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Long Digital Transformation Journey Still Lies Ahead

Monday Jan 21st 2019 by Mike Vizard

About the only thing most IT organizations can agree on going into 2019 is that, to one degree or another, they want to have a digital business transformation strategy.

Digital transformation is one of those IT trends that is clearly in the eye of the beholder. In some organizations, it means modernizing every system they have on an end-to-end basis. In other organizations, it may mean something as simple as being able to send an alert to a customer’s mobile device. About the only thing most IT organizations can agree on going into 2019 is that, to one degree or another, they want to have some sort of strategy when it comes to digital business transformation.

In fact, a survey of 481 C-level executives published by AppDirect, a provider of e-commerce platform for IT applications and services, finds 79 percent of respondents say their organization has embraced some form of digital transformation. But among those respondents that are engaged in digital transformation, a full 90 percent admit they are encountering significant obstacles, including the ability to conduct e-commerce (55 percent) and integrating with third-party applications and services (55 percent).

Typically, there is no shortage of people, processes and systems within the average organization, notes Dan Saks, president and co-CEO of AppDirect. But organizations are finding it hard to unify everything to the point where it drives a specific outcome, says Saks.

“They don’t really have a platform to drive a transformation,” says Saks.

A similar survey of 2,000 IT professionals published by F5 Networks finds that despite all the hurdles involved, two-thirds of respondents say their organization is engaged in ongoing digital initiatives. The main difference between organizations that are making substantial progress and those that are struggling generally comes down to who inside the organization is held accountable for driving digital transformation, says Cindy Borovick, business intelligence director at F5 Networks.

Organizations that appoint, for example, a chief digital officer are more likely to be able to bring together the cross-functional teams needed to drive digital transformation, says Borovick. Without a dedicated leader, it becomes difficult to overcome organization inertia, adds Borovick.

“Digital transformation is changing everything,” says Borovick. “It changes the skill sets needed.”

The AppDirect and F5 Networks surveys echo findings from a similar survey published by Red Hat. Only 35 percent of the 40 customers surveyed by Red Hat say they are in the process of adopting a new business model or introducing new digital services within the next 12 months. Another 26 percent say they are evaluating such initiatives, while 15 percent say their organization plans to implement some form of digital transformation some time beyond this year.

On one level, that represents progress because the same survey a year ago showed that only 18 percent of respondents were in the process of adopting a new business model or introducing new digital services within the next 12 months, says Margaret Dawson, vice president for portfolio product marketing at Red Hat.

“That’s a significant improvement,” says Dawson.

A Matter of Degree in Digital Transformation

The issue that many organizations are wrestling with is to what degree to embrace digital transformation. There’s no doubt that there’s an opportunity to at the very least improve the overall customer experience, if not drive additional streams of revenue. But many organizations are wrestling with the size and scope of digital business transformation. In many instances, creating a mobile application that replaces a paper-based process is all the business initially wants. In more ambitious instances, entire backend monolithic systems are becoming modern microservices-based applications that promise to make the overall IT environment both more flexible and resilient. Other organizations are looking to invest in a wide range of artificial intelligence (AI) capabilities that promise to simultaneously reduce costs by enabling customers to self-service their own needs. But as is often the case with AI, organizations need to proceed with care. A recent survey of 1,200 consumers and 400 retail executives conducted by Oracle NetSuite in partnership with Wakefield Research and The Retail Doctor, a retail consulting firm, finds two-thirds of consumers (66 percent) don’t find chatbots to be helpful. In fact, many of them noted chatbots in their current form are often more damaging to the shopping experience than helpful.

In fact, just because AI and other technologies can enable organizations to more actively engage customers, it doesn’t always follow that they should do so, advises Urban Airship CEO Brett Caine. For example, it may be possible to determine where a customer is physically located without them expressly providing that information. In theory, an organization could send that person a message letting them know about some event or sale occurring near them. But many customers may consider that message to be intrusive.

“You have to think through the creep factor,” says Caine.

IT Can Lead the Digital Transformation

Ultimately, most organizations will need to carefully navigate a whole range of technical and business issues. Most organizations would be well-advised to at the very least begin experimenting with a range of digital business use cases. After all, if one organization can envision how a digital process might be employed, chances are high that some new or existing rival will come to the same conclusion. Rather than being completely caught flat-footed, organizations that have active pilot projects under way will find it easier to respond to any new competitive threat.

In the meantime, IT leaders can rest assured that there will be more digital transformation mandates issued from on high. Boards of directors are under pressure from investors to demonstrate the level of mastery their organization has over advanced IT technologies in case Amazon or Google decide one day to become a direct competitor. The board is usually a little too far removed from IT to understand what level of investment might be required to digitally transform a business process on an end-to-end basis. But in the absence of clear directives, it will be important for IT leaders to be seen to be working more closely with lines of business to effect some level of change. The important thing is to remain flexible. Most digital business initiatives turn out to be something altogether different from what was initially planned. As a rule, that’s not a bad thing because whatever ultimately manifests itself as a digital business process is usually a lot more informed by business reality than the original plan.

 

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