People
The term digital transformation has most CEOs rolling their eyes. It means everything and nothing to most C-suite executives.
I have spent 30 years running or consulting with IT functions. When the term digital transformation emerged a few years ago, I found myself googling it, thinking I had missed some revolution or invention taking place in my backyard!
Digital transformation isn't an IT thing! Gary Barr, then a CIO at Morrisons and a mentor of mine, told me 25 years ago that "there is no such thing as an IT Project," which I have come to appreciate and passionately believe in. Unless a clear business value is attached to the technology implementation, and everyone understands that value, you might want to pause.
So, what is it, and why should CEOs care? Wikipedia defines it as "the adoption of digital technology by an organization. Common goals for its implementation are to improve efficiency, value, or innovation." If the company wants to remain competitive and protect its business, digital transformation is not a nice to have; it’s a matter of survival and evolution of business strategy.
Digitally-mature organizations exhibit two hallmarks: agility and innovation. Agility means operational efficiency—doing things you did yesterday quicker and cheaper, as well as adapting and adjusting to new market opportunities and challenges. Innovation means enabling new customer and employee experiences or channels that drive engagement, loyalty, and revenue—an increasingly necessary skill as customers' digital expectations skyrocket.
Agility and innovation aren't mutually exclusive and often live on the same spectrum. To be innovative, you ideally already have agility, without which organizations are likely to introduce additional operational inefficiencies and costs.
During COVID, many companies had to transform their businesses quickly and enable new consumer and employee channels out of necessity. A great example is the adoption of online ordering and delivery at convenience stores, restaurants, and department stores. Because operational processes and the technology stack were not agile, the burden for operational execution fell to store personnel and introduced more manual processes. Additionally, IT functions bolted on the new technology to existing legacy architectures, increasing the technical debt and introducing further complexity and risk to enterprise architectures. While we all hope COVID was a once-in-a-lifetime event, the same challenges occur with acquisitions, mergers, and divestitures where companies work to tight timelines to align people, processes, and technology.
Organizations' digital transformation initiatives stumble for two main reasons:
- It takes too long. People forget why they started it in the first place. And corporate lethargy creeps in.
- A lack of governance and accountability established up front. These initiatives start as an "IT thing" with little or no involvement from the teams that will be using it. And there is no measurement or visibility of the digital value. "What's measured improves," as Peter Drucker advised.
So how do you know where you are on the journey to becoming a digitally-mature organization?
- Can you introduce new business value-added digital services into your business—from idea to prototype within weeks?
- What is the latest status of your digital initiatives? Which business owner is responsible for them? How is digital value being tracked?
- Is your data reporting yesterday's news or predicting tomorrow's? What percent of actions are based on data and insight, and which of those actions are reactive vs. proactive?
- Does your leadership team understand their role in digitally transforming the organization, and do they have the requisite skills?
- Are your IT costs in line with operational consumption, meaning can they scale up and down based on usage? If you close a store, can IT spend be reduced?
The purpose of this article isn't to get super technical and wax lyrical about why you should have microservices, platforms, RPA, cloud computing, virtualization, application containers, and artificial intelligence. Instead, I hope it serves as a reminder that at the core of the digital transformation, you are looking for very practical outcomes such as lower costs, reduced risk, or incremental sales.
There is no such thing as an IT project!
