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The COVID-19 pandemic forced many companies to evaluate their use of technology and rapidly transform to meet the demands of a new remote work environment, exposing a gap between companies that had invested in digital transformation and those that had not. At the end of 2019, Accenture found that the companies leading in the adoption of digital technology were growing faster and had high confidence in the reliability of their data. In other words, implementing a digital transformation strategy pays off.
However, this “digital transformation-or-die” mentality — while germane — overlooks the catch-22 facing many organizations: To be a disruptor, companies must undergo digital transformation, but they may disrupt themselves along the way. Despite the prevalence of (and need for) digital transformation, there still isn’t a handbook for it. How digital transformation looks — or how it is defined in the media — may differ from one organization to the next.
That said, because digital transformation should not be delayed any longer, organizations must determine how to execute. There are several universal elements that can make a successful digital transformation, and conversely, there are still many hurdles overlooked by organizations. The common denominator? Humans. Read on to learn how organizations can go from disrupted to disruptors by addressing internal politics and vision.
Why Is Digital Transformation So Disruptive?
Years ago, digital transformation was thought of as a way to impact margins — how can organizations become better, faster, and cheaper? While those objectives may still motivate companies, the most disruptive piece of digital transformation is the human element. At many organizations, decision-makers and IT leaders built 25-year-old systems and business processes that were (and, to some extent, still are) very successful. It’s difficult to approach these seasoned professionals, who often run their division, and tell them that everything needs to change. Having built those systems, they know the difficulty of starting from scratch. They will also be reluctant to hear their staff will need to be changed and retrained. And the least convincing part? There isn’t a clear path forward to success. Worse, they still need to get moving.
If organizations aren’t moving aggressively, they’re falling behind, as made clear in the banking and insurance industries. Yet this pressure can become unwieldy without a plan. In many cases, core business functions still need to run, but the people running them lack the necessary data. The result is that leaders are faced with a problem, don’t know what new solutions are needed to solve it — or how to address their legacy systems — and don’t have the right talent to figure it out. I discuss these challenges often with our company’s partners, and as Mike Mahon from Zia Consulting says, “It’s like having your house on a solid foundation, but now it’s crumbling beneath you.”
To keep pace with progress, while minimizing disruption, organizations need to get their people on board — starting with creating a vision.
How to Create a Digital Transformation Vision
It’s harder than it sounds — which is why many organizations will bring in outside consultants and work with their partners/vendors to craft a digital transformation vision. This should include not only a five-year plan but also an idea of where the organization should be at the end of year one. The vision should also define what digital transformation looks like.
Without a clearly defined vision, many organizations have made the wrong investments in technology, and, as a result, they are now failing. They defined digital transformation as building a DevOps team, moving to the cloud, or starting a machine learning initiative — but this is the wrong mindset. Those are widgets that don’t work across business lines; they don’t actually drive a business outcome. Mike Mahon put it best, “To digitally transform, you have to be digital.” It’s important to found DevOps and machine learning teams, but organizations must start with clean data.
If an organization wants to retire 300 enterprise applications, they must ask a few questions first: What is the risk? Where is our data living? If it’s in a data lake or large content repository, can we trust the Data Quality? If the answer to the last question is, “I don’t know,” the organization needs to take a step back and lay a foundation first. Make sure that data is trustworthy — know where it came from, where it is, who has touched it, and how it’s governed. From there, organizations can use it for reporting and learning, and then decide if applications should be kept or replaced.
In choosing digital transformation projects, organizations need to always keep a vision in mind. Many leaders and members of the C-suite will determine business outcomes — e.g., lowering risk and cost — and then try to fit them into the vision. Instead, they should look at the current environment and think, “I have a mainframe that works and 300 siloed applications; what can I accomplish with them? What inefficiencies can I eliminate?” Once projects have been selected, the next step is to get people on board.
How to Make Digital Transformation Persuasive
Internal politics is one of the main barriers to digital transformation. If the head of a department is not convinced of a project, then it’s unlikely that much progress will be made. Organizations can’t just have a digital transformation vision — they need to be able to communicate it to employees at a team level. It’s important for the CEO to buy into digital transformation, but it’s equally important for people on the ground to understand the value. The first question employees will have is: How will this make my job better? It’s easy to feel like change is more disruptive than the end benefits.
Organizations need everyone to be aligned on digital transformation — from the people who open up the office, answer the phones, and set the meetings, all the way to the C-suite. That’s vision. Leaders should focus on projects that improve employees’ jobs and engagement because when they are already working 40 hours/week on an existing system, people don’t have time or energy to dedicate to a forward-looking DevOps initiative. That’s digital transformation — saving employees a few hours of work today, so they are freed up to innovate.
Digital transformation, when underpinned by a vision and organizational unity, can be the game-changer enterprises need. Tackling futuristic projects blindly will result in internal disruption. However, laying a foundation for clean data, identifying real pain points on the ground, and empowering employees will deliver the results organizations are looking for.