Data from Deloitte’s 2020 global tech leadership survey shows 79 percent of organisations globally are engaged in a digital transformation effort, with nearly half (45 percent) of transformations undertaken as a reactive response to imminent market threats.
Also, based on Forrester’s research and observations over the past six years, most “digital transformations” are not transformational. They estimate that over 90% of companies are using technology to modernise their existing business model vs. transforming it.
One of the most important aspects to understand is that at the core of a digital transformation is a business transformation. With a digital Transformation, you change the way of engaging customers across channels, simplify business processes, and redesign products or services.
During my experience of delivering some challenging transformation programs across a variety of client verticals, sizes and geographies, I have been asked by clients – which technologies we should add to become more digital.
I tell them that, it is really a business transformation, supported by investments in new technology—not a new technology in search of opportunities.
My work with companies undergoing technology transformations revealed several myths that are widely believed among executives—and that, unless dispelled, can hinder success.
Myth1: Technology transformation is the same as digital transformation
Many organisations perceive digital transformation as a technology change when the truth is that digital transformation’s purpose goes beyond technology. Therefore, migration from on-premise data centers to Cloud (AWS or Azure) or migrating from legacy systems to new SaaS-based platforms cannot be merely classified as digital transformation. Digital transformation requires evolving the organisational culture and ways of working keeping your customer experience as the focal point. If your digital transformation business case is not delivering topline revenue growth and reducing your technology cost of delivery, then there is something fundamentally wrong and needs to be revisited with some expert guidance.
Myth 2: You can outsource your digital transformation agenda to an external 3rd party specialist
We all have come across several “digital transformation experts” and there is no doubt that they can bring value to your transformation journey. However, remember that you know your business, your customers, your organisation’s culture and processes. An external specialist can guide you and support your journey, but they do not have a magic wand to deliver digital transformation without close engagement with you and other senior stakeholders of your organisation. We all know that one size does not fit all! Even if your external consultants have worked in the same/similar industry / vertical that you operate in, there were always specific nuances of your business that only people who run it closely on a day-to-day basis will understand and know. Therefore, it is good to engage external consultants with experience in digital transformation and learn from their experience in helping other organisations operating in the same sector but trying to do exactly what they have done might not always be a good idea. Your digital transformation journey should be bespoke to your organisation’s need with an objective to put you ahead of your competitors and to achieve this, you need to think outside the ordinary. You cannot outsource your problems to an external 3rd party provider; your key stakeholders need to lead from the front while the “external experts” can be in supporting roles.
Myth 3: Technology budgets will go up as part of digital transformation
Digital transformation programs don’t always need massive technology investment. In fact, the main objective of digital transformation is to drive your technology cost lower than current levels. Preliminary data from Deloitte’s 2020 global tech leadership survey finds that market/industry leaders on average spend about 3.14 percent of company revenue on technology while the average for all others is 4.24 percent. Initially, investments may be needed to embark on your digital transformation journey but eventually, the total cost of ownership (TCO) should see a reduction as the use of technology should have been optimised as part of the process. For organisations that run a fully digital business model will have no technology debt to carry. As an example, FinTech such as Xoom, Trussle, Skrill, to name a few, are digital businesses that uses technology optimally and cost per transaction is usually much lower than competing high street banks for exactly similar services.
Myth 4: Embracing Agile development will be enough to deliver high-quality digital solutions quickly
Agility enables you to adapt swiftly against every fluctuation in the business landscape. As a result, most modern IT organisations have embraced agile development to adapt to changing customer needs. But agile alone is not enough to deliver high-quality/high-impact digital solutions. It is very important to ensure there is a cultural shift and you provide the required skills/training to your employees to deliver benefits offered by agile development. It is imperative that businesses must lay the proper foundations to reap the benefits of agile. In agile, you build big things but take a baby step at a time. Relevant stakeholders need to be motivated and engaged because they are empowered to make their own decisions about how they accomplish their work. Agile has an end result in mind, and in most cases a timeframe, but it only gets into the details as needed, which allows for a change in response to new information.
Myth 5: Digital transformation will fix your broken business model
Digital transformation is not a silver bullet to solve all your problems. Many organisations even today work in silos and have a broken business model. If you are aware of these issues, you need to first find ways to turn around a business or a division in the event of a broken business model or disrupted strategy. A digital transformation cannot be the answer to solve this problem and without fixing the underlying issues, it would not be wise to embark on your digital transformation journey. In your digital transformation journey, you need to enhance, optimise and discover new opportunities to improve the end-to-end experience for your customers and users.
Businesses need to counter these myths to see real value from their investments in digital technology. Acknowledging that change is difficult and clearly grasping what is necessary are the first few steps for a renewed approach to a successful transformation.