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June 30, 2017

What’s driving digital transformation?

Organisations need to move much faster and adapt to evolving consumer and employee requirements if they are to survive and thrive.

By James Nunns

For all the concern that digital transformation might be unfulfilled hype, actual adoption remains a key strategic imperative and area of investment. The potential benefits are too great to ignore.

Darryl Beckford, Head of Digital Transformation, KCOM

71 per cent of the UK organisations achieving digital transformation are already seeing improvements in customer experience (Coleman Parkes research). While 34 per cent are also seeing increases in revenue as a result, the danger for some enterprises is that these potential benefits remain just that: potential. Organisations need to move much faster and adapt to evolving consumer and employee requirements if they are to survive and thrive.

For some, results have not yet been delivered for the same recurring reasons, and this puts digital transformation in a dangerous predicament as faith in the concept itself could be lost within an organisation. IDC’s recent Digital Transformation report suggests that 70 per cent of digital transformation initiatives will ultimately fail because of insufficient collaboration, integration, sourcing or project management.

For many, this is caused by a lack of understanding of why digital transformation is necessary, what is driving it and how the workplace ecosystem has necessitated a shift. For many businesses, the first challenge is defining what digital transformation actually means for their organisation.
IDC’s report also predicts that 60 per cent of digital transformation initiatives will not be able to scale this year because of a “lack of strategic architecture” or failure to back up customer experience with internal processes.

Without this base of understanding, many enterprises are making blind assumptions about where their structure requires reinvention and how it can best be deployed. Little wonder the adoption of digital transformation sometimes fails to match predictions.

“We can use technology to work smarter and be more productive” is not a sufficient justification for changing working practices and recommending new technology roll-outs, no matter what statistics and cost savings may be quoted. Enterprises must also appreciate why the opportunity for digital transformation has arisen, what caused the rapid initial interest and excitement – beyond technological innovation – and therefore how best to implement the principles into their own organisations. It’s not enough to know digital transformation is the solution; enterprises need to fully understand their organisation’s challenge too.

As a first step, business leaders and departmental managers alike must educate themselves on the sociological, economic and commercial drivers of digital transformation, and determine the degree to which each is evident within their own organisation. This can then allow them to design how they pursue the digital transformation trend.

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Reacting to changing markets

Many companies have to change their structures, cultures and practices to remain competitive. Around them the world is becoming ever more connected, highlighting the need for both a local and global focus. There are increased demands for transparency, sustainability and compliance, while economic instability is an ongoing concern. These challenges require greater flexibility and decentralisation to respond and adapt faster to changes in customer behaviour or demand.

 

Responding to customer expectations

The bar for contemporary customer experience is constantly rising as consumer needs and expectations continue to evolve. Customers want to engage using the channel of their choice and expect organisations to know, understand and respond to their requirements instantly. They use social media instinctively to share their experiences, both to praise and complain. Operating in this new fast-moving digital landscape is second nature to them as they make consumer comparisons

online, and switch provider at the click of a mouse or, more often, the tap of a screen. For those organisations where customer experience is a survival metric, bringing together systems and processes and being agile will be crucial to meeting customer needs.

Managing complexity

The world is becoming more complex, with the emergence of new technologies and multiple channels. Traditional organisational hierarchies with power concentrated at the top have led to internal fiefdoms, in turn leading to disconnected systems and silo-based structures that aren’t compatible with a desire to be agile, competitive and cost-efficient. For those enterprises struck by this problem, this structure must change to retain any commercial advantage.

Realising and nurturing potential

Worker age groups have increasingly different views and motivators. In fact, research from The Future of the Workforce suggests that differing views between worker age groups will mean the end of a unified corporate culture. 75% of managers see managing a multi-generational workforce as a significant issue, highlighting the need for new tools, platforms and capabilities.

Encouraging creativity

The economic backdrop has triggered a greater focus on creativity in order to maintain competitive advantage, but traditional hierarchical structures have made ideas slow or even impossible to progress across complex organisations. A new creative idea may have to work its way through a series of managers, each one being further away from its application and less likely to understand its value. Every manager in the chain has the power to say no, and even if they say yes, the inefficient process of approving it has already wasted time and effort. Digital transformation can democratise the process, removing this problem.

Once these drivers have been identified, what can business leaders do next to design their agile, lean, innovative and collaborative organisation of the future?

– Review the flexibility and agility of your business. How fast can you respond to changes in the market? How easily can teams be brought together to manage specific opportunities or threats?

– Identify changes appearing in your marketplace. How are customer and employee expectations changing? What are your competitors doing to adapt?

– Assess how innovation is encouraged within the business. Are new ideas regularly being presented to middle and senior managers? What happens to them?

– Identify how customers are interacting with you at every point, and assess these interactions from their point of view, especially with regards to effort required in that interaction. This will pinpoint where legacy systems and business processes are limiting the customer experience and reveal opportunities for improvement.

– Assess the level of digital maturity across your business. This will help you establish where you are now, benchmark yourself against others and help you plan for transformation.

Telefonica (O2) recently embarked on a transformational programme in using this exact approach, to make the most of emerging technologies and create a more flexible and agile infrastructure. Their challenge was to increase the capacity of their IT department to meet the new business needs without having to recruit, train and manage large numbers of IT contractors.

The operator has since overcome numerous IT resourcing challenges in digital transformation projects and accelerated a customer experience culture. It now also has guaranteed access to high-quality IT resource when needed, without the associated management overhead of dealing with multiple recruitment companies and supervising staff. They have better visibility of their solution design processes, and have been able to improve quality levels against quantifiable measures, and achieve every single one of their transformation goals.

Read more:Leadership failings create digital transformation crisis

Digital disruption is having an impact across all industries. Organisations need to move much faster and adapt to the evolving requirements of consumers and employees if they are to survive and thrive. Taking the appropriate first steps to evaluate the external and internal drivers of organisational transformation will allow enterprises to design a future that will meet these challenges head on.

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