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Throw out the old handbook: Digital transformation requires a new way of doing business

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Technological change now dominates business thinking in all industries. This is because it’s about survival of the fittest – customer expectations have evolved so much that businesses need every edge to secure growth, improve products and services, and increase efficiency.

Virtually every business in every industry is feeling the effects of digital transformation. Even if a business doesn’t have its own initiative, its competition likely does. Digital transformation is a complete reimagining of how businesses work, enabled by the transformative technology of today,  such the cloud, mobile, and big data.

According to a 2017 study from Forrester, 38% of business and IT decision-makers believe that technological change such as digital transformation would have the greatest effect on their business decisions over the next 12 months. Digital transformation can provide an opportunity to rewrite the rules of business.

Digital transformation is happening. Last year’s BT Software Survey said that 83% of companies were making back-office technology investments a high or moderate priority.

Digital allows your business to shorten the distance between what your company wants and what it gets.

Business should invest in systems of insight

Many businesses are drowning in data and starving for insight. Leaders need to make sure their businesses are:

  1. Discovering the insights that matter most;
  2. Embedding them into the software customers and employees use to engage; and
  3. Continuously learning and measuring through results.

Forrester calls what’s needed to power digital businesses ‘systems of insight’. This is equal parts people, process, and technology. 

Businesses need:

  • Small, cross-functional insights teams. These will need to be sponsored by a leader with accountability for a business income. They will combine business domain expertise, data science skills, engineering insights, and software development knowhow, all with the aim of finding, testing, and implementing insights.
  • Repeatable insight-to-execution processes. This means an integration of data science, collaboration, governance, and agile implementation methods. Without a repeatable process, it’s not a system, but rather a time-consuming search for minimal insights.
  • A digital insights architecture. Big data management and agile business intelligence systems include insight delivery engines and data feed management capabilities, providing insight discovery, collaboration and governance tools.

Predictive analytics will power the insights to drive businesses forward. According to last year’s PwC Global Data and Analytics survey, 81% of businesses use or are building predictive systems today or plan to in the next 12 months (22%)Benefits for businesses include:

  • Improved customer experience,
  • Increased revenue,
  • Reduced operational costs,
  • Increased business agility,
  • Better-informed business decisions,
  • Deeper insights from existing data, and
  • An ability to drive new revenue streams with data and intelligence services.

Artificial intelligence in the enterprise

Demand by businesses for productivity-boosting technology is pushing enterprise software vendors to introduce AI into their products. Gartner analysts believe that, by 2020, AI technology will be pervasive in every new product and service.Artificial intelligence will ignite the insights and actions of the future. PwC said last year that 71% of businesses use AI today (51%) or plan to in the next 12 months (20%). Businesses said they were currently using AI to:

  • Mitigate security risks,
  • Improve business automation,
  • Gain better customer insight,
  • Improve efficiency in business operations, and
  • Create and deliver better customer experiences.

Digital transformation requires business ecosystems

One of the most important steps in the digital transformation strategy of any business is to establish a digital ecosystem. This will help them interact and share standardised digital platforms and benefits, with goals being commercial gain and innovation. Digital ecosystems allow businesses to interact with customers, partners and even competition in different industries. Finding digital transformation leaders can be a great way for businesses to collaborate, find co-innovation partners and create a digital strategy that meets their needs. They might also find that customers want to partner as well as buy from them, bringing their own needs to the table and creating chances to fast-track the innovation process and create solutions for their industry.

But there are challenges, including:

A lack of executive understanding

Digital transformation requires a top-down approach, driven by leadership that has created a framework for success. This needs commitment, and an understanding of how technology can improve the business. Whether this is data, artificial intelligence or automation, businesses must seek out training or new technical blood to fill the knowledge gap.

Existing silos 

With the old rulebook, the organisational structure of a business meant that it was separated into departments with their own respective objectives. In today’s world, though, this dynamic causes problems. Digital transformation requires collaboration between departments; silos must be overcome. 

Legacy applications

Businesses may regard legacy applications as a barrier to digital transformation, since they depend on this technology for their day-to-day business. However, what they should aim for is to build new transformational systems in parallel with these legacy systems. This allows them to take advantage of historic data, which could be extremely valuable going forward.

Data without context 

Data without context is just noise. Businesses generate huge amounts of data, and if employees are bogged down in it without context, it becomes meaningless. There needs to be concerted efforts in making sure the organisation has people with the right training in data use and interpretation in place.

A lack of ownership for customer outcomes 

The C-Suite must have a vision and strategic plan, with achievable results and where continuous improvement is possible. Without this, you create a circle of pain – leadership doesn’t take ownership, there is no forward progress, and the rest of the business isn’t inspired towards the continuous improvement that digital transformation inspires.

Misaligned metrics 

Successful digital transformation requires alignment on key metrics such as customer satisfaction and value delivery. For example, if one part of the business is working well with product development but is not achieving sales leads, then there’s a problem. There needs to be metrics where every part of the business can see the role in the value chain.

A multi-pronged approach to digital transformation

For successful digital transformation, businesses must take a multi-pronged approach:

Assess digital maturity and identify gaps 

Businesses must find ways to plot their organisational maturity. This will provide guidance on where they need to elevate their digital capabilities. They’ll need to analyse how they can drive a digital culture, how they organise and resource to do this, how they invest, and how they take advantage of customer-driven insight to steer them where they need to go.

Build the relationship between business and IT to focus on customer outcomes 

Successful digital transformation requires businesses to improve the customer experience across all departments. Technology isn’t one-size-fits-all – each business needs to find its own way to make sure its transformation results in positive customer outcomes – the key metric which can help light the way.

Plot a two-path roadmap – quick wins and platform investments 

A digital transformation strategy could have two roadmaps – one that follows a path of quick wins, and one that focuses on the platform investments needed. Quick wins show improvements that are visible to the business, show benefits and can be delivered quickly. 

Invest in core systems with a clear ROI 

Digital transformation will come with significant expenses, so it’s necessary to make sure that investments made in hardware and software show ROI when it comes to cost savings, productivity benefits and reduced inefficiencies.

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Digital Rewrites the Rules of Business

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