Digital Transformation: Agency or SaaS?

This brief article is to delineate the two different approaches to Digital Transformation that I tend to encounter. Whether to follow an Agency (incremental) model or Software as a Service (SaaS) model. True Digital Transformation would be SaaS but that is not always the optimal solution. That said, I believe that leveraging technology is always an option to consider, though the extent that it is integrated depends on the nature of the activity. For example, CRM which puts too much emphasis on automation tends to fail as it can not address the nature of peoples problems and the different requirements to resolve. CRM that focuses on problem resolution fails from the start because it does not respect that the problem lies with the person and not with whatever is broken.

Agency model - I use the term "agency" as more of a metaphor than an exact model of implementation. Agencies are traditionally based on human capital. As a business scales up so does the number of employees to cover the additional work. More customers means more employees which means more revenue. Business is based on a % of profit of each employee. Efficiencies gained through technology may mean that fewer employees can manage more customers, but there is always a direct correlation between the two. This is the most frequent approach to digital transformation. Providing employees new toys to improve their efficiency such as Sales Force or WeChat. Training falls into this category as it is usually intended to increase efficiency of employees and often is tied to a new tech or better understanding of existing. This is where I spend most of my consulting time and there is great benefit to companies for this incremental gain. I have yet to perform an audit of a company and not have been able to improve performance by 40% or more through better understanding and minimal impact process change. That is significant.

SaaS - again I use this as more of a metaphor than an exact model. What I am trying to convey is that through true and complete digital transformation a company removes its dependency on growth via increasing employee base. Now this is an ideal that hopefully will not be achieved in the near future. Humans play an important role in organizations but changing their contribution away from 'tending the farm' to creating visions and, more importantly, ensuring that the evolution of the organization is on the best possible trajectory for customers and shareholders. Digital transformation is the undoing of business process traditionally owned by people and replacing with technology solutions. These technology solutions must operate end to end and operate as a continuous self-monitoring and self-learning feedback loop that corrects and improves itself. In a full digital transformation people learn from the activity of the technology and are not just facilitated by it. It is through this learning that customers are better served and employees can more effectively guide the evolution and apply this knowledge to other areas. In the 1980's and 90's digital transformation was about empowering employees by giving them more control over their work activity but now digital transformation is about removing work activity from the mix and empowering employees to be visionaries.

My ramblings are my own and, whereas they are based in experience and data, they in a field so large of this can never be more than informed opinion. I hope to stimulate thought on what outcome and organization hopes to achieve. The Agency model produces significant results and the least disruption. However, we will be moving as a global economy to the SaaS model. It is our destiny.

Much success,

Doug

www.PRDA.Asia