Labs & musings
The digital transformation train has left the station, but it is not too late to get onboard The digital transformation train has left the station, but it is not too late to get onboard
Musings / 08.03.2022
Digital Transformation can be categorised in many ways and mean different things to different companies. At its core, it is a fundamental change to business processes, either by computerising existing manual processes, the modernisation of existing systems that are no longer fit for purpose, or the creation of new systems to support new business channels. In nearly all cases it breaks down into three distinct categories: foundation, core business, or new business.
Digital transformation was already at the forefront of business leaders’ minds before the global pandemic. In order to meet customers’ business needs during the pandemic, they have had to accelerate that journey not just to maintain pace with digital natives, but because the customer has changed their behaviour. Customers were already looking at the world differently and many established businesses have been disrupted. The pandemic has accelerated that, massively and globally. We also see huge disruption in global supply chains and with logistics, as countries and businesses open up again, exacerbating the challenges faced by businesses even further.
The ones that can solve these issues will have a huge market advantage. Customers will flock to them.
What does this mean for business? Our understanding of traditional IT needs to change. Manual processes have always been the standard way of working, but in today’s world Digital must become the way we do business. Digital Transformation is not something that we order and expect to be delivered, sometimes poorly, in 2-5 years. It is now something that should underpin the whole business. It needs to be adaptable and agile.
Businesses that struggle to learn how to make this work for them will see an ever-shrinking market share. Even if you have unique products and almost complete market share, you will see disruption. The barriers to entry in most businesses are reducing, as you can market and sell a product without ever needing to make or store it. As long as you meet the customer how they want, you will win their custom over the long term, if not the short.
Businesses need to address how they meet the customer, they need to modernise their systems and become data driven. In some cases, they will need to create new capabilities, where existing systems are manual or don’t exist, as with new business processes. Automation and speed are key. This means reducing the long-lived platforms of the 90s in favour of slim, customer focused products with flexible backend systems. Only with these in place will you be able to weather the coming (or current?) storm.
How do we achieve this? As mentioned above, we need to look at our business differently, by merging our technology and business capabilities together. We must look at technology as the way in which we do business, as well as an enabler and method of reducing cost. Scalability can come from repeatable, well created automation in every aspect of what we do. We need to give the business access to data to allow for decision making at speed, based on real data points, not gut feelings. The only way to really succeed is by being agile, not just in our approach to developing software systems, but in the sense of business agility. Only then will we be able to meet customers the way they want and be able to pivot easily if needed.
When looking at the change we must be aware of biting off more than we can chew. We can’t change everything all at once, we need to ensure that we can measure the success of the changes we make and approach them in the right way. The ability to do this with haste is what we mean by business agility, however if we don’t have a technology architecture that will support our growing needs, we will spend more resources in terms of time and money to reach our goals. Another consideration is where to start. When approaching transformation, the best piece of advice would be to concentrate on the areas that your business needs to be unique. For example, there are no benefits to spending all of your efforts implementing a new way of storing internal documents, if the customer can’t find what they want to purchase on your website. That doesn’t mean that the new document system isn’t needed, just that it can wait or can be bought off the shelf. Where companies have a differentiator, they should invest in systems that will highlight that difference. Where they have a system that runs the business, for example: accounting and email systems, they should look to purchase what they need. They should keep in mind that if any system tries to do too much, it will likely be a bottle neck in the future. Cloud services are an ideal way to test future systems, as the speed of development and procurement of new infrastructure is an ideal way to understand what will work and what won’t, even if the end system will not run in cloud, well at least not public cloud.
The plus when working in this way, is that it is far cheaper to work like this, than in a slow to change, siloed and monolithic traditional way. Changing our culture is hard, but it is by far the most effective way of accelerating change within an organisation. It is the foundation that underpins the journey of transformation. Embracing innovation and continuous improvement will ensure that we are always ready to be disrupted or better yet, to be the disrupter.
The article was published in AmCham's Yearbook 2021