Digital Transformation concerns business change utilizing digital technologies, with the aim of meeting a firm's strategic objectives.
Covering all aspects of the business, successful transformation involves multiple stakeholders, challenges, and business functions. An ongoing process, rather than a onetime event, it should also enable forward thinking, leading to a continuous improvement program that affects the evolution of all processes and the wider technical landscape.
What is Digital Transformation?
The textbook definition above is fine for an academic understanding, but businesses are better served with a more practical explanation. Anyone can point to the adoption of technology to drive innovation, but this does not necessarily capture everything. Purchasing new computers or software does not count as a digital transformation initiative, for example. Transformation is the holistic evolution of the organization, not disparate change.
The modern enterprise has to engage in rapid innovation in order to keep pace with the digital age. The arrival of computing and the internet forced business strategy to adapt, but these disruptions are just the first steps. Cloud Computing, Big Data, Machine Learning Artificial Intelligence and more will continue to disrupt business models around the globe. Business goals are now as likely to focus on bounce rate or CTR as they are on physical efficiencies.
Perhaps most important to the concept is the opening up of new opportunities, rather than simply improving existing ones. Transformation initiatives are as likely to enable new business models and open up new markets as they are to drive innovation within the firm’s supply chain or help processes. A truly successful initiative will add value to every customer interaction (whether directly or indirectly).
Of course, such a broad concept will often be misapplied and a great many “transformations” are better defined as mere improvements, changes, and technological implementations. Nor is it the case that transformation is somehow better than smaller changes, but rather that the pace of the modern business world and the rise of start-ups and unicorns demands that enterprises embrace digital transformation.
What is Driving Digital Transformation?
To an extent, you just need to look around you to observe factors that push firms to adapt. Computers began to become widespread in the 80s and 90s, with the arrival of the internet bringing new opportunities in the late 90s and early 2000s. E-commerce began to take up a greater share of retail business from the mid 2000s, which also brought the arrival of social media platforms and saw industries such as music and film begin to transition to internet-enabled business models. The development of the smartphone then saw further disruption, perhaps most notably with the launch of Uber in 2009, a service only possible through the combination of widespread internet access, smartphone availability and apps.
However, the advance of technology is not alone enough to explain the entire growth. After all, as we have stated digital transformation is not merely the adoption of new technologies, and encompasses a greater shift in how businesses operate. Rather, the advances have helped to open up opportunities which have greatly increased the pace of change, not just in technology.
The car industry is a good example. Tesla and Uber, two of the most important firms of the last decade, have both been enabled by advances in technology – not just computing technology in Tesla’s case. Both have forced existing car and taxi businesses to drastically shift their business models, moving rapidly to adopt mobile phone apps and electric motors. And the pressures for transformation are likely to continue, with Uber, Tesla, and the rest chasing the same ultimate goal: dominating the market for self-driving cars. A car manufacturer could not hope to be successful merely through releasing electric cars, as Tesla’s advantages rely in a number of areas: a charging network, supply chain innovations, onboard computer systems, battery manufacturing, and more. To keep up demands new approaches.
In general, the potential for start-ups and new entrants to radically disrupt existing industries has been a major driver. Even for those industries that are relatively unaffected by technological development, the growth in areas such as VC funding and the diversification of big players such as Amazon places pressure.
Digital Transformation Examples
Altran, a French consulting firm, assisted one of their clients with aligning their divergent tools and processes throughout their European operations, to help rationalize processes, lower the total cost of ownership, and improve efficiency.
GDPR was a major new challenge that many multinational organizations faced if they had operations in Europe. Requiring major changes in the processing and handling of data, companies had only a few years to completely revamp parts of their digital organization. GF Forsikring, a Danish insurance company, successfully got to grips with GDPR despite the wealth of personal data that insurance companies need to deal with, bringing together all of their data flows.
Kellogg’s, the cereal manufacturer, had come into the digital age without a joined up strategy, which resulted in disparate IT teams scattered across their different locations and different capabilities for different regions. In 2016 they embarked on an enterprise architecture initiative to bring the whole IT landscape together and give stakeholders clear vision of different parts of the enterprise, successfully uniting their scattered IT.
How to Achieve a Successful Digital Transformation?
Given the scope and potential range of projects that could count as a digital transformation initiative, not to mention industry specific factors, giving concrete advice is not simple. Naturally, one option we would highlight here at Orbus Software is the help you can gain from a proper Enterprise Architecture function using a powerful EA tool like iServer365, but there are several more general steps that can be applied to help organizations.
Understand the digital landscape of the firm
One of the major insights that enterprise architecture can provide for transformation projects is the potential impact that a change can have the organization. At its simplest, this could be something like business users being unhappy because a niche application was rationalized. A proper business impact analysis will cover a much broader range of potential issues, and aim to ensure continuity throughout the organization even with the most disruptive of changes.
By being fully aware of what the digital landscape in a firm looks like, it becomes much easier to perform an impact analysis and determine how transformations will have short term effects on different parts of the business.
Avoid siloes of information or action
One of the biggest issues that large enterprises face are siloes, hiding away pertinent data or functions from the rest of the business due to geography, communication or IT integration issues. Siloed data can back to bite you if it’s not addressed before transformation. Whether through important stakeholders not being consulted, or vital data becoming unusable due to technology change, these effects can be drastic.
By taking steps to ensure the entire organization is properly integrated, buinesses can prevent isolation and ensure change takes place in a uniform manner, with uniform impacts.
We had to say this one, didn’t we? Of course, everyone knows that good planning is key to success for big projects, but when it comes to digital transformation it’s not just about planning ahead. Roadmaps for change can be a huge help, presenting change in an easy to understand way for stakeholders and thus earning buy in from across the organization.
What is more, a proper technology roadmap can be far more detailed than a traditional plan and help to alleviate other issues, such as the aforementioned impact analysis which can be done ahead of time using the roadmap as a source.
Digital Transformation and Enterprise Architecture
As we have mentioned above, Orbus Software are dedicated to facilitating successful enterprise transformation through enterprise architecture (EA). However, if you have stumbled upon this page without being experienced in EA, it may not be clear how or why EA is important for digital transformation.
Explaining EA is no simple task, and for an in-depth explainer head to our dedicated page. But to keep it simple, EA aims to describe the structure of an organization in order to facilitate change, particularly digital change. An Enterprise Architect essentially sits between IT and the rest of the business, helping to turn business objectives into actionable insights for IT. The type of influence an EA team can have will range from simple cost saving actions like Application Rationalization to the roadmapping of the next 5 years of technology development within the firm.
Enterprise Architects will not necessarily take the lead on digital transformation initiatives, but they will provide the tools and information needed to make it happen. The creation of a roadmap is a good example. While anyone could feasibly lay
out a 6 month or multi-year plan, how you can trust that their predictions are going to be reliable, or useful? With EA, a roadmap will source all lifecycle dates directly from a central repository, guaranteeing that the introduction of new technology
and replacement of old takes place at expected intervals. Technology within the roadmap will be clearly linked to strategic assets throughout the firm, so that it is clear how the changes will affect different parts of the business and an impact
analysis can be performed. And everything will be presented in clear, easy to understand diagrams and models.