Why Digital Transformation Is An Empty Catch-Phrase

Author

Joe McKendrick

December 16, 2016

They should designate “digital transformation” as the buzzphrase of the year. It all sounds so good, so modern and forward-thinking. Vendors love it, of course, since it means companies buying lots of shiny new systems.

But enacting a “digital transformation” against an organization that is mired in calcified processes, non-customer-friendly behavior and restrictive, top-down thinking will simply add a layer of shiny new systems on top of all this dysfunction. It means doing digital transformation for the sake of digital transformation. Worse, it may mean doing lots of the wrong things even faster.

Before digital transformation, there needs to be a transformation of the mind — in the way people think about their business. It means opening up organizations to encourage employee innovation at all levels. It means restructuring staid, 9-to-5 operations as more nimble confederations of entrepreneurs (meaning “entrepreneurs” in the broadest sense of the word, from independent startups to internal corporate ventures). It means being all about the customer, 24×7 (meaning “customer” in the broadest sense of the word, from outside consumers to internal business units being served). It means looking at technology as a tool, as a platform — but not the end-all — for assisting with this opening up of organizations.

Unfortunately, it looks like enterprises — enamored by the siren song of digital transformation —  continue to drop new systems on top of their organizations, expecting innovation and profitability to suddenly spring forth, overnight.

More evidence of this disconnect — or over-reliance on technology to accomplish what needs to be accomplished on a human level — came through in a recent survey sponsored by SADA Systems. The majority (56%) of the 350 IT executives surveyed said their organizations had already spent at least $1 million dollars on a company-wide digital transformation effort, but only 18% said the money had been allocated to “change management.” In others words, showing people across the organization how to employ new technologies to deliver more value to the business and their jobs.

What are the goals of digital transformation? This cuts to the very heart of the matter, as it is an extremely amorphous buzzphrase. The SADA survey found the most commonly cited goals of the transformation, indicated by 74%, were to “improve the way their organizations capture and use data, and to improve the products and services they offer using digital technologies.”

Hmm. Nothing about serving customers better, but I digress.

There are several different avenues by which companies are pursuing digital nirvana, including cloud computing (19%), big data analytics (14%) and social media (14%). It’s notable that these all involve different advocates across the enterprise — cloud is likely in the IT domain, big data analytics in the financial, analyst or marketing domain, and social media purely in marketing.

The survey also shows that digital transformation projects are relatively new, with 54% having commenced within the past three years. Interestingly, all the elements of digitization have been underway for decades now — Webifying interactions and processes through e-commerce and e-business began in earnest in the 1990s, big data analytics in the 2000s, service oriented architecture and web services also in the 2000s, mobilized engagements starting in the early 2010s. Where are all the lessons learned from what should have been foundational activities?

SADA Systems, not surprisingly, has a horse in this race — they provide digital transformation services for a living. But the point that digital technologies are seen as a cure-all fix-all for corporate woes is an important takeaway. Remember, the Titanic had the most state-of-the-art design, engines and navigation systems of its time. Lehman Brothers had start-of-the-art real-time risk-management system of its time. Enron has awash in the latest energy market-pricing tech of its time.

It’s notable from the survey that while digital transformation was an “extremely high” priority (49%) at the organizations in the survey, many transformations suffer from “poor internal communication, education and training.” The survey report’s authors go on to say that more than half of respondents (53%) said “they had trouble securing the funds necessary to make the transition properly.”

Another 53% of respondents said their biggest challenge in completing a digital transformation was “getting non-IT departments to overcome a fear of massive change,” and 57% said their biggest challenge was helping employees use modern tools and methods. Remember, most also said their organizations spent upwards of $1 million dollars on digital transformation.

Interestingly, 27% said they didn’t want to make the transition in the first place.

Hmm. If more than one in four don’t even want the technology, there’s either a lot of education and selling of ideas that needs to be done. Or maybe a need to involve people in the planning process from the beginning.

The takeaway here is again, many enterprises see the collection of technologies that comprise “digital” as a grand strategy that move things to the next level. These components — cloud, data analytics, mobile — will do wondrous things for agility and productivity. But decision makers have to sit down and define how they’re going to get to the next level, and what it takes to transform their businesses first.

 

This article was written by Joe McKendrick from Forbes and was legally licensed through the NewsCred publisher network.

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