We’ve all heard of digital transformation. Almost all organisations, from city councils to start-ups and enterprises have a digital transformation strategy in place, and most leaders agree that it is necessary. And yet it’s clear that many businesses are still not doing nearly enough to fully realise the benefits of digital transformation.
It’s an interesting – and crucial – topic for a number of reasons. First, there’s no doubt this is one of the burning platforms for all modern enterprises. Most customers expect to have a seamless, technology-enabled experience, whether they are paying their rates to their local city council or shopping online. Any organisation that is not meeting this bare minimum requirement is ripe for disruption and given the pace that technological advancements and consumer adoption continue to accelerate at, who knows what innovations are just around the corner. Every second of inaction is two seconds moving in the wrong direction.
Second, while business leaders agree that digital transformation is critical, it’s equally clear that it’s not happening at the pace or scale that modern technology enables. Which in many ways is puzzling, given the fact that it’s a customer expectation, it enables businesses to
achieve aggregated, large-scale material efficiency benefits across the whole organization at pace, and all the tools are available to begin the journey.
So, what’s holding businesses back?
Digital stumbling blocks
Transformation can be daunting
Any transformation takes time, effort, investment and change management to achieve. Some businesses go to big and the result is paralysis, with everyone returning to the ‘old’ ways of doing things. Others don’t have the available cash flow to change the entire business overnight and so they do nothing. Others invest in the right technology but don’t follow through with training and change management. The key to solving this challenge is recognising that it is a daunting shift, but a necessary one, and the result will benefit the business, employees, customers and partners.
Organisations start small… and then stop
There is nothing wrong with starting small. The problem is when small changes are made with no further follow through.
A great example of this in action is a bank that only automates filling in loan applications. These can now be done online and customers don’t need to come into a branch. However, nothing else is automated. Processing isn’t automated, the credit assessment isn’t automated. The contract itself isn’t automated. This is transactional automation and it is now commonplace. It also means that while this bank is now more efficient than it was, it is not digitally transformed in the way that a neobank is. The full end-to-end user experience has not been digitised using automation, big data, AI and machine learning, and eventually, the bank that started small with a few automation will no longer be able to keep up with fully digitised counterparts.
Technology and automation are confused with digitisation
Just adding technology doesn’t mean a process or business unit is digitised. For example, a city council giving someone who mows lawns an iPad is not digitisation. However, a programme that calculates the most efficient routes between jobs, streamlines teams and allows local citizens a self-service platform to log jobs and make requests of city parks officials is digitisation.
Similarly, an app that a parking inspector fills out instead of manually handwriting a ticket is entry-level automation. Digitisation takes that automation and adds layers of computing power to it. A photograph captures the infraction and categorises it (ensuring indisputable evidence that cannot be thrown out in court). All vehicle registration details are instantly captured and linked to the owner, the ticket is logged on the system and prints out automatically. Quality and governance are built in, protecting the employee and helping them to reach exponentially more cars or areas in a day, and the opportunities for how the system can be extended are endless because the key to digitisation isn’t just that it adds pace and efficiency, but technology allows businesses to adapt to changes in a way humans cannot in a manual setting.
Now, if a new traffic law is passed at council level, the algorithm is tweaked and immediately every photo taken of a vehicle will capture the brand new infraction – in a way that would have taken months (even years) of training and change management to achieve manually.
The art of embracing true digital transformation
The first step to embracing digitisation is to understand that it is always evolving. If we use our bank example again: a decade ago, being able to apply for a loan online would have been cutting edge digitisation. Now, it is the bare minimum that most consumers expect. The actual process or system that is digitised is therefore less important than the strategic objective of the organisation and how digitisation supports that objective.
The key is to treat digitisation as a set of building blocks that are transforming the business into a smarter, more agile, faster, and efficient version of itself.
In the context of digital transformation, automation comes up a lot because of the benefits of automating manual processes. However, the real benefit in digital transformation lies in processes that cannot be manual. These are processes that require millions upon billions of data points and enormous computing power. There is no way a human (or team of humans) could perform them.
You need to start automating processes and digitising to gather this data and then you must keep building on it with a clear end-goal in mind, knowing that the more digitised your organisation becomes, the more it will be able to adapt to left-field curveballs because of the amount of big data at hand and the level of computing power available.
Previously, human analysis drew on data from the past to glean insights and make decisions. The digitally transformed business can instantly run scenarios based on data modelling, however.
To the future and beyond
In a digitally enabled world, you put one unit in to get two, three (and eventually, exponential multiples), out. You can make decisions based on billions of data points and shifts are instant. We speak of future-proofing a business, but this is what it looks like in practice. Imagine if Kodak had the data and insights to predict how consumers would embrace digital cameras? Or Blockbuster understood how consumers would gravitate towards streaming services that were instant and didn’t require them to leave their homes (or remember to return DVDs).
Would their strategic decisions have been different? Of course they would have. Not to mention the level of digitisation embedded in new product offerings.
There’s no longer a question of whether digital transformation is necessary, or happening. The question is how quickly, how extensively, and with what end goals in mind?
Looking for more information about digital transformation? Get in touch with the experts!