Maybe digital transformation — now a well-worn, perhaps overused term — could use a rebranding. “Digital transfusion,” anyone?
Technology executives and professionals, often pushed to the forefronts of such efforts, are being asked to redesign their companies’ business models, often with shaky and begrudging support from their business colleagues. The business side of the house could use transfusions of knowledge on what technology can and cannot accomplish, and the technology side of the house could use of transfusions of support and direction on which way to take technology.
The nine components of digital transformation were explored in an MIT Sloan Management Review article published six years ago, but, as well all know, that is six centuries in Internet time. Recently, two of the original study’s authors, Didier Bonnet (Capgemini Invent, IMD Business School) and George Westerman (MIT Sloan), updated their observations on digital transformation, noting that while everyone is now aboard with digital transformation, execution is still an open question.
In essence, now is the time for technology leaders and professionals to step up, do a lot of hand-holding, and guide their businesses through these perilous times. “We’ve seen the dawning of a hard-won recognition of the importance of the IT function in making digital transformation work,” Bonnet and Westerman point out “Many first-wave digital transformations did not include IT as a partner and failed as a result. Now, IT leaders are driving digital transformation in some companies.”
And, along with the digital essentials of delivering customer experience and operational efficiencies, business and technology provocateurs need to focus more on questioning existing business models, employee computing requirements, and building up around a digital platform.
Employee experience is key, “since employees make the business run and have firsthand insights on where processes need to improve,” Bonnet and Westerman point out. Business models also need tweaking or upgrades, especially “with the rise of multisided platform businesses and the increasing dominance of global platform players, such as Alibaba, Amazon, and Google.” Building upon digital platforms can make all of the above happen.
The foundation enabling all these transformations is built upon “cloud computing, agile development methods, external code libraries, and easy-to-use development tools enable developers to build new functions rapidly but can also lead to the proliferation of inconsistencies and complex tangles of tech spaghetti,” Bonnet and Westerman write. Also, “Agile, GitHub, DevOps, as well as containers and microservices, make it easier to coordinate changes; innovate quickly, safely, and smartly; and avoid reinventing the wheel.”
The three elements of the emerging digital platform consist of the following:
- Core platform: “A strong foundation for operational and transactional systems (back-office systems, systems of record, etc.) that power a company’s key processes.”
- Externally facing platform: “Powers the websites, apps, and other processes that connect to customers and ecosystem partners.”
- Data platform: “Provides the ability to perform intense analytics, as well as build and test algorithms, without disrupting the company’s operational systems.”
There are three elements supporting business model transformation, Bonnet and Westerman find:
- Digital enhancements: “Finding ways to digitally enhance their existing business models without requiring major changes to the business.”
- Information-based service extensions: “Information-based services, combining sensors, communication networks, apps, and analytics to create value for customers and new sources of revenue for themselves.”
- Multisided platforms: Leveraging technology to open new lines of business.
Three elements of employee experience transformation have emerged in recent years, including the following:
- Augmentation: Employing “robotics and other digital technologies can augment employee productivity and performance — enabling people to work faster, smarter, and more safely.”
- Future-readying: Creating a learning culture.
- Flexforcing: Bringing in talent from outside sources, or expanding the talent base of current employees.