5 Questions to Assess Digital Transformation at the Enterprise Level

AnalyticsAnywhere

Digital transformation is still one of the business buzzwords of the year. It is estimated that 89% of organizations have digital transformation as a business priority. But if you feel like you’ve come to a standstill in your digital transformation efforts, you are not alone. As many as 84% of digital transformation efforts fail to achieve desired results. And that statistic would likely be higher if we examined only the larger, enterprise level efforts.

What exactly is digital transformation? According to researchers at MIT Sloan, digital transformation occurs when businesses are focused on integrating digital technologies, such as social, mobile, analytics and cloud, in the service of transforming how their businesses work. The preoccupation with digital transformation makes sense given the pace of change. Richard Foster, at the Yale School of Management, found that the average lifespan of an S&P company dropped from 67 years in the 1920s to 15 years today.

Creating digital products receives a lot of press. For example, the 2017 Ford GT supercar’s digital instrument display has been advertised as the dashboard of the future featuring a state-of-the-art 10-inch digital instrument display that helps reduce driver distraction. Yet, Ford’s share price is down nearly 30% over the past 3 years. On the other hand, the design of the Airbus 380 aircraft had some exciting digital innovations, but Airbus also leveraged big data to improve customer experience with very positive results on the company’s share price over the past 3 years. GE is another example of a company that has pursued digital transformation to reinvent its own industrial operations through digital technology, and then leveraged those learnings to help its customers do likewise. While the product innovations are sometimes impressive, more than purely product related innovations are needed for digital transformation at the enterprise level.

There’s no doubt that the digital tools which includes social, mobile, analytics and cloud (sometimes referred to as the “SMAC” acronym) creates value – but digital transformation at the enterprise level must go beyond just the tools.

Having a transformative purpose or vision and a process based view is recognized as being important. In “Leading digital,” the authors found that firms with a strong vision and mature processes for digital transformation were more profitable on average, had higher revenues, and achieved a bigger market valuation than competitors without a strong vision. Yet more reason to emphasize that while technology is integral to digital transformation – it can’t just be about technology. If we go back to the early days of the research on digital transformation, it was proposed that true digital transformation at the enterprise level needs to embrace fundamental change is three areas: customer experience, operational processes, and business models.

Focusing on customer experience is central to success. According to the Altimeter Group in 2014, around 88% of companies reported undergoing digital transformation – yet only 25% of respondents indicated that they had mapped the customer journey. The 2016 update to this research, based on survey data from 528 leaders, found that the number of companies which mapped customer journey had risen to 54% – indicating a positive trend – but still a way to go.

Focusing on improving the organization’s ability in improving end to end business processes is also needed for success with digital transformation. Where does your organization stand in terms of its process maturity? Are you just beginning the process improvement and management journey or is the organization well on the way to modeling, improving, measuring and managing its key business processes to achieve business goals? If there is room to improve your people’s skill in areas such as BPM, customer experience and change management, then you may wish to explore the training programs offered on these topics at: http://www.bpminstitute.org/learning-paths.

Further, the answers to the following questions may provide you with additional insight on your organization’s situation on its enterprise digital transformation journey:

  1. To what extent is your company strategy driving the digital transformation program?
  2. To what extent are you actively challenging the elements of your business model (i.e. value proposition, delivery channels, etc.)?
  3. To what extent are you exploring new digital business and digitally modified businesses?
  4. To what extent do your leaders have a shared understanding of the entire customer journey?
  5. To what extent are you deploying digital to redesign end to end business processes?

Recall the power of the one page principle. This involves in having a high level schematic – just one page for your customer journey map, one page for your business model, and one page for your process relationship map. That’s what drives discussion and collaboration and storytelling. Of course, some of these high level schematics need to be developed at a more granular level of detail – but the one page view is what captures attention and drives dialogue.

The vast majority of digital transformation efforts at the enterprise level are led from the top. Leading by example is part of the success formula as well as defining clear priorities and managing the cross-functional interdependencies that many digital solutions often involve. Chances for success are amplified when employees believe that their leaders have the skills to lead the digital strategy and understand the major digital trends – and that is augmented with stories.

How can you get started on the journey? The following were some of the tips presented by Gartner at the Program & Portfolio Management Summit (PPM) in Orlando:

• Assess your organization’s appetite for risk taking
• Be introspective
• Introduce innovation into every project
• Find a project that can be monetized with digital
• Engage in experiments and communicate lessons learned

One of the keynotes at the 2017 Gartner PPM also emphasized that digital business is an entirely new game, the rules of which are not yet written. Whatever road you choose for your digital transformation journey, it will be important to take into account the central role of customer experience, the power of process management, and the importance of having clear priorities.

Source: BPM Institute

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4 Critical Factors in Digital Transformation Success

OnTheGo

The term ‘Digital Transformation’ has taken its place in today’s business vocabulary. It’s on the lips of virtually every IT vendor, most management consultants and an increasing number of executives.

Much of the buzz around digital transformation has substance. Some is just plain hype. It is clear that the combination of social and mobile technologies, analytics & big data and the cloud – popularly known by the acronym SMAC – represent powerful forces that will shape the nature of competition in the foreseeable future. This trend is being further accelerated by the evolution of cognitive computing and robotics. Yet – it’s true that there are a lot of misconceptions around digital transformation. Digital transformation occurs when businesses are focused on integrating digital technologies, such as social, mobile, analytics and cloud, to transform how their businesses create value for customers. If there’s not a clear emphasis on customer value creation it’s not transformation. If the effort is simply focused on applying IT tools to the same business model – it’s not transformation. If the initiative is largely around cost reduction – in the context of the existing business model – then it is surely not digital transformation.

There is good reason to consider jumping on the digital transformation bandwagon. The pace of change today is astounding. According to research conducted by Singularity University, the average half-life of a business competency dropped from 30 years in 1984, to a low of 5 years in 2014. Equally noteworthy is that nearly 90% of the Fortune 500 companies which were listed in 1955 were no longer on the list in 2014 and the average life of an S&P company has decreased from 67 years to 15 years. Perhaps even more significant is the prediction by the authors of Exponential Organizations that as many as 40% of the companies listed on the S&P 500 in 2014 will cease to exist by 2024.

A new breed of upstart organizations are X times faster and better than traditional firms – these are the so called “exponential organizations” that deploy digital technologies in a new and novel way. These companies have demonstrated the ability to reach a market cap of a billion dollars much faster than the typical Fortune 500 Company or even Google for that matter and include firms such as Facebook, Tesla, Uber and WhatsApp.

The cumulative effect of digital technologies, exponential organizations, and external threats means that more traditional organizations will have to change the way they do business to compete in the evolving environment. That’s why it will become increasingly important for companies to focus on large scale change. As a 2015 MIT Sloan Management Review global study found “strategy, not technology, drives digital transformation.” Successful companies understood the importance of integrating digital technologies such as social, mobile, analytics, big data, the cloud and even cognitive computing in transforming how their business operated – while less advanced firms stressed solving discrete business problems using individual technologies.

Given this background, let’s consider the four critical factors in digital transformation:
1.Measure what matters to customers
2.Challenge the current operating model
3.Adopt an end-to-end business process based view of work
4.Make it easier for employees to serve customers

The fastest and arguably the most effective way of drawing attention to performance problems is to measure what matters to customers. This typically involves metrics around the timeliness and quality of the products and services provided – and these set the stage for viewing the business in the context of the value creating, cross functional business processes. Don’t underestimate the needed shift in management attention that this involves as most companies still tend to focus on financial measure of performance and place insufficient emphasis on critical to customer metrics such as perfect order performance, variance to promise and responsiveness.

Then, in addition to thinking about just customer touching actions – it’s useful to model both the customer journey and a model of the high level the cross functional business processes that create value for customers. As the old saying goes about pictures being worth a thousand words, and most companies simply do not have pictures of the flow of work that creates value for customers.

The case of Tokyo Electron America (TEA), a subsidiary of semiconductor manufacturer Tokyo Electron Limited represents one example of an organization that reflected on these 4 success factors of digital transformation success. TEA set the objective of moving from a product to customer-outcome focused support organization.

They realized a key success factor would be to transform how the field service group – a 500-strong team of field service engineers (FSEs) – worked in creating value for customers. Their digital initiative gave this group real-time access to relevant customer, product and service information.

TEA monitored critical to customer metrics such as “mean time to repair.” As a result of this program TEA’s field service team realized major benefits such as a drop in mean time to repair times and costs per service inquiry, reduced equipment downtime, and customer satisfaction scores increase*.

While the specific factors will from one organization to the next, challenging the current business model, measuring what matters to customers, viewing work in terms of large cross functional business processes and making it easier for employees to serve customers are invariably four of the critical factors in digital transformation success.

Source: bpminstitute.org