One of the hottest terms in both technology and business is digital transformation. Executive teams across the world are clamoring at the term as a success model for business success. The downside is that most are failing to see the business benefits from digital transformation. The root of the issue is that companies are focused on the wrong thing. So, what is it and what does it mean for your business?
DIGITAL TRANSFORMATION FUNDAMENTALS
At the most basic level, digital transformation means leveraging technology to improve business outcomes. Put another way, it means to digitize your enterprise. In many ways, this may mean replacing manual processes with technology automation. The thinking is: If you go through digital transformation, your business will prosper. Unfortunately, this thinking is backwards.
Going further, some look at digital transformation as a destination versus an ongoing process. This is a problem I address in a post from 2016 about project versus product thinking. Moving from project to product thinking provides constant evolution versus an end-state. Technology is not a destination and the most successful examples of using technology leverage an evolutionary or product thinking model.
THE DANGER OF FOCUSING ON TECHNOLOGY
Early movers that embraced the digital transformation movement are now experiencing newissues and asking the question why. Large sums of money are being spent under the digital transformation banner and early movers are now asking what business value they gained from their investment. Sure, processes are now automated, and the company is using digital more fully. The real question is: Was the business outcome worth the investment?
Much of the digital transformation movement focuses on automation of existing processes; both good and bad. Before getting into automation of processes, digital transformation misses several questions that need to be asked first including: Is there a different process that is needed versus just automating existing processes? Are these the most important processes to automate? What is the business value (in $) gained from automating the process? Are there changes to the processes needed?
Beyond core questions, automation of processes can be a risky venture that requires thought before execution. One downside is the automation of bad processes. Automation is good in many ways, but it can speed up a bad process to the point of failure. By taking the human out of the process, there is no longer the ability for cognitive thought to stop, delay or change a process. When automated, the system plows through the process potentially leaving significant damage to clean up. This cleanup often far outweighs the benefit from automation in the first place.
PLACING FOCUS IN THE RIGHT PLACE
If digital transformation is not the right focus, what is? The inherent benefits that many ultimately seek are actually related to business transformation. Technology is just a means to enable business transformation, where appropriate.
Starting with the business context provides the guidance that technology organizations ultimately seek. Business context provides the focus, priorities, outcomes and value chains to understand where to appropriately leverage technology.
Technology is not a panacea and so neither is digital transformation. Both look at the problem from the wrong direction. However, by starting with business guidance first, technology can become a differentiated driver to business change…and ultimately business transformation.
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Agreed. ‘Simplify then automate’ is an old credo often overlooked.
The focus should always be on “The Business”, and targeting the evolution of your customer’s needs. Technology is an important methodology, but not the end all to the business success. However, when targeted and implemented efficiently technology can be the game changer in our evolving market. The key is to understand where and how your market is evolving and using your technologies intercept and manage the evolutionary ride.