Creating a Digital Enterprise – Part 4: The Four Building Blocks of Digital Transformations

In this article we will explore 4 building blocks of digital transformation, they are the catalyst for transforming today’s enterprises to digital enterprises.

Building Block 1: Managing the risk of accelerating information

The first strategic building block in digital transformation is risk. How should your organization manage the risk of accumulating too much information?  Organizations began to realize that they needed a strategy to find, produce, and protect their information assets. This includes formal records like contracts, as well as informal communications like emails and instant messages.

In addition to this new legal requirements to safe guard digital documentations, most companies also face industry-specific laws and compliance requirements tied to how they manage information. For example, healthcare organizations must demonstrate compliance with HIPAA. Public companies must demonstrate compliance with Sarbanes–Oxley. The new Dodd-Frank reform legislation contains a host of new information-related requirements. These kinds of unique rules exist for just about every industry. Adding to the complexity of any organization that operates at scale, they also vary by country.

Data leaks and security breaches have magnified these concerns. The list of front-page security breaches and information management disasters gets longer by the day. Think about the Target, Home Depot, and Sony hacks. These problems are not just embarrassing; they directly impact credibility, trust, and value. And yet despite all the evidence and a lot of good intentions, organizations still have major problems securing their information.

Managing information risk is a first key element in building a strategy for digital transformation.

The next element is reinventing and automating your business processes. 

Building Block 2: Transforming and automating information-intensive business processes

The second building block in building a strategy for digital transformation is process automation. How should your organization transform and automate its information-intensive business processes? The walls that used to exist between your customers and all those messy, back-office business operations are being torn down by social technologies. Organizations can no longer hide the weakness in their processes. The next five years will witness a massive reinvention of business processes. If the first wave of automation was all about digitizing existing processes, the next wave will be much more radical and involve the actual reinvention of processes from the ground up.

AIM data suggests that organizations still have a significant gap between what their customers see, their external-facing systems of engagement, and how business actually gets done, their core back-end systems of record. Organizations understand that they have to automate, and they need to expose their back-end processes to the light. 68% of organizations agree that business at the speed of paper will be unacceptable in just a few years. Getting there, though, is quite another thing. The amount of paper still used in your business processes is a good indicator of how far behind you are.

For example, in 25% of organizations, the volume of physical paper is increasing instead of decreasing. Even when organizations deploy scanning technologies to reduce their use of paper, 16% of the original paper documents still get photocopied before scanning, and 65% of those documents are not destroyed or recycled after scanning. In other words, the paper still survives and keeps piling up. Even business processes that many think were automated a long time ago still use significant amounts of paper.

For organizations committed to financial automation, 44% of their invoices typically arrive in electronic form, yet 59% of those digital invoices will still end up as a paper copy. So reinventing your core processes is clearly critical to building your digital transformation strategy.

Building Block 3: Engaging employees and customers

The third building block in building a strategy for digital transformation is engagement. How can your organization use information to better engage customers and employees? In this new world of rapidly changing information technologies, our ability to engage is the key to success. If you're not fully engaging your customers, your partners and your employees, your business is probably falling behind the competition. You can no longer assume that engagement will happen serendipitously in your organization. You need to think strategically about the information systems that are necessary to make it happen.

According to Gallup, in Average Organizations, 33% of workers are engaged in their jobs, 49% are not engaged and 18% are actively disengaged. On the other hand, in World-Class Organizations, the numbers are vastly different. 67% of workers are engaged in their jobs, 26% are not engaged and only 7% are actively disengaged. In far too many organizations, collaboration is just another name for sending around big attachments on email to a long list of recipients asking everyone to comment and then sending those comments via a reply all message. Social technologies give us a way to rethink and reinvent this, and directly tie collaboration to your business processes. There's also a critical need to rethink how we engage with customers. Most organizations have a thin veneer of social engagement. They have a Twitter account or a Facebook site or a mobile app.

The challenge moving forward is that most of these systems are basically just a veneer, unconnected with the core back-end business processes. Everyone has experienced the call center from hell, where you wait in a long queue for a real person only to have to constantly restate information to all of the various people with whom you speak. Organizations have long had a challenge with building a 360-degree view of the customer. In an era of radical transformation, this problem is getting more pronounced, except now the customer has social power to immediately tell the world when they've had a bad experience with your business.

Engaging with employees is not the same as engaging with customers. Senior executives often confuse them, and this is reflected in AIM survey data. 54% of organizations are finding the rapid convergence of collaboration and social tools to be very confusing. 65% of organizations say that their employees struggle to access internal information from mobile devices. 50% of organizations believe that they have shortfalls in technical support for internal collaboration.

And 42% of organizations struggle with rationalizing the many ways customers engage with them and connecting these inputs to key business systems. Connecting with customers and employees is critical to building your digital transformation strategy. 

Building Block 4: Integrating analytics and big data

The final building block in building a strategy for digital transformation is insight. How can your organization get business insight out of all the information you are gathering? Organizations of all sizes are struggling with how to extract insight and mitigate risk relative to the massive volumes of information and data that they're accumulating. This isn't just a question of big data. It is also a question of dark data trapped in long forgotten repositories, often without accompanying metadata. This is content and information that just begs for the light of day through semantics and analytics.

Big data initiatives to date have been almost exclusively driven by IT. These initiatives are focused on the question of how do we apply technology to manage large volumes of data? And that's where cognitive computing comes in. Cognitive computing operates in natural language, makes evidence-based recommendations, and is not bound by volume, by memory, or by format. This technology creates an entirely new set of opportunities for organizations to understand and interpret the data they have.

These tools allow you to move beyond the sheer volume question and ask what kinds of questions and hypotheses we should be testing with our data. In other words, how does insight into our data change the very nature of the questions we ask and the hypotheses we form in our businesses? Almost all Analyst data suggests that most organizations are still in the very early stages of this transition. Forty-seven percent of organizations today feel that internal search and e-discovery is becoming impossible, given their volume of data.

For 71% of organizations, search is vital to extracting insight, yet only 18% have cross-repository search capabilities. For 34% of organizations, big data will be an essential capability, but they face enormous challenges in connecting, in linking, and in supporting systems.

 So if the four building blocks of a digital transformation strategy are risk, automation, engagement, and insight, what kinds of skills do we need in our organizations to address them? We'll explore this question in our next article.

Cheers

DC*