Digital Transformation – The Buzzword Simplified – Part 2

 

In my last post, I had quickly given a glance to my readers a brief on Digital Transformation – its definitions and elements. In this post, I will look through the Key approaches involved in the digital transformation journeys

Present and future shifts and changes, leading to the necessity of a faster deployment of a digital transformation strategy, can be induced by several causes. This is often at the same time, on the levels of customer behavior and expectations, new economic realities, societal shifts (e.g. aging populations), ecosystem/industry disruption and (the accelerating adoption and innovation regarding) emerging or existing digital technologies. In practice, end-to-end customer experience optimization, operational flexibility and innovation are key drivers and goals of digital transformation, along with the development of new revenue sources and information-powered ecosystems of value, leading to business model transformations and new forms of digital processes. However, before getting there it’s key to solve internal challenges as well, among others on the level of legacy systems and disconnects in processes, whereby internal goals are inevitable for the next steps. The human element is key in it on all levels: in the stages of transformation as such (collaboration, ecosystems, skills, culture, empowerment etc.) and obviously in the goals of digital transformation. Since people don’t want ‘digital’ for everything and do value human and face-to-face interactions there will always be an ‘offline’ element, depending on the context.

Hence A digital transformation strategy aims to create the capabilities of fully leveraging the possibilities and opportunities of new technologies and their impact faster, better and in more innovative way in the future. A digital transformation journey needs a staged approach with a clear roadmap, involving a variety of stakeholders, beyond silos and internal/external limitations. This roadmap takes into account that end goals will continue to move as digital transformation de facto is an ongoing journey, as is change and digital innovation.

The way we successfully strategize will be based on we ask the right questions and collect right/adequate responses. The illustration below depicts this in a detailed fashion.

Many executives feel like they are viewing a good jigsaw puzzle that they have to finish, and they have a bunch of pieces but they don’t know if they have all the pieces, and they don’t know what the finished picture looks like. As mentioned this doesn’t happen overnight and requires a series of incremental steps. And here the goal or ‘the what, why and how’ becomes a mix of intermediate goals and broader objectives within which they gain more significance.

5 Steps in Digital Transformation

Finally, the reason why we would prefer to speak about accelerated business transformation or, if needed, digital business transformation, is that it’s just a matter of time before no one makes a distinction between digital and physical or offline and online. Customers, for instance, don’t think in these terms at all, nor in the terms of channels.

How to lead a digital transformation

To meet shifting customer expectations, many CIOs are aligning with key executives, making sweeping organizational changes, reskilling employees, setting up innovation labs and experimenting with emerging technologies to meet strategic mandates issued by their CEOs and boards.

One of the first things companies should do in embarking on a digital transformation is answer the critical question: What business outcomes do you want to achieve for customers? It definitely starts   with the business outcomes and the new business models you are going after and working backwards from there. Here, a keen understanding of your customer journey map and lifecycle is key. Consider the process of settling an insurance claim, which typically takes 7 to 14 business days and requires a lot of paper shuffling. Thanks to algorithms and mobile applications, consumers and claims officers can resolve claims in minutes.

Approach to Digital Transformation

Digital transformation hits each industry. But it can also affect all activities, divisions, functions and processes of the organization as it can impact the very business model as such.

CapGemini Consulting was one of the first to come up with the concept of digital transformation and a digital transformation framework as you can see below. The company did so in collaboration with the ‘MIT Center for Digital Business‘ during a three-year study which defined an effective digital transformation program as one that looked at the what and the how.

The McKinsey chart below shows just aspects where digital transformation can play:

  • The (digital) customer experience (as said, de facto a key element with many digital transformations being a mix of customer experience optimization and process improvement – and cost savings).
  • Product and service innovation where, for instance, co-creation models can be used.
  • Distribution, marketing and sales: another usual suspect and in practice an area (along with customer service) that is often one of the earliest areas undergoing digital transformations.
  • Digital fulfillment, risk optimization, enhanced corporate control, etc.

Others we can add include:

  • Intelligent information management (with information, data and the processes they feed being key and a focus on activation).
  • Customer service, customer experience management and contact centers, customer relationship management.
  • Work, human resources, new ways of collaborating, workforce engagement and enablement (agile working, social collaboration, enterprise collaboration, unified communications).
  • Learning and education.
  • Procurement, supply chain management (with the digital supply chain) and supplier relationships.

It’s important to remind that in a digital transformation (and, for that matter digital business) context, all these aspects, functions, processes, etc. are interconnected and silos have less (or no) place, not from a technological perspective but most of all also not from a process and people perspective.

Stay tuned…. Part 3 of this foray, we will look into the tips, key roles and pitfalls to any Digital transformation journey. Please feel free to review my earlier series of posts 

Please feel free to review my earlier series of posts 

Authored by Venugopala Krishna Kotipalli

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