and installing all the latest technologies, and thinking it will all magically transform an organisation with moribund processes into an overnight dynamo, is misguided — and expensive — thinking. That’s the problem with “digital transformation” — it’s one of those feel-good terms that suggests enterprise leaders are recognising that their futures lie in leveraging technology to create and deliver spectacular customer experiences.”
Joe McKendrick, Technology Alone Won’t Buy You Happiness — or Digital Transformation, Forbes, June 2018
Have we learned nothing?
Well almost. This reality check from a Forbes article last year, highlights that when it comes to technology transformations, we’re still not learning from the past.
Remember the early 2000s CRM craze? While the industry grew at a meteoric rate, it took a massive reputation hit in the process. In 2002, nearly 70 percent of CRM users reported some form of failure. A post mortem revealed that simply ‘dumping’ technology into the organisation wasn’t going to produce miracles overnight. It takes an understanding of the people using it, processes and how technology integrates for results to be seen. No huge surprises there.
Yet, as we move through the digital transformation cycle, are we seeing the same patterns occurring? If the opening paragraph is anything to go by, then yes. And, the stats don’t lie. While we’re not seeing the huge failure rates of CRM, we’re not seeing massive success either.
Only 14 percent of 1,733 business executives polled by McKinsey in September 2018 said their digital transformation efforts have sustained performance improvements. Just three percent reported complete success at sustaining change. Another McKinsey study highlighted that 70 percent of digital transformation projects will fail to reach their stated goal. Whichever way you look at it, the signs aren’t great.
If digital transformation is to be successful, what’s needed? A study of 4,300 executives from Deloitte and MIT Sloan Management Review identified the characteristics of what they term the ‘digitally mature’ organisation.
These organisations recognise that digital transformation has to come from within. They ‘adopt forward-looking attitudes and encouraging innovation at all levels’. In short, it’s far from simply being about technology. It’s about the people, processes and indeed partnerships that when combined, deliver the success organisations crave.
The process of digital transformation is an uncomfortable and uncertain one. It requires quick, yet confident and mindful decision-making. It also needs the ability to adjust quickly when things go wrong. And, the entire organisation has to be on board, working together. Yet still, this is an issue. According to a report from Mulesoft, 84 percent of organisations have integration issues – meaning there’s very little collaboration going on.
To succeed requires a start-up like culture and mindset. And, for those in the mid-market, this should be infinitely easier than in larger enterprises. It requires flat structures, honesty and transparency to work. Cross-functional teams from all over the organisation should come together. This allows new ideas to be cross-checked by employees from different offices and functions, foreseeing any problems and addressing them before the entire organisation goes too far down the path of adoption. It allows for consideration both up, and down stream the business – and what the potential impacts could be.
Often, the very mention of a digital transformation project is followed by a plethora of outside consultants. Fresh eyes and a different perspective is invaluable. McKinsey, in their ‘how of digital transformation’, discusses the importance of bringing in an outside chief transformation officer. The rationale being that often, the skills needed for transformation projects may not exist within the current set-up. This is especially important in mid-sized organisations. Second, an external person is unconstrained by internal politics, and is able to make decisions quickly.
Yet, first-hand knowledge of those impacted by the transformation on a daily basis is perhaps even more critical. As was the case with the great failures of CRM a decade and a half ago, it’s not that the technology was fundamentally flawed. It was that insider knowledge of how the organisation operates was often overlooked.
Digital transformation requires a thorough understanding of how teams work together. Only then can you apply a cutting-edge approach to work.
While much of the focus of transformation is on the traditional triangle of people, process and technology, there’s a fourth and very important element. The value a passionate digital partner can bring to the table.
There’s good news for Australian organisations on this front. Many are ahead of the game when recognising that going in alone for digital transformation may not be the best option. PWC’s Global CEO Survey revealed almost half of Australian respondents said ‘they’re addressing how they partner and who they partner with.’ A far higher figure than many of their global peers.
Working with the right partner allows you to draw on years’ worth of prior experience and implementations relevant for your organisation and market. This is particularly important for mid-sized companies, where getting a head start creates huge efficiencies.
Digital partners also bring with them a depth and breadth of skills that may not exist within your current organisational set-up. Acquiring these skills is often time-consuming and costly.
Finding the right blend
Digital transformation is tough. Most organisations find it hard to gather the right ingredients in the first instance. Mixing them together to find the right blend makes life even harder. For mid-sized organisations, this process is amplified with a number of other challenges that larger competitors may not come up against, such as having access to the right skills and resources.
If anything, this emphasises even more, the value a great digital partner can bring. From exposing valuable market insights, to offering the right skills, a great partner can help you develop, implement and manage your digital strategy to maintain long-lasting customer relationships that drive growth.
 Michael Krigsman, chief executive officer of the consultancy Asuret and a specialist in project risk assessments
 Five moves to make during a digital transformation – McKinsey