In recent years, there have been a wave of articles professing that digital transformation is about people, not technology. The argument typically runs along the lines that it takes people to execute the strategy and without the right skills, culture and change management, any digital transformation initiative will likely miss the mark. While this is accurate, the same could be said of most major initiatives.
The real requirements for success in digital transformation involve both people and technology. Without technology, digital transformation is just transformation, and the benefits of making digital an integral part of the business strategy are lost. Ideally the business strategy and the digital strategy should be “one and the same” so the business can fully capitalize on the opportunities afforded by digital.
Technology informs and unlocks the art of the possible
Without thinking about business scenarios and industry use cases for exploiting enabling technology, much of the “art of the possible” with digital transformation is lost and any intended transformation may become simply optimization at best.
After all, it was a powerful combination of technology that enabled Amazon to reimagine grocery shopping and introduce their checkout-free shopping service. Recently, one of the UK’s largest supermarkets, Sainsbury’s, followed suit and opened the UK’s first checkout-free store in London. In some scenarios this combination of smartphones, computer vision and sensor fusion may have the potential to make the infamous checkout line a thing of the past.
Another example of technology unlocking the art of the possible is the case of “smart spaces” – such as smart cities, factories, buildings and workplaces – where AI, IoT-connected edge devices, digital twins and blockchain are combining to drive more connected, coordinated and intelligent solutions and environments. The greenfield Indian smart city, Amaravati, was “born as a digital twin” and upon completion will rank among the top three advanced cities in the world.
Essential capabilities: The table-stakes for any digital transformation
So to get a clear picture of what’s involved in successful digital transformation, we have to look at two distinct areas: firstly, the essential business capabilities that are required as pre-requisites for any organization to undergo their digital transformation and secondly, the techniques of the top performers who are pulling ahead and creating a growing digital divide between themselves and their competition.
A useful way to understand the essential capabilities required for digital transformation is to look at maturity models. Useful maturity models, by their very nature, need to cover the waterfront in terms of the various strategic pillars and underlying capabilities that are required as organizations progress in their digital transformation maturity.
There are several models available including those from Gartner and BCS (British Computer Society) as well as many others. Each model approaches the digital maturity topic from a slightly different perspective, so it’s often useful to assess your maturity against a couple of these models to gain some additional insights and recommendations.
As an example, the Gartner framework looks at customer experience management, infonomics and business model agility as part of its nine digital business competency areas whereas the BCS framework looks across strategy, people, process and technology as its four primary pillars with three competency areas within each pillar.
Whichever maturity model you select, you’ll likely see some common focus areas including strategy (e.g. digital strategy, digital focus and investment), process (e.g. digital innovation, change management and governance), people (e.g. digital skills, leadership and culture) and technology (e.g. disruptive technology enablers, platform architectures and business models, and digital service mastery).
The main takeaway from these models is that in addition to perennial themes such as leadership, people and cultural competencies, it takes several new competencies – specific to digital business – in order to succeed. The most successful organizations have maturity across both perennial as well as these newer areas and work to advance across all pillars.
Strategic themes: The differentiating capabilities of the top performers
Gartner’s 2019 CIO Survey found that 33% of respondents where at either the “scaling” or “harvesting/refining” stages of their digital initiatives, in contrast to only 17% in 2018. With digital maturity having now reached a tipping point, we can start to examine the techniques of the top performers and look at where they’re building competency to gain a competitive advantage via their transformations.
As with the maturity models, it often helps to look at multiple data points to see where these organizations are gaining an advantage. The Gartner survey found that 75% of top performers are changing or have already changed their business model, 75% have implemented product-centric delivery, and 89% are measuring the ROI of digital. When it comes to technology, 40% of top performers expect AI to be a game-changer for their organizations and 23% see the same for data analytics.
In the case of the recent PwC Digital IQ survey, 91% of top performers had an executive in charge of employee experience, 64% said their business faces a serious threat from disruption (compared with 27% of others), and 54% said their leadership was digitally savvy and helps the workforce think in a new way (compared with 41% of others).
Overall, these top performers are digitally savvy, are taking the threat of digital disruption seriously, encouraging innovation across the entire workforce, changing their business models, exploring platforms and ecosystems, becoming more product-centric and measuring the return from their digital investments. They’re also rebalancing their technology portfolio to invest in game-changing technologies such as AI, data analytics and cloud to power their transformations – perhaps proving that it is about technology as well as people after all.
The strategic themes of new business models, customer centricity, game-changing technology, product-centricity and innovation are universal themes which can be applied regardless of your industry. You don’t have to be a consumer-facing company to explore platform business models or customer convenience. ExxonMobil’s investment in gas delivery and on-demand vehicle care service, Yoshi, is just one example among many.
In summary, the next time you read an article about digital transformation not being about technology, be sure to consider how technology can help to unlock the art of the possible. Technology is an integral part of the strategic themes for digital transformation and the new competencies of the top performers.