Digital transformation: Starting the new year the right way
It is still early in 2019 and as we look ahead to the new year, we have the opportunity to reflect on past choices, decisions, and judgments that have passed and what is to come. Over the past few years, we have seen a shift toward businesses embracing digital transformation with many companies having struggled to see any returns following the integration of various other technologies.
A joint report published by EXL and Harvard Business Review, which surveyed over 800 global executives, found that less than a third report high success when it comes to achieving fundamental business goals.
Digital Transformation spending by businesses worldwide is expected to hit 1.7 trillion dollars in 2019, according to International Data Corporation.1 A critical objective for companies today is the need to plug the gap between their expectations for digital initiatives and the outcomes they want to achieve. So what can business leaders learn from 2018 to help them make more informed strategic decisions this year?
Technology - Not a Silver Bullet
Businesses are placing their hopes in emerging technologies such as automation, artificial intelligence and analytics which are widely being heralded as the Holy Grail to survive. The robotic process automation (RPA) market will continue to undergo dramatic and rapid maturation in 2019, estimated to grow 61% by 2021, according to Forrester.2 Similarly, the machine learning market is anticipated to grow to a whopping $19.86 billion by 2025, according to Transparency Market Research.3
While these digital technologies continue to gain traction, technology implementation needs to be seen as more than a technology change, but a shift in the organizational mindset to drive strategic improvement. Rather than ploughing investment into the latest technologies, businesses need to identify what they want to achieve and look to digital transformation projects as a business-led initiative.
According to EXL’s report, one factor which contributes to digital transformation projects failing was that executives were focused too narrowly on next generation technology and not identifying the key business outcomes they wanted to achieve.
As more IT budget spend will move to end user departments,4 business leaders need to start off with their goals in mind. Without the end goal in mind, business executives have nothing to measure their success against.
The buzz surrounding digital trends is not necessarily being translated into the level of adoption. In EXL’s report, despite Artificial Intelligence making headlines, only 30% of respondent actually said they deployed AI compared to 57% of respondents using advanced analytics.
There is no one-size-fits-all approach to a digital transformation, so businesses need to outline what the business objectives they want to achieve are so that they can then work their way back from this to orchestrate a solution to enable them to remain commited to their goals.
Legacy Systems: The Achillies Heel
With the current digital landscape, digitalization can no longer be considered to a separate initiative. Therefore, a company’s digital strategy needs to sit at the foundation of its overall corporate strategy.
Legacy systems complicate digital transformation efforts. Business and IT teams must collaborate to ensure that companies have an IT architecture that delivers customer experience even while having legacy infrastructure. The ability to make the new and old technologies work together is key to making digital transformation successful.
People underestimate the cost of modernizing and integrating legacy systems. To make the most of investment into future technologies, business executives need to invest a significant amount into how the technologies will co-exist and integrate. The best way to ensure success is to do pilot projects and proof of concepts to experiment with how they can work seamlessly with legacy systems.
Talent: Forgotton Asset
In EXL’s report, senior executives report several internal challenges which hinder their Digital Transformation efforts. This is why employee engagement has a pivotal role to play in driving transformation.
According to EXL’s report, 53% of all survey respondents cited the most common roadblock is a siloed mentality among management and the workforce. Communication failures and a lack of clear leadership are preventing many enterprises from moving their digital transformation strategies forward. This awareness gap results in employees misinterpreting transformation efforts which are both costly and time-intensive as replacing them versus helping and augmenting them to do their work better. Everyone needs to be on the same page, so that a senior executive’s vision can be implemented across the business.
Senior executives also said a barrier to digital transformation was not devoting sufficient resources to digital efforts, cited by 46%, and a lack of internal expertise to take full advantage of the technology, cited by 43%. Investment in technology and talent goes hand in hand, so businesses can deploy digital technologies to their full potential.
Treating employees like machines without any vision or a goal in mind creates a roadblock to digital transformation success. Employees need to understand the premise of processing changes and technology implementation towards the overall business outcomes.
Business executives need to ensure they create a collaborative, innovative, empowered environment for talent to transform into a functional digital business. Talent and technology need to work together to empower employees to remain invested towards building the future of the company.
In order to meet tomorrow’s business challenges, businesses need to view digital transformation as a continuous process of changing how business is done driven by technology, data, domain and talent.
Kick off the new year the right way!