Most enterprises that try digital transformation achieve only partial success. Why? Because digital business transformation is far more than a technology upgrade. For an enterprise to scale digitally, it must transform its operating model with the help of technology. Changing an enterprise’s operating model is challenging but the rewards are commensurate.
How to Succeed Digitally
Managing digital transformation to realize successful outcomes is not easy. The secret to success lies in carefully treading the tight rope between technology upgrade and changes in the operating model. Too much focus on technology and too little on the operating model will, after initial success, land the enterprise in the middle of a digital dip. Such a digital dip is typically caused by siloed approach, confusion over KPIs, conflicting stakeholder views, and poor user adoption. Operating model changes without adequate technology upgrade will constrain the efficiency of the enterprise.
Remember that digital success across the breadth and depth of the enterprise is the real objective. It is much easier to succeed with smaller projects. For lasting results, technology transformation must be driven by a comprehensive IT and operations framework that leverages agility, analytics, automation, and cloud.
How to Transform Technologically
To create intelligent operations, a Machine FirstTM approach is essential. This has four elements. The first is to integrate operations across IT, infrastructure services, and business processes. The second is using automation to take over routine manual tasks and processes. The third is extracting actionable insights from data generated by these automated processes. This is best done with a Machine First approach, conserving human efforts for complex tasks that cannot be automated. The fourth element is identifying imminent process disruptions, and preventing or correcting them.
Analytics and AI have made such an approach practicable. The insights and automated tasks enabled by Business 4.0TM technologies can make processes faster, more accurate, and less expensive.
To embrace a Machine First approach, executives must switch from being process-centric to being data-centric. If the data shows that a feature set has no appeal to customers, developers must rethink the product, however advanced it is technologically.
Executives need to automate not just the operations but the delivery of insights. Filling orders, responding to customers, and ordering supplies must happen without human intervention. Systems supporting a cognitive operation provide alerts that predict problems before they occur and give executives insights to perform tasks that machines cannot.
Machine learning, AI, and advanced analytics capabilities can today be used to identify and fix inefficiencies without having to overhaul entire business operations.
How to Transform Operationally
The need for digital transformation at an operational level calls for a multi-stakeholder conversation at the board level. Transformation requires culture change, access to differentiated talent, a plan to upskill the talent and, most importantly, long-term commitment. Governance is critical and enterprises need to measure value through evolving metrics. The digital enterprises of tomorrow must:
Be agile, innovative, and learning: Nearly 70% enterprises believe that organization structure is a barrier to digital scaling. Next generation enterprises need agile ninja squads to incubate initiatives across functions and business units. Digital command centers play an active role in enterprise-wide adoption and scaling of innovation. As automation and intelligence strike root within an enterprise, business context will become invaluable and lead to a dramatic need for cross-functional techno-ops skills. Central innovation organizations must be the governors of this transformation journey. Measurements of reduction in IT downtime will have to be supplemented with numbers that correlate IT investments with reduction in process cycle times and improvements in cost, revenues, and customer experience.
Have flexibility in funding, balance risk, and innovation: About 45% enterprises fail to sustain their digital initiatives due to lack of funding. In keeping with agile, rapidly iterative, and adjusting journey cycles, multi-modal funding structures are needed to balance risk and innovation and inject flexibility into transformation.
Foster ownership, experimentation, and collaboration: An ownership-driven culture with focus on experimentation is needed. It requires leadership buy-in for cross-stakeholder alignment and to overcome resistance and inertia; achieve collaborative innovation across silos; and iterative improvements.
The Right Transformation Approach
Enterprises can become digital natives through an enterprise-level or a function-level transformation. The right or right mix of approach depends on factors such as business health, industry disruption, and availability of digital talent.
Whether your business model is at risk of disruption or you would like to elevate your enterprise to the next level, the prescription is the same: digital transformation. And Business 4.0 technologies are what would get you there. But you have to reengineer your business processes to extract the maximum technological benefit. What has been your experience? Which changes have got you the best results?
What has been the biggest learning in your transformation journey?