ARTICLE

How do established businesses make the transition to digital?

Mats Johard, Country Head Sweden

The success of big, digital-only companies like Uber and

Netflix has encouraged many organisations, both new and

established, to re-examine the importance of becoming truly

digital enterprises.

But while such digital-only companies may serve as an

inspiration, they can’t be used as a blueprint for the

majority of organisations looking to start their own digital

transformation. Many of the online giants have sprung up in

the last few years and have no physical business or product

to manage. And no legacy systems to be maintained. This is

clearly about much more than borrowing a successful start-

up’s digital playbook.

OVERCOMING LEGACY TECH AND CULTURAL BARRIERS

Often, the systems and processes that have gradually

accumulated throughout an organisation’s years of doing

business are the biggest challenges they face in their digital

transformation.

Companies seeking to embrace digital find the burden of

their legacy IT may be impossible to overcome. Or they find

that the culture within the organisation is a barrier prevent-

ing digitalisation from taking hold.

So how can more established businesses begin to transition to the digital age and what could possibly hold them back?

Larger organisations need little convincing that digital can bring value to their business. They understand its importance and how it can allow them to reach new markets, create fresh products and services, increase efficiency and – arguably most important of all – better serve customers. The bigger question for such companies is not ‘Why should we do it?’ but ‘How should we do it?’.

ABOUT COGNIZANT

Cognizant (NASDAQ-100: CTSH) is one of the world’s leading professionalservices companies, transforming clients’ business, operating and technology models for the digital era. Our unique industry-based, consultative approach helps clients envision, build and run more innova-tive and efficient businesses. Headquartered in the U.S., Cognizant is ranked 230 on the Fortune 500 and is consistently listed among the most admired companies in the world. Learn how Cognizant helps clients lead with digital at www.cognizant.com or follow us @Cognizant.

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DIGITAL JOURNEYS FAIL WITHOUT VISION AND DIRECTION FROM THE TOP

For established businesses, the most fundamental piece of a

successful digital transformation is understanding the scope

of change it can bring and having a vision to match. This

requires a profound understanding of the customers they

will serve in the years to come – including their needs and

aspirations, and how new technologies such as AI can satisfy

those. Once that is achieved, a path can be created that

incorporates this understanding into product and service

roadmaps. This is about two perspectives – based on people

and technology – coexisting in the same project teams.

Organisations that are facing the challenge of going

digital have some typical responses: getting new types of

digital competencies into the organisation, and accepting

that re-learning must be taken up as a real exercise by all

departments. While both these approaches are important,

they can only take a company so far.

Established companies need to imagine how they can break

the boundaries of a traditional enterprise and re-form them-

selves in order to be a digital company, not merely do digital.

A siloed business simply isn’t well equipped to undertake a

digital transformation.

And of course, without a strong vision and direction from

management on where the organisation is going and how it

will get there, digital can be hard to implement. Going digital

means understanding this shift of mindset and culture, that

an organisation must have an eye on the products that will

matter to customers over the next five to 10 years, and that

it must gain a new perspective on how to bring efficiency

using digital tools. The vision must encompass all of these

points.

Traditional companies may have a hard time grasping this

but it is the very first step of any digital journey.

These challenges are particularly difficult when a business

is already doing well and its traditional revenue streams

are looking sustainable, as there is less incentive for both

management and staff to buy into a potentially disruptive

digital transformation.

Turning around a supertanker is no easy matter but it is

possible. Some of the tools that digital-native start-ups use

can also be beneficial to more established companies. For

example, putting in place innovation units, setting up agile

teams and using fail-fast prototyping can help start new

digital products and processes that take improved customer

focus as their starting point.

However, for larger businesses the staff and units involved in

these new ways of working may end up with a very different

culture to the rest of the established business. While the

innovation unit may have a very forward-looking culture,

putting customers first like most businesses that are digitally

native, those elsewhere may be more focused on keeping

the primary business in good health by continuing to run it

in the way it has been historically.

One way around this challenge is to turn it to the organ-

isation’s advantage: it can explore building new, digital

services and products alongside, but separate to, the exist-

ing non-digital ones.

That way, the new services can be built and tested in a rapid

yet safe fashion, then scaled up and brought back into the

main business as and when appropriate, without impacting

the running of the primary business. In many companies,

there may be a benefit in creating a separation between

serving a digital customer and supporting a traditional

customer – trying to merge those views can both raise the

complexity and be hard to manage. But make no mistake,

either route should be about better serving customers.