Misses OR Messes

In the second part of this series we will look at what has Digitalization not achieved or what was the real intention of the digital wave and what did it actually achieve.

We can safely say that as of now hardly 10-20% (let’s call them Group 1 or the leaders ) of businesses have been “Digitally Transformed” and around 30-40% (Group 2 or the followers) are in the journey of digital transformation, whereas the rest 40- 50% (Group 3 or the Laggards) are nowhere near Digital Transformation.

Before discussing more in detail, we can safely assume that Digital Transformation is actually a union of Technical Transformation and Business Transformation. Where do we stand in reality? Let’s plot it in a 2-2 Quadrant and see what has happened. 

Quadrant 4 or the one in yellow (right hand most corner) is the box where we should have landed by now. In reality a majority (more than 50 – 60%) of the businesses which have gone for Digital Transformation have landed in the Green box (box 2). This means majority of them have gone ahead and implemented a ton of technology but have not achieved the intended business transformations.

The problem is the very low percentages of companies in the 3rd quadrant and very little percentage of companies moving from 3rd to the 4th Quadrant. The real “Digital Journey” is to move from Quadrant 1 to 3 and then to 4. In reality most companies move from Quadrant 1 to 2 and then stop. Either Management loses interest in the journey, or the funds stop flowing, or key players leave or new projects come in and the old ones fall off or management just does not see the value.

Lets look at what has actually happened and what did we miss in the Digital Transformation journey.

A) Business and Technology still remain dis-enchanted silos.

1)    Business lead Digital Transformations: Most of the businesses started the journey of digitalization as a part of revamping their entire business, changing processes and creating new avenues for revenue. However, in reality most of them ended up with a new set of tools to manage and monitor, parallel and redundant processes and higher business entropy due to competing and confusing demand for resources. In the entire process, business leaders are getting disenchanted, IT teams are getting over worked, not much changes in revenue sources observed and both employees as well as customers remain confused and clueless.

2)    Digital lead Business Transformations: This is more dangerous as these are transformations which the business never asked for. These were transformations which were pushed by the IT team “in the name of digital transformation”. These initiatives will very soon get orphaned: either when the champion changes, or new technologies or priorities come up. Simple - business never wanted it, they don’t like it, and will not embrace it. These will add to the “Technology Debt” which has already piled up and the company has to pay for it at a later date.

B) Misplaced understanding of Digital Transformation. This is evident from the fact that more than 80% of businesses and government departments are still struggling to understand the real meaning of it and in the process have started giving their own spin and definitions to digital transformation. Best example: A large enterprise had posted a job opening for a Chief Digital Officer, however in reality they were looking for Data Analytics Lead who will report into the CIO. This shows the understanding of Digitalization in the company. In fact, we can pick up any job posting for a Chief Digital Officer or a Digital Director or Digital Lead and see the common requirements. They would eventually read: required knowledge in a bunch of tools and technologies like ReactJs, NodeJs, Kafka, BiqQuery, Jira etc. Some do ask for vertical knowledge as well, but no one understands or is ready to take the risk of hiring someone from outside the vertical but with an innovative mind who can change the way business is done. Doesn’t Digital Transformation require that?

C) Vendors and service Providers misleading businesses. Not long ago I had tutored the CEO of an IT Services company on the difference between “Digitization “and “Digitalization”. It took him 6 months to understand the difference. However, the day he understood the differences, he went ahead and “Digital Washed” all his services as “Digital Services”. The services remained the same, the delivery teams remained the same, the partners remained the same, but the services were now “Digital Services”. When businesses hire such vendors or services providers, what do they expect? Their business will change over night or their IT debt will turn into more IT debt with an extra “Digital Technologies” layer which they have to now maintain for the next 15 years.

D) Messed up processes. One of my earlier mentors used to teach me – if non-digitalized processes were a mess, digitalized processes are a bigger mess. Eg: If you plan to relocate from one country to another, you would obviously want to close all your transactions and bank accounts in your current place and move out. However, the municipalities and other agencies went on a digitalization drive and moved all the processes and transactions on-line. This means that your final settlement and deposits would be sent directly to your bank account, which is fine. However, the bank has still not changed its processes which requires your physical presence to close an account. How would the person close his bank account, once he has relocated from the place, no one thought of it. So, the mess continues.

E) Messed up hiring and recruitment.: As new roles and Job descriptions are not clear, there is no clarity on the kind of people who would fill this position and what is expected from them, recruitment processes have literally broken down. As mentioned earlier companies advertise for flamboyant positions like Chief Digital Officer, Chief Automation Officer, Chief Analytics Officer, Chief Product Officers but they are basically looking for people with experience in various automation, data analytics or RPA tools. Sometimes they ask for 10 – 15 years of experience in tools and technologies which have been around for 3-4 years. Even if they get people for these positions, they join the old siloed IT teams of Infra, Applications, and Operations and become part of the usual office politics. Everyone forgot the Digital Transformation journey they started off initially.

F) Consultants and service providers making merry. As in the Y2K, ERP and other eras, consultants are happy with this situation. They are happy to provide technical solutions to all business problems, implement multi-million-dollar tools and charge millions for it. Half of the tools may not be required, some of them redundant and some of them would get obsolete in next 3-5 years, but enterprises spend millions, have multiple layers of consultants, remain in the 2nd - Green quadrant and be happy with it.

It may seem gloomy everywhere but there is still light at the end of the tunnel and its not a train provided you have been sincere in your Digital Transformation journey.

We will discuss that in the next and last part.