R. Scott Raynovich — Founder and Chief Analyst of Futuriom
For two decades he has been covering technology in the communications and cloud markets as an editor, analyst, and publisher. Most recently, he was VP of Research at SDxCentral.com, which acquired his previous technology website, Rayno Report, in 2015. Prior to that, he was the editor in chief of Light Reading, where he worked for nine years. He was the founder of the Heavy Reading Insider research service. Raynovich has also served as Investment Editor at Red Herring. He has won several industry awards, including an Editor & Publisher award for Best Business Blog. His analysis has been featured by prominent media outlets including NPR, CNBC, The Wall Street Journal, and the San Jose Mercury News.
Many investors and entrepreneurs believe we are in a Golden Age of IT innovation, because new technologies are coming at a pace never before seen in history – cloud, AI, and portable workloads are changing IT at the speed of light.
But what impact does this have on your business? Moving fast means taking risks, but a bigger risk may be doing nothing. Many IT professionals feel overwhelmed by the pace of innovation, because implementing technology in a business environment is far more challenging than inventing the technology itself. It’s important to take a deep breath and evaluate a clear-headed strategy to implement some of these technology tools in the business case known as “Digital Transformation.”
Most IT and business professionals really have three goals: 1) Improve business efficiency, 2) Don’t screw up, 3) Don’t get fired. Because 2 and 3 are scary prospects (and of course related), people are often afraid to try 1, because it is difficult to execute. But doing something will get you a lot further than doing nothing. Ask the CEO and CSOs of Equifax, who did nothing about IT security and ended up failing 3. You need a plan.
Identifying Transformation Initiatives
Almost all business success today is related to digital transformation. This is not trivial, as witnessed by Amazon’s climb to the top of the business pyramid through its slavish devotion to digitization, automation, and customer experience. It now owns the majority global market share of ecommerce and retail in general, as well as an increasing portion of the IT cloud.
An interesting executive study gives us a good roadmap to this success, whichever industry you serve as an IT professional. The MIT Sloan Management Review recently conducted in-depth research with executives about how managers can use so-called digital transformation initiatives to improve their businesses. The research was based on interviews with 157 executives in 50 companies, typically with more than $1 billion in sales. (https://sloanreview.mit.edu/article/the-nine-elements-of-digital-transformation/)
According to the study, executives are focused on digitally transforming three key areas of their enterprises: customer experience, operational processes, and business models. Each of these has differing elements. These elements include the following initiatives, assigned to each category.
Transforming Customer Experience
- Customer Understanding – Building analytics capability to understand customers in more detail.
- Top-Line Growth – Companies are using technology to enhance in-person sales conversations.
- Customer Touch Points – Enhancing customer service with digital initiatives.
Transforming Operational Processes
- Process Digitization – Using automation to enable companies to refocus people on more strategic tasks. For example, a manufacturer centralizes the HR function, allowing economies of scale through self-service and freeing HR people to focus on skills development.
- Worker Enablement – Virtualizing tools for workers so they can be more productive and liberated from physical spaces
- Performance Management – Optimizing transactional systems to gain deeper insights into products, regions and customers, and allowing decisions to be made on real data and not on assumptions.
Trming Business Models
- Digitally Modified Businesses – Transforming traditional products into digital offerings whether they are content, software, or business logic.
- New Digital Businesses – Introducing new digital products that complement traditional products. For example, a sports apparel manufacturer sells GPS and other digital devices to track and report on a customer’s workout.
- Digital Globalization – Transforming from multinational to global operations.
This framework, based on what people are doing in the real world rather than speculation, is useful to driving IT initiatives grounded in business results. Let’s take a further look at the impact this has your three goals — 1) Improve business efficiency 2) Don’t screw up 3) Don’t get fired.
What Does Transformation Mean for You?
Looking at the list above can be daunting. Imagine your boss, the CEO, CIO, board, or whoever, spending days on end in meetings looking at this list and trying to figure out how to solve all of these problems. The most likely place to start are the ones with the most impact.
This will vary from industry to industry and company to company. For example, right now, the telecommunications service providers are very focused on transforming their operations, to save on operational expense. They are especially focused on process digitization, to cloudify their operations and put applications and services closer to the customer on a more automated platform.
The consumer retail industry is different. In retail, there is an enormous focus on customer experience, using digital tools to improve customer understanding and customer touch points (category #1). So, depending on your industry and what your boss is going to be getting yelled at about, it’s important to identify the areas that need the most focus.
It should come as no surprise the that first category, customer experience, is especially strong. Everybody wants to understand and motivate their customers, and top-line growth is at the top of the list of many CEO priorities. According to a research Gartner study, 58 percent of CEOs said growth was their top priority. That’s great, but how do you get there? The answer is technology, apparently. “IT-related priorities, cited by 31 percent of CEOs, have never been this high in the history of the CEO survey,” said Gartner. (https://www.gartner.com/newsroom/id/3689017)
Gartner concludes that the answer is to go “digital first,” or focus on the initiatives and categories outlined above. But how do you start, and how do you execute without failing? The Gartner study, based on results from 388 CEOs, concluded that transformation can only be achieved at scale if it is systematically driven. CIOs and IT staff need to help CEOs by setting up criteria and KPIs to achieve results.
To conclude, you can follow some of these guidelines to develop a plan and strategy to assault digital transformation, otherwise you might end up like the Equifax folks. To start, pick the categories, focus, results and KPIs that need to be achieved, and carefully define them. Then you can start chipping away at the initiatives with specific tactical technologies.
In the next blog in this series, we’ll take a closer look at what this means for the cloud, and how not to get fired.