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November 2018

Digital Transformation Derailment
Digital Transformation Derailment Raju G

Digital Transformation Derailment

Why Are Companies Hitting Roadblocks in Their Transformation Efforts?

No leader today needs convincing when it comes to digital transformation (DX). In fact, it’s all that we hear about at leadership conferences and symposiums.

The rules of digital transformation do not change with the change in business scale or size. Many enterprises – big and small – are making serious investments into it. However, they are running into roadblocks that are derailing their DX journeys. So, what is causing these roadblocks and why?

Focus Only on Adding New Technologies

It’s true that IT and technology plays a major role in DX. However, it is not the whole of DX. Most of the companies are too quick to invest in technologies like cloud, big data, automation, AI, machine learning, etc. They believe that once they have things in place, life will be easy. If only that was the case!

Embracing these technologies is not enough. You also need to have the processes in place to support these technologies.

We know that some business processes can be easily modified for DX. But there are some business-critical processes that cannot be reengineered easily. The legacy of these processes can also be partly due to legal regulations in place.

Adopting new technologies will only help you modernize your business. But without right kind of processes, you may not be able to transform at all.

Building on Top of Legacy Infrastructure

When discussing DX investments, many business leaders choose to invest their bucks in developing new apps and software. They believe that this would help them keep their technical debt under control and also accelerate their ROI realization from DX investments.

This strategy may work for many businesses, but this is a short-term solution. You cannot keep on mounting higher DX investments over an aging infrastructure. While it may solve your technical debt problems today, it will add more bigger problems to the milieu in the long run.

This kind of approach leads you nowhere and in fact leaves you stranded in dire straits.

This is precisely why CEOs need to step up and lead the digital transformation initiative and not let individual functional heads drive it. With CEOs at the front, the functional heads will have better collaboration which will lead to better strategic decisions.

Gaps at Strategic Levels

In many cases, we have seen that functional heads are individually driving the DX efforts. This means their focus at times is limited and they may not see the big picture. So, if the technology heads are leading DX they would develop competencies that they believe are needed. However, these competencies may not deliver fully on their potential due to lack of business context. The same is true for business leaders as well.

Both the leaders invest in developing competencies which may or may not interoperate with each other. This is what has been creating major gaps in digital transformation. Such siloed approach can only lead to a fractured strategy and execution.

Not Having the Right DX Partner

Many businesses invest in DX on piecemeal basis. For technology they may work with a particular IT vendor while for business processes realignment they may join hands with another service provider.

When this happens, no particular partner gets the full vision of the business and ends up delivering services that meet the need of the hour.

However, if you have one DX partner working with you on every single aspect, then it leads to better strategies, executions, and deliveries.

Now, we know it can be difficult to find a company that is good with all the aspects of digital transformation. After all you need somebody who understands technology, operations, business models, culture, people mindsets, existing skills, etc.

A good way to go about here is to engage with a digital transformation consultant on a trial basis. Talk to them to see if they really get your vision or not. A larger and broader engagement can be decided after your first interaction.

Getting a single partner to look into all your technology and operational level requirements will be the best decision you can make for your business. It will save you money and efforts while setting you on the right path of digital transformation.

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Digital Transformation: ROI & Justifying the Investments
Digital Transformation: ROI & Justifying the Investments Raju G

Digital transformation is not just a keyword that is buzzing around. It is a strategic goal and a top priority set forth by many business leaders.

Not many enterprises have managed a successful digital transformation. There are certain challenges that make digital transformation difficult. But the one challenge that is commonly found across industries is investment.

Digital transformation requires commitment from the highest level of decision makers of an enterprise. This means there are funds and resources that need to be set aside for it. However, both these resources are scarcely available and need to be utilized wisely.

The ROI has to be proved before any investment decisions are made, especially when there are multiple initiatives on the table demanding attention.

Digital Transformation & Traditional ROI

In most businesses, the ROI calculations usually depend on payback period or breakeven analysis. In some cases, the internal rate of return is given prominence. In simple terms, the gains from an investment are divided by the cost of making the investment to gauge its viability.

Now when it comes to digital transformation, things become a little complicated. Many consider digital transformation a one-time initiative of redefining and restructuring the business. If this is the case, then your ROI calculations would show that it wouldn’t be wise to spend millions behind the exercise. After all, you would be dealing with things like technology legacy, aging inventory, and technical debt of the enterprise.

But if you consider digital transformation a way of existing and doing business in the future, then making that million-dollar investment seems wise. You cannot build the futuristic business models and processes on aging systems.

If you are going to build a business case that presents digital transformation as a way of developing and launching new products or services, then your ROI projections will change and possibly look more lucrative.

Is Digital Transformation Really Pricey?

The response to this question depends on who is leading the digital transformation drive. In the early days, when technical leaders were driving the initiative, the projection of digital transformation and expectations from it were different. However, now with CEOs taking charge, the business case for it has changed.

When we work with CEOs on creating a business case to seek funding, we always tell them that there are two sides to digital transformation. One is the side that helps them save money by addressing operational inefficiencies, changing the way ideas are taken to marketplace, accelerating innovation, etc. It helps you understand your customers better which in turn impacts your product design and service delivery cycles.

The other is the side that helps enterprises improve revenues. Digital transformation helps you launch more relevant products and services, reduce go-to-market time, identify trends and patterns early, redefine supply chain and sales strategy, etc. it also helps you create a superior customer experience through omni customer view which turns brand loyalists into brand advocates.

Digital Transformation – Do It Right

There are some leaders who believe that digital transformation is priceless!

But if you are one of those leaders who is worried about the returns on the funding, the time is now for you. Even if the ROI calculations don’t look stellar, the business benefits outweigh all projections.

We believe that there are only three real threats when it comes to digital transformation:

  • Incorrect understanding of digital transformation
  • Having the wrong strategy in place.
  • Having the wrong skillsets and mindsets implementing the strategy.

Our digital transformation evangelists work with business leaders to address these three things and prepare a business case for getting the money and resources invested in the process.

If done right, digital transformation is not an initiative that would let you down. It would only add to your growth.

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