The Digital Challenge (part II)

I mentioned in part I of this 2-part article that shifting to digital interactions with suppliers, customers and employees is especially difficult for established organisations. There are two main obstacles: legacy systems and organisational mindset.

Legacy systems

A large organisation will typically have all sorts of technology in use. Some mainstream, some specialist and often even custom developed applications. The challenge with these systems can be understood by the answer to a simple question: "where is your customer data?". The same question could be asked about suppliers and employees, but let's take one step at a time.

The question seems simple, and often the first answer is quite simple as well. It might be "our ERP" or perhaps "our CRM". Then someone will say: "well, of course only our sales people use the CRM, and division A people don't use it at all". At this point, it's important to keep going: to understand the typical patch-work quilt which represents customer data. It's always an illuminating process, if slightly depressing. Data scattered all over the place is clearly not a good foundation for digital processes.

Organisational mindset

The other big challenge working against established organisations is the mindset of the employees. I'm talking about all employees across the whole hierarchy. An established organisation will have familiarways of working and people's careers are tightly connected with their understanding of these ways of working. For example: customer sales orders arrive in the mail or by telephone. Maybe by email as well. Then the order is passed to the fulfilment section, where someone checks inventory ...

Can you imagine the change impact of offering goods and services on a website paid for by a credit card? I'm not talking just about the technology changes, I'm talking about the people change. Jobs will change, titles and hierarchies will change and different skills will be needed. What people do on a day-to-day basis will change. This is all terrifying stuff for most people. This is why business change management is a critical focus in digital transformations.

Digital Transformation

So-called disrupter firms don't have this baggage because they have started with a digital approach. Some good examples include: "fintech" companies disrupting traditional banking, stock trading platforms disrupting traditional stock advisors and brokers, media companies such as Spotify disrupting traditional physical music media companies, not to mention on-line sales of almost anything.

The idea of digital today is in its infancy in established organisations for the reasons stated above. But while many of these organisations are stuck in the starting blocks, there are plenty of competitors who are learning quickly and re-inventing themselves. They have learned from established web companies, and understand the importance of transparency from a customer perspective - from payment to delivery - and the challenges that are associated with this seemingly simple goal.

After experimenting with separate digital functions, many organisations are merging these groups with the corporate IS function because it makes good sense to do so. In the past, these digital groups may have had a sales role in the sense of figuring out what parts of the business to shift online. In the end, this has to be the responsibility of business divisions. The question is: are they up to the task and do they understand what is needed?