The debate no longer is about whether businesses need digital transformation or not. If you look at the disruption caused over the last one-and-a-half decade by digital-native new businesses, you will realize that every business, small, medium, or large, needs to embrace this transformation to survive and to remain relevant. Digital transformation is not only about the tools and the technology. It is also about Agile transformation and enterprise agility. The situation caused by Coronavirus has reinforced the future dependence on the digital further. While no one is sure about how the situation will be over the next few months when humanity attempts to return to “normalcy”, one thing is sure, that the resilience needed for business in the future is not going to be possible without the digital transformation of today’s businesses.

Studies have shown that the impact of successful digital transformation among B2B and B2C players has resulted in higher client-satisfaction scores, reductions of 10 to 20 percent in costs, revenue growth of 10 to 15 percent, and an increase in employee satisfaction. IDG estimates over $2 trillion already spent behind digital transformation initiatives, and the trend is there to continue.

What Digital Transformation Means?

But what exactly is digital transformation is and what does it entail? Here is an interesting fact; In 2018, Gartner published a research note. According to that note, while 66% of CEOs said they are embracing digital transformation, efforts of only 11% can be said to be truly transformational based on the activities they did. For some, moving their on-premise data centers to the cloud will constitute digital transformation, while for a few others, it would mean improving customer journey using digital platforms, something we did for Simbli (Download the case study). In truth, digital transformation transcends the boundaries of digital technologies. It is more about fundamentally changing the way we think, feel, and operate as a business.

If we have to model the digital transformation, we will model it on five pillars. They encompass every aspect of your operations. Here is the graphic that represents those five pillars;

The Culture And The Mindset

When you talk about digital transformation, then you are talking about changes and optimization in these five areas. And the changes needed encompass the processes, tools & techniques, manpower, and mindset & culture. In fact, transforming the culture and making it conducive to constant change is the biggest challenge of digital transformation.

A culture of constant is needed because digital transformation is about many small changes, each delivered quickly. Ahmad Azhar Yahya, Chief Digital Officer of Telecom Malaysia Berhad, says that;

Going digital is not about one big idea— it’s about solving 1,000 small problems together as one synchronized company.

The idea is to build an environment of continuous improvement. Many organizations have already embraced that. Digital transformation is about being successful through the momentum and rhythm built by continuously improving.

Technology Capabilities

But the question always is how to build this momentum? From the IT perspective, as the systems grow complex and scale, changes become increasingly difficult no matter how good the architecture is. This dilemma is present because leaders always think in terms of monolithic structures even when the IT systems are made up of micro-components. Sometimes, this slow pace of change is also a result of the risk of averseness. If the costs involved with one small change gone wrong is significantly high, as might be the case in increasingly complex, mission-critical applications, changing those components is going to be a long-drawn, slow affair. Hence, a lot of leaders suggest two-speed IT operations.

As the name suggests, this architecture involves looking at the overall IT systems and capabilities in two separate dimensions. You have mission-critical, core components, and application code, that does not and need not change often. This is the part that relates to the core business. For example, for banks, this will be the core banking features, like maintaining account balance, calculating interests, etc.

But then there will be a part which is between the customers and these core functions. Continuing the above example, applying for loans, accessing statements, facilitating money transfers and payments are the functions that can continue to be optimized at a greater speed than the core functions. These changes also allow for personalization and recommendations to drive engagement and revenues.

Maintaining a two-speed operation is easier said than done. The conflicts and synergies between the development, operations, and business teams need to be managed carefully. Team augmentation through external and contingent developers and partners has been one of the strategies adopted by organizations, especially for parts that should go with significant churn.

The Outcome

Of course, every organization will need to focus on different areas at different times, and the focus and extent of efforts will depend on a variety of factors. Some of the factors will be internal, while some of them will be external including competitive environment, compliances & policies, and overall economic situation. But internally, the digital transformation should enable you to do the following;

1. It should allow you to make proactive, real-time, contextual decisions.
2. Allows for contextual, personalized customer interaction no matter the touchpoint.
3. It should be supported by extensive, real-time automation that drives information available throughout the entire value chain.
4. Scalable, interactive systems that can allow to capture and execute on cross-sell and up-sell opportunities.

With business challenges set to increase, it is imperative that organizations find innovation and efficiency both to survive and grow post-Covid19. Digital transformation, if done right, offers a platform that can provide you the boost that you need. The organizations of tomorrow will definitely be digital-first, the question is whether you take the lead or choose to follow.

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