Digital technologies are rapidly and dramatically changing companies and business models in all industries around the world. Many organizations are traying to incorporate these advances to reap the benefits of these technologies. Another reason is that some of the competition is already adopting these solutions because what they do not want is to be left behind, pure survival.
While many companies that do not have large IT resources focus their efforts on employing SMAC (Social, Mobile, Analytical and Cloud) technologies, a true digital transformation goes far beyond technology implementation.
According to Gartner, digital business transformation is the process of exploiting digital technologies and the capabilities that support them to create new robust business model. The global center for Digital Transformation (participated by CISCO) says the digital transformation is based on organizational change, because it requires changing the way people work and think. Deloitte says it is strategy, not technology, that drives the digital transformation.
At the time of implementing the digital transformation project, our experience says that there are three key factors that must be considered. These factors must be respected if success is to be assured.
The Deloitte report “Strategy, not technology, drives the digital transformation” based on a study of digital deployment in companies, shows that only 15% of companies that are in the initial phase of digital deployment claim to have a clear and coherent digital strategy.
On the other hand, among the most mature companies in the digital field, more than 80% have a well-defined strategy. The lack of a clear digital strategy is therefore one of the main barriers to digital transformation.
Defining a strategy in the digital environment requires a combination of the use of traditional business analysis techniques (SWOT or PESTEL analysis, business model canvas, Porter´s Forces, etc.) with a broader vision of what technology and innovation means in a world where changes occur at great speed and where risk is implicit as there is no time for the old long development and testing processes.
The companies that succeed in this new scenario start from a future vision of their business. This includes aspects such as the demands and experience of their customers, cost reduction and increased productivity, or even the development of new services or comprehensive business models.
The difference in the digital transformation is that this vision includes changes that are necessary or possible mainly thanks to the capabilities that technology offers us. Other factors (political, social, economic, regulatory, environmental, etc.) can also be considered, but it will be technology that enables and responds to these new needs.
Every business is different and will have to define its strategy differently according to its objectives and capabilities. But it is always important, before tackling a digital transformation project, to be aware that technology is not an end, and that changes involved in a digital transformation go far beyond the implementation of a software.
The strategy must also include tools for optimization and continuous improvement, which will allow constant evaluation of progress and make the necessary adjustments to achieve the objectives set. In this sense, the establishment of reference indicators is fundamental to ensure the success of the transformation.
Any transformation process inside companies is carried out by the people who are part of them. If this is true for any type of change, it is even more important in digital transformation processes, as they will directly affect the entire organization. Any company that has launched a major technological project, such as the implementation of an ERP, will know that resistance to change is one of the main factors of failure.
When it comes to involving people in digital transformation projects, we must look at three main axes:
- Leadership: When people in key positions in companies understand the importance of the digital transformation and are proactively involved with it, the success of the project is much greater. Incorporating specific profiles with extensive digital knowledge to lead the process, such as a Digital Director (CDO), has proven to be a factor that multiplies the chances of success.
- Capacities: Another success factor in the digital transformation is the development of the talent and skills of employees throughout the organization. For this purpose, it is important to carry out a task of redefining roles and responsibilities so that they are aligned with the objectives of the transformation. Among the most critical capabilities are those oriented to the integration of business with technology and those related to technological innovation.
- Empowerment: The digital transformation is also, and mainly, a transformation of the organization. Information and decision silos are destroyed to make an open company much more collaborative, so it is vital that employees also participate actively in the process.
In this process of change, it is also essential to establish fluid communication mechanisms that allow leaders to involve all teams in the transformation, as well as enabling bottom-up communication to facilitate the participation of the entire company in the project.
Of course, in a process of digital transformation, the selection and implementation of the technologies that allow the strategy to be developed and the objectives to be achieved is, in the end, what will allow the project to work.
We are not going to detail in this post all technologies that can be used, among which would be the SMAC technologies, but also others like artificial intelligence, the Internet of things (IoT), wearables, etc. We want to emphasize that the choice of technology depends on the processes you try to implement or optimize to carry out the defined strategy.
Technology is only a support to carry out the strategy. It is not about looking for the most advanced or disruptive technologies and finding a gap to implement them in the company, but about finding the technology that best fits the objectives of the company and how to implement them effectively.
A final observation regarding technology is that it is important to include a component of innovation in the technological search. Perhaps the ideal solution for a given process does not yet exist, but the pace of technological development can easily make it possible quickly.