The 4 Drivers of Digital Transformation
How Effective are You in Driving Digitalisation?
Today's enterprises are targeting digital transformation to remain competitive, viable, and successful in an increasingly digitalised marketplace.
While digitalisation is generally associated with technology, that is, in truth, only one of the levers that drive the enterprise forward. Successful transformation is still based on the holy trinity of people, process, and technology – but today these competencies are redefined for the digital ecosystem: "People" translates to a hybrid workforce in which value-adding human work is done alongside digital work (aka automation software or “the digital workforce”); “process” is managed end-to-end, starting beyond the walls of the enterprise; and “technology” translates to software that is automated, intelligent and able to react like a human (including machine learning and cognitive processing as well as the as-of-yet-little-understood-but-fast-approaching reality of artificial intelligence).
Added to these three is a newcomer: Data – perhaps the key differentiator in the digital enterprise, fuelling smarter people, integrated processes and automated software.
TRANSFORMATION: WHAT DOES IT MEAN?
Transformation is inevitable and necessary, but each enterprise is impacted differently. Giacomo Parato is Head of Digital Product Management and Solution Design at a Scandinavian Biotech company. The digital product, Giacomo explains, is today defined primarily through data-driven insights that can be monetised. It’s whatever has value for customers or the ecosystem. For example: “We have data scientists today figuring out wastewater solutions through technology, instead of traditional approaches focused primarily on lab work. And our solutions are increasingly delivered via applications that support the process via a user experience that reflects the one we are used in to in our private lives.”
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Whatever the pressure to transform, pull or push, success will depend on getting people, process, technology and data right. These four factors enable transformation, but can also disrupt it. Here is how to make digital transformation work.
HOW TO DRIVE SUCCESSFUL DIGITAL TRANSFORMATION
1. People & culture: Developing the future-fit workforce
The future workforce will be digitally aligned to the enterprise reality as well as external ecosystem to take advantage of all opportunities. Integration, cross-pollination, innovative thinking … these are all facets that make up the human workforce of tomorrow, as automation takes over the mundane and transactional work.
Skill sets are shifting to automation and analytics, whereby the focus will be less on siloed expertise than on broadly integrated capabilities. The modern-day worker, in other words, needs to be well-versed in automation and analytics and thus able to identify opportunities across his or her own workspace. Automation will become everyone’s responsibility.
The ‘Kaizen” philosophy of the past is effectively being reapplied in an automated, data-driven environment, empowering employees to take ownership of new tools at their disposal, and using digital workers to support humans in delivering more value-add. SSON’s 2019 survey* highlights future success as being dependent on the ability of employees to understand the true nature of the work being done in order to come up with “innovative solutions and insights.” “Innovative thinking,” in fact, emerged as the biggest skills deficit today.
The challenge, therefore, is to cultivate the ‘right’ mindset and skillset that supports digital transformation. This means defining, implementing and leveraging a culture in which automation, analytics and seamless collaboration all go hand in hand.
The driving force for cultural change is found more easily in recruiting new talent than it is by retraining existing talent. That, at least, is the experience of Giacomo Parato in leading the digital reinvention of his business. A digital culture is down to people, he says, so you need to encourage a workforce that is comfortable with disruption.
Many large organisations tend to have a mental block around this, says Giacomo, and find it difficult to transition from traditional business models based on face-to-face meetings and lots of human interactions, to a new way. “But that traditional approach misses a lot of insights that can be gained through social media and the Internet of Things,” he warns. “Customers want a different experience, but companies are struggling to deliver it. So that's what we need to focus on: Embracing digital change."
While training and communication have a role, the make or break of digital culture is down to hiring employees with different backgrounds, says Giacomo. "We’re not focussed on recruiting biotech experts as much as we are on recruiting people who have experience of start-ups or who have already gone through digital transformations. They bring diversity and boldness into our culture and are far more open to disruption.”
Effectively: the ‘hipsters’ of the modern corporate world.
Particularly valuable are product managers with a start-up background, he says. They don’t see transformation projects as IT implementations. Instead, they view them as business-enabling disrupters. “And that is how we should view this opportunity: As a start-up digital business.”
While resistance is inevitable, the best way to overcome it is by proving the business value of adding a digital layer to existing products, believes Giacomo.
"You have to talk to the businesses in the language it understands, and that is revenue. So, wherever we can present data or results that prove the business value of digitalisation, we gain support,” he explains. “The short term may be painful and early transformation attempts might not succeed, but in the long term they will because we are all becoming digital natives.”
2, Re-evaluating “process” for the digital business
Agility and transparency are the name of the game in digital operations. What this means: Instead of addressing and optimizing separate parts of a process, the objective is to drive a seamless and integrated workflow end-to-end, whereas ‘integration’ delivers a lot of value.
To do so will require reviewing the process as is, to ensure it makes sense; then applying Process Discovery and Process Mining solutions to identify bottlenecks through visual heatmaps; and finally, automating what can be automated.
However, the key metric is not just the efficiency of the process but the overall integration of data, process and decision-making. This translates to empowered employees, truthful data, and reliable interactions.
Modern-day process management, therefore, needs to be redefined. Traditionally, it was guided by Lean thinking and FTE reductions but the digital interpretation is slightly counterintuitive, explains Giacomo.
"Digital is really about the operation of current processes, not targeting an ‘optimised’ version. The danger is that in focusing purely on end-to-end process excellence the approach becomes too rigid. If we accept that a disruptive approach is the right one, we also need to rethink our focus on end-to-end optimisation.”
Giacomo sees more potential in achieving digital transformation by disrupting processes as they are, rather than optimising them. "We need to achieve the right balance by considering the needs of the business,” he says.
3. Digital technology: the ultimate enabler
While process facilitates digital transformation, culture drives it, and people make it happen – technology is the critical enabler. In future, optimised human resources and smarter processes will combine with increasingly intelligent and competent technology to create a powerful force for change.
The digitally transformed enterprise will make use of tools far beyond the realm of RPA. The future will be defined by machines (aka software) that can make the right decisions: Cognitive technology simulating human decision-making though programmed solutions, and Machine Learning (systems that learn) marking a step beyond cognitive, based on algorithms that are capable of self-learning. As a result, solutions will constantly improve themselves based on the data they are fed.
Giacomo sees enormous potential in leveraging the Internet of Things and sensor technology. "Our priority right now is on heavy data crunching, with data acquired through the IoT and sensors and by leveraging Deep Learning capabilities. This will deliver exponentially more value than traditional process excellence or optimisation initiatives could ever deliver.”
So much technology today is offered through Cloud and integrated with learning solutions. The magic sauce is data that delivers truly valuable business insights, which in turn empower agents on the frontline to reduce churn and improve sales.
“Today’s successes are not just measured by pricing but by how we do business,” explains Giacomo. “We are already feeling the results of this through the data insights we can offer the business, and that are redefining our products for the digitalised economy.”
The ground-breaking opportunity these technologies present are in decentralising knowledge and thinking about the workforce in an entirely different way.
4. Data: That which makes it all come together
When we consider digitalisation moving from the front- or customer-facing into the middle- or back-office, the big opportunity is in managing the digital ‘supply chain.’ And this translates primarily into an opportunity around ‘data.’
While in the past the front- or customer-facing end was primarily responsible for customer experience, and also for collecting customer data, this doesn't work in a digitalised enterprise that is pushing up the value chain. For straight through automation to work, all relevant information (i.e. data) needs to be harvested by all stakeholders in the process.
Patrik Rising is a transformation expert whose particular passion is data. He was previously at Nordea, where he ran the Strategic Data Initiative and the Groupwide Data Transformation Program related to it. Currently, he advises companies on data digitalisation and transformation in the digital space.
Data is critical in automated, digital environments, Patrik says, because machines are still fairly rigid, unlike people who can interpret a given data point based on their needs. With the current focus on Big Data involving Machine Learning and Advanced Analytics, data is under the spotlight as never before. The question is, how to tackle it?
"Many enterprises are moving from a people-driven to a data-driven strategy," explains Patrik. What this means, however, is that your data must be good enough to drive decisions without further human input required. The challenge is particularly felt itself when regulations dictate a qualified opportunity. A data-driven company needs sufficient information about its customers to know whether a new product or service is right for them, in accordance with regulations.
Although data drives these opportunities, it can also present a problem if it's trying to be all things to all people.
"The key lesson is to take your primary capability, the one that you really need to improve on, and focus on the data required to serve it," explains Patrik. "Once that's in order, people set the policy and machines can do the rest."
He warns about overselling data, however. “The cost of using a particular data set for multiple different purposes can quickly escalate as the data requires fine tuning,” he explains. “The more dimensions you are trying to meet or serve from the start, the more complex it becomes."
Digital transformation presents the most significant opportunity for modern-day enterprise. It's not so much about choice as it is about the need to understand how to navigate it. While all three traditional levers of change – people, process, and technology – need to play their role, it is without doubt data that differentiates both the imperative and the opportunity of today. Enterprises that have been quick to present a digital front to their end customers are still struggling to reflect that modus operandi in the middle and back end of the business. And yet, it's from there that real change is driven. Collecting data about everything and feeding back into increasingly automated solutions will drive the customer centricity that determines success. The opportunities are enormous.
* SSON’s 2019 Global State of the Shared Services Industry Survey and Report