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The development of new competencies revolves around the capacities to be more agile,
people-oriented, innovative, connected, aligned and efficient with present and future shifts in
mind. Digital transformation is a journey with multiple connected intermediary goals, in the
end striving towards continuous optimization across processes, divisions and the business
ecosystem of a hyper-connected age where building the right bridges in function of that
journey is key to succeed. In this online guide we explore the essence of digital
transformation, its evolutions and how it is present across various business processes and
industries.
Digital transformation is probably not the best term to describe the realities it covers. Some
prefer to use the term digital business transformation, which is more in line with the business
aspect. However, as an umbrella term, digital transformation is also used for changes in
meanings that are not about business in the strict sense but about evolutions and changes in,
for instance, government and society.
This guide is about mainly about digital business transformation. In other words: about
transformation in a context of, among others:
Digital transformation is certainly not just about disruption or technology alone. It is even not
just about transforming for a digital age. If it were the latter, one has to realize that this digital
age exists since quite some time and is relatively vague.
Causes of disruption and transformation
And this ecosystem aspect brings us to an essential aspect of digital transformation: the
interdependency and interconnectedness of everything: from business processes and models
to business activities and each single activity of the organization. The butterfly effect in
action. Think about how virtually all business processes de facto are linked, the
interconnectedness of business activities from the customer perspective, the way information
runs across all digital transformations and much more.
So, while we just split up some aspects of digital (business) transformation, it’s of the
utmost importance to get that holistic picture.
Businesses have always been changing and innovating, technologies always came with
challenges and opportunities, regulations and ecosystems have always evolved.
It’s in the degree of interconnectedness and of various accelerations as we cover them that
digital (business) transformation is to be seen as more than a buzzword but as a profound
challenge, force and most of all opportunity for organizations that will enable them to achieve
the core business competencies they need to succeed in rapidly changing environments where
speed of change touches upon a myriad of phenomena, ranging from the acceleration of
technological innovation and disruptions challenging the status quo of common business
models to the need for speed in dealing with changing customer and partner demand across
the value and supply chains.
To make sure we speak the same language it’s important to emphasize that digital
transformation is not just about:
Digital marketing, even if that’s an important part of the business activities and if it’s
the context in which digital transformation is often used.
Digital customer behavior, although it plays a role and customers are increasingly
‘digital and mobile’.
Technological disruptions because the disruptions are always about customers,
workers, markets, competitors and stakeholders, even if related to technological
evolutions and knowing that ’emerging’ technologies indeed can have a ‘disruptive’
effect.
The transformation of paper into digital information as originally meant nor the
digitization of information (flows) and business processes, which is simply a
condition sine quod non.
Finally, the reason why we would prefer to speak about accelerated business transformation
or, if needed, digital business transformation, is that it’s just a matter of time before no one
makes a distinction between digital and physical or offline and online. Customers, for
instance, don’t think in these terms at all, nor in the terms of channels.
By the End of 2017, Two-Thirds of the CEOs of the G2000 Will Have Digital
Transformation at the Center of Their Corporate Strategy
This speed is contextual and felt differently across various industries. It goes hand in hand
with the role ‘new technologies’ can play in the specific industry, the market conditions, the
types of customers and stakeholders (and go-to-market approach) and so much more. Still,
speed is crucial in more than one way. There can always be an organization in any industry
that sees and grasps the opportunities competitors don’t. And in some parts and functions of
the business a lack of speed just isn’t an option, regardless of industry.
Finally, exponential growth or speed of change in any area whatsoever (customer behavior,
regulatory frameworks, technologies etc.) can happen at the most unexpected moments.
Creating the conditions to be ready for rapid evolutions and ideally pro-dapt and take
the lead, changing the status quo, is part of business transformation.
However, it’s a mistake to just look at all these tech companies out there that we keep
showing as examples of digital transformation. While some have indeed been ‘disruptive’ in
the sense of forcing bigger players to adapt or die and we can learn from these start-ups and
the technology success stories everyone talks about, it’s easy to overestimate them, certainly
when comparing with the organizations that have been successful at digital transformation in
‘less sexy’ but sometimes far more challenging and interesting areas.
The attention given by media and tech fans to disruptors such as Uber and the other usual
suspects is not without danger and hype. Digital transformation leaders can be found in
virtually all industries and often are not among these darlings of those fascinated by digital
technologies and companies as such. Digital transformation is industry-agnostic and starts
with the business goals, challenges, customers and context of the organization.
CapGemini Consulting was one of the first to come up with the concept of digital
transformation and a digital transformation framework as you can see below. The company
did so in collaboration with the ‘MIT Center for Digital Business‘ during a three-year study
which defined an effective digital transformation program as one that looked at the what and
the how.
Digital transformation framework by Capgemini Consulting and the MIT center for digital
business – larger image here
The McKinsey chart below shows just aspects where digital transformation can play:
The (digital) customer experience (de facto a key element with many digital
transformations being a mix of customer experience optimization and process
improvement – and cost savings).
Product and service innovation where, for instance, cocreation models can be used.
Distribution, marketing and sales: another usual suspect and in practice an area (along
with customer service) that is often one of the earliest areas undergoing digital
transformations.
Digital fulfillment, risk optimization, enhanced corporate control, etc.
Intelligent information management (with information, data and the processes they
feed being key and a focus on activation).
Customer service, customer experience management and contact centers, customer
relationship management.
Work, human resources, new ways of collaborating, workforce engagement and
enablement (agile working, social collaboration, enterprise collaboration, unified
communications,…).
Learning and education.
Procurement, supply chains and supplier relationships.
Etc.
It’s important to remind that in a digital transformation (and, for that matter digital
business) context, all these aspects, functions, processes, etc. are interconnected and silos
have less (or no) place, not from a technological perspective but most of all also not
from a process and people perspective.
Digital transformation – digital can reshape every aspect of the modern enterprise – source
McKinsey
The graphic below from Capgemini (check out the eBook from Capgemini: “The Digital
Advantage:How digital leaders outperform their peers in every industry“), dispels some
myths and offers some realities.
1. Business/IT relationship is key (closing the gap between both, focusing on the same
goals and NOT overlooking the role of IT).
2. There is a common DNA among digital leaders and the path to digital
transformation shows common traits (even if context matters).
3. As said, each industry is impacted, including your industry. Customers,
employees, partners, nor competitors or new, disruptive players, will wait for business
to catch up, regardless of industry.
4. Digital transformation is led from the top (or at least requires firm buy-in from the
top – and all stakeholders).
To achieve them, however, many conditions need to be fulfilled in an often staged approach
and always involving people, processes and technologies. Again three usual suspects indeed.
Back offices in digital banking – legacy systems and silos as digital transformation
challenges – source Capgemini Consulting via InformationDynamix – click for PDF
Change management.
As it is the case in virtually all impactful changes that affect multiple stakeholders, divisions,
processes and technologies (including implementing an enterprise-wide marketing ROI
approach, a content marketing strategy or any integrated marketing approach with CRM,
marketing automation, etc. to mention three marketing-related ones), there is not only an
opportunity for change and looking at what can be done better and what should be
(re)connected but also a need for change management.
Knowing the role of data and analytics in digital transformation, there are even more
opportunities for change and needs for change management. This is not new: when web
analytics became popular, for instance, their implementation and the connection between
different data and analytics “silos” in the customer/marketing space, often showed clear
needs for digital transformation in many customer-facing and customer-oriented operations,
long before the term digital transformation became known. Grasp those opportunities and
tackle the challenges. People and processes.
The world is full of roadmaps for virtually any digital transformation project. However,
roadmaps are what they are and the intent, priorities, pain points and actual needs for the
individual business and its ecosystem, within a broader reality, matters more.
There is never a one size fits all solution and intent, outcomes and priorities steer the digital
transformation efforts, on top of changing parameters in the ecosystem. Priorities also means
prioritization, often including looking at the low hanging fruit but always with the next steps
and ultimate goals in mind, knowing these goals – and the context within which they were set
– will evolve.
Digitization
We mentioned it before but it’s important. It’s a mistake to think that organizations are really
ready for profound digital transformation in a broad way. There are still far too many gaps in
regards to the digitization (and automation) of existing processes and the digitization of data
from paper carriers. Worse: what is sometimes called digital transformation is sometimes
“just” digitization (turning paper into electronic information into processes). You need
digitization in order to optimize in a digital transformation context but digitization does not
equal digital transformation. What matters is the combination, strategic and prioritized
interconnecting and the actions you take to achieve business goals throug digitization and
combining data.
Furthermore, there is an even bigger gap between back-office processes and the front end. An
example of this phenomenon can be seen in the financial industry, where there are extremely
strong disconnects between the back-office and front end. There are lots and lots of
digitization efforts that still need to be done in many areas of business and society and we all
know and feel it, whether it’s in our daily experiences as “business people” or in the often
totally unnecessary administrative tasks in regards to our governement-related or finance-
related ‘duties’ and interactions with business where we’re forced to use paper, the phone or
channels we really don’t want to use anymore.
Digital transformation – just as social business, digital business and any form of customer-
centric marketing and business processes, requires the ability to work across silos. In many
cases, digital transformation even is about totally reworking organizational structures, which
can be as much about collaborative methods, Centers of Excellence as removing specific
silos.
The debate about the responsibility over digital transformation as a whole and within specific
functions and processes in that sense of genuine transformation is archaic, even if it needs to
be held as Chief Digital Officers, CIOs and other CxOs all play a role. Here again, there is no
ideal solution regarding responsibility: context does matter.
Marketing should learn from IT and IT from marketing. Sales from customer service, the
contact center from sales, the list goes on. A digital-savvy culture is not the goal of digital
transformation but today’s CxO needs to be not only digital-savvy but also know 1) what
others are doing and 2) their experiences, methods and skillsets. As for the responsibility
debates: we will look more in depth at them later.
The customer experience doesn’t belong to just one department and a transformational
approach by definition includes several stakeholders, including the customers.
While technologies have affected customer behavior and expectations on one hand and
enable transformations on the other, the focus is on people and processes. To truly enhance
the customer experience in an enterprise-wide and holistic way, several elements, divisions,
caveats, processes and technologies need to be taken into account.
However, the people dimension is probably – and obviously – the most crucial of all in the
customer and customer experience context. The customer experience is probably also one of
the key areas where business meets IT in a transformational perspective.
Innovation accelerators – new core technologies as added by IDC to its 3rd Platform – more
With a clear focus on (digital) customer experience and overall stakeholder experience, while
optimizing costs, innovating and creating competitive differentiation, digital transformation is
set to become the cornerstone of a digital transformation or DX economy in the words of
IDC.
Adding more technologies to the 3rd Platform and, more importantly, witnessing an added
layer to the core technologies and innovation accelerators of innovation and transformation,
IDC sees a future whereby this layer where the optimization, transformation and innovation
as such accelerates.
And this, in turn, will lead to a DX economy. But make no mistake about it: despite all the
technology it’s still about (digital) customer experience and stakeholder experiences or the
human dimension, empowered by processes, information and the 3rd Platform evolutions in
the first place.
In 2007 IDC introduced the 3rd Platform, back then consisting of four
technological/business pillars: cloud, big data/analytics, social (business) and mobility.
Gartner called it the ‘Nexus of Forces‘ and, as others did, talked about SMAC (social,
mobile, analytics and cloud). Regardless of the name: what mattered was that these
technologies and, more importantly, their adoption by consumers, workers and businesses,
their behavior-changing impact and the ways they were leveraged to achieve various goals
were dramatically altering the business reality – a digital business reality.
The 3rd Platform, which is preceded by respectively the mainframe and client-server model
era/platform, was joined by various other technologies which IDC called innovation
accelerators.These include robotics, natural interfaces, 3D Printing, the Internet of Things,
cognitive systems and next generation security.
What we see now is that with the (digital) customer experience, disruption, innovation,
competition, differentiation, automation, cost reduction, optimization, speed and experiences
of stakeholders as business drivers, the mentioned technologies and the way they are used
lead to that famous next wave or additional layer of innovation and of digital transformation.
This in turn, IDC says, led to an innovation stage and information is essential to enable it.
Digital transformation requires IT and information excellence in an end-to-end approach.
This stage of innovation and further challenges brought by disruptive business models will
accelerate in the next years. In other words: what we (will) see is that the pace of innovation
and transformation is changing and resulting in a stage whereby the disruptive impact of
digital transformation is about to be felt in every industry as enterprises flip the switch and
massively scale up their digital transformation initiatives as IDC’s Frank Gens puts it, to
secure a leadership role in the ‘digital industrial revolution’.
Stage 5: digital transformation at the core of a new economy
Finally, it’s this ‘digital industrial revolution’, which IDC dubbed the digital transformation
economy or DX economy, that will put digital transformation at the center of growth and
innovation strategies that will rapidly impact all industries even more and faster than we’ve
seen before. And the innovation accelerators such as the Internet of Things, cognitive
(artificial intelligence) and the likes will be key in this evolution, as are the ‘traditional’
backbones of the 3rd Platform (cloud, big data/analytics, mobile etc.)
Marketing is one of many areas where digital transformations take place (even leading to
confusions whereby digital marketing transformation is used interchangeably with digital
transformation).
The digital customer journey, data and data-driven marketing, social CRM, the contact center
and – again – the customer experience are important elements in this regard. The digital
marketing transformation imperative is driven by changing customer behavior and
expectations before anything else. With the end of the sales funnel and ongoing
fragmentation in an increasingly digital customer reality whereby control has shifted in mind,
marketing has no choice than to transform and to work closer together with other divisions
such as IT and customer service, to name just two. This also has consequences for the
marketing function and changing role of the CMO.
Last but not least, the need for digital marketing transformation goes hand in hand with the
connected optimization goals.
For all too long optimization efforts, whether it’s in business processes, marketing
optimization of customer service level improvement, has occurred in disconnected and siloed
ways.
In an increasingly connected and complex customer, worker, partner and other stakeholder
environment, this isn’t possible anymore.
Holistic optimization looks at the broader picture of improvement, not just by seeing how
everything in an optimization ‘chain’ is de facto connected but by actually setting in motion
the necessary transformations and innovations to optimize in a far broader and interconnected
way than ever before: beyond functions, divisions, silos and anything making an end-to-end
optimization and experience flow impossible.
This focus on optimization through digital transformation is directly linked with the goals of
(customer) experience enhancement and stakeholder engagement. It goes hand in hand with
process optimization, often automation and cost efficiencies.
There are four so-called information chaos challenges according to John Mancini of
AIIM (association of information management professionals):
1. How do we optimate business processes?
2. How do we get any business insight out of all the information we collect?
3. How do we use information to better engage customers, employees and partners (also
think omni-experiences)?
4. How do we manage the risk of growing volumes and complexity of content?
Turning these ‘information chaos’ problems into solutions is a lot what the link between
digital transformation and information management is about.
Information and information management are also key in all three parts of the well-known 1)
people, 2) process and 3) technology/tools triangle. To learn more click the link below.
In a digital transformation context, ‘managing information’ and data is crucial but it’s
not enough. In today’s and tomorrow’s information- and data-driven business, insights,
intelligence and actions matter most: the outcomes.
That’s where context, semantics, artificial intelligence and activation come in. With the
Internet of Things and Web 3.0 upon us the intelligent dimension becomes more important in
regards to making sense of unstructured information, automation and connected devices and
putting information at work. It’s why we talk about ‘intelligent information activation’.
As we shift towards information-based organizations and information has become part of the
capital and business assets of the enterprise, an intelligent information management approach
enters the boardroom.
At the same time the activities around and value of data are looked upon from the
perspective of engagement, outcomes and the last mile.
Making data actionable, introducing devices (IoT) in an increasingly complex and growing
data landscape, the steep growth of unstructured data, deriving meaning and insights from
information and leveraging it at the right time and right moment for the right reasons and
actions are all critical.
This isn’t just about ‘managing’ information in the traditional sense anymore. It’s also not
just about connecting systems and data nor even connecting through information. With the
advent of the Internet of Things, the need to ensure data quality and the increasing need to
use and unlock it faster, despite the sheer volume, adds several elements to the information
and transformation equation.
intelligence (as in artificial intelligence as the only way to add and extract meaning
from ever more data and as the only way to use information and data in an IoT and
inter-device context),
speed (with speed being a customer experience and even competitive benefit),
a holistic security approach (with information and data as assets),
the need to digitize and capture paper-based data (digital transformation requires
digitization and thus scanning) closer to the source, owner and process to go paperless
(paper slows down digital transformation),
and an increasing focus on accuracy, quality and outcomes.
What this all means and how it will evolve? On top of the existence of systems of records and
systems of engagement – which are both needed – we are moving to systems of intelligence
and intelligent automation and optimization, ecosystems of code, algorithms, cognitive
computing (understanding and beyond) and fast/smart data as ways to succeed with digital
transformation and, vice versa, information-based challenges as transformational drivers. To
learn more click the link below.
However, regardless of the ways typical areas where governments are involved such as public
healthcare, transport, public infrastructure, policing and defense, citizen services or
regulation, are organized, there are many commonalities in the challenges and priorities, not
in the least from the digital transformation perspective.
While from the citizen experience perspective the role of digital transformation becomes
clear in areas such as e-government and digital identity programs, in many other areas
transparency, efficiency and coordination are key in the digitization of processes and project
management.
Research shows that a majority of public sector professionals recognize the disruptive impact
of digital technologies on government.
The first driver of digital transformation in government and the public sector is cost
savings in a world where populations are aging and a mix of local, national and geo-
political shifts necessitate choices and changes, whereby higher cost transparency and
cost reductions are key.
The second driver of digital transformation in government is meeting the demands of
a ‘digital’ citizen and enhancing the citizen experience. Citizen demands are evolving
because demands of people are evolving, whether it’s in their capacities as workers,
consumers or citizens. Improving the citizen experience of an increasingly digital and
mobile first citizen whose digital lifestyle doesn’t match with the often paperwork-
intensive reality that is still too dominant and causes frustration is a priority.
From a technological viewpoint, the Internet of Things, Big Data and everything related to
‘smart’ play a key role. Furthermore, investments and innovations in making customers
aware of their consumption and allowing them to control it in unseen ways add to the many
possibilities in areas such as ecology/environment and changing supply chains.
Digital transformation is about using digital technologies to improve (and connect and often
radically change) processes, enhance customer experiences, focus on the area where business
and customer value meet and seeing new and better possibilities , while using different and
digital-intensive ways to realize them. Digital transformation even goes beyond the use of
digital technologies to support or improve processes and existing methods. It is a way to alter
and even build new business models, using digital technologies. In that sense, it also goes
beyond digitization (although that’s often a condition to make it happen) and certainly
beyond a digital-savvy culture, which is nothing less than a must in the age of an
increasingly channel-agnostic and digital customer.
Digital transformation is also about responding to the changes that digital technologies have
caused – and will continue to cause – in our daily lives, individual businesses and
organizations, industries and various segments of society. These changes are obviously not
brought upon us by the technologies themselves. The human dimension is not just an
important focus of digital transformation, it’s a catalyst whereby the ways we use and see
digital technologies can have very unexpected consequences, regardless of whether it
concerns consumer/customer behavior or the innovative capacity of disruptive companies
(nearly always a mix), in the end also people.