Digital transformation: just a trend or a reality?

IT has been subject of many trends in the past 15 years.

Some were effective and had a deep effect on the way companies are using it. Usage of email as first communication factor has been a very good example even if Today some, like Atos, are thinking of replacing it by social media platforms.

Some others were more like fashions pushing many CEOs and CIOs to adopt from day to day the strategies that strong gurus were predicting to be unavoidable. It has been funny for instance to notice how outsourcing was “the way to go” 15 years ago, then being neglected (see particularly 2006 conference of Prof Strassmann: “Is Outsourcing Profitable?“) and now coming back again.
Were companies having deeply outsourced their IT more successful than the ones having kept their know-how in-house? Difficult to say. There are success stories on both sides.

All in all, we may understand that, after the Y2K issue that required strong attention of business to their IT, new subjects popped up on a very regular basis driving budget choices, sometimes with expected ROI that were slightly theoretical.

And now, for about 2 years, a new topic has risen up: Digital Transformation !

But what do we actually mean by this? And how CFOs and CEOs can be sure that the expensive changes such approach requires are a necessity for their company growth?

The Business case:
do you want to survive?

It is not anymore a rhetorical question but actually a fact: customers’ behaviour is changing!

• According to IDC, purchase habits are currently changing, giving more and more preference to mobile devices. IDC even expects purchase volume over such device will exceed $ 1 Trillion up to 2017;
• Usage of smartphones is continuously increasing and expected to reach 20% of the worlwide population up to 2020, according to Ericsson;
  
• and people don’t hesitate to use their worldwide network to support their purchasing process (see for instance this study from xAd confirming that 60% of consumers are using mobile only to make purchase decisions).

It is therefore not anymore a question to know if a new market is emerging and if companies want to be part of it, but make sure their business model will survive from this new environment. As some well-known strategists already express it, we are actually facing a digital darwinism era to which one have to adapt or to disappear like dinosaurs 65 millions year ago. As Altimeter summarizes it very well in their report about it: digital transformation is not a fad or a trendy moniker.

Just a marketing topic?

But then, what to do? What are the changes to execute in the company to get ready to this tsunami?

Many articles explaining Digital Transformation tend to put the focus on the customer, the customer, and again the customer. Altimeter, for instance, conducted a survey among big strategists, asking them to rank the key elements of an efficient digital transformation.

But if a deep and continuously reviewed understanding of customer journey is a key success factor of such approach, other matters need as well to be considered with attention. Accenture considers this even as one of the key element to consider: digital transformation expand beyond marketing.

To get a bigger picture of the topic, some companies developped models evaluating the maturity level in digitalisation. That is the case of Forrester with their Digital Business Readiness Assessment, or BCG with their Digital Fitness Assessment developped with SAP and Insurance company Achmea. These tools reveal actually essential subjects that should be also considered:

• In HR, strong programme has to be developped not only to educate people to new customer habits, but also make people collaborating together in a more opened and non-hierarchical model;
• In IT, beyond the logical development of new mobile oriented platforms and applications, internal processes need to be reconsidered to gain in efficiency and quality. Many speak now about “Operational Excellence” or also “DevOps“;
• Innovation becomes an asset as the most probable first identifier of new trends customers will adopt;
• Customer support requires strong call into question, connected with social media communication;
• Coordination, and even beyond, collaboration implies the need to setup dedicated teams to digitalisation, with the mission to increase cross-department collaboration and breaking the usual silo-oriented approach developped by unit managers;
• And last but not least, company priorities need to be reformulated at C-level to avoid the big risk that individual objectives enter in conflict with this global change.

First steps

Once convinced about such a need of change, and aware about every area on which the change has to be conducted, the real problem is rising up: where to start?

This is probably the big challenge to which many different answers can be given.

Most of companies, following in this usual pulic advisors, decide to work first on the customer interface by going mobile first. This is for sure a clever approach since it should bring by principle a quicker RoI: by delivering to the customer a better experience, one may expect increase of business, justifying his choices to his main stakeholders. This will most probably starts with the setup of few customer journey workshops in which not only online marketing but also IT and HR should get involved. This way, opportunities of sharing different point of views and of quickly identifying what is possible / not possible to do will be easily generated.

But there is for sure good reasons to already start background actions as well. Indeed, referring in this to the “Golden Triangle of Disruption” of Fred Wilson, we can very quickly understand that focusing on mobile technology should be balanced by not forgetting real time delivery and social media usage.

To reply to the real time challenge, starting to review his ITIL maturity level and working on automating some IT processes could be a very good add-on. Gartner, for instance, is strongly inviting companies to consider it.

On the social media side, it may be interesting to consider usage of such platform to facilitate the exchanges inside the company, across departments, starting through this way to destroy the silos earlier mentioned.