November 14, 2019
Digital transformation is about using technological innovations to rewrite the rules of engagement for how you deal with customers, partners and whole industries. The goal is to leverage mobility, the cloud, data analytics, the Internet of Things (IoT) and more to move your business into a more profitable, competitive mode. A big change like this, however, can be risky. This article reviews the top 10 mistakes we’ve seen in the digital transformation process.
Digital transformation is about more than just the cloud and IoT. Data management and analytics is a key success factor for digital transformation, as is e-business. Back office, operations and logistics, as enabled by new cloud ERP platforms, are part of the transformation picture. Other technologies playing a big role in transformation include business process management and automation (BPM and BPA) as well as API-based application integration. We mention these technologies because they often make surprise appearances in digital transformation mistakes.
Everyone makes mistakes. With something as complex and multi-dimensional as digital transformation, you’d be amazed how many smart people can stumble in the process. Consider the following mistakes as teachable moments. To bring these issues to life, we’ll use the hypothetical example of a company in a traditional industry that wants to create a mobile app to builder better customer engagement.
1. Not having a comprehensive strategy
Digital transformation needs a comprehensive strategy, even if the first steps are small. Having an app could be a great move, but it will only get you so far. A transformative strategy should probably go further, perhaps with IoT sensors, connections to other entities and big data. That said, it’s important to think through the strategic ramifications of the transformation. It might put you into a different industry with new competitors.
Transformation means doing things differently, but not everyone likes change. Not anticipating and dealing with change management issues is a major error in digital transformation. It’s a good practice to expect resistance and arrange for training and open discussions to get people accustomed to new ways of doing business.
The best approach to digital transformation is to start with a small project. This way, you can get a quick “win” and move on to bigger projects. It’s an incremental process. One mistake we see a lot is companies that take on too much up front. Typically, progress seems slow at first, but it then accelerates quickly.
Transformations need a technology platform in order to work. There is no “Digital Transformation Platform” now on the market, so what we mean is an extensible ERP solution or a cloud platform like Microsoft Azure that enables IoT, mobility, big data and so forth—all in a single platform. If your company already has a platform like Oracle or WebSphere, that should be your transformation platform. Changing platforms is probably a mistake unless your existing stack won’t suffice.
Data analytics and advanced reporting capabilities are part of digital transformation. At least, they should be, even if they’re not specially called out in the transformation plan. The hypothetical company app should harvest as much data as it can for analysis. This will give the management insights into what’s working with the transformation and what isn’t. Data might even suggest entirely new kinds of businesses to go into.
It’s easy to get so caught up in the excitement of transformation that you neglect how the program aligns with your overall business strategy. The mobile app needs to show demonstrable Return on Investment (ROI) through better customer engagement, e.g. repeat business, bigger purchases and so forth.
Digital transformations can link a company to a new partner ecosystem. This arises from the use of standards-based APIs, which enable relatively simple and fast application integration between companies. The mistake that crops up in this context is to be overly piecemeal with APIs. APIs do well when they’re part of a cohesive API management and security program.
A digital transformation, with its new technologies, usually expands your cyber attack surface area. The plan should include security and compliance. For example, the addition of a mobile app might lead to the company gathering and storing personally-identifiable information (PII) about its customers. This creates a security and compliance obligation for the firm.
A digital transformation may lead to a parallel organizational restructuring. This may not occur all at once, but as new technologies come online, there will be new people hired to manage them. New groups will form, and so forth. The IT department will likely be called upon to manage old and new technologies at the same time. This can cause friction. It’s wise to get to ahead of trouble and allow for departmental buy-in.
Digital transformations are, by definition, vehicles into uncharted territory—a place you want to be, because that’s where the opportunity for profits are. They thrust business and IT managers into new technology use cases, new technologies, even entirely new ways of thinking about technology. A partner should be part of the transformation process. How deeply engaged the partner gets will be up to everyone involved in the project.
Get Started on the Right Path to Digital Transformation
An effective transformation effort, one that produces tangible strategic and financial benefits, is within reach for every company. The process involves utilizing new technologies to effect fundamental changes in customer engagement and ways of working. It’s a challenging process, with difficulties arising from not having a comprehensive strategy and failing to appreciate the change management aspects of the concept. Digital transformation mistakes also include doing too much in the beginning, not picking a platform and underestimating the role of data. Transformations change organizations and introduce new ways of doing things. Having the right partner can make a big difference in terms of achieving the desired outcomes.
Get the full guide here: 10 Digital Transformation Mistakes and How to Avoid Them
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