It is commonplace for organisations to confuse investment in new technologies with digital transformation.
Although there is often a significant investment in technology required, the key difference is that digital transformation also requires a business to fundamentally change aspects of its products, business processes, internal governance and customer engagement model in order to operate in a digital ecosystem.
The business changes that come about as a result of digital transformation can take many forms, from automating processes and using artificial intelligence to automate decision making, through to the development of digital products and engaging with clients through new channels such as mobile applications.
Whatever the scope, the organisation needs to be committed to the changes in its operating model, processes, organisational structure and governance, as well as being committed to the technology investment.
Daniel Newman's article highlights nicely that with both the rate and sustained levels of change in technology digital transformation is not a one-time exercise. Instead, organisations need to embrace a culture of transformation, adaptation and agility to harness the latest opportunities and demands that new technology puts on a business or the market that it operates in.
Making a step-change in culture and business operations requires the buy-in, support and ownership required across the C-suite in order to become a truly digital organisation. Not least, the CEO needs to be one of the evangelists for the benefits of technology and becoming a digital business.
Technology is critical but it should be recognised as the enabler not the complete answer. Organisations that succeed in harnessing the power of new technology as part of a wider programme to transform their products, services or ways of working will differentiate their businesses in current markets and create the platform to rapidly expand into new markets in contrast to their competition.
Sectors like retail, where e-commerce and digital channels are now the norm, illustrate how digital transformation requires significant business change like the closing down of high street stores and investment in services like same day delivery for online purchases. Furthermore, what the retail sector has also highlighted is that those who were quick to embrace a digital culture have been the organisations who have been able to invest and incorporate the next wave of leading edge technologies to diversify their products, services and business portfolio even further (e.g. Amazon).
For industries like Financial Services, where the digital journey is just beginning, the rapid rise in FinTech and InsurTech start ups presents a wealth of opportunity and potential. It is now over to the organisations in this sector, and similar, to pluck up the courage to make the shift in culture and operations in order to grow and in some cases survive - perhaps even leading an overhaul of the products and services delivered within the sector.
The question of when digital transformation will be complete is a moot point these days. New technologies and digital trends will never stop. However, it’s likely that the people leading the charge will be the change from year to year. In a recent report from Altimeter, analysts found that CMOs lead the transformation in 34% of companies, while CIOs and CTOs take charge of digital transformation in only 19% of companies. I have two comments as it relates to this. First, the CMO needs to have a role in Digital Transformation, however, it is the CEO that must lead. Second, I believe in 2017 we need more CIOs and CTOs taking prominent positions in digital transformation.