JeneliaBecause digital transformation will look different for every company, it can be hard to pinpoint a definition that applies to all. However, in general terms, we define digital transformation as the integration of digital technology into all areas of a business resulting in fundamental changes to how businesses operate and how they deliver value to customers. Beyond that, it’s a cultural change that requires organizations to continually challenge the status quo, experiment often, and get comfortable with failure.
Why does digital transformation matter?
A business may take on for several reasons. But by far, the most likely reason is that they have to: It’s a survival issue. In the wake of the pandemic, an organization’s ability to adapt quickly to supply chain disruptions, time to market pressures, and rapidly changing customer expectations has become critical.
At an MIT Sloan CIO Symposium series event, IT leaders agreed that consumer behavior has quickly shifted in many ways since the start of the
pandemic. Sandy Pentland, a professor at the MIT Media Lab, described how optimized automated systems in areas like supply chain management broke down when faced with rapid shifts in both demand and supply — a reality that just about everyone has faced on a personal level during the pandemic.
How has the COVID-19 pandemic changed digital transformation?
“We’ve seen the COVID crisis rapidly re-shape both the “what” and the “how” of companies’ digital transformation agendas, notes Mercer’s Swift.
Take employee experience for example, she suggests. “Even as employee experience has become a key theme in the HR community, in IT circles this notion had been getting a mixed reception – sometimes stereotyped as “spoiled employees expecting best-in-class consumer-grade tech on shoestring budgets,” says Swift.
“Today, with a vast portion of the workforce now remote, employee experience of digital technology has gone from “nice to have” to “the only way work gets done. Consequently, it’s getting the problem-solving focus it likely long deserved.”
- Furthering the reach of customer support via tools including chatbots
- Automation tools for resilience reasons
- Radical housecleaning of redundant or conflicting systems
What does a digital transformation framework look like?
Although digital transformation will vary widely based on organization’s specific challenges and demands, there are a few constants and common themes among existing case studies and published frameworks that all business and technology leaders should consider as they embark on it
For instance, these digital transformation elements are often cited:
- Customer experience
- Operational agility
- Culture and leadership
- Workforce enablement
- Digital technology integration
While each guide has its own recommendations and varying steps or considerations, CIOs should look for those important shared themes when developing their own digital transformation strategy.
What drives digital transformation?
An important elementof course, technology. But often, it’s more about shedding outdated processes and legacy technology than it is about adopting new tech. It’s also about enabling innovation.
In the area of government IT, for example, more government agencies are on the verge of realizing the cloud model’s full potential – beyond cost-cutting to using cloud for strategic advantage, notes Dave Egts, chief technologist, North America Public Sector, Red Hat. “Deloitte recently released a list of nine technology trends transforming government, and one, in particular, will be key to enabling the future of technology in government: The cloud as an innovation driver,”
What are the key trends in digital transformation in 2022?
As Enterprisers’ Stephanie Overby has reported, digital transformation took on new urgency during the pandemic. Some CIOs and IT organizations achieved previously unimaginable speed of change. Today, CEOs see digital transformation work as key to future success. “As organizations have weathered the upheavals instigated by the pandemic, digitization has become integral to their responses and also their future plans,” Overby notes.
E.G. Nadhan, chief architect, Red Hat, notes: “Even companies who have embarked on multi-year transformational journeys have had to make adjustments midstream, as they should.
Consider these eight key digital transformation trends that business and IT leaders should be aware of in 2022:
- Focus on resiliency and sustainability
- An emphasis on using cloud to enable innovation
- AI-fueled automation of business processes
- Continued acceptance of remote work
- Increased attention to managing data for its entire lifecycle
- Security as a business imperative, not an afterthought
- Prioritizing AI ethics and governance
- Increased use of maturing machine learning technologies
How can I measure ROI on digital transformation?
To prove the success of efforts, leaders need to quantify the return on investment. That’s easier said than done with projects that cross functional and business boundaries, change how a company goes to market, and often fundamentally reshape interactions with customers and employees.
A project such as revamping a mobile application may have a short-term payoff but other projects are chasing longer-term business value.
Moreover, as we have reported, “Digital transformation efforts are ongoing and evolving, which can render traditional business value calculations and financial governance approaches less effective.”
First, ask if you’re taking enough risks.
“When determining how well digital transformation investments are performing, it’s best to take a portfolio view and not a project level view,” says Cecilia Edwards, partner with digital transformation consultancy and research firm Everest Group. Just as a mutual fund manager or venture capital firm would look at overall performance to determine how well things are going, digital transformation leaders must take a holistic view of change efforts.
This is particularly important so that the underperformance of one particular project doesn’t reflect negatively on the overarching efforts of IT.
Next, consider best practices regarding digital transformation metrics:
Set initial metrics in advance
Develop micro-metrics for agile experiments:
The goal is to learn and adjust.
Incorporate business outcomes:
Look at strategic impact (e.g., revenue growth, lifetime customer value, time to market), operational impact (e.g., productivity improvements, scale, operational efficiencies), and cost impact.
How can I get started on digital transformation or improve my strategy?
If all of this makes you feel woefully behind, fear not. One of the biggest misconceptions CIOs have about it is that all of their competitors are much further ahead of the game than they are. That’s because “there’s much admiration of (and popular press around) the fastest transformers, but little critique of how hard transformation is or how long it may take for a typical Global 2,000 company,” says Tim Yeaton, former CMO of Red Hat.
As businesses formulate their own digital transformation strategies, there is much to be learned from your IT leadership peers. Use this collection of digital transformation articles and case studies to explore further.
The term needs a makeover: What would you rename it?
Dow CIO: demands rethinking talent strategy
Building a learning culture with AI
3 ways building acumen can impact business success
Johnson & Johnson CIO:
4 signs of a superstar
Vanguard CIO: How to help your organization think like a startup.
Where can I learn more?
Digital transformation work, done successfully, will produce a business that is more aligned with customer demands and resilient in the fast-moving digital future.
For more insights on digital transformation,see these resources:
- What’s slowing down your 8 questions to ask (Ebook)
- Teaching an elephant to dance
- The automated enterprise (Ebook on managing IT with automation)
- HBR Analytic Services report: Maintaining momentum
- Our entire article collection
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