Digital transformation is the profound transformation of business and organizational activities, processes, competencies and models to fully leverage the changes and opportunities of a mix of digital technologies and their accelerating impact across society in a strategic and prioritized way, with present and future shifts in mind.
While digital transformation is predominantly used in a business context, it also impacts other organizations such as governments, public sector agencies and organizations which are involved in tackling societal challenges such as pollution and aging populations by leveraging one or more of these existing and emerging technologies.
In the scope of this digital transformation overview, we mainly look at the business dimension. The mentioned development of new competencies revolves around the capacities to be more agile, people-oriented, innovative, customer-centric, streamlined, efficient and able to induce/leverage opportunities to change the status quo and tap into new information- and service-driven revenues. Digital transformation efforts and strategies are often more urgent and present in markets with a high degree of commoditization.
Present and future shifts and changes, leading to the necessity of a faster deployment of a digital transformation strategy, can be induced by several causes, often at the same time, on the levels of customer behavior and expectations, new economic realities, societal shifts (e.g. aging populations), ecosystem/industry disruption and (the accelerating adoption and innovation regarding) emerging or existing digital technologies. In practice, end-to-end customer experienceoptimization, operational flexibility and innovation are key drivers and goals of digital transformation, along with the development of new revenue sources and information-powered ecosystems of value, leading to business model transformations and new forms of digital processes. However, before getting there it’s key to solve internal challenges as well, among others on the level of legacy systems and disconnects in processes, whereby internal goals are inevitable for the next steps.
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 (between front end and back office, data from ‘things’ and decisions, people, teams, technologies, various players in ecosystems etc.) in function of that journey is key to succeed.
The human element is key in it on all levels: in the stages of transformation as such (collaboration, ecosystems, skills, culture, empowerment etc.) and obviously in the goals of digital transformation. Since people don’t want ‘digital’ for everything and do value human and face-to-face interactions there will always be an ‘offline’ element, depending on the context. Yet, also in non-digital interactions and transactions digital transformation plays a role in the sense of empowering any customer-facing agent.
A digital transformation strategy aims to create the capabilities of fully leveraging the possibilities and opportunities of new technologies and their impact faster, better and in more innovative way in the future. A digital transformation journey needs a staged approach with a clear roadmap, involving a variety of stakeholders, beyond silos and internal/external limitations. This roadmap takes into account that end goals will continue to move as digital transformation de facto is an ongoing journey, as is change and digital innovation.
Digital transformation and hyper-connectedness: focus on the edges
Customer and customer experience, purpose and end goals, partners, stakeholders, the last mile of processes and disruption often sit and occur at these edges and are key for digital transformation. Sometimes digital transformation is even narrowed down to customer experience alone but, strictly speaking, this a mistake, leaving out several other aspects.
The end goals of the business, customers and stakeholders, however, do drive the agenda. The central role of the organization is to connect the dots and overcome internal silos in all areas in order to reach these different goals as interconnectedness is the norm. In other words: although the focus shift towards the edges, the central capabilities are realized in order to work faster and better for and at the edges. This happens for instance at organizational (integrated, ecosystems), technological (an ‘as-a-service approach’, cloud and agility enablers) and at a a cultural level.
The movement towards the edges also reflects in technologies and the decentralization of work and business models.
From a technology perspective think about how data analysis is moving to the edge, the decentralization of information management, the shifts in security towards the endpoints, the impact of the Internet of Things and much more.
Still, it does not mean that strategic decisions move to the edges or that digital transformation is only possibly in organizations with “new” organizational models. Enterprise-wide digital transformation requires leadership, it is organized and as long as the holistic approach towards the goals with the edges in mind prevails over internal soils and gaps between reality and perception. In practice we see that pilot projects on the way to a more holistic and enterprise-wide approach often happen bottom-up, ad hoc or in specific departments. This is normal, typical in early stages but, if not followed through on a broader level, a potential risk for long-term success.