The Digital Dilemma: From IT Management to Digital Transformation Leadership

The original role of IT was one of troubleshooting and infrastructure maintenance. Today, companies are trying to figure out how they can adapt to the digital future; IT is firmly planted in the centre of strategy and revenue generation. That is quite a big challenge for HR and IT professionals, since they must redefine their capabilities in the process of rising up to meet demands that they were never prepared for. The road to digital maturity is often blocked by roadblocks, unfamiliar choices, and a whole lot of trial and error. Here's how to make the transformation effective.

A Brief History of IT Management: The Custodial Days

Traditionally, IT was a utility—a behind-the-scenes yet indispensable service inside corporate structures. Its purpose was to bring efficiency, reduce human error, and generally help the departments function better. Innovation and revenue generation were not its remit. But with the growth of cloud computing and improvement in digital capabilities, this supporting act became outdated. Technology crept into every area of the organisation, becoming part of employee/customer-facing interactions.

Take my client, a big retail company, for example. The mobile leave management app that the company's HR and operations “citizen developers” developed using low-code development platforms, bypassing the IT department. This incident just goes to show the current climate: technology has now become a competitive necessity that requires involvement from all departments, with or without IT readiness.

From Cost-Cutting to Value Creation: The New Digital Agenda

Historically, the mandate for IT was rather straightforward: decrease operational costs and increase workflow efficiencies. Today, however, technology is expected to enable innovation and value creation. Technology use today has to be done in such a way that it not only supports the HR operations but also becomes part of their value proposition. Evidence of this shift could be witnessed in companies like my client, a telecommunication company, where systems like the learning platform at the company blend tutorials, co-creation, and curated content offerings into a formidable employee learning process and experience. Being non-native digital players, this transition for most traditional firms-from cost-saving processes and firmwide learning contents to value creation through completely novel processes and experiences-is pretty disorienting.

This emphasis on innovation, along with new operating models, creates tension at the structural level for companies used to setting productivity-oriented goals. For IT departments that have been kept in the background, will they now be able to pivot and give consumer-grade solutions in HR, impacting user experience and value creation?

Legacy Firms and the Challenge of Digital Transformation

Incumbent organisations, founded upon rigid legacy structures, must change to remain relevant in a landscape defined by rapid movement. Their existing capabilities—risk aversion, process optimisation, and conservative change management—conflict with the agile approaches required in today's digital economy. Most IT departments are poorly positioned to embrace rapid iteration and continuous innovation in the way that their digital-first rivals do.

For example, a friend of mine and a very senior program manager acknowledged that his extensive experience with rolling out systems like Oracle or SAP to 6000 global sites does not mean he can manage innovation along with the need for speedy experimentation toward customer-centric solutions. Capability development of both HR and IT leaders is urgently needed to shift the focus onto building agility, customer centricity, and the willingness to take up failure as part of the innovation process.

New Capabilities for a Digital World: The Imperatives for HR and IT

This closing of the capability gap requires that incumbent firms develop a new suite of skills for the digital economy. Three key capabilities to focus on are:

1. Value Orientation: The IT function needs to shift from an efficiency focus to value creation focus. This will be realised by embedding the IT into core company value proposition and redefining the skill set of technology professionals in favour of those who have cross-functional teams leadership.
2. Experimental Mode of Working: Traditional IT depended upon long predictable project cycles. In contrast, successful IT teams in the digital age build an experimental attitude and deploy test cases and minimum viable products much faster. Equally, HR and IT leadership should nurture a culture that encourages experimentation with a view to embracing Agile or DevOps methodologies for fast innovations.
3. Customer Centric Digital Integration: IT must move away from support role and be much more of an active contributor in the customer journey. For this to be possible, talent needs to be acquired regarding customer-centric technical capabilities, and new process design is done or should be oriented to ensure a rich user experience and employee satisfaction. Success measures lie in customer engagement and loyalty characteristics tied to digital tools.

Bridging the Capability Gap: Practical Strategies for Transformation

In addition to building internal capabilities, there are many strategic approaches that may be considered by firms in effectively bridging the capability gap. Each has a set of benefits and challenges:

• Open Innovation: Companies open their HR digital ecosystems to integrations from third parties (e.g. technology partners, citizen developers, etc.). These third-party developments can enrich the offering and the company's offer but mean that HR must prepare staff to work in collaboration with other ecosystems; IT must develop security and compatibility.
• Acquisition and Integration: Company can choose acquisition to accelerate digital competencies. It bought companies that work on software to develop competency. However, this is a faster method of building often leads to integrations and cultural mismatch. Change management would therefore need to be highly targeted.

More information is in my article "The Long and Winding Road to Innovation" https://www.dhirubhai.net/pulse/long-winding-road-innovation-tamer-el-tonsy-r0zge

Reshaping Organisational Structures for Agility and Innovation

Where new capabilities are established, structural changes have to be made. Traditional hierarchies can inhibit the flexibility needed for digital transformation. Many firms have adopted the use of HR Digital Transformation Centre of Excellence and use Agile and DevOps frameworks that allow for faster development cycles aligned with employee needs.

Other firms even open their IT systems development to open innovation and crowdsourced product development. For instance, Oracle asks customers to contribute to new ideas and OTBI dashboards. These tactics engender innovative communities and make customers co-creators of value.

Moving Ahead with Metrics to Success

This shift to leadership in digital transformation calls for a different mindset, together with relevant metrics to gauge progress. Key performance indicators-those baring the characteristics of digital success-should be instituted, such as customer satisfaction scores, revenue from new digital services, and metrics on the speed of product releases. Otherwise stated, it means that HR and IT professionals are adopting a culture that is focused on tangible digital results.

Eventually, only those organisations that will fully harness the power of digital transformation will have a greater likelihood of thriving in the modern economy. Those organisations that lean on traditional structures risk irrelevance, as flexible digital disruptors outshine them. A future for HR and IT leaders is using technology at the centre of employee value delivery, not as an operational tool. Gone are the days when IT was a utility; the future belongs to innovators, transformers, and trailblazers.

References

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Nadkarni, S. and Prügl, R., 2021. 'Digital transformation: a review, synthesis and opportunities for future research'. Management Review Quarterly, 71, pp. 233–341. Available at: https://doi.org/10.1007/s11301-020-00185-7.

Nambisan, S., Lyytinen, K., Majchrzak, A. and Song, M., 2017. 'Digital Innovation Management: Reinventing Innovation Management Research in a Digital World'. Management Information Systems Quarterly, 41(1), pp. 223–238.

Schrage, M., Pring, B., Kiron, D. and Dickerson, D., 2021. 'Leadership’s Digital Transformation'. MIT Sloan Management Review. Available at: https://sloanreview.mit.edu/projects/leaderships-digital-transformation [Accessed 4 Nov. 2024].

Svahn, F., Mathiassen, L. and Lindgren, R., 2017. 'Embracing Digital Innovation in Incumbent Firms: How Volvo Cars Managed Competing Concerns'. Management Information Systems Quarterly, 41(1), pp. 239–253.

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Tumbas, S., Berente, N. and vom Brocke, J., 2018. 'Digital Innovation and Institutional Entrepreneurship: Chief Digital Officer Perspectives of their Emerging Role'. Journal of Information Technology, 33(3), pp. 188–202.

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