A recent Harvey Nash/KPMG worldwide survey of 4,500 CIOs and technology executives found that 43% thought “resistance to change” was the biggest impediment to digital transformation. Resisting the resistance, 41% of the organizations surveyed reported they have an enterprise-wide digital strategy in place, up from 27% just two years ago.
Digital transformation is what currently drives new investments in information technology, business models, and skills. The term, however, is rarely defined. Instead, we typically get a list of the latest digital technologies to impact enterprises—mobile devices, social networks, cloud computing, big data analytics, machine learning, artificial intelligence—as if just selecting the right tool will magically move the organization into the digital age.
Digital transformation is a critical element in the vast remaking of management thinking and doing that the emergence and success of “digital natives” (e.g., Amazon) has brought about. So far this year, retailers have announced plans to close more than 6,700 stores, more than the previous all-time high of 6,163 store closings in 2008 amid the financial crisis. The response to the changes in consumers’ buying habits—as well as to all the other changes driven by the rapid replacement of the physical with the digital—calls for business, IT, and digital transformations.
Business transformation is about finding and successfully pursuing a new business model, designed for the digital economy. IT transformation is finding out how to make IT a revenue-generating strategic lever for the business in addition to serving as a robust business infrastructure. Digital transformation is understanding what data can do for the business and acting on these insights.
For digital transformation to succeed, executives must think beyond automation and a new set of technologies and build solid foundations for digital strategy, execution, and culture. They must develop a digital-friendly business platform that will move the organization, including people resisting change, to the digital age. Here are a few suggested building blocks for the digital-friendly business platform:
- Value: Data is the new capital and the value of assets and activities should be measured in relation to their data content.
- Talent: Forget “industry experience” as a key search and recruitment criterion. Instead, look for people with proven digital know-how.
- Monetize: Assess the urgency and ROI of IT projects on the basis of their potential contribution to data monetization, creating new digital services and revenue streams.
- Fusion: Assemble ad-hock teams consisting of business, IT and digital staff to go after specific strategic thrusts.
- Integration: Create a seamless customer experience across all physical, social, mobile, web and ecommerce interactions.
- Augmentation: Invest in training and upgrading skills to prepare all employees to work with smart machines and excel at the human-digital interface.
- Measurement: A/B testing is not just for website design. Establish a culture of experimentation and rapid prototyping, with decisions based on valid data.
- Trust: Develop data security and privacy strategies that ensure all employees follow data governance policies and understand risk tradeoffs and the importance of transparency with all stakeholders.
- Curation: Elevate data management and analysis roles and responsibilities with particular attention to cultivating the right talent—people that can come up with the questions that require answers and people that can come up with answers to questions that are not being asked.
A digital-friendly business platform is a must for the digital economy in which ones and zeros are eating the world. IDC predicts that by 2021, at least 50% of global GDP will be digitized, with growth driven by digitally-enhanced offerings, operations and relationships. By 2020, IDC also predicts, 90% of large enterprises will generate revenue from data-as-a-service, from the sale of raw data, derived metrics, insights, and recommendations. The end result will be the transformation of all enterprises into digital natives.
