All you need to know about digital transformation
Digital transformation as a concept has been around for a while and the common understanding is that we need to transform the business to adopt digital technologies in order to improve our efficiencies and value, or even foster innovation. In short, it is this need to move from digital incompetence to digital competitiveness.
With this understanding it’s simple – it is all about technologies – and at a superficial level it’s easy to agree. But Tony van der Linden, CIO and Head of Research and Development at BBD, doesn’t believe it is that simple.
Van der Linden chatted to Barry Dwolatzky “The Grand Geek”, Emeritus Professor at the University of Witwatersrand and leading authority on SA’s ICT sector as part of a podcast series with various experts on all things digital transformation and modernisation. Here’s a look at how that conversation went.
“Unfortunately, most organisations miss the point that by its very nature, digital transformation is not just a one-time thing. It’s a journey.” You don’t just one day decide that you want to transform, and then the next day you are. You don’t just create a web application and call it your digital storefront and then celebrate the fact that you have digitally transformed. It’s a journey. You start off by providing a foundation that promotes digital literacy and learn to support intentional experimentation. You use the data that is produced to inform your strategy and then align your operations to achieve those goals and support this with the systems you need to succeed. And then, you leverage this ecosystem to inform your next move. It’s important to remember that it does not stop there. “This cycle continues – a cycle of permanent innovation.”
We see rapid and perpetual change in technology and for this reason transformation cannot ever be done. It is continuous.
Van der Linden would argue that digital transformation is the continuous optimisation of an organisation’s business processes to increase their digital maturity in support of their strategic alignment to customer-centric goals. In this explanation, it is clear that the focus on digital transformation is not just on technology, nor is it purely on the business. It is both. It is centered on evolving and maturing business systems and making digital a first-class citizen of those. It is also important to remember that “systems” here doesn’t only refer to technology, but to people, processes and the tools that make it a system that produces the products and services that these systems need to provide.
Who leads digital transformation projects?
For some businesses, especially those considered to be large organisations, there is already some sort of digital transformation plan in place and BBD’s engagement would be in enabling some part of that plan. Here, you can engage with the specific business unit and those responsible for the technology that supports them. For others, especially the smaller organisations where digital transformation is still an idea, the engagement would be at the very senior level with a focus on understanding the business objectives the organisation wants to achieve. The focus would be on helping them to create a plan with all the appropriate guardrails required to successfully start their journey. In both cases, those responsible for reporting to the shareholders remain responsible for digital transformation even if the responsibility is sometimes proxy to a Chief Digital Officer or even a senior business manager.
“And the reason for this is because the captain of the ship is the one person who can effectively encourage change among their crew” says Van der Linden.
What risks are involved in digital transformation?
Consider culture, cost and technology the primary risks any digital transformation initiative should understand. From a culture perspective, “or rather the adaptiveness of an organisation’s culture”, digital transformation requires a journey, and some organisations just cannot change direction easily.
Cost. There are so many factors that can contribute towards costs skyrocketing out of control. Such as not controlling the scope for each iteration or change, and trying to get, to that ‘we have digitally transformed’ statement within just one cycle. Or even, setting unrealistic upfront budgets to fund digital transformation initiatives.
Technology buying, where you invest large sums of money in overly complex enterprise-grade commercial off-the-shelf solutions and expecting them to solve all your problems can be risky as well. These typically take a long time as we know, and by the time they’re implemented, your strategy may have shifted. And then finally technology drift – not architecturally ensuring that you can continuously evolve your systems as technology changes. There are definitely a lot more risks but Van der Linden sees these as the main ones to focus on.
Why digital transformation initiatives fail
“We know digital transformation initiatives are problematic or even fail for various reason, but I truly believe the top reasons are those directly associated to culture and appetite.” For instance, poor change management, with a specific focus on an inability or reluctance to evolve the organisation’s culture – thinking that digital transformation is only about technology and that the IT department should be able to handle this.
Other risks include:
- Inappropriate technology choices. Not considering alternative solutions such as robotic process automation (RPA) or even low or no code solutions
- Attempting to fund digital transformation on a fixed-cost basis
- Not supporting intentional experimentation
- Not understanding the value of failing fast
- Ineffective governance structures, especially not collecting and/ or using the data that is produced to support an evolving strategy
- And finally, thinking that digital transformation is a one-time thing – not planning for the journey
Van der Linden adds that BBD has seen a number of these projects in the industry over the years and when you look at this number, you can understand why organisations are weary.
So what’s the first step when embarking on the journey?
“The most difficult question to answer for me is where to start first when embarking on a digital transformation journey because it very much depends on an organisation’s individual environment.” But Van der Linden believes there are general guidelines organisations can use to their advantage:
- Tackling any digital transformation initiative is complex but maybe the best place to start is by changing your mindset. Give yourself the ability to change direction
- Know where you want to end up, and be calculated in what your next move is
- Don’t be afraid to fail, but when you do, limit your impact radius and learn loads from it – collect useful data and form opinions about your aspirations
- Remember, it is not just about technology, it’s also about people
- Know where you are and what you have to maintain your current position
- Next, understand the value and impact your vision will have when compared to your current situation will have on the business
- Finally, form a strategy that supports the move towards your vision and prioritise the outcomes – specifically, understand the gaps that may exist between people, skills, technology, data and operations, and make sure you understand your future operating model and what role governance plays
- Maybe most importantly of all is once all the above is in place – be involved
Who is BBD?
BBD’s been helping businesses solve their business problems for almost 40 years. The company started off as a small custom software development company working mainly in the financial services sector, but over the years has grown into an international company with over 1 200 employees across 5 geographies. BBD also became a trusted partner in other domains such as education, gaming, telecoms and the public sector, and even though software development remains core to the business, BBD has been really effective in providing its clients with guidance to meet their strategic goals, offering tailored solutions such as digital strategy, technology, business consulting, cloud enablement, system integration, and naturally the facilitation, support and maintenance of solutions that are born out of these engagements. Van der Linden sums it up as BBD being that “trusted partner that builds effective enterprise-scale digital business solutions which supports the optimisation of your business and enablement of your digital strategy”.
In closing, digital transformation is something you can make complex for yourself, but it is something you can make simple if you really think about it. Do it slowly, start with a good plan and use the iterations to support you.
Click here to listen to the full podcast episode.