The Business Case for Digital Transformation

Part 1
By: Gary D. Abello

Digital transformation has become a business imperative that cuts across all industries. What looked to be confined to known early adopters such as telcos, tech, retail, and FSI companies has expanded to all other sectors that now share the same pressure to transform. This pressure to transform is heavily driven by customer needs that have not only changed but are continuously evolving along with customer behavior.

Although Digital Transformation is no longer a new buzz phrase, the reality is that many companies are still in the midst of designing and embarking on their transformation roadmap, the business case for which does not solely focus on IT spending. Many companies that have had a head start in their transformation initiatives can attest that Digital Transformation is in fact business transformation, and therefore should encompass investments and considerations outside of the tech landscape. Moreover, Digital Transformation is turning out to be not just solely the CIO’s predicament, but is a key agenda item for the entire enterprise, from C-suite executives down to the lines of business.

Building the business case for your organization entails thoroughly considering a number of moving parts. Covering your bases in the following aspects may spell the difference between success and failure in your Digital Transformation journey:

Your company’s definition of innovation – Innovation is relative and will be very specific to your company’s nature of business, level of IT maturity, and internal or customer-facing processes. For some, innovation may not even be heavily hinged on tech, but can accelerate your operations just the same. Be mindful of existing success stories of innovation in other companies that may not necessarily be relevant for your business. A good place to start for management is to have a common understanding of why innovation is needed, what exactly needs to change in the business, or what outcome is the aim. For example, e-commerce is easily a given in any retail company’s transformation roadmap, but the rationale for this should be defined even further. Is your company’s future direction for e-commerce to eliminate brick-and-mortar stores, or simply to add another channel for a purchase to occur?

Ensure that data on customer preferences and behaviors comes into play as you define innovation for your company. Your clients’ data is a rich source of insight that you should continually consider in order to be relevant to them. Looking at today’s ride sharing giants, they saw that there was much to improve in a passenger’s experience in taking public transport. Queues to hail a cab could be eliminated, fare prices could be more predictable, and errant drivers can easily be put in check. And now, booking a ride from your mobile device is a common yet impactful innovation in our daily lives. In another example, mobile devices have evolved into sources of entertainment and so telcos now offer on-demand content services as a response to customer preferences.

Another source of insight as you define innovation are the risks that may make your organization and clients vulnerable. For the banking sector, added security features in credit and debit card transactions are innovations that clients highly appreciate and may even demand even more to stay loyal.

The business drivers behind your need or desire for digital transformation – Don’t just transform for transformation’s sake. Think about what business outcomes you would like to achieve out of the transformation. Who is your customer and what drives them to do business with you? Do you want a more nimble supply chain with heightened visibility on your systems? Do you need more in-depth market sensing that can help you enhance touchpoints with your customers? Do you need some process automation that provides more employee bandwidth and facilitates a stronger customer focus? Think about what your company needs across your lines of business, and from an internal and client-facing standpoint. This will also help you determine what success looks like in your transformation, and measure this accordingly.

Your timeline and milestones – Your transformation roadmap may not necessarily mean a company-wide, one-time big-time shift. Transformations are always long-term, so think about your priorities, what your low-hanging fruits are, the pace that your financials can afford, and your cadence in measuring your results against your targets. For your transformation to be successful, a strong project and program management framework has to be put in place. Moreover, the pace by which milestones are reached should not be at the expense of your company’s ability to reach its business goals, and operate on a daily basis.

Leadership, people, and culture change – Whether it be top-down or bottom up, the transformation should be everybody’s business. Senior leadership should be able to clearly set the direction for the organization. Scopes, interdependencies, transition plans should be clear among lines of business, corporate/admin functions, middle management, and staff. Communication lines should remain open, and opportunities to acquire new skills are readily available. A balance must be achieved between promoting from within and putting in place external talent that can build expertise and introduce new leadership perspectives. Remember that even with a well conceived transformation plan, it remains just a plan without the “right” people to carry it out. If your crew does not have the knowledge, skills, and attitude to embrace the transformation, it is bound to fail.

And as you prepare to kick off your transformation journey, management should ask: is the entire organization on board? (To be continued…)

Gary D. Abello is a Practice Director in ZMG Ward Howell, specializing in digital entertainment, media, telecoms, and tech industries.