Seven Myths of Digital Transformation Debunked
Back in the day, making your product or service incrementally better and cheaper was a slam-dunk formula for business success. But those days are long gone. In this edition of the Twelve Days of Digital Transformation, we’ll take a look at seven misconceptions about business transformation.
Here’s the thing. In the digital economy, organizations are under relentless pressure to keep up with exploding expectations, and fast-moving digital trends.
Perhaps this is why 87% of Global 2000 companies said they were planning digital transformation projects in 2017, according to a recent LTM survey. And why 54% of respondents ranked digital transformation as their number one corporate priority.
So, here’s a rundown of some popular misconceptions about digital transformation, and why you shouldn’t believe them.
Myth #1: Digital transformation is a technology challenge.
Last year, Forbes reported that 84% of digital transformation plans failed. Experts offer different viewpoints on the high casualty rate. But many agree on two things. First, the hard part of digital transformation is getting organizations to change. Second, the transformation journey should start with upgrading your business strategy for the digital economy.
“You have to start with developing a future-facing view of your industry,” says David Rogers, author of The Digital Transformation Playbook: Rethink Your Business for the Digital Age.
“Think about how emerging technologies, such as robotic process automation and artificial intelligence, will impact your industry” says Rogers. “Start with that, then come up with strategies for how your company can leverage these trends to remain relevant in this new world.”
“So, first figure out your strategy,” says Rogers. “Then, figure out which technologies will enable them for your organization.”
But, getting people to work differently than they did before? Enabling them to work across silos the way they didn’t or couldn’t do in the past?
This is where the real value of digital transformation is.
“I like to think of it in terms of dimensions,” says Vijay Gurbaxani in a recent blog interview on Appian.com. Gurbaxani is Founding Director of the Center for Digital Transformation, at the University of California, Irvine. (Check out Gurbaxani’s Digital Trailblazer interview on the 5 dimensions of digital transformation Every CXO Should Know)
“A lot of businesses think that digital transformation is a marketing activity or a customer experience initiative. Or you can have pockets of digital here and there. But digital transformation is about operating in a whole new way,” says Gurbaxani.
What it all comes down to is this. Think about digital transformation as a vision, and the technology as a piece of the puzzle, a tool you can use to transform, rather than an end unto itself.
Myth #2: Focus on optimizing your business processes.
Better to focus on rethinking your business model, not just optimizing your processes.
There’s nothing wrong with making incremental process changes.
The thing is, 55% of organizations prioritize Business Process Management (BPM) for their business—but 48% say they are vaguely familiar or have no clear understanding of BPM, according to researchers at AIIM Market Intelligence.
The thing is, not to let process optimization get in the way of doing something bigger. “Digital transformation is about changing from a caterpillar into a butterfly, says George Westerman, author of Leading Digital: Turning Technology into Business Transformation. “It should make you faster, more agile, and closer to your customers. It should give you wings so you can fly.”
“Unfortunately, too many companies talk a good digital transformation game. The problem is, they’re just thinking about being a fast caterpillar, not a butterfly,” says Westerman. (To learn more about turning technology into transformation, check out Westerman’s recent interview on Appian.com)
Myth#3: Traditional companies can’t adapt to operating in the digital economy.
The research reveals otherwise.
It turns out that a lot of investment activity is happening with traditional companies in the digital space.
In fact, total spending on digital transformation will grow at a rate of 17.9% through 2020, to an incredible $2.0 trillion, according to IDC.
The most successful traditional companies are transforming operations and the customer experience.
They see the big picture. They’re not just thinking incrementally about the mobile project or the AI project, or the customer experience effort.
These digital masters are re-imagining how their companies might work in the future. And then they figure out the right technology to make it happen.
On the flip side, some experts warn that lots of traditional industries—that haven’t been hit by disruption—will be hit hard by emerging technology in 2018 and beyond.
“And the next digital wave, because it involves transformation of knowledge tasks, is going to be even more dramatic,” says Stephen Andriole, Professor of Business Technology, Villanova University.
“The gap between startup and mid-stage companies will shrink faster than ever,” says Andriole. “Which means the days of casually tracking technology are over. Cloud availability has forever changed this.”
“You can create an Uber now in 2 or 3 years, not 8 to 10.”
“That kind of potential disruption is a big change, says Andriole. “…So, if you’re running a big, established company and you think that you’re insulated from disruption—you’re not.”
Myth #4: The best place to start your digital transformation journey is in the front office.
Many companies talk about digital transformation as a way to validate their focus on the customer experience. Why? Because it’s easy to see.
But a better place to start is with back office automation, including RPA and AI.
The thing is, if you’ve got a messy back office, it’s really hard to get a unified view of your customer.
The best digital transformation efforts start with the back office first. Because, if you get that right, amazing things can start to happen, that just weren’t possible before.
Myth #5: Customers want personalized service, not automation.
Amazon recommends books based on books you’ve bought in the past. Netflix recommends movies and TV shows based on content you watched before. Those recommendations can lead to higher sales and more subscription renewals.
Digital transformation is about transforming the customer experience and operations to make you faster, more agile and closer to your customers.
There are plenty of assumptions out there about what customers want. And one of them is that customers want people to provide them with service—not automation.
The truth is, customers want personalized service. And, they don’t care whether it comes from a robot or a person.
One way to do it is with modern Business Process Management (BPM) software that’s flexible enough to manage information across silos. Case in point: Appian’s dynamic case management solution.
This advanced BPM functionality allows you to combine structured processes, rule-driven policies, data, content, across your entire organization to deliver personalized customer experiences.
You know the deal. The benefits of personalization are huge. According to eMarketer, total retail sales will hit $5.68 trillion by 2021. And, Accenture says there’s a $2.95 trillion opportunity for companies that leverage digital transformation to personalize the customer experience.
So, if you’re not using automation to deliver a personalized customer experience, it’s time to make a change.
Myth #6: In Tech Adoption, It’s Better to be perfect than early.
Not when innovation is happening faster than anyone ever imagined, or change is increasingly seen as the norm, and there are more disrupters and fewer barriers to entry.
Just ramping up efficiency in your core operations just won’t cut it anymore.
It took 30 years for electricity and 25 years for telephones to reach 10% adoption but less than five years for tablet devices to achieve the 10% rate, according to the Harvard Business Review. It took over 60 years for telephones to penetrate 40% of the market.
Compare that to smartphone, which reached a 40% penetration rate in just 10 years.
Digital leaders understand that the economics of the digital world are different than the economics of the physical world. Many of the digital juggernauts have benefited from first mover or early mover advantage—winner takes most. So, it’s more important to be early, and less important to be perfect.
Myth #7: Digital automation is a job killer.
The experts are split on this one.
It turns out that the rise of automation is a tale of two trends—jobs lost and jobs gained.
Yes, automation will cause workforce disruptions, as robotic process automation and artificial intelligence reshape a variety of jobs. By 2030, 75 million to 375 million workers (3 to 14 percent of the global workforce) will need to switch occupational categories or upgrade their skills, according to a recent report by the McKinsey Global Institute.
On the other hand, if you look at history and the waves of technology, it’s also true that new technologies create more jobs than they displace. The question is, how do we manage the transition? And this calls for making some hard decisions around training and investment.
Here’s the bottom line. The secret to winning your face off with disruption is to enable your entire organization to get involved in digital transformation and digital innovation.
That’s the appeal of modern low-code app development. It gets business and IT shot callers engaged in the digital transformation journey, by enabling non-developers to get involved in building solutions, and testing them out with customers.
The opposite approach is to stick with traditional approaches to custom app development. Or, put a handful of IT people in charge of innovation. But this approach could create a bottleneck. Disillusion people. And turn digital transformation into just another buzzword.
“It all comes down to focusing on the customer experience, and using process automation to deliver a better digital experience—by connecting the front end of your organization with the back end,” says Clay Richardson, Co-Founder & CEO of Digital FastForward (and formerly with Forrester Research).”
“It’s essential that digital transformation not just be about process, but also about freeing up people to do high-value work,” says Richardson.