DIGITAL TRANSFORMATION | WHAT IS IT, WHY IS IT IMPORTANT, WHY IS IT SO HARD, AND HOW CAN YOU GET BETTER AT IT?

As a consultant, Digital Transformation is a phrase bandied about on a daily (ok hourly…) basis. It is something that my colleagues and I understand the importance of, because it is our job to. For others though, it is simply the amalgamation of two of the most overused buzzwords merged together to create the ultimate meaningless consultancy waffle. Unfortunately, for the doubters at least, it seems Digital Transformation is not only here to stay, but is going to further grow in importance. Getting onboard is therefore critical. Understanding what it is; why it is important; why it is hard; and most importantly, how to do it well is imperative. So that’s the purpose of this article - to answer those very questions by drawing on my experiences of Digital Transformation across retail; consumer; life-sciences; public sector, and defence.

It’s probably best to start with what Digital Transformation actually is. It means different things to different people, but ultimately, to me it is about making substantial changes to the:

• Skills your organisation needs to deliver the best digital services possible. For example, moving from an era of infrastructure architects to cloud architects.
• Ways of working among your organisation’s teams, including for example, moving from siloed functional teams like Project Management; Architecture; Service Operations, to multi-disciplinary agile teams aligned to the ongoing change and run of specific products and services.
• Products & services your digital teams can offer the wider business and even end customers, beyond simply laptop and desktop provision to more complex services such as Business Intelligence & Analytics which give users the data, information, analytics and visualisation tools they need to make sound business decisions.
• Technologies that underpin the provision of digital services, such as moving from bare metal infrastructure to public or private based virtual machines, and now containers so that digital services are quickly deployable, re-usable, and scalable as the business grows.
• Commercial models used to buy and charge-back for digital services, such as consumption based pricing for cloud services, which ensure you are only paying for what you use and avoiding large capital investment.

That’s all great, you say. I now broadly understand ‘what Digital Transformation is’, but I still don’t get why I need it. The answer is fairly similar to that of many major business investments. Digital Transformation, if done well (note the ‘if’…), will:

• Enable the realisation of new business strategies, the creation of new revenue channels, and delivery of new the products for your customers. This in turn helps organisations maintain or grow market share, expand the market itself, enter, or even create new markets. There are many examples of organisations that have both seized the Digital Transformation opportunity, and those that missed it. Look at supermarkets like Tesco and the impact digitalisation has had on their businesses through the advent of online delivery services. Failing to offer such services would severely cap the market share available to Tesco, and is proof that Digital Transformation is a key enabler to revenue growth. Conversely, let’s look at an organisation like Blockbuster who were once kings of the home video rental market. After failing to recognise and act on the threat of digitalisation, their business has ceased to exist, despite a thriving streaming market consisting of Netflix, Prime, Disney.
• Allow your organisation to do more with less, so that you can increase operating margins, undercut competitors, and focus your workforce on higher value, more rewarding activities. ChatGPT has sent shockwaves through economies in 2023, as it has brought Artificial Intelligence into everyday lives. It is a great example of a tool that is already driving huge efficiencies in organisations, particularly within customer service operations. By dealing with a large percentage of incoming customer queries, ChatGPT either reduces the need for human agents and therefore the organisation’s cost base, or allows those human agents that would previously have been dealing with simple requests to focus on the more complex customer queries. This in turn, reduces customer wait time and drives up customer satisfaction.
• Give you first mover advantage, when delivering new digital products and services to your end customers so that you can stay ahead of the pack. Remember the ‘console wars’, where Sony, Microsoft, and Nintendo would battle it out to win gamers hearts? The key to success in this battle, was often which platform could get to market first. By doing so, you could build momentum and become the de-facto standard because nothing else was available. When other consoles did arrive on the scene, the cost of change was too high for people. The same principle is true in the delivery of both physical and digital goods. Speed to market is crucial, and just like building a factory quickly to make and distribute consoles, organisation’s must now building the digital environments to develop and productionise high quality digital products and services rapidly.
• Creates a dynamic and attractive working culture. I’m not sure what stereotype is associated with my generation, but I do know that we are relatively demanding of the latest tech when doing our jobs. I dread to think therefore how demanding the workforce of tomorrow will be, given many kids will have been hooked on streaming on-tap Peppa Pig content as a means to getting through the terrible twos, and then grown into teens where they have had a plethora of collaboration tools (TikWhat?!) at their finger tips. Giving workers modern tech, and importantly, choice over tech is therefore something that is expected within the workforce now, and is surprisingly impactful on the attractiveness of employers who are continually battling it out for the best talent.
• Protect you from harm. It feels like 25 years ago, cyber security scaremongering was all the range, with technophobes throwing mud at this revolutionary thing called the internet. As a young kid, I remember thinking that it was all just a bit over-hyped. Things have changed dramatically though. Back then, the internet’s usage was not widespread. We didn’t use it for shopping, or banking - just the odd email or to ask Jeeves what this google thing was (remember him!). Contrast that with today though, and the internet is embedded in every aspect of our lives from the moment we wake up, to the moment we sleep. Scrap that…it is even doing things to us whilst we sleep. So making sure we are secure is of huge significance. It now feels like not a week goes by where we don’t hear of some new ransom attack, whereby an organisation’s data is stolen or systems become inaccessible until a fee is paid. Such experiences can be devastating given data protection regulations which can result in eye-watering fines. So all of a sudden, cyber security has become pretty damn important. Organisations want to understand where their vulnerabilities lie, what the latest attacks are, and how they can combat them through a combination of technology and policy.

Ok, so you get what Digital Transformation is and why it is important. Why, you ask, don’t people just get on with it then? Put simply, lots of people try, but fail, for surprisingly common reasons:

• It just takes too long. Transformation rightly suggests that big changes are being made to drive substantial results. Too often though, this is translated into multi-year programmes that, if (and it’s a big if) they even deliver are outdated upon completion. Furthermore, humans are impatient creatures, and few executives have the desire to support multi-year cost intensive initiatives and will pull the plug or severely tighten the purse strings as other pressing matters arise.
• It costs too much, and isn’t clear what the return is. What’s the saying, “you get what you pay for”. Unfortunately, Digital Transformation is expensive, and ironically, this is often because transformation has not been undertaken for years (or even decades) leading up to it. Getting people to stump up the cash really needed to make it happen can be difficult. This is often because the return on investment can be challenging to articulate. Take Microsoft 365 for example. Based on my experience of using it over recent years it has undoubtedly increased my own productivity, which has helped me earn more money for my employer. But could I put a value on how much my productivity has increased? No, absolutely not. Unfortunately, working out the cost of Microsoft 365 is far easier to do, which means that when you present the business case to the purse string holder, the cost lines look rather scary, and the benefits pretty fluffy.
• People just don’t get it. If you have ever worked with architects you will know that they often get very excited about new technologies and the benefits it will bring. “Imagine using infrastructure as code and how quickly we could stand-up those VMs”. If you’re talking to your average CEO, CFO, or COO you might as well be talking gobbledygook. And that’s the problem, whilst re-platforming 300 applications might seem transformative to somebody in Digital, it means very little to somebody outside in the core business. People need to understand what it means for them, and why it will make their job, and their team’s jobs faster, easier, less frustrating.
• You don’t have the right people to make the transformation happen. As mentioned earlier, Transformation is about making big impactful changes to lots of people or things. Whilst organisations may be equipped with change teams for specific projects, there are few organisations that could afford to keep a bunch of highly paid transformation managers sitting around to wait for a new programme to be launched every five years. As such, when organisations are preparing for transformation, they need to consider what support they will need to deliver it successfully, and how they will secure the time of those that have really been there done it, and got the t-shirt. Trying to do Transformation on a shoe-string will either not deliver the intended benefits, or will result in delays and cost over-runs.
• There is no appetite to do the ugly stuff. Bear with me for a second, as I may be about to go on a tangent…! I played lots of rugby growing up and was a ‘forward’. For those that are unfamiliar with rugby, the forwards are the guys and girls that seem to spontaneously have group hugs during the middle of the game. These are known as ‘scrums’. We also run around the park wrestling for the ball once people are tackled in what are called ‘rucks’ and ‘mauls’. This is all with the intent of securing the ball so that the pretty and flamboyant ‘backs’ can score points and steal the glory - not that I’m bitter. The point to this random offshoot though, is that if the forwards didn’t do the really ugly, painstaking, hard yards, the backs wouldn’t get to do the fun stuff. Now, the lesson here, is that to undertake Digital Transformation that wows the business and stops people calling foul of “bloody IT”, there’s a load of plumbing that probably has to be re-done to enable the cooler stuff. Systems may not integrate properly and be coded in a manner that only Bob who retired 15 years ago understood. Re-plumbing all of this stuff is expensive, and just damn complicated. The problem is, the business doesn’t really care, they just want shiny new stuff, and they want it yesterday.
• There is a culture of perfectionism. Don’t get me wrong, I like things being right, but I have also come to accept that there can be diminishing returns when I spend time on things. If something is broadly fit for purpose, I now get it out there and move on to the next thing. That way I can have greater overall impact. The same principle applies in Digital Transformation. Because transformation is big and complex, perfection is a pitfall. Making changes and getting projects into live service so that teams can iron out issues or make improvements is far better than delaying wider projects because of a fixation on perfection.

Great, so I’ve sold you on the idea of Digital Transformation, but am now telling you that you can’t have it. Well here’s for the uplifting bit! It is absolutely possible to make Digital Transformation work, and that so many organisations fail will make it all the more rewarding when you succeed. There is no silver bullet, but fundamentally organisations should:

• Become Adaptive. Shhh, don’t tell my bosses I’m telling you this, as it isn't exactly good for business, but why bother with big Digital Transformation programmes at all? Your best bet is to become better at adapting and driving continual digital change. Doing this will smooth the cost profile of transformation and prevent unpalatable business cases for execs. Furthermore, you’ll get better at delivering change as you do it more often, reduce the build-up of obsolescence and risk, and be continually delivering improvements to your users. Don’t get me wrong, you will probably require support at different points of change, but provided you have a well established Enterprise Architecture and Delivery capabilities you can go a long way.
• Focus on shorter timeframes. If transformation is the way forward, then ensure it is driving towards meaningful delivery timeframes. Talk to the business in timeframes of 6-9 months, rather than grandiose 2-3 year programmes. The business will become more engaged and it will focus minds on delivering value early which will build momentum for future tranches of transformation.
• Get the execs bought in. Spend time with senior leadership team members outside of Digital to ensure they understand the importance and value it will bring. Take them to meet other organisations that have benefited from Digital Transformation to make it tangible to them. Bring them on the journey of understanding how Digital has been both the making, and death, of organisations that have done it well or poorly.
• Build the right team to get the job done. You want your transformation to deliver on the right balance of time, cost, and quality. To achieve this, ensuring you have the right balance of skills is essential. Establishing an in-house team puts you in control of the transformation, and prevents lock-in to external support is of paramount importance. As is supplementing such teams with the right transformation professionals who bring the skills and experience of doing this day in and day out elsewhere, and the scars that go with it. Investing in the right team early, will save cost later, even if upfront costs look sizeable.
• Have a plan for difficult conversations. Transformation is, by its nature, disruptive. Whilst this is largely a positive, there will be times when people will become frustrated, or disenfranchised due to changes that may impact them. Having a plan of who is going to be impacted, and how, is essential to being able to proactively engage people and make them feel involved in decisions.
• Be clear on the vision. I was once a sceptic of ‘visions’ and ‘mission statements’. To me they felt like blasé promises and glorified statements that marketeers had constructed. I’m changing my tune though. I have come to like such mechanisms for many reasons. They are an anchor point which you can continually use to guide decision making; they are mechanisms for quickly communicating complex situations or ambitions; and they provide clarity and continuity of thinking. Perhaps most importantly, they serve as a reminder of purpose for when when things get difficult. So get one, and be proud of it!
• Remember to do the hard yards. Perhaps I’m overly bitter about my rugby days and lack of try scoring ability, but I’m proud in the knowledge that those tries wouldn’t have been scored had I not have been wrestling in a ruck or maul. Don’t forget that the same applies for your Digital Transformation, and that until you deal with some of the ugly legacy stuff, your dreams of slick integrated systems and services will remain just that, dreams. Don’t underestimate the time, and commitment required in simply understanding what to do with the spaghetti of interconnected systems that hang together with sticky-back tape, let alone actually making the changes themselves.

To conclude, Digital Transformation is a complex beast, and this article barely scratches the surface on what is a huge topic. I will leave you with this… In 2005, Walmart was the biggest retailer in the world; we bought our Friday night films from blockbuster; and I was sweating over school essays late into the evenings. As we near 2024, Amazon is now the biggest retailer in the world; blockbuster is a distant memory, with iPlayer, Netflix, Prime, and others taking its spot; and students of today have a ChatGPT to write essays for them in 15 seconds. Imagine what will happen in the next 25 years…

If you want to hear more about how to navigate your Digital Transformation please do get in touch.

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