Digital Transformation : Just a Buzzword or Real Transformation

Digital Transformation

Just a Buzzword or Real Transformation

Association for Information Technology Professionals (AITP)

St Louis

11172016


The term lsquodigital transformationrsquo has been used to describe anything from creating a fully responsive mobile website to developing a social media strategy but in reality true transformation needs to involve much more than just the end product

httpswwwmarketingweekcom20160414what-does-digital-transformation-really-mean

Digital Transformation is Confusing ndash What Exactly Is It

Business Innovation

Digital Strategy

Disruptive Innovation

Disruptive Technologies

Business Innovation

User Experience

Digital Marketing

Digital Experience

Digital Disruption

Digital Transformation is Confusing ndash So Many Voices

Digital Transformation is Confusing ndash Who is Responsible

CEOCTO

CEO

CLO

COOCDO

CFO

CMO

CIO

Digital Transformation is Confusing - So Many Decisions

Terms

bull Business Innovation

bull User Experience

bull Digital Experience

bull Digital Strategy

bull Digital Marketing

bull Digital Disruption

bull Disruptive Innovation

bull Disruptive Technologies

Business Innovation

bull Business innovation is an organizations process for introducing new ideas workflows methodologies services or products

bull Business innovation should enable the achievement of goals across the entire organization with sights set on accomplishing core business aims and initiatives

bull Innovation often begins with idea generation wherein ideas are narrowed down during brainstorming sessions after which leaders consider the business viability feasibility and desirability of each idea

User Experience

bull User experience (UX) refers to a persons emotions and attitudes about using a particular product system or service

bull It includes the practical experiential affective meaningful and valuable aspects of humanndashcomputer interaction and product ownership

bull Additionally it includes a personrsquos perceptions of system aspects such as utility ease of use and efficiency

bull User experience may be considered subjective in nature to the degree that it is about individual perception and thought with respect to the system

Digital Experience

bull A digital experience is the way in which a user interacts with content on the web and how a user can achieve a goal on the web

bull Digital experience not only means reading and consuming content but interacting with web content

bull A good digital experience is when a user feels connected to the content and tools that they use on the web Also nowadays digital experiences are spread across a multitude of devices and platforms

Digital Strategy

bull A digital strategy is a form of strategic management and a business answer or response to a digital question often best addressed as part of an overall business strategy

bull A digital strategy is often characterized by the application of new technologies to existing business activity andor a focus on the enablement of new digital capabilities to their business

bull Formulation often includes the process of specifying an organizations vision goals opportunities and related activities in order to maximize the business benefits of digital initiatives to an organization

Digital Marketing

bull Digital marketing is an umbrella term for the marketing of products or services using digital technologies mainly on the Internet but also including mobile phones display advertising and any other digital medium

bull The way in which digital marketing has developed since the 1990s and 2000s has changed the way brands and businesses utilize technology and digital marketing for their marketing

bull Digital marketing campaigns are becoming more prevalent as well as efficient as digital platforms are increasingly incorporated into marketing plans and everyday life and as people use digital devices instead of going to physical shops

Digital Disruption

bull Digital disruption is the change that occurs when new digital technologies and business models affect the value proposition of existing goods and services

bull The rapid increase in the use of of mobile devices for personal use and work has increased the potential for digital disruption across many industries

bull A powerful example is the way Amazon Netflix and Hulu Plus have disrupted the media and entertainment industries by changing how content is accessed by customers and monetized by advertisers


A disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network displacing established market leading firms products and alliances

The term was defined and phenomenon analyzed by Clayton M Christensen beginning in 1995


bull Not all innovations are disruptive even if they are revolutionary For example the first automobiles in the late 19th century were not a disruptive innovation because early automobiles were expensive luxury items that did not disrupt the market for horse-drawn vehicles

bull The market for transportation essentially remained intact until the debut of the lower-priced Ford Model T in 1908

bull The mass-produced automobile was a disruptive innovation because it changed the transportation market whereas the first thirty years of automobiles did not


bull Term coined by Harvard Business School professor Clayton M Christensen to describe a new technology that displaces an established technology

bull A disruptive technology is one that displaces an established technology and shakes up the industry or a ground-breaking product that creates a completely new industry bull Here are a few examples of disruptive technologiesbull The personal computer (PC) displaced the typewriter and forever changed the way

we work and communicatebull The Windows operating systems combination of affordability and a user-friendly

interface was instrumental in the rapid development of the personal computing industry in the 1990s Personal computing disrupted the television industry as well as a great number of other activities

bull Email transformed the way we communicating largely displacing letter-writing and disrupting the postal and greeting card industries


bull CapGemini Consulting was one of the first to come up with the concept of digital transformation and a digital transformation framework

bull They did so in collaboration with the lsquoMIT Center for Digital Businesslsquo during a three-year study which defined an effective digital transformation program as one that looked at the what and the how

httpwwwi-scoopeudigital-transformation

Digital transformation is rapidly reshaping the landscape

Sources 1McKinsey How IoT Can Support A Dynamic Maintenance Program 20162IDC 2016

~80margin1

driven by appsanalytics andservices in 2020

Average increase in income for the most digitally transformed enterprises

$100M

2020

200930B

Things

Income

IntelligenceldquoEvery business will become a software business build

applications use advanced analytics and provide

SaaS servicesldquo Satya Nadella

2

2


Digital transformation is the profound and accelerating transformation of business activities processes competencies and models to fully leverage the changes and opportunities of digital technologies and their impact across society in a strategic and prioritized way



ldquoTo be clear investing in technology to stay current or ahead of the curve isnt the same thing Pretty much every company is putting money into new tools platforms and services And doing so is a matter of becoming tech-enabled which doesnrsquot mean companies are actually changing to compete in a digital economy With digital transformation however technology is driven by purpose and that purpose is meant to reshape businessrdquo (emphasis mine)

I define it this wayThe realignment of or new investment in technology business models and processes to more effectively compete in an ever-changing digital economy

Brian Solis Principal Analyst Altimeter Group


bull Digital transformation may be thought of as the third stage of embracing digital technologies digital competence rarr digital usage rarr digital transformation with usage and transformative ability informing digital literacy

bull The transformation stage means that digital usages inherently enable new types of innovation and creativity in a particular domain rather than simply enhance and support the traditional methods

Digital literacies concepts policies and practices By Colin Lankshear Michele Knobel 2008 p 173


bull Some authors have posited that rapid advances in six primary areashave converged to create the ldquoera of digital transformationrdquobull Hardware

bull Software

bull Networks (cables wireless and social)

bull Commercial and consumer comprehension

bull Democratization of technology at scale (low costs amp mass adoption)

bull Moving beyond human time to digital time

Digital Transformationbull The evolutionary path to digital transformation followed a timeline

that included the invention and development of the followingbull Computersbull Memory and data storagebull Mass adoption of PCs and laptopsbull Local Networksbull ERPsbull The internetbull Mobile networks and mobile phonesbull GPSbull Mass global adoption of wireless devices (laptops mobile phones tablets smartphones

wearables sensors)bull Proliferation of websites and online activitybull Rapid adoption and expansion of online and mobile databases and searchbull Rapid adoption and expansion of online marketplaces and reviews

Digital Transformationbull ldquoDisruptionsrdquo and digital (business) transformation can be caused by

numerous factorsbull Technological innovations (technology-induced) which are more impactful than

ever before However itrsquos not the technology that drives the disruption or transformation Itrsquos how it is used and adopted by customers partners competitors and various stakeholders

bull Customer behavior and demands This so-called customer-induced transformation and disruption is not necessarily related to technology Technology often enables or as just mentioned causes it when adopted and turned into business challenges

bull Ecosystem-induced economical changes demands from partners who want you to adapt regulatory changes the list is endless

Five Domains of Digital Transformationbull Customers

bull Competition

bull Data

bull Innovation

bull Value

Across these five domains digital technologies are redefining many of the underlying principles of strategy and changing the rules by which companies must operate in order to succeed Many old constraints have been lifted and new possibilities are now available

Rogers David L The Digital Transformation Playbook Rethink Your Business for the Digital Age (Columbia Business School Publishing) (pp 5-6) Columbia University Press Kindle Edition

Digital transformation hinges on four imperatives

Engage your customers

Empower your employees

Optimize your operations

Transform your products

Systems of Intelligence

Digital TransformationFour digital transformation realities to emphasize

bull BusinessIT relationship is key (closing the gap between both focusing on the same goals and NOT overlooking the role of IT)

bull There is a common DNA among digital leaders and the path to digital transformation shows common traits (even if context matters)

bull As said each industry is impacted including your industry Customers employees partners nor competitors or new disruptive players will wait for business to catch up regardless of industry

bull Digital transformation is led from the top (or at least requires firm buy-in from the top ndash and all stakeholders)

Myths vs FactsMyth Reality

Digital is primarily about the customer

experience

Huge opportunities exist also in effeciency

productivity and employee leverage

Digital primarily matters only to technology

or B2C companies

Opportunities exist in ALL industries

NO exceptions

Let a thousand flowers bloom bottom up

activity is the right way to change

Digital transformation must be led

from the top

If we do enough digital initiatives we will

get there

Transformation management intensity

is more important for driving overall performance

Digital transformation will happen despite

our IT

Business IT relationships are key and in

many companies they must be improved

Digital transforamtion approaches are different

for every industry and company Digital leaders exhibit a common DNA

In our industry we can wait and see how

digital develops

There are digital leaders outperforming

their peers in every industry today


The Path to DigitalThe path to digital transformation is less about capitalizing on new technology it requires business leaders to embrace a different way of bringing together people and processes with those technology tools as well as an openness to re-envisioning traditional business models and the mindset of a digital company in terms of how you engage your customers empower your employees and optimize your operations to reinvent products and business models

-Microsoft

Digital Transformation Maturity Models

Digital Transformation Maturity Model


The Path to Digital Transformationbull There is no one way to pursue digital transformation but without

human-centered input direction or best practices companies can be led astray

bull This squanders time resources and potential ROI Change agents must step outside of their departments and collaborate with other functional and executive leaders to foster real change

bull Digital transformation takes a modern human market perspective to guide cross-functional research collaboration and innovation in how organizations compete for tomorrow hellip today

ldquoSix Stages of Digital Transformationrdquo Altimeter Group

The Path to Digital Transformationbull A common imperative for digital transformation leaders is

understanding digital customers and their differences expectations behaviors and predilections

bull By concentrating on digital companies can examine how it affects or alters the connected customerrsquos journey and influencestheir decision-making at large

bull Digital transformation is more than just digital itrsquos about remodeling businesses to be agile innovative and customer-centric at their core


The Path to Digital Transformationbull The Six Stages of Digital Transformation reflect the state and progress of

an organization in motion

bull The stages are defined by the digital transformation elements that are present in an organizationrsquos current position or its immediate roadmap

bull Although presented as six distinct steps companies may not migrate through each step on a linear path or at the same speed

bull Depending on which groups or change agents are leading specific efforts and in which departments elements of digital transformation occur in pockets across the stages


The Path to Digital TransformationSTAGE 1 CUSTOMER OPERATIONS MAINTAIN THE STATUS QUO ldquoBUSINESS AS USUALrdquo

bull Business as Usual Companies in this phase are incredibly risk-averse and the culture of the organization inhibits ideation experimentation and inside entrepreneurship (ldquointra-preneurshiprdquo)

bull In specific situations compliance and regulation also deflate innovative thinking As such a lack of urgency exists and any need to change is largely rebuffed or dissuaded by leadership

bull Organizations operate with a familiar legacy perspective of customers processes metrics business models and technology believing that it remains the solution to digital relevance


The Path to Digital TransformationSTAGE 2 NEW TECHNOLOGY SPARKS IMAGINATION AND EXPERIMENTATION AS COMPANIES BECOME ldquoPRESENT AND ACTIVErdquo

bull These companies are evolving because of change agents who recognize new opportunities and fight to lead experiments within their respective domains

bull New trends in digital mobile social Internet of Things (IoT) etc inspireearly adopters to experiment with new possibilities

bull Pockets of experimentation are driving digital literacy and creativity albeit disparately throughout the organization while aiming to improve and amplify specific touchpoints and processes


The Path to Digital TransformationSTAGE 3 A SENSE OF URGENCY ACCELERATES CHANGE WITH ldquoFORMALIZEDrdquo RESULTS

bull Early adapters become change agents and lead each area and also collaborate with others Insights lead to early development of digital transformation roadmaps to prioritize and optimize areas of opportunity and deficiency

bull Strategic investments in people processes and technology solve for current work and set the stage for a more unified digital transformation effort

bull Experimentation becomes intentional while executing at more promising and capable levels Initiatives become bolder and as a result change agents seek executive support for new resources and technology


The Path to Digital TransformationSTAGE 4 THE STRIVE FOR RELEVANCE ESCALATES AND COMPANIES FORMULATE ldquoSTRATEGICrdquo APPROACH TO CHANGE

bull Change agents have successfully created a sense of urgency earned executive sponsorship and now have the attention of the C-suite

bull Efforts in digital transformation become a company priority The roadmap becomes focused and refined by specific short- and long-term goals that necessitate changes and produce key outcomes

bull This work is supported by dedicated investments in infrastructure and operations New skillsets are also brought in to manageexecute against the roadmap

bull Technology is purposeful and implemented to drive goals rather than basing processes around technological capabilities


The Path to Digital TransformationSTAGE 5 TRANSFORMATION IS IN THE DNA AS COMPANIES ARE OFFICIALLY ldquoCONVERGEDrdquo IN THEIR APPROACH

bull The path toward digital transformation is now underway

bull New operating models and teams are created to unify disparate repetitive or competitive roles and processes while streamlining operations to deliver integrated consistent and holistic customer experiences

bull Technology is purposeful both in customer-facing and back-office integration

bull Digital transformation expands beyond DCX and is now enterprise wide affecting all facets of businessnot mdash by function and focus lines of business et al mdash at scale

bull A dedicated digital transformation team forms to guide strategy and operations based on business and customer centric goals The new infrastructure of the organization takes shape as roles expertise models processes and systems to support transformation are solidified


The Path to Digital TransformationSTAGE 6 CULTURE OF INNOVATION BECOMES TOP PRIORITY AS COMPANIES BECOME ldquoINNOVATIVE AND ADAPTIVErdquo

bull Digital is no longer a state instead it is part of how a business competes with work in transformation continuing as technology and markets evolve

bull Innovation becomes part of the company DNA with the establishment of formal teams and efforts to track customer and technology trends

bull These activities feed into a variety of programs that range from test-and-learn pilots to the introduction of new roles expertise to partnerships with and investments in startups

bull Programs then permeate deeper functions within the enterprise to continually advance key processes Investments in people processes and tech are tied to business employee and customer experiences

bull Digital transformation becomes a way of business as executives and strategists recognize that change is constant A new ecosystem is established to identify and act upon technology and market trends in pilot and eventually at scale


The Path to Digital TransformationDigital transformation maturity is focused on the following elements in the organization

Governance and Leadership

People and Operations

Customer Experience

Data and Analytics

Technology Integration

Digital Literacy


Three Imperativesbull Most companies that have started to transform are still in the early

stages so optimal organizational designs for large transformed digital companies are not yet clear

bull MIT Sloan and CISR research has defined three clear imperatives for transformational change that can move you aggressively toward digital redesignbull Define how you will change the worldbull Identify critical business componentsbull Develop human-machine partnerships

MIT CISR

Three ImperativesDefine how you will change the world

bull Boldly articulate a grand new vision

bull Redesign redefine or rethink an industry

bull Rethink industry boundaries

bull Reformulate products as components of solutions

bull Reimagine customer relationships

MIT CISR

Three ImperativesIdentify Critical Business Components

bull May need to redesign your company to encourage collaboration and coordination

bull Smaller units less heirachy

bull Nimble units

bull Replace current functional structures with smaller loosely coupled business components

bull Structure business activity around business components

MIT CISR

Three ImperativesHuman Machine Partnerships

bull Resist temptation to search for digital experience

bull Encourage people to leverage machines and technology

bull Encourage use of more sophisticated technology solutions and business solutions around analytics big data IOT to free up human resources to do other work of envisioning

MIT CISR

SummaryDIGITAL TRANSFORMATION IS A JOURNEY NOT A DESTINATIONbull Technology has empowered consumers to become more mobile social and

connected than ever This has changed how they interact with each other and with products services and businesses

bull Digital transformation is your organizationrsquos internal equivalent of external consumer evolution It opens the door to new opportunities for innovation in how to design integrate and manage customer (and employee) experiences

bull But digital transformation and change at large is daunting As digital transformation involves many departments leaders and an overall cultural shift of an organization there is no set prescription for its strategy and implementation

bull Like the imminent customer journey you will develop the path from phase to phase is not a linear experience Use these best practices as your guideposts



The term lsquodigital transformationrsquo has been used to describe anything from creating a fully responsive mobile website to developing a social media strategy but in reality true transformation needs to involve much more than just the end product

httpswwwmarketingweekcom20160414what-does-digital-transformation-really-mean


Business Innovation

Digital Strategy



Business Innovation

User Experience

Digital Marketing

Digital Experience

Digital Disruption



CEOCTO

CEO

CLO

COOCDO

CFO

CMO

CIO


Terms









Business Innovation




User Experience





Digital Experience




Digital Strategy




Digital Marketing




Digital Disruption























~80margin1



$100M

2020

200930B

Things

Income




2

2














bull Software














bull Competition

bull Data

bull Innovation

bull Value
















experience




or B2C companies


NO exceptions




from the top


get there




our IT






digital develops





-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR








Business Innovation

Digital Strategy



Business Innovation

User Experience

Digital Marketing

Digital Experience

Digital Disruption



CEOCTO

CEO

CLO

COOCDO

CFO

CMO

CIO


Terms









Business Innovation




User Experience





Digital Experience




Digital Strategy




Digital Marketing




Digital Disruption























~80margin1



$100M

2020

200930B

Things

Income




2

2














bull Software














bull Competition

bull Data

bull Innovation

bull Value
















experience




or B2C companies


NO exceptions




from the top


get there




our IT






digital develops





-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR









CEOCTO

CEO

CLO

COOCDO

CFO

CMO

CIO


Terms









Business Innovation




User Experience





Digital Experience




Digital Strategy




Digital Marketing




Digital Disruption























~80margin1



$100M

2020

200930B

Things

Income




2

2














bull Software














bull Competition

bull Data

bull Innovation

bull Value
















experience




or B2C companies


NO exceptions




from the top


get there




our IT






digital develops





-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR








Terms









Business Innovation




User Experience





Digital Experience




Digital Strategy




Digital Marketing




Digital Disruption























~80margin1



$100M

2020

200930B

Things

Income




2

2














bull Software














bull Competition

bull Data

bull Innovation

bull Value
















experience




or B2C companies


NO exceptions




from the top


get there




our IT






digital develops





-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR







Business Innovation




User Experience





Digital Experience




Digital Strategy




Digital Marketing




Digital Disruption























~80margin1



$100M

2020

200930B

Things

Income




2

2














bull Software














bull Competition

bull Data

bull Innovation

bull Value
















experience




or B2C companies


NO exceptions




from the top


get there




our IT






digital develops





-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR







User Experience





Digital Experience




Digital Strategy




Digital Marketing




Digital Disruption























~80margin1



$100M

2020

200930B

Things

Income




2

2














bull Software














bull Competition

bull Data

bull Innovation

bull Value
















experience




or B2C companies


NO exceptions




from the top


get there




our IT






digital develops





-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR







Digital Experience




Digital Strategy




Digital Marketing




Digital Disruption























~80margin1



$100M

2020

200930B

Things

Income




2

2














bull Software














bull Competition

bull Data

bull Innovation

bull Value
















experience




or B2C companies


NO exceptions




from the top


get there




our IT






digital develops





-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR







Digital Strategy




Digital Marketing




Digital Disruption























~80margin1



$100M

2020

200930B

Things

Income




2

2














bull Software














bull Competition

bull Data

bull Innovation

bull Value
















experience




or B2C companies


NO exceptions




from the top


get there




our IT






digital develops





-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR







Digital Marketing




Digital Disruption























~80margin1



$100M

2020

200930B

Things

Income




2

2














bull Software














bull Competition

bull Data

bull Innovation

bull Value
















experience




or B2C companies


NO exceptions




from the top


get there




our IT






digital develops





-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR







Digital Disruption























~80margin1



$100M

2020

200930B

Things

Income




2

2














bull Software














bull Competition

bull Data

bull Innovation

bull Value
















experience




or B2C companies


NO exceptions




from the top


get there




our IT






digital develops





-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR


























~80margin1



$100M

2020

200930B

Things

Income




2

2














bull Software














bull Competition

bull Data

bull Innovation

bull Value
















experience




or B2C companies


NO exceptions




from the top


get there




our IT






digital develops





-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR




















bull Software














bull Competition

bull Data

bull Innovation

bull Value
















experience




or B2C companies


NO exceptions




from the top


get there




our IT






digital develops





-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR
















bull Competition

bull Data

bull Innovation

bull Value
















experience




or B2C companies


NO exceptions




from the top


get there




our IT






digital develops





-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR




















experience




or B2C companies


NO exceptions




from the top


get there




our IT






digital develops





-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR








-Microsoft


























































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR
































































Customer Experience

Data and Analytics


Digital Literacy





MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR










MIT CISR







MIT CISR




bull Nimble units



MIT CISR





MIT CISR













MIT CISR




bull Nimble units



MIT CISR





MIT CISR










bull Nimble units



MIT CISR





MIT CISR











MIT CISR







Digital Transformation : Just a Buzzword or Real Transformation

Business

Transcript of Digital Transformation : Just a Buzzword or Real Transformation