Digital transformation cannot happen without a strong IT/business relationship. That's according to Didier Bonnet, senior vice president and global practice lead at the Paris-based Capgemini Consulting Worldwide. And he should know. He co-wrote the book on digital transformation along with Andrew McAfee and George Westerman, leading lights from the MIT Sloan School of Management.
The authors classified companies as beginners (taking a wait-and-see approach to digital), conservatives (digital transformation is happening but in a narrow area of the business), fashionistas (doing everything digital at once but without a vision or roadmap) and digital masters (businesses that have successfully used technology to drive business transformation).
The class of digital masters excludes the obvious Googles and Apples in favor of brands like Disney, Nike and Burberry and lesser-known companies like Asian Paints, an Indian paint company headquartered in Mumbai, and CODELCO, a government-owned copper mining company in Chile, where digital technologies upended -- and eventually enhanced -- the business.
Here's an interesting takeaway for CIOs: Shadow IT may provide a workaround for injecting new technology into the business (a must for digital transformation, by the way), but it's a short-term solution at best. Shadow IT perpetuates departmental silos, and if businesses want to make the digital transformation leap, they'll need to knock down those silos and pave the way to better communication. "When you implement a digital program, you'll see that you need marketing, IT, supply chain -- it cuts right across the organization," Bonnet said at the recent CDO Summit in New York City.
The more pressing question for businesses is how to build a better bridge between IT and the business. "I don't think anyone has figured it out completely," Bonnet said. But he pointed to trends like two-speed IT and the rise of the chief digital officer as examples of businesses searching for ways to overcome that hurdle.
The journey to digital transformation won't be easy, Bonnet cautioned. But it won't even get started without first breaking down IT/business barriers.
What else should businesses do to achieve digital transformation? Bonnet outlined a few areas:
- Vision. A vision statement can help define the reasons for change. For businesses that are struggling, "the catalyst for change is there," Bonnet said. For businesses that are doing well, defining a vision may be necessary to "get the ball going," he said.
- Engagement. Businesses have to foster engagement among key players to achieve digital mastery. "This is where the vision becomes reality," he said. The benefit of digital? It can help leaders foster that engagement at scale.
- Governance. "The problem with digital is that it cuts across all of the ways we've organized our companies for the last hundred years," Bonnet said. So the transformation process requires leaders who can govern and direct it. He noted a couple different ways to do that, including shared services programs, committees and appointing a digital officer.
One more thing: If your organization has decided on a wait-and-see approach, the road ahead will be a difficult one because the competition will have a considerable head start. "Transforming an organization doesn't take three months," Bonnet said. "It takes more like three years."
What are digital masters doing?
Bonnet also gave CDO Summit attendees a glimpse at what these digital masters are working on now. He said it boiled down to three buckets:
- Customer experience. Bonnet said, until recently, as much as 80% of digital investments were focused on understanding and developing customer experience. Customer analytics is a key component of these investments, i.e. collecting data to get to know customers at a granular level -- what they are purchasing, how they are making purchases and so on. Bonnet said digital masters have now begun meshing the physical and digital experiences together. "Burberry is a good example," he said. Many customers of the luxury fashion line still want an in-store experience. So Burberry brought the benefits of digital technology to its stores by, for example, adding RFID tags to products. The tags interact with display screens situated throughout the store and show the making of a garment or how the item looks on the runway.
- Operations. Bonnet said operations is often seen as boring. But if businesses really want to carve out a competitive advantage, this is the place to do it. "When you build a great mobile app, the first thing your competitor will do is take it apart and analyze it," he said. "Operations is less visible." For Bonnet, operations refers to digitizing business processes to become a paperless company; worker enablement through collaboration tools and performance management; and applying analytics to the business.
- Business model. Bonnet said if businesses do the first two things well, they can then "start to play around with your business model." Nike, for example, used digital technology to become more than an athletic shoe and apparel company. Its Nike+ FuelBand is a wearable device that acts as a digitized personal trainer, tracking an athlete's activity levels and providing space for customers to share their results, if they're so inclined.
"The truth is, if most organizations are honest with themselves and don't get caught up in what they put in their annual reports, they're not actually customer centric. They talk about it; they care about it; they say it. But if you look at the way they organize, and if you look at the way they measure success or the way they drive revenue, their needs and the customers' needs are not always in alignment." -- Jaime Punishill, head of digital marketing and channel management, TIAA-CREF
"In my world, in fashion, the thing our industry forgets all the time is that operations is the most important customer touch point and brand moment you can deliver on. … The guys that run supply chain and the guys that are running the technical infrastructure -- those guys now are far more important than what's on the front end." -- Johanna Murphy, CMO and digital director, Ivanka Trump
"Mobile first is dead already; it's context first." -- Tony Fross, vice president, North America practice lead, digital advisory services, Capgemini