10 Digital Transformation Mistakes to Avoid
Most companies accelerated their digital transformation plans in 2020. Now, it's time to readjust to the new 'new normal.'
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Digital transformations continue, albeit not as originally planned. Before the pandemic, most companies had multi-year plans in place. However, in 2020, they were forced to become more digital sooner than anticipated just to survive, let alone thrive. Now, organizations are readjusting their plans as they bring employees slowly back to the office.
Clearly, remote work was the No. 1 priority in 2020. Artificial intelligence and automation remain strong themes but beware of viewing digital transformation from a technology-centric lens.
"In an increasingly digitalized world, there is a prevailing view among many companies that automation and AI adoption are the primary factors needed to ensure the success of their transformation goals. However, without the integration of a human centric approach to transformation strategies, companies face an uphill battle," said Errol Gardner, EY global vice chair - consulting. "As important as AI and automation are to increase efficiencies and productivity, companies will not succeed in their transformation goals without an emphasis on two critical groups: customers and employees."
The organizations that focus relentlessly on customer experience, employee engagement and motivation excel further and faster than those that prioritize tech alone. Their greater people emphasis and personalization allow them to innovate faster and protect against market disruption in the future, Gardner said.
Some organizations have gone as far as creating a separate digital part of the organization that operates in parallel with the traditional organization. The result is a dual-speed organization in which one part moves at its traditional pace and the other moves at a digital pace. There may also be a bifurcated culture enabled by physical separation in which the digital cool kids have ping pong tables and other superfluous indications that the digital organization is "more like Google." However, bifurcated, dual-speed organizations don't tend to succeed as a single entity.
"The organizations that lead their industries make decisions and set goals through zero-based design (strategizing from scratch) in order to set creative and clear goals," said Jon Walden, CTO Americas for intelligent automation platform provider Blue Prism. "Decisions on the choice of workflows and workforce transformations can then flow from this central strategy. This decision-making process ensures that digital transformation is driven across the enterprise in a uniform way that benefits all teams and users."
Following are 10 more avoidable mistakes companies make.
Many companies approach digital transformation as a project that begins and ends on certain dates, has a fixed budget and static objectives. This flawed thinking causes companies to miss the most important benefits of digital transformation because they're unable to achieve the level of organizational agility and resilience they need to stay competitive.
"To benefit from digital transformation, companies must view it as a never-ending process that continually challenges established methods and procedures," said Arthur Iinuma, co-founder and president of software development and consulting agency ISBX. "This requires a cultural shift throughout the organization that moves away from traditional slow-moving bureaucracy towards a more agile approach that constantly evolves to meet new challenges."
Some companies make the mistake of being too focused on incremental operational improvements.
"They need to think bigger. Businesses struggling with adopting wholesale digital transformation may only invest in AI, cloud and data in some areas of the business but not across the enterprise," said Manish Sharma, group chief executive of Accenture Operations. " This could lead to key data being contained in siloes, causing teams to be disjointed, slowing innovation and hurting the customer experience. Critical thinking and problem-solving are now the backbone of every enterprise, and translating data into growth and employee productivity hinges on having access to the right information at the right time."
A recent Accenture report found an elite group of “future-ready” companies, about 7% of the total, scaled digital transformation across the enterprise. They outperformed peers with 3X higher profitability and 2X efficiency. If the remaining 93% of companies practiced these same strategies, Accenture research estimates it would add $5.4 trillion in global profitability. Business leaders can avoid the mistake of incremental thinking by taking a top-down approach and assessing how they can best optimize digital transformation within their operational models, focusing on the long-term goal as opposed to short-term gains, Sharma said.
Old habits die hard. Business as usual served companies well for decades and now agility is the order of the day. Calvin Hendryx-Parker, co-founder and CTO of Python web application development company Six Feet Up, said one of the biggest mistakes his company sees is replicating highly bureaucratic and outdated processes in the digital world.
"When developers are required to accommodate every single edge case in effect under the old system, the opportunity to simplify, bring consistency, and create leverage through technology is missed," said Hendryx-Parker. "To avoid this pitfall of useless complexity, decision-makers must invest in change management and have conversations with their stakeholders. They must get everyone on board about the benefits of embracing new technology and inventing streamlined processes to break through the complexity ceiling."
Some organizations attempt to accomplish too much too soon. These "big bang" approaches tend to fail more often than they succeed.
"Transformation should [include] big goals, but I believe in sprints to A/B test and to avoid the negative impact of larger projects missing the mark on what the initial project value had end to end," said Elizabeth Kwo, deputy chief clinical officer at health insurance company Anthem. "It's important to build a strategic roadmap, with feedback that entails a team focused on adoption, testing and accountability to prove the useful value of the transformation. If not, new projects or teams can lose credibility, especially as new requests or updates are needed and budgeted. This agile approach can avoid or minimize any resistance to the transformation occurring."
Kelly Walsh, CIO of The College of Westchester, thinks a common mistake is to equate change with transformation. For example, management may decide to move from one critical platform to another because they're unhappy with the performance of the existing platform, but they don't understand the root causes of the perceived performance or functionality issues.
"Often, perceived 'systems' issues are in fact governance issues, inadequate technology or poorly trained human resources," said Walsh. "It's easy to fall into the trap of thinking that something new will be better, yet a new platform may do little to resolve underlying issues with process, people, communication, training, sufficient server power, bandwidth, and so on."
Business continuity has always been an enterprise staple, though 2020 changed the meaning of it for good. Prior to the pandemic, companies were planning for natural disasters such as earthquakes and hurricanes. Though some companies included a pandemic among the possibilities, no one anticipated a 100% remote workforce and the need to digitally transform virtually overnight. However, the need for high-quality video conferencing and cloud applications exceeded what some companies were able to deliver. The result was frustrated users, unproductive downtime and new security gaps introduced by personal devices.
"Many companies have recognized that they must build a 100% work from home capability into their business continuity plans. To do this, they are focusing on securing cloud and network access and delivering a high-performance user experience from anywhere employees are working," said Terry Traina, CTO of SD-WAN service provider Masergy. "In fact, home offices today need to be as sophisticated as medium-sized offices were a little more than 5 years ago."
Some digital transformations are executed as an IT tactical response that's focused on a narrow viewpoint and not well aligned with a set of strategic initiatives that are tied to business practices, processes, and objectives.
"Your digital transformation journey should provide your organization with agility, business process integration and standardization, and improved time to market. The end-state architecture should service all the viewpoints of the organization adding value to all of the stakeholders' processes," said Eddie Ambler, CTO at Oracle technology solution provider BIAS. "Having standardized business processes and access to integrated information supports business process improvements via automation and reuse of architectural building blocks. The efficiency gains from your transformation journey should enable your organization to be able to capitalize on its ability to quickly turn data into information and bring updated products and process optimizations to market quickly."
During the pandemic, many organizations relaxed some of their cybersecurity protocols to enable remote working. When returning to the physical workplace, they should re-establish stricter cybersecurity protocols to ensure the company network is protected. In addition, organizations should have adjusted their business continuity and disaster recovery plans to account for the shift to remote work. These plans should be readjusted again to account for employees returning to the office.
"Failing to tighten cybersecurity protocols upon the return to the workplace could leave networks vulnerable to cyberattacks and breaches," said John Beattie, principal consultant at business continuity solution provider Sungard Availability Services. "Additionally, failing to update [business continuity] and [disaster recovery] plans, and ensuring that employees are aware of the changes, can lead to outages or the inability to promptly act on contingency plans when the time comes."
Some organizations approach digitization from a technical standpoint rather than starting with what the business and users will require.
"This mistake creates the potential to miss the entire point of digital transformation. You’ll end up pleasing the 'techies' rather than benefiting the average user," Emmanuel Olivier, worldwide chief operating officer at cloud platform provider Esker. "Approach digitization opportunities by first consulting with your users and asking for their input, such as, what areas need improvement? Where do you waste time? And, overall, how can our solution increase the value of your work? Things such as chat bots, RPA, workflow automation, etc. are simply tools that should be selected after the objective is clear."
After all, technology only facilitates digital transformation.
Management guru Peter Drucker once said, "If you can't measure it, you can't manage it." This is true for digital transformation. For example, goals have no meaning if they're not supported by quantifiable objectives (e.g. the target percentage of customers ordering groceries online for pick up on a regular basis by June 30, 2022.). And how is it possible to ascertain the degree of positive or negative change if no baseline has been established?
Measurement and monitoring are essential to validating whether changes are trending in the right direction or not. Moreover, having a constant feedback loop enables incremental improvements and timely course corrections.
Check out other InformationWeek slideshows.
Management guru Peter Drucker once said, "If you can't measure it, you can't manage it." This is true for digital transformation. For example, goals have no meaning if they're not supported by quantifiable objectives (e.g. the target percentage of customers ordering groceries online for pick up on a regular basis by June 30, 2022.). And how is it possible to ascertain the degree of positive or negative change if no baseline has been established?
Measurement and monitoring are essential to validating whether changes are trending in the right direction or not. Moreover, having a constant feedback loop enables incremental improvements and timely course corrections.
Check out other InformationWeek slideshows.
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