Digital transformation has rapidly evolved into a must have
As digital technologies profoundly reshape every industry around the world, many companies have implemented efforts to capitalize on trends or to simply keep up with competitors. Although the pace was quickening before 2020, during that year the world advanced five years forward in digital adoption in only eight weeks.
According to a Deloitte survey, 77% of CEOs reported that the pandemic sped up their digital transformation plans. Microsoft CEO Satya Nadella noted early on in the crisis, “We’ve seen two years’ worth of digital transformation in two months.” Another study conducted by Twilio found that COVID-19 accelerated digital communication strategies by an average of six years.
This means many businesses have either catapulted themselves forward or have been left behind scratching their heads, or even shutting their doors. The good news is that it’s not too late to implement technology that greatly enhances business performance. To be successful, the process requires solid planning, the right mindset, the best tools, and qualified partners.
What is digital transformation?
Digital transformation is the rapid evolution (or metamorphosis) of an organization to fully integrate technological advancements that help define and execute new business models. Today, technology allows for the identification of new revenue sources, customer base expansion, innovative products, and improved financing.
In many ways, a shift from digital-first to digital-must has occurred. During the crisis of 2020, many companies scrambled to increase their digital footprint as huge numbers of transactions were being completed online. For example, e-commerce sales are projected to reach a record $843 billion for 2021, blasting past levels that weren’t expected until 2025.
The companies that manage to pull off a successful transformative process implement new technology, and lots of it. Still, a true transformation, that produces a measurable change, extends far beyond bolting on the latest tech gadgetry.
What makes the transformative process a success? It all depends on planning, strategy, company culture, technology, and execution.
Digital transformation strategy
Digital transformation isn’t about finding a solution for a single process, system, or department. Instead, it discovers ways to transform the entire organization. Here we outline the strategic steps to follow.
Audit current processes
During an audit, truth is all important. The more honest and transparent the process, the better new initiatives will address, and transform, business reality. Companies need to dive into details, such as interviewing employees to identify real issues, deficiencies, and needs. This is neither a witch hunt or cheerleading exercise. The idea is to expose the root of anything holding back business growth.
The audit should also include business operations flow analysis and the level of automation, if any, involved in each process.
Determine transformation objectives & scope
Building upon the audit findings, objective and scope should be laid out next. For example, how might operational costs be impacted? What digital touch points or automation might be enabled to improve outcomes?
Some companies find value in engaging with a consultant to get a better handle on costs, opportunities, and processes. Still, an in-house digital transformation leader should be assigned, preferably someone at the highest levels, such as the chief information officer (CIO) or chief technology officer (CTO). Some companies may even hire a person temporarily to oversee the transformation process.
Establish clear goals
Any major business reboot involves taking a hard look at the company vision, market analysis, customer experience, and infrastructure adjustments.
To set the organization’s sights at the right level, investments need to be linked to clear, ambitious targets. The magnitude of what digital technology can deliver should not be underestimated. This also helps establish the right mindset for change, that is, wholehearted optimism. For example, if cycle times can be improved by 100%, people will be intrigued and want to know more.
Create benchmarks for each avenue of value creation—cost savings, revenues, improved performance, satisfaction of employees and customers, and so on. For example, targets can be set by:
- Frequency of releases
- Percentage of processes to be automated
- Number of transactions to be migrated
- Amount of new code to be tested automatically
- Level of personalization to be achieved
- Number of campaigns to run per month
Operational & cultural shifts are key to successful digital transformation
This may be one of the most nuanced, and most important, factors for transformative success. While organization-wide buy-in is critical, it all starts at the top. If the CEO is not on board 100%, then the effort will be an even steeper uphill battle. It’s not just that the top brass sanctions the initiative, but they must immerse themselves in the transformative process and its promotion.
CEO sponsorship should be provocative, present, disruptive, ambitious, encouraging, and challenging for transformation to be successful. Simply deploying new technology is never enough. Company reinvention is notoriously difficult, and for those that actively seek change less than 30 percent succeed.
What do the successful organizations have in common? According to surveys, there are identifiable attitudes that improve the odds for success, such as:
- Management establishes a clear change story for transformation
- Senior managers foster a sense of urgency for change
- Senior leaders encourage employees to experiment with new ideas
Digital transformation solutions & tools
Sooner or later during the digital transformation, organizations eventually must look at the tools available to implement changes. It’s clear that certain technologies have been identified as keys to opening up operations unlike never before. Here are some prime examples.
This is your customer facing storefront. No matter what, it must be friendly, intuitive, and adaptable to any environment or device. Clunky, clumsy interfaces just won’t cut it in the age of ultra-convenient, slick mobile applications. Plus, a superior frontend is intentionally designed to drive conversions and revenue streams.
With microservices, an application can be divided into standalone services that can be built, deployed, scaled, and updated independently. This means modifying or scaling a specific feature can be accomplished with little to no disruption to the rest of the technology stack.
Contrast this with large monolithic software architecture where any meaningful change or update requires wrestling with complex code and entire system reboots.
Microservices offer several business advantages, such as:
- Responsiveness - Pivot faster to capture opportunities or sidestep obstacles.
- Multitasking - Software teams can quickly develop multiple features to deploy faster.
- Reliability - The entire system does not have to be shut down for maintenance or repair.
- Scalability - When a growth opportunity appears, engineers can build it out rapidly without an entire system overhaul.
This solution with a strange name enables the orchestration of vast numbers of applications on a global scale. Kubernetes can automatically scale a nearly unlimited number of application instances in response to demand for up to millions of widely distributed users. Kubernetes keeps track of load, performance, and application health over 1000s of instances and multiple applications.
Cloud migration is a key component for digital transformation as it enables massive growth opportunities. Before the cloud was available, many organizations were stuck in legacy technology silos where data was hard to get to and difficult to extract value. Plus, downloads, maintenance, and upgrades sapped time and resources.
A fully integrated, secure, real-time cloud solution enables more data access and faster work execution, as well as improved analytics with real time data.
Mining company Freeport-McMoRan combined the power of AI and the institutional knowledge of veteran engineers to drive operations to higher levels. Harry “Red” Conger, COO, says real-time data allows them to lower operating costs, be resilient when commodity prices fall, and make faster decisions. “A learn-fast culture means we put things into action,” says Conger. “We don’t sit around thinking about it.” Now, several of their mines’ processing rates are 10 percent higher than before.
Big Data & Machine Learning
Businesses collect a lot of information, but most companies fail to fully exploit the value locked inside the data. With the right technology, data can be curated, cleansed, and organized, which then enables AI and machine learning to take place. This is by far one of the most powerful tools for digital transformation. Benefits such as granular segmentation, predictive insight, and predictive maintenance for the industrial sector are all game changers with proven business benefits.
In 2020, Levi Strauss began making investments in AI to gain better insight into running promotions. An AI driven campaign that ran in May throughout Europe was launched and drove sales five times higher than the previous year. “AI gives us the ability to quickly transform data and facts into action,” Chief Financial Officer Harmit Singh says. “We’re using this intelligence alongside our own consumer expertise and judgment to drive better results.”
DevOps accelerates the delivery of applications and services by eliminating gaps between Development (Dev) and Operations (Ops) teams. This creates an optimal collaboration and productivity environment. The digital transformation benefits include shorter time to market, higher throughput, minimized risk, and improved operational resiliency.
The internet of things (IoT) ties in cloud computing, sensors, big data, and edge computing to collect data and put it to use for a wide variety of business improvements. In the Oil & Gas industry, for example, sensors can be placed on rigs and wells to collect data which can enable new operational efficiencies, such as predictive maintenance and improved safety protocols. Meanwhile, Anheuser Busch implemented IoT technology to create "connected breweries" capable of monitoring the quantity, quality, temperature and other traits in each batch of brew.
It’s actually easy to launch transformative initiatives. It’s harder to keep them up and running and to build out more. Companies may fund several initiatives, assign managers, or even set up specific teams. Still, if initiatives fail to gain traction executives may decide the effort was a failure and an investment loss.
To ensure early efforts thrive and build momentum, leaders should carefully choose early projects and provide full resource support. Prerequisites include a high-caliber launch team, organizational structure evaluation, and continuous digital culture cultivation.
Best communication practices are also vital to success, and it pays to fully hype the transition organization-wide to build team spirit. Clearly outlined deadlines, updates, reports, documentation, testing, quality assurance, progress tracking, and ROI should all be recorded to the highest level of detail and transparency as possible.
Digital Transformation execution and operational strategies
Companies often start out with lighthouse projects that offer low hanging fruit rewards with manageable risk. Such projects may include customer services activities or straightforward automation that immediately provides visible resource savings. Still, leadership should not get comfortable with early wins, but rather continue to push the envelope.
The thoughtful sequencing of subsequent initiatives and building more capabilities is critical to full transformative success. As an initiative delivers more value, it becomes self-funding and gains greater support. Rather than go with a shotgun start, it makes more sense to plan sequentially in an agile manner. Prioritize strategically important, complexity reducing initiatives with quick pay back.
Tracking returns is essential to ensure all available value is captured. Often, targets can be raised during continued deployment as projects provide greater productivity compared to original benchmarks. These victories should be trumpeted throughout the organization with an eye upon doubling down to achieve even more.
A strong technology partner can be the difference in success or failure
Internal changes are critical for any organization seeking meaningful digital transformation. However, valuable partnerships will accelerate the process and make it easier. Firms with specialization in advanced technology — and with experience accompanying businesses along the transformative journey — can provide a wealth of information and help avoid common pitfalls.
Technology and development specialists can assist with the business model assessment, and recommend tools that can produce the desired change. The best partners will enable an agile development approach and help establish a holistic business perspective realized through frictionless solution integration.
Partner with Xerris to transform your business
The key to successful digitization depends on taking the time to plan, prepare, and implement decisively. It all begins with a mindset laser focused on transformation since it requires fully reinventing the company to be ready for the now, next and the unknown future.
Xerris remains at the forefront of key disruptive technologies that are changing the face of business. Our expertise includes cloud migration, frontend development, microservices, Kubernetes, machine learning, DevOps and more. As an AWS Advanced Partner and Google Cloud Platform expert, we help companies overcome technical barriers to enhance innovative growth and future-proof their businesses.