Digital Transformation: A 'make or break' challenge

Digital transformation is a buzz-term today but what exactly is it and how should companies address it?

You might view digital transformation as the latest in the technology world’s many amorphous umbrella terms – just another silver bullet shooting for the gullible. Or you might believe that this is a crossroads where business winners and losers will be separated by their ability or inability to create a joined-up, attractive and effective way to market and trade across media consumption platforms. And there again, there’s always the chance that you feel the truth lies somewhere between these polar extremes. Digital transformation – defined here as the means by which organisations attempt to reconfigure sales, marketing and customer service – across devices and platforms – is a ubiquitous term but is it just another case of the Emperor’s new clothes? To ferret out where it really sits today I have been speaking to a range of people who work directly on transformation projects.

CloudTalent is a consulting company specialising in such transformations and is owned by Avanade, itself an Accenture subsidiary, which presumably sees a market big enough to justify having yet another brand. I ask CloudTalent CTO Mark Steel whether this wasn’t effectively a re-run of dotcom, e-commerce, Y2K and other thresholds that excited vendors in part because they created opportunities to sell more ICT.

“Superficially yes, but in reality no,” Steel responds. “Many previous change stimuli were technology driven, where advances in technology were forecast to lead to sweeping changes to demand and how people interact with technology. Digital transformation is different. Frequently, organisations are responding to how people interact and their expectations of the experience a business should provide. There is more of a ‘pull’ than a ‘push’ and whether we call this process digital transformation or not, this is a trend that will continue.”

Mark Armstrong, EMEA managing director at Progress, believes the need for transformation is very real but contends that many firms are “in denial”.

Progress recently commissioned Loudhouse research that suggests 96 per cent of C-level executives see digital transformation as critical or important, but 62 per cent say their companies are resistant to change. (For comparison, CloudTalent’s research suggests 34 per cent of decision makers say they are close to finishing digital transformation projects but the company says its experience tells it this number is “too high”.)

Caroline van den Bergh, VP of business development at DMI, says there is also an issue with short-termism.

“Budgets allocated for a campaign might be for six months or a year at the longest but they’re not thinking about what happens afterwards. This needs a CIO or CTO who is very switched on. It’s not just about development anymore; you have to match that with business objectives and this goes all the way back to the ERP and e-commerce system. We have to be aware of the whole ecosystem.”

That thinking has taken Barcelona, Spain-headquartered DMI into accounts including Tesco, Virgin and O2, but when pressed for an iconic example of transformation she points to the British baker Warburtons’ tablet app to check store presentation.


Roles and responsibilities

A large part of any major change project will be figuring out who does what. CloudTalent’s Steel says that business leaders have taken over the lead from IT. “We have moved from an engineering-based approach to IT to an economics-led one,” he argues. 

The Progress research says that CEOs are the main advocates of change but IT leaders will lead the charge. That said, many respondents who observe recalcitrance to change put the blame on IT. It’s not just about who leads the project though; digital transformation is all about widespread organisational reform according to Progress’s Armstrong.

“There appears to be a lack of joined-up thinking in many businesses,” he says. “Digital transformation is like any other project in that it needs buy in from all relevant stakeholders. The challenge comes from the fact that digitalisation affects your whole business and everyone is a stakeholder. When it comes to digital transformation, the biggest risk isn’t choosing the wrong software – it’s actually a lack of internal alignment.”

But other barriers are obstructing change. “The biggest nervousness is not on the expense but security,” says DMI’s van den Bergh.

Van den Bergh also points to the fact that terms need to be explained and suggests that the obsession with business-to-consumer mobile apps needs to end in favour of understanding broader opportunities.

“Apps are expensive and not campaign-able,” she says. “Back-end collection of data [is more important. We probably now out [customer] touch-points as a secondary concern and there needs to be a much more thoughtful approach to enterprise apps in general.”


The god that failed

A few years ago, HTML5 was being touted as a panacea to deploy content and services across multiple platforms but the ballyhoo has died down.

“We’re very technology-agnostic,” says van den Bergh. “HTML5 will never take over but it has its place. It has improved a lot but when native is best, it is really best.”

Tools such as Xamarin, recently acquired by Microsoft, and the Apple-originated Swift, are already helping developers to write for multiple platforms and deal with device proliferation, she adds. Meanwhile, she says she is excited by developments in identity management and biometrics. These includes selfie photo tests to confirm identity, currently being trialled by Mastercard, where users must blink to show that the picture is not old, and heartbeat testing, now being tested by Lloyds Banking Group.


Help needed

CloudTalent’s Steel obviously sees opportunities for specialist consultants and says firms are taking a balanced view.

“We do see examples of [companies wanting to keep transformation exercises in house] but it is not as common as it was.  Organisations now tend to split their activities in terms of where they can get differentiation by doing things in house and where there is no value or differentiation – and they staff them accordingly. Major businesses use a blend of freelance, contractor, consultant or full-time resource for change projects and then a different blend for running operations. The mix depends on the skills and resources they have available of course, but more importantly it depends on the economics - what makes most financial sense. There seems to be a general willingness to consider new approaches.”

So, to use an old but useful cliché, in digital transformation what does success look like?

“Organisations are looking for value and have far less interest in the underlying technology,” says Steel. “The vendors and technologies that will win are those that deliver pace and value.”

Everyone I spoke to agreed that transformation should not be viewed as a one-off but rather as an ongoing iterative process that never ends. That inch-by-inch progress might mean that digital transformation might not get the sharp spike in attention of some earlier mega-trends but it is still likely to have a seismic effect on enterprises.