Digital Transformation: Vision to Execution - Part 02
In part 02 of this 04-part blog series, Prasad Kularatne takes a deep dive into Digital Channel innovations projections. The author is the Chief Technical Advocate at N-able, with extensive experience in architecting and delivering key digital transformation projects for our organization.
Author's Note: In the first part of this blog series, we looked at digital transformation and its realization through four categories of projects. In this second part, we will dig deeper into Digital Channel Innovation projects, look at their distinct nature, Critical Success Factors, project challenges and how to overcome them.
Strengthening the channel strategy has been considered a key enabler in most of digital transformation initiatives. Digital channels, here, refer to all avenues made available by organizations to their customers to acquire their products and services and perform transactions on them in an end-to-end digital fashion, either completely self-service or assisted.?These could be web or mobile self-service channels augmented by video or conversational assistance providing online interaction pathways for customers to interact with their Bank or insurance company. Almost all these projects aim at finding innovative ways of using digital channels to interact with their customers - a B2C interaction - to deliver a unique and differentiated experience.
Project Objectives
Delivering unique and differentiated experiences over digital channels is part of broader digital transformation initiatives in many industries. Objectives stemming from broader organizational strategies to position themselves as strong partners in the digital lifestyles of their customers. Projects undertaken to achieve this end usually have clearly defined objectives and are driven by Centres of Excellence (CoE) for digital initiatives in the respective organizations. We have experienced customers stating the following broader objectives when they initiate these projects.
1.?Increase customer acquisition in strategic segments
2.?Retain existing customers by delivering frictionless customer experiences over digital channels
3.?Increase share of wallet for existing customers by selling more products or services
4.?Reduce overheads associated with servicing customers
These objectives get translated into project objectives which defined the dynamics of projects of this category.
?Nature of Projects
To achieve the above broader objectives in this category of projects, getting into details, we note that our solutions must deliver the following capabilities.
Most of our customers in these progressive industries have already established channel solutions. They were initially implemented to establish organizations' web and mobile presence to enable end customers to perform a specific set of transactions over these channels. Those solutions are generally rigid and less adaptive to deliver the demands of rapidly changing customers' digital lifestyle needs. They are built on dated technology and development frameworks that cannot keep up with the dynamics of modern customer journeys. Therefore, projects in this category are channel replacement solutions targeted at meeting end customers' digital lifestyle needs.
Broadly, we observe two approaches in these projects. First is a product-based approach where the solution provider customizes pre-built customer journeys to meet the organization's digital channel interaction vision. A second approach is a platform-based approach that relies on a digital experience platform to develop customer journeys using built-in frameworks and services.?Our experience has been that most organizations prefer the platform-based approach which provides the flexibility to deliver differentiated customer experiences that helps them realize competitive advantage by focusing on their organizational strengths and the uniqueness of their customer base. We will, therefore, focus on this platform-centric category of projects in examining the time value impact of the project delivery.
To understand the specific dynamics of these projects, let’s examine their scope, timeline pressures and stakeholder dimensions.
Scope: These projects generally aim to deliver the capabilities identified in the above table as an integrated and extensible solution replacing the existing channel interaction experiences. Defining the Minimum Viable Solution (MVS) is the key challenge where you must balance between time to market vs. key capabilities that MVS shall deliver. Selection of the key disruptive and differentiating capabilities is very critical as the initial momentum these solutions create in progressive market segments largely defines its short to medium-term success.
Time: Generally, the digital channel innovation projects span over a period of about ten (10) months up to two (2) years depending on the readiness of the organization, skills and experience of the solution providers and IT maturity of the organization. Most of these projects are driven using agile project delivery methodologies and work towards delivering Minimum Viable Solution within the shortest period and then gradually onboarding remaining capabilities. There is fierce competition among the organizations to win over the growing millennial and professional customer segments and digital channel innovation becomes a key ingredient to acquiring and sustaining these segments. Therefore, these projects usually come under intense time pressure for delivery.
Most organizations demand accelerated delivery of a stable Minimum Viable Solution (MVS) so that value-added features targeting the digital lifestyle of end customers can be onboarded faster than the competition in subsequent phases.?
Stakeholders: These projects are driven by the Centre of Excellence for digital initiatives, or an equivalent setup, usually led by a Chief Digital Officer. Sales, Marketing and Customer Service departments along with IT are an integral part of this CoE
Critical Success Factors (CSFs)
Having examined the nature of the Channel Innovation projects, let’s look at what it takes to make these types of projects successful. Project success is defined by its ability to deliver the stated business outcomes within the time constraints.
We observe that the following factors are critical to the successful and timely execution of this category of projects:
It is our experience that organizations must evaluate the above critical success factors in the context of the maturity of their IT landscape in the following dimensions:
Figure 1: Dimensions of organizational maturity impacting readiness
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?Digital maturity, in the above context, relates to several facets of the core applications. How easy it is to integrate with these applications to support the interactions demanded by the customer journeys identified is one key facet. Since these customer journeys from digital experiences for customers, they must deliver faster response times. Event-oriented integrations are also key, customers need to be notified about the status of their requests, transactions and introduction of new products and services of interest.
The design of these core applications should also be able to accommodate different workload profiles that channel interactions will bring, for example, there will be a massive influx of channel inquiries such as checking account balances. Back-office processes should also have a high degree of straight-through processing and support event-oriented integrations.
Now let’s examine some important facets of CSFs identified above.
Digital Experience Platform (DXP) provides an integrated set of services, tools, and accelerators to design, visualize, compose, deliver, manage, and optimize customer journeys across a range of digital channels or customer touchpoints.?Depending on the nature of customer journeys planned, technical, digital and data maturity of the organization, the selection of the right set of DXP capabilities defines the success of these projects. Examination of the capabilities of these platforms is a topic on its own and I am looking forward to a post on this in future.
As we noted earlier, this category of projects replaces existing channel solutions that were organically grown over time. However, we should note that we are not only replacing the features delivered by existing channel solutions with modern technology. We are transforming the experiences through well-thought-out customer journeys that delight the identified customer personas in our target customer segments. At the same time, we should deliver the selected combination of features faster to the market. Managing these constraints and coming up with an initial set of features and capabilities that shall go into the MVS, therefore, become key to success.
Once the above exercise is complete, the selected features and capabilities shall be mapped to customer experiences. This is accomplished using a modern customer journey mapping exercise. This is where the CoE members pool their knowledge about customer behaviours, evaluate customer behavioural research, and attempt to derive the journey flow that would delight the customer. Delightful experiences cause less friction, reflect organizations' empathy towards the customer and make the experience more personal. Research has shown that the more personal the experiences are, the more empathetic the interactions are, higher will be the resulting customer attachment and potential for a sustainable relationship with the customer. While we can deliver frictionless experiences through intuitive interaction flows coupled with straight-through processing, analytics and AI are the foundation for generating personalized customer experiences with a touch of empathy. Our experience suggests that the success of the customer journey mapping exercise and extending its focus toward generating analytics-driven customer journeys are the most impactful CSFs in this category of projects.
However, we should note that we are not only replacing the features delivered by existing channel solutions, with modern technology. We are transforming the experiences through well-thought-out customer journeys that delight the identified customer personas in our target customer segments.
The ability to visualize the journeys being mapped in the target channels (web, mobile, wearable) with closer to real-life interaction experiences during the journey mapping exercise itself is very important. We have observed that such a visualization-driven approach drives active participation of the key CoE members and delivers higher levels of success to the journey mapping exercise.?
Customer journeys that avoid friction and increase customer attachment handle all business and technical exceptions gracefully. Those journeys have answers to most practical deviations from the happy path and such answers make the customer experience delightful. However, the realization of such journeys requires massive testing efforts. Multiple journey paths under multiple scenarios may need to be tested to check if the intended experience for the end customer is always preserved. With the type of timeline pressures these projects come under, the use of a mature test automation framework and tooling becomes mandatory. Automation of both functional and non-functional testing (especially performance testing) that exhaustively check and reports all journey paths under all practical scenarios, therefore becomes a CSF in these projects.??
Dependent projects cannot be avoided in executing projects of this nature. Not all organizations have, for example, the right maturity in their Identity and Access management strategy to address the requirement of channel innovation projects, interfaces, especially call-back mechanisms of their back-office workflows may not be ready, and they may not have a modern Personal Financial Management or Video KYC solution. Enabling these capabilities in separate project streams results in dependent projects, management of which as part of a single program is an important factor of success in this category of projects.
Challenges, Pitfalls and How to Succeed
Now that we have reviewed the critical success factors of channel innovation projects, let’s examine the challenges organizations and solution providers face in incorporating the above CSFs to drive the successful delivery of expected business outcomes.
One of the biggest challenges we observe is inadequate planning effort that goes into undertaking projects of this nature. In most cases, this arises from the inadequate focus given by stakeholders to assess the relative readiness of the organization in terms of its maturity in the dimensions we examined above. This results in unrealistic timeline expectations, inadequate or late focus on dependent projects and wide-ranging revisions to the project scope.?While it is impractical to wait till an organization achieves higher levels of integration, data, and digital maturity to initiate this category of projects, it should be noted that venturing into this type of project without some level of maturity will be disastrous. Our experience suggests that focusing on integration and data maturity is key. Organizations must focus on building simple yet versatile service-oriented and event-oriented interfaces to their core applications through a well-thought-out enterprise integration architecture. This is a mandatory prerequisite for channel innovation projects. In terms of data maturity, we have noticed those organizations with a mature data integration architecture with a well-designed centralized data repository – a data lake or a data warehouse - command a clear edge in being able to deliver differentiated and contextual experience in their customer journeys within the timeline pressures inherent in these projects.
We also see challenges in defining the MVS, where most organizations try to replicate all features in their existing channel solution into the MVS, thereby expanding the scope significantly. It is a true challenge to identify the impactful features and capabilities that should go into the MVS for it to bring a disruptive and differentiated experience to the target customer segments. Stakeholders must balance the timeline expectation, organization maturity, capabilities of the platform, and features that are likely to disrupt the target customer segments in deciding on the MVS.
Another challenge common to these projects is the inability of the CoE lead to balance the expectations of the business teams and the capabilities of the IT team and the limitations within which they operate. Detailed assessment of organizations' readiness will help IT teams to articulate the time and cost of incorporating the capabilities in demand and thereby strike the right balance of impactful features vs. time to deliver. This will enable them to move ahead with successful negotiations with the business teams.?
From a project execution standpoint, one major challenge we have observed in these projects is the inadequate domain and technical skills of the organization's programme management. This challenge is often aggravated by the inability to get dedicated time from core members of the CoE team. The organization must source a dedicated programme manager with the right expertise and the right level of authority shall be defined through a sound programme governance framework. The required skillset and experience may not be available from within the organization and therefore may need to be sourced from outside. The programme manager must deep dive into the organization's relative readiness for the project and more importantly, carry out a detailed dependency analysis before putting together the actionable and realistic programme plan.
The following diagram illustrates the role of the Programme manager within the organization.
Figure 2: Role of the Programme Manager employed by the organization
Having examined CSFs, the challenges in achieving them and recommendations for overcoming those challenges, let us summarize what we examined and evaluated in the preceding two sections, in the diagram below.
Figure: 3: Recommendations for Channel Innovation project success
The diagram clearly illustrates the importance of planning to achieve readiness in projects of this nature. Also, the role of the CoE and the programme manager in the success of these projects is very critical. Powerful journey maps with versatile testing strategy and execution are two key recommendations during project execution.
Conclusion
We looked at defining characteristics of Digital Channel Innovation projects, a category of projects that forms the core of organizations' digital transformation efforts. We examined the unique nature of these projects to understand what is critical to their success. We then went on to analyse the challenges to achieving these Critical Success Factors and critically looked at ways to address those challenges.
How N-able can help:
As N-able, we have been advocating architectural transformation to the enterprise application landscape of key telecom and banking customers in Sri Lanka and played a primary role in multi-year digital transformation programmes involving all types of projects examined in this blog. We have built four (4) key solution practices to deliver these solutions and a specialist programme and project management practice.
You may be looking into the use of hyper-automation technologies to increase the automation level of back-office business processes, attempting to modernize your in-house developed applications by converting them into cloud-native architectures, planning to replace your legacy core application with a digital-friendly new variant or looking for expertise to transform the legacy service-oriented integration architecture into multi-style agile integration architecture. Depth of experience from N-able, and our relentless focus on delivering business outcomes can provide you with a unique journey experience in realizing these business objectives.