by Lynette Seah, founder of Alpha7
The buzz these days is about digital transformation and how companies should embrace the digital age. Embarking on such new journey involves heavy investments and is easier said then done, resulting many companies to fail. What does it take to master and excel the digital journey?
The need for digital transformation.
Digital transformation, also abbreviated as DX, is the application of digital capabilities to processes, products, and assets to improve efficiency, enhance customer value, manage risk, uncover new monetization opportunities and speed-to-market.
With these objectives in mind the actual deliverable is achieved through the digital capabilities, which are electronic, scientific, data-driven, quantified, instrumented, measured, mathematic, calculated and/or automated (CIO.com).
In short this would mean establishing competitive advantage through improved customer experience and company productivity by the use of data and automation.
Digital failure is sizeable.
A CIO survey reveals 89% of enterprises said their industry is either being disrupted by digital technology, or such disruption is only a matter of time, even after spending an average of $5.7 million on digital.
The same survey also points out that 80% of IT leaders are under pressure to be constantly improving their organisation’s customer experience through digital innovation, but 90% of digital projects fail to meet expectations and only deliver incremental improvements.
One of the key handicap to the improvements are the legacy databases and their limitations, resulting in 84% of digital projects cancelled, delayed, or reduced in scope. Other issues faced are the lack of (qualified) resources and the complexity of using multiple technologies.
The characteristics of successful digital transformation.
With so many companies struggling to deliver digital projects, leads to believe digital transformation is something else than another IT or digital project.
McKinsey suggests DX is actually a Trojan horse for a business transformation, which requires company wide and especially board engagement. Approaching it as a business transformation will demand attention for three key factors to succeed: breaking down silos between departments and hierarchy, changing key performance indicators across the organisation and for individuals, and the appointment of a designer as part of the executive team.
Design thinking is becoming a critical lever to deliver DX successfully. Together with Open Thinking and Platform thinking, it sets apart the digital leaders from the digital laggards (Tech Republic).
Design thinking is focused on optimizing the customer experience, which in turn guides ALL business decisions. Open thinking encourages the innovation from both inside and outside the company, breaking down those silos and collaboration to meet the digital needs. Finally, Platform Thinking is about deploying new business models where and ecosystem of partners and customers is build to exchange data and capabilities in order to create added value.
With this transition, data becomes the underpinning factor and companies are to concern themselves what data they need, how it is shared, where it stored, how fast it moves and the analytical power to trigger the next business decision. This is not an IT requirement any more, but touches all functions and more likely so the front-end sales & marketing, supply chains, sourcing, operations and finance.
Exploring digital transformation through data and analytics.
Like any business transformation, DX will need to have the support from the top, and boards play a fundamental role in establishing the digital change.
If boards are serious about DX, then they are to get digital-ready themselves, and switch from looking at historical data but at live data (McKinsey). Another consideration is the board member profile itself to ensure a younger, more entrepreneurial generation of potential customers is part of the make up.
Confidence and not undervaluing past performance and existing competitive assets, together with ability and technology are critical (Tech Republic). With data and legacy databases being a critical delay or fail factor, this needs to be addressed with top priority by boards and organizations.
Access to live data is the new mantra. No matter how little or fragmented it is, start connecting and showing it onto dashboards or control towers to drive the new culture and capabilities, ignite the conversations across functions and suppliers, drive the open collaborations and the development of the necessary platforms. Data has been there for decades and it’s now a matter of unlocking, analyzing and utilizing it.
Lynette Seah is an Australian Chartered Accountant with over 28 years of experience in MNCs such as PWC and J.D Edwards, including 8 years’ experience as VP of Finance & Strategy at Salesforce.com and is the founder and owner of Alpha7, a company named one of the top 25 Most Promising Technology Startups in 2016 by APAC CIO Outlook.