“Digital Transformation? – Oh yeah, we did that in the early days of the pandemic. Good stuff.”thousands of CXOs across the world
Digital Transformation is the ultimate buzzword. It’s been the topic of hundreds of Wall Street Journal articles and a talking point on thousands of strategic plans and earnings calls. Every Board of Directors has been guided to demand “a Digital Transformation plan” from every organization – especially for-profit companies. Not unlike “mom” and “apple pie” and “puppy kisses on the cheek“, everyone agrees: Digital Transformation is a good thing! But what is it really that we’re all agreeing is so important? … Let’s look first at a few pretenders for this label – good things all, but not “Digital Transformation” …
It is NOT the Implementation of Videoconferencing or Collaboration Software
Clearly, the COVID-19 lockdowns greatly sped up the world’s adoption and comfort level with videoconferencing tools. This was, in many ways, a silver lining in the tragic worldwide cloud represented by the pandemic. Telemedicine and work-from-home have become household concepts with which most people are quite comfortable – viable options now alongside traditional face-to-face interactions in business and in society generally.
Collaboration tools like Slack and Teams chat have also spiked in usage and given teams new ways to work together, effectively flipping over the view dimension from email’s “collection by person” to “collection by topic”. It greatly facilitates group interactions, creating “persistent chat” which can be searched and referenced later. These channels also serve as fantastic reading lists for new team members to get up-to-speed without team members having to forward them hundreds of emails.
But as impactful as these tools proved enabling companies to continue to operate under enforced physical separation, and as useful as they’ve proven to be for productivity and collaboration, they do not “transform” the purpose or overall function of the enterprise. They are digital capabilities, or digital features, but not “Digital Transformation“.
It is NOT the Implementation of Digital Marketing Software
Digital Marketing tools help organizations reach and engage their customers using online & mobile channels. These tools allow you to plan, execute, and measure marketing campaigns across all of your digital channels such as your website, email, social media, and paid advertising. These tools have increased steadily in usage as communication media proliferate and Marketing groups seek a centralized system to coordinate their messaging across all of them.
While these tools do involve communications with customers, they do not enable a “transformation” of the company’s value propositions or business model.
It is NOT, in Short, the Implementation of ANY Specific Software
Software has matured significantly over the last decade, with Platform-as-a-Service (PaaS) offerings now delivering a nice balance between the cost/effort efficiencies of an off-the-shelf product with the flexibility of custom-built software. As a result, the “Buy vs. Build” decision models of old are now far more nuanced.
The implementation of any specific software solution does not represent a “transformation” of the organization in itself. Undergoing a true Digital Transformation, companies will most likely need new software solutions of the kind mentioned above or in other areas, but this is a means to an end. The power of Digital Transformation is in the vision and strategy for the end goal.
It is NOT the Implementation of ANY Specific Hardware or Infrastructure – including CLOUDLike software, IT infrastructure has undergone major shifts over the last decade which now offer companies more options, more flexibility, and more affordability for the computing power they need to operate and thrive. Cloud-based infrastructure is one such shift which has allowed companies to “right size” their IT needs – only paying for the storage, processing, and bandwidth they actually use rather than having to over-provision for growth or peak usage periods.
However, as with software, the adoption of cloud infrastructure does not constitute a Digital Transformation in itself. It is a means to an end, and without a change in the vision and strategy for the kinds of workloads running on that infrastructure, an organization simply arrives back at the same point of tech capability, but with more efficient computing power handling it.
It is NOT the “Digitization” of Analog Records & Paper into Data
“Going paperless” appeared in earnest on corporate IT project boards in the 1990s, and although most sizeable organizations have completed this transition, there are some still underway with it. In many cases, this involved running huge numbers of documents through scanners and then categorizing/tagging them for electronic filing & retrieval. Technologies like Optical Character Recognition (OCR) even made the content of paper documents searchable electronically.
When compared to receiving, routing, filing, and accessing stacks of paper, these improvements have delivered significant ROI over the last few decades, and there is no doubt that having all of this information as “data” rather than physical paper, microfiche, index cards, etc. has represented a huge prerequisite step to position companies to consider Digital Transformation today. Digitizing on its own, though, is not a “transformation” but just a nice efficiency.
What, then, IS Digital Transformation? A Fundamental Re-envisioning of an Organization’s Business Model in Light of Technology’s New Potential
True Digital Transformation is a wholesale re-imagining of the way an organization conducts business, factoring in the context of all the recent advances in Information Technology; this vision ranges from how it a company is structured, staffed, and operated, to how it goes to market and engages with customers, to how it creates and delivers value. This kind of transformation represents not just the implementation of new software or infrastructure, but a major change in the reasons WHY an organization needs software and infrastructure in the first place. It is a change in the mindset and strategy behind each of those decisions, with new technology capabilities and costs as the backdrop, stepping out of a “tactical” mindset on IT projects – one improvement after another – to instead build a “strategic” roadmap to a more ideal state made possible by the right combination of IT capabilities.
What, then, is Digital Transformation?
A fundamental re-envisioning of an organization’s business model in light of technology’s new potential.
Whether approached top-down or bottom-up, Digital Transformation is achieved by revisiting the fundamental goals of the business – what it wants to achieve and how it wants to compete in the market – and using digital technologies not just to make incremental improvements in performance, but to enable a wholesale change in the business model itself. It involves an evaluation of every process of an organization through the lens of whether an automated solution or AI model might be equivalent or better than human involvement, to isolate those functions which are the highest & best uses of the organization’s human intelligence and build their staff “wingspan” with technology solutions to enable them to fly higher than ever before.
This kind of transformation can deliver exponential return on investment, potentially “disrupting” the company’s industry and giving them a competitive advantage which may be insurmountable. But it is a major undertaking, and requires a significant investment of time, money, and resources. It also requires a commitment from senior leadership to see it through, to ensure there are no “sacred cows” in the old business model, that there are no blind spots (it is often helpful here to engage outside experts), and that the will to “see it through” continues despite blockades, speed-bumps, and missteps.
Many organizations have implemented videoconferencing, collaborating, and digital marketing software in recent years in response to the pandemic, and those changes have been helpful. Many companies have migrated much of their IT infrastructure to the cloud, which has helped them reach new levels of flexibility and reliability.
Far fewer organizations have embarked on a true Digital Transformation. But those who do, and who take a professional approach to this change, leveraging outside experts where needed and ensuring a continued commitment from senior leadership, truly take up the challenge to remake their company and position it not just to compete, but to dominate in the Digital Age.