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This is not just another article on digital transformation. Frankly, I think most of the digital transformation advice out there really misses the boat. To me, digital transformation is not about a new ERP or going paperless or updating all the other same ol' same ol' of the past. A digital transformation initiative -- if approached as an add-on or a new tool -- is going to fail. As CIOs know, dumping new tech into an old tech black box just adds complexity to systems that are already so complex they impede the company's ability to compete and, thus, stay in business.
I believe digital transformation is a move to fundamentally change the whole approach to IT automation. It demands a total rethinking of what can and should be done with rapidly evolving technology and with the new customers -- and competition -- new technology creates. A digital transformation initiative answers the need to interact with internal and external customers the way they want you to. That will require adopting and integrating new tools to transform the way a company operates.
Today, companies are adopting new technology, including business process management suites (BPMS), robotic process automation (RPA) and AI. Some are also looking at the technology horizon and seeing next-generation tools, including 3D phones, holographic tables, quantum computers and more. Tomorrow's technology is being invented right now, as we watch.
But as exciting as this technology is, it is not the real issue in a digital transformation initiative. The challenge for CIOs and their companies is to rebuild their existing infrastructure to accommodate these new technologies. Equally important is the need to reduce or eliminate both operational and IT complexity and then streamline the work.
Defining the problem
Many of today's IT operations are 60 years old with a cobbled together mix of old and new technologies that have been made to work together. Applications I helped write in the 1970s are still running as legacy batch systems. Some companies still use green screen systems that have been changed to the point where little of the original code remains in use. Some of these applications and their operating environments are no longer supported by the vendors, and change is up to specialist programmers who still deal with these technologies.
Complexity is so rampant that few IT shops can tell you how the data really flows through the legacy applications or how it transforms as it moves. Documentation on the myriad changes in the legacy applications is virtually nonexistent, and change is based on reading program code and embedded notes. Everything is out of context and generally out of date -- there is no real source of truth for the systems or the data. The result is that we cannot change anything fast. Even worse, when we implement new technologies, we have to handle them as separate tools that have little interaction with the legacy world.
But to succeed in a technology-enabled, customer-centric business environment, these constraints must be overcome. Speed, flexibility, cost efficiency, reduced risk and operational simplification are the characteristics that define the IT and business operating platform companies need to build.
Focus on what it will take to gain market share
So, the challenge in a digital transformation initiative is not to keep up with changes in technology -- you can't. (Technologies such as robotics, AI, holographic phones and quantum computing are coming too fast for any one person to keep up with.)
The challenge is to create a type of business and IT operating environment where the old and new tools and, thus, applications can work in harmony. This is easy to understand and to recommend, but is hard to accomplish.
Some companies, as they tackle integrating old and new tools, have a firm focus on cost reduction. Some are focused on upgrading a particular system. I recommend that you focus instead on what it will take to gain market share. In a rapidly evolving marketplace, your ability to remain relevant in the eyes of your customers is paramount. Building the flexibility to adopt and integrate new technology as you adapt to evolving customer demands supports this ability; a focus on cost reduction or on a particular system upgrade does not.
I believe that many companies are at a crossroads -- and time is running out for choosing the right path forward. Many of the new technologies you need to incorporate have been adopted by the millennial generation. These young people know how to use technology and they are constantly demanding more. They have no patience with mobile apps or websites that don't work easily or do what was advertised. Soon, they will also have no use for apps or other interfaces that aren't fun.
If companies build a very flexible IT operation, capable of quickly incorporating whatever emerging technology that will help them compete, they will be able to keep up with customer expectations -- and evolve as the customer evolves.
Digital transformation initiative quiz
So, how ready is your company to start building the business and IT operating environment required to compete and, therefore, stay in business in the emerging digital market? Here is a readiness assessment quiz to take:
- Can the company change both the business operation and its IT support in days or weeks -- or is months the norm?
- Is there a large IT backlog of changes that need to be made to old application systems?
- Has IT expenditure allowed the company to keep up with emerging technology or has it fallen behind?
- Is your IT operation modern or primarily comprised of old legacy applications and old technology? Does the company have a BPMS or RPA tool that it actually uses? Is anyone looking at the role of AI in automating processes?
- Is the technology infrastructure flexible enough to support modern technology and rapid application change?
- Is your IT budget adequate to support a multiyear design and construction of a new IT infrastructure?
- Is there a corporate vision for a digital operation that's focused on interacting with the customers on the customers' terms?
- Is the corporate digital marketplace vision global? Does your business transformation plan address the digital expectations of employees and business partners?
- Does your strategy map out a digital foundation that will allow you be competitive in 10 years?
- Does senior management support the need to invest in new digital business operating environment?
- Is the company focusing on cost reduction or market growth?
- Has downsizing stripped the company of knowledge workers? Can the company support both the ongoing business operation and the research and ideation needed to really apply innovation to business redesign?
- Has the company fallen behind its competition in preparing to operate in the emerging digital marketplace -- does anyone know what technology the customer is obtaining and what they will have in five years or longer?
- Is there any plan in place to track the evolution of the customer's technology use or buying pattern? How well has the customer been defined and what will the company do when millennials reach 50% of the buying public in a few years?
These questions will help you to gauge your operational readiness for a digital transformation initiative. If you honestly confront these issues, you should be able to tell if your company is on track in adjusting to the evolving digital market, or if it really needs a new strategy. If you think you are in good shape and ready for a move into the future, great. Many CIOs will see that their companies are not only unready, but also not even thinking in these terms. Now is the time to change that.
The constant stream of new technology will likely continue far into the future. Success will depend on your ability to use technology for business gain. Companies that have taken the time to rethink and rebuild their IT infrastructure and approach to applications support will remain relevant in the eyes of the buyers. They will also be able to avoid the additional complexity and costs of continuing the past approach of cobbling new technology into inefficient legacy environments.
Please feel free call or email me with questions or different points of view. (Dan Morris, 630-290-4858, email [email protected])