By: Ciopages Staff Writer
Updated on: Feb 25, 2023
Digital transformation is the megatrend driving billions in investment across the corporate world to reinvent the way they do business. CIOPages.com’s definitive guide to digital transformation is a comprehensive and in-depth insight for executives and entrepreneurs on how to think, plan, implement, and run things to be successful in the digital age.
In the enterprise digital transformation guide, we will address the following topics to help you master the art and science of digitalization.
“When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.” – George Westerman, MIT
Digital transformation is a customer-centric reimagination of the future of an enterprise and subsequently rethinking the business model. Reshaping the product/service portfolio, restructuring the processes, re-platforming technologies, reskilling the workforce, and instilling a new culture to get to the end goal.
That definition of what is digital transformation packs a lot of punch. Let’s unpack as to what all that means:
Of course, not every company needs to do all the things and that too all of them at once. Boiling the ocean may be one of the challenges companies face when they proclaim to the analysts and media about a billion-dollar digital transformation. Of course, ultimate it may require a massive investment, but planning, prioritization, sequencing, and phasing are as essential to get quick wins, and then accelerate momentum.
On the other hand, companies that think piecemeal focusing on the surface issues will fail irrespective of how much of a patchwork of solutions they implement. For example, if a company deems poor customer satisfaction as either a fancy portal problem, or an employee training problem, or something else, it is missing the forest for the trees.
What is driving the digital transformation agenda of the C-Suite in large corporations? A few megatrends plus a host of business drivers. Let’s examine the megatrends first:
The launch and subsequent phenomenal growth of iPhone and other smartphones may be one of the pivotal moments in history. Companies like Apple, Zappos, Spotify, Airbnb, Amazon, et al. have made the customer experience the cornerstone of their success and jaw-dropping growth. Today, customers no longer compare the experience of peer groups – banks, retail stores, and home services and the like. Instead, the benchmark of ease and experience are set by the tech giants and emerging startups upending the status quo in every sector.
The digital disruptors include a few household names from the Web 1.0 and 2.0 era and are now giants in the digital age. Apple, Amazon, Netflix, Facebook, Google exemplify the digital disruptors turned giants that are spreading their reach into various corners of the industry sectors. And add to the relatively old stalwarts are the new disruptors – Uber, Lyft, Spotify, Airbnb, et al.
Today, the Global 5000 companies are playing catch up and trying to learn and emulate the digital natives. That is a seriously big deal.
Touch-enabled devices (smartphones, tablets, phablets, and laptops) along with the ubiquity of wi-fi and 3G/4G heralded a new revolution. Today, we are no longer tethered to a desk or a couch, and we are doing everything on our mobile devices – interactions, transactions, learning, sharing, and being. Most people consider their mobile phone to be more important than a car or a television. Times have changed indeed. The mobility revolution is driving significant changes across companies – irrespective of whether they engage in B2C, B2B, or B2B2C or any variations thereof. It is not just about the form factor and front-end user experience, but how those interactions and transactions are supported and how they impact the demand chain and all way to the supply chain. Mobile first, touch first is the new paradigm.
The cloud revolution is another critical factor driving the digital revolution. It is both a driver and also an enabler. Enterprises are migrating to the cloud at a rapid pace – initially storage and a few application such as CRM (Customer Relationship Management), SFA (Sales Force Automation), Help Desk, and HCM (Human Capital Management) type functions. And the process of going to the cloud is reaching into the core services and mission-critical applications. It is no longer, “Why cloud?” but “Why not the cloud.”
The advent of big data and advanced analytics, including predictive analytics and decision analytics, are another big drivers for the digital business transformation. Companies can no longer live in the past and let their instincts and gut determine the future course of action. Many companies are leveraging data and analytics for real-time decision making. The data-driven decisions are the core of how digital natives have the edge over the large entrenched players in various industries.)
In more recent times, technologies such as RPA (Robotic Process Automation), connected devices, machine learning, artificial intelligence, and related cognitive technologies are necessitating the digital transformation. AI and cognitive techniques are a driver, an enabler, and a potential competitive differentiator.
“Digital transformation is more than painting a shiny picture of the future: digital transformation means tying the back end to the front end, which CIOs have done over and over again.”
Where are most firms focusing their energies on with regards to embracing and implementing digitalization efforts:
Digitalization and transformation are complicated endeavors. Companies will need to either create or adopt a digital transformation framework and tailor to their unique needs. The digital transformation framework is a holistic perspective of what it takes to transform digitally and acts as a runbook for achieving the digital destiny.
So, what is a digital business transformation framework? A digital business transformation framework is a conceptual depiction of critical phases and high-value activities from the vision to realization journey of digitalization.
A typical digital transformation framework may include guiding principles, essential themes, sequential and iterative phases, critical activities, enablers, disablers, and desired business outcomes. Of course, not all frameworks cover the gamut, and not all companies are beginning from square one. Hence, it is up to the transformation team to define the scope and magnitude of the digital shift and encapsulate the essence of the work in an easy to digest framework.
Below is a sample digital business transformation framework from CIOPages.com.
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Top business leaders of firms embarking on digitalization journey should ask and answer the following dozen questions to create an effective strategy and an actionable roadmap.
The digital transformation strategy is a blueprint that sets the direction of what comes next. Companies without a clear and coherent digital business strategy will end up with subpar results. The classic case of “operation successful but the patient dies.”
CB Insights has fun and a bit of pun about corporate innovation.
Formulating a compelling digital strategy and then documenting is a profound activity, but need not take months to complete and 100-pages to document. Given the nature of digital, we advocate concise and coherent articulation of the digital transformation strategy using any strategy model that you may like.
As an input into your digital strategy framework, a digital current state audit and a digital transformation survey will come in handy.
Some enterprises are hiring reputable digital transformation consulting firms – of every stripe and skill imaginable – to help define and direct digitization programs. Digital transformation consulting is a multi-billion dollar business with no signs of slowing down. Whether you hire a digital consultant or do it yourself, digital strategy is the fountainhead decision and helps corral the execution.
In the end, irrespective of the words you use and concepts you follow, digital business transformation strategy needs to answer the fundamental questions such as: Why, What, Where, Which, Who, When, How much, With What, etc.
The truth is a digital strategy alone is far from sufficient. Executing the digital vision into an actionable reality is fraught with risk, cost, hard work, and complexity. However, the rewards of success in a digital transformation can be the difference between surviving or thriving.
“The truth is that digital transformation is actually not about adapting to new technology at all — it’s about directing an organisation to be more adaptive to change itself.” ― Lindsay Herbert
People throw around the term “Digital Capabilities” all the time, using it to mean a slew of different things – abilities, capabilities, competencies, processes, and systems. Of course, as long as the other person or team understands what you are saying, that may be ok. However, digital capabilities have a distinct and different meaning under business architecture nomenclature.
A digital business capability is what a business does and can do in the digital or physical realm using underlying value streams and processes, and realized by systems/applications.
So, a digital business capability is an elemental entity or a Lego block in the digital universe. A company may need a set of such digital capabilities to accomplish its digital objectives and reach its manifest digital destiny.
Let’s break down the concept of digital capabilities a little bit more using “Customer Experience” as a case study:
For example, when an executive says “Let’s improve Customer Experience” it is a goal or a desired outcome.
Then a business leader says, “Achieve highest customer experience scores by seamless post-market service delivery,” they are articulating a strategy.
“We will need a customer-centric culture,” it indeed refers to culture, change management, training, and development.
“Prospect to Customer” and “Purchase to Promoter” are value streams (Value stream, a particular component of business architecture, is a higher level depiction of an end-to-end customer flow leading to an outcome.)
“Prospecting Management” “Product Research” “Onboarding” “Order Management” “Order Fulfillment” “Account Management” are some of the digital capabilities which may be an integral part of improving customer experience.
“Portals” “Mobile Access” “Security and Authentication” “Product Search” maybe some of the underlying technologies to power the capabilities.
So, what it means is a company needs a comprehensive digital business capabilities model which encompasses a detailed drill down of digital capabilities into a granular and elemental level. The digital capabilities must be mutually exclusive and collectively exhaustive.
Detailed decomposition of digital capabilities to level 3 or 4 will help companies figure out the execution details.
The image below captures how just saying a word – “Digital marketing” or “Social Media” is not sufficient, and for a capability to be IT-enabled, it requires a more in-depth level decomposition.
You can jumpstart your digital transformation journey by purchasing a CIOPages.com Digital business capabilities model which will feature a detailed list of digital capabilities.
A digital transformation roadmap is a compass for how to realize the digital transformation vision through a series of projects, phases, milestones, and releases. The digital transformation roadmap is a critical deliverable, and it should be more granular than a strategy document and a bit more abstract than a detailed project plan.
The digital transformation roadmap work is more brass stacks and happens after a digital vision, operating model, and strategy are already clearly articulated. The roadmap is how the concept gets turned into a reality. The following are nine critical steps to building a digital roadmap.
The digital roadmap typically comprises of broad themes which are in turn are a set of features, functions, and clusters of capabilities with phases, and milestones along the capability-enablement lifecycle. The digital implementation roadmap is typically very detailed for one quarter and a bit higher level for the following three quarters, and then more at a feature/function level for the subsequent 12 months.
The following is a sample view of a digital transformation roadmap for a single digital capability.
Large companies are using digitalization as an opportunity to fix many of the functional areas and move them into the digital age.
Marketing Transformation: Since the advent of social media and the digital wave, progress in marketing technologies has been phenomenal. Scott Brinker’s marketing technology landscape map is an eye-opener. Given the growth in online marketing, many large enterprises are embarking on marketing transformation.
CRM Transformation: Sales force automation and customer relationship management may have been where the enterprise SAAS digital revolution may have commenced, thanks to companies like SalesForce.com. Today, most companies have already completed or in the throes of a CRM Transformation.
Accounting and Finance Transformation: The role of finance has changed tremendously in recent years. Today, finance has become a strategic function and a business enabler. A digital transformation of finance function is at the core of many companies digital endeavors.
HR Transformation: In the digital age, people and data are probably the most critical assets of any company. Hence Human Resources Transformation is on top of mind of companies who want to make the employee experience as exceptional as customer experience.
Business Intelligence and Data Analytics Transformation: Big data and analytics have helped companies transform regarding data-driven decision making, customer analytics, people analytics, operational analysis, and risk management. Data Analytics and Business Intelligence transformation help add strategic value across many functional areas and positions the companies for the data-driven digital age.
Supply Chain Transformation: While many focus on the demand chain, particularly e-commerce and customer experience, the supply chain is an area where digital technologies and digital concepts have revolutionized how companies source, collaborate and innovate with their suppliers and partners. Companies are re-imagining their supply chains with next-generation digitally powered Supply chain transformation.
Digital process transformation or digital process re-engineering is different than the traditional process re-engineering efforts of yesteryears where cost-cutting was often the core focus. Instead today, digital process transformation often involves one of three things:
Hence, when your enterprise is thinking about process restructuring or re-engineering as a part of digitalization, rethink the value and if possible recreate the flow. It is not about an incremental efficiency or elimination of a single step. If something could be done way differently or not done at all, it changes the paradigm.
“Thinking digital” “Doing Digital” and “Being Digital” are various stages of the digital mindset and culture. For large legacy enterprises digital is something that they need to acquire and is not as natural for the digital natives.
Digital natives do not need to remind themselves of “Touch-first and Click Next.” It is in their DNA.
Digital natives aren’t thinking “Why Cloud?” and associated justifications. It is just the way it is.
So, how do traditional enterprises bridge this digital cultural divide and reach a state where digital is not an act put on for the show but is an integral part of how the firm operates?
The magnitude and impact of change management during a digital transformation cannot be overstated. Since digitalization is more of a business transformation, cultural transformation, and people transformation – more than just a technology transformation – change management occupies a pivotal position in making the digital transformation something that the employees embrace and for the rewards of transformation bear fruit.
The change management in the digital age is indeed different and different.
Companies need a cohesive change management framework and a change orchestration plan.
What are the benefits of digital transformation? It is essential to articulate the benefits of digital business transformation and of course deliver those benefits. Here are the ten benefits of digitalization in the enterprise context:
According to research firm IDC, companies expect to spend upwards of $1.1 trillion on digital transformation initiatives. Despite these eye-popping investment numbers, many digital projects fail or underperform. The failure of digital projects is emblematic of the broader syndrome affecting all projects – the larger the projects and more ambitious the reach and scope, the more likely they will fail or underperform.
Digital transformation is not complete without several enabling technologies rising to the forefront. Digital transformation technologies are evolving fast bringing in their wake new possibilities. The following are some of the digital transformation tools and technologies that are driving digitalization efforts. Which of them are fads or long-term solutions remains to be seen? So, before investing millions of dollars, enterprises should conduct a proof of concept and ensure they are using the right technologies for the proper use cases. Also, remember! IT digital transformation is an enabler and a means to an end, not the end.
CIOPages.com offers a lot of Transformation Toolkits, Templates, and Guides for digital transformation. Many of these are in a variety of formats: PDF, PowerPoint, Word, Excel templates or documents.
Please contact us for digital transformation deliverables or digital transformation consulting.