So what really is Digital Transformation?!?
To me the term Digital Transformation was always a bit vague and intangible. “Digital” to me are all things “zeroes & ones” in information technology and telecommunication, the things I have been working with for the last 30 years. So what’s new? “Transformation” likewise is some kind of change so why not call it project, programme or portfolio if you want to sound fancy. Is Digital Transformation just another buzzword?
A prowl on the internet also failed to provide enlightenment. There are sales pitches around skills, culture or strategy, there are opinions about technical details or industry specifics and there are talks and events. No common definition in sight, nothing that could provide advice or instructions to for business owners or managers keen to “go digital”.
As that did not get me anywhere, I formulated my own workable definition to make sense of it all.
Digital Transformation is the improvement or expansion of an existing business by the use of modern IT technology and services.
The question then is how to start “transforming digitally” and there are two approaches:
- Starting with using modern technology and services. Let’s call this approach Quick & Simple.
- Starting from the aim to “expand & improve the business”. This is a more fundamental approach and shall be named Re-Think & Re-Design.
Quick & Simple
This approach to Digital Transformation starts with using tech, Apps or cloud services to replace some manual tasks and functions from the outset. This seems simple enough and quick to get some results.
However, this is a basic business automation and is something the IT industry has provided for many decades, although not always with fancy Apps and not always successfully. To get the ball rolling, business owners just need to talk to hardware and software vendors or service providers.
The best results will be that the business will do the same s*** (stuff), only faster. There might also be the benefit of less paper (digitisation in its basic definition) and improved access to information.
The risk however is, that there might be cost increases because the business as a whole is only adding IT and not necessarily streamlining, eliminating or improving existing processes. The risk is about failing to leverage cost savings.
At the same time, there is the danger of hidden cost increases through unorganised use of Apps or cloud services by users, sometimes even using different services to do the same job (catchphrase Shadow IT).
Just adding IT also increases complexity, which in all likelihood needs to be simplified at a later stage (catchphrase Technological Debt).
Furthermore, businesses that follow this approach cannot be sure that all existing issues are considered because transformation is mainly driven by tech, services and their capabilities, not by the desire to improve.
Re-Think & Re-Design
The prerequisite for this approach is, that there is a goal where the business should be at, let’s say two to five years (i.e. a vision) and a general approach how to expand or improve (i.e. a strategy). As long as business owners have some kind of business vision and strategy, even if only very draft or existing only as a thought, they can start on their journey of Digital Transformation.
The transformation should then start with a high-level analysis of the business as a whole, covering not just IT but also processes, the organisation, the business environment as well as data and information.
The following re-design will cover simplification, automation or elimination of processes, organisation and information. IT changes will becoming almost consequential at that point. Business drives IT, not the other way around.
In addition, this approach allows businesses to express and consider existing issues or pain points. Ideally, those issues will be considered in the re-design. The transformation will not only focus on new & shiny tech and services but fixing, improving and expanding the business as well.
In the long run, this approach to Digital Transformation is more cost effective as:
- It optimises the whole business, not just a part (i.e. IT).
- It is much less likely that later projects have to consolidate or simplify a previous piecemeal-approach.
- It allows management to retain control of IT cost (i.e. how and where IT is used in the business).
Key Success Factors
Business owners should consider to Re-Think & Re-Design the way they currently do business. For this journey to begin, business owners need to have two things:
- Their vision – where they want their business to be in two to five years in terms reputation, size, profitability, market share or services/products they provide.
- Their business strategy – how they want to get to their vision such as by competitive pricing, improving quality, mergers, cost reduction, up- & cross-selling or all of the above.
Vision and business strategy do not need to be elaborate documents or presentations. It is good enough to get started if they exist in the minds of business owner and managers.
At the beginning of the Digital Transformation as well as during, it is critical to involve all staff as they usually know the issues and pain points already and might even have good suggestions of how to address them.
Ideally, the approach focusses on business outcomes (e.g. increased sales) rather than the mere delivery of tech, Apps or services. Business outcomes should be measurable and should be tracked throughout the Digital Transformation.
And another piece of advice, although this not strictly a key success factor. Consultants (such as yours truly) can act as facilitator or mediator. With the right approach, they will pull together a consistent and complete programme of work. They can also be instructed to train and mentor internal staff to continue the digital journey. These externals also bring in fresh ideas and they have seen how to do it, and maybe more importantly, how not to do it.
Whether businesses use consultants or not, they should have their own dedicated IT and business managers to oversee and drive the Digital Transformation and not rely on vendor or provider staff.
Summary
Business owner’s vision and strategy as well as their staff’s knowledge of the business and industry/sector is essential for any Digital Transformation.
Digital Transformation should start with a thorough analysis of the business as a whole. In the following design of the future state, businesses will find that the required tech and services become almost consequential.
I would advise to use external consultants to assist, mediate and facilitate the transformation and by this leveraging on their experiences from previous transformations. Consultants can also be used to train and mentor your own staff.
About the author
Heinz Tonn is an Enterprise Architect Consultant and has worked in the IT industry since 1995 with a focus on architecture, strategy and consulting since 2001. During this time, he has worked in a wide variety of roles in the IT industry (e.g. IT service providers, consultancies) as well as in public and private companies (business & industry, government). Find out more on LinkedIn.
In 2017 Heinz is partner of Business Medic, providing a novel & unique value proposition for small and medium businesses and charities.
In 2020 Heinz is also engaged as a design partner in Café Associates, a network of like-minded architecture consultants, offering architecture-as-a-service.
Having lived in London since 2008 – for the second time – Heinz still regards himself as a “residential tourist”. Roaming and discovering the various parts of the Greater London is his contribution to sustainable tourism.