Today Digital Transformation is on everyone’s lips, used by some as a common colloquial business term, while for other it is an imperative to support the survival of the organisation.
So what is digital transformation? The first concept to appreciate is that Digital or Digitalized is not Digitized.
Digital carries a focus on attracting new customers and enabling new value propositions. It typically involves a transformation that is focused on people, processes, data and technology in the organisation. Given its pervasive nature, it takes the shape of changing business models.
Digitized, on the other hand, is more focused on operational excellence that increases productivity through automating manual processes. Typically this involves core business processes in the back office, where years of manual intervention have been used to enable processes between different non-integrated systems.
Digital transformation then focuses on leveraging technologies ability to transform an organisations abilities.
Think of how artificial intelligence can automate decisions. This technology allows the organisation to fundamentally change the way in which they fulfil certain activities, like making automated decisions that are contextually relevant to the customer, which was not possible in the past.
Part of these technology advancements show organisations are embracing new business models, like platforms and ecosystems as technology that allows them to generate value in novel ways than what was done in the past.
So what is driving this embrace of digital transformation for organisations? Well various aspects can be highlighted, but in essence it can be distilled to the following four:
• Changing customer needs are fuelled through the increasing expectation of personalisation and meeting previously unmet needs;
• Changing economics where the cost to manufacture services in a digital space is on a decreasing cost trajectory, creating increased business competition;
• Changing business models, where platforms are starting to become more dominant in scale, and taking more market share
and
• Technologies’ ability to solve problems is rapidly increasing, allowing organisations to solve previously unsolvable problems.
Given the pervasive nature of Digital Transformations in organisations, organisations generally find it difficult to embrace it in totality. The easiest way to approach the topic is to talk about technology developments being implemented as part of digitally transforming the organisation (e.g. Cloud or Blockchain). The reality is that the true impact is actually on the people side, as they need to understand how they can solve problems differently and operate more effectively by leveraging these technologies, which requires a cultural embrace of the opportunity.
The architecture function of an organisation is uniquely positioned to bridge the two ends of the Digital Transformation continuum by using their skill to marry the ability of technology and the emotional embrace of what the opportunity represents for the organisation - a critical determinant of successful Digital Transformation in any organisation.
Author – Oscar Stark