A review of the disruptive forces unleashed by digital technologies on businesses, large and small, over the last two decades paints a stark picture of what can happen with frightening speed to those who stick their heads in the sand and ignore changing consumer expectations and behaviors. Yet, still, according to Dynatrace, 93% of CIOs say IT’s the ability to maximize value for the business is hindered by challenges, including IT and business teams working in silos, and 74% say they are fed up with the need to piece together data from multiple tools to assess the impact of IT investments on the business.
In the near past, when the need for businesses to change was sporadic and controllable, and IT projects were often planned as staged processes and implemented over months, sometimes years, and this was the accepted norm. But in an age of digitalized enterprises and big data, the more nimble and adaptable a whole organization is to the speed of change, the bigger the potential benefits, so the lead of IT in defining the way forward is not in itself likely to deliver the adaptability to change digitalization promises, let’s examine why?
If one definition of insanity is doing the same thing repeatedly and expecting different results, then using an ‘old school’ approach characterized by an apparent need to upgrade core systems, implement multiple digitization projects in parallel, and prioritize the technology over the business need is bound to disappoint if digitization is approached as an IT issue rather than a business change opportunity, seeking support and involvement from people across the organization it is almost bound to disappoint. Typically, this strategy has focused on the organization’s most visible areas and left others siloed, thus consuming resources with no tangible return on the horizon. Indeed, as Everest Group notes, the result is that 78% of digital transformations fail to meet their business objectives, and 73% fail to provide any value at all.
The challenge for many businesses is that the enormous investments they have made into highly complex IT structures have resulted in a conundrum: the same large-scale and often cumbersome systems that currently facilitate their core day-to-day operations now constrain their flexibility. And the constraints of the technology mean that creating new relationships inside and beyond their enterprise, identifying and analyzing new data sources, or making even minor changes to simple processes can require considerable resources to be applied. Above all, Digitalization needs to deliver adaptability
89% of CIOs surveyed by Dynatrace say that digital transformation has already accelerated, with 58% predicting this trend will continue. However, it is perhaps unsurprising that many organizations with massive investments into big-ticket systems believe digital transformation requires more technology. They have typically adopted a business as usual approach, with IT-led planning, development, and implementation, divorced from the business analysis and without the right people or lacking top-down commitment.
The challenge, and the opportunity, is to keep in place the core technologies and data, not seeking to change what is not broken but using it as the engine to create a new, infinitely adaptable architecture that re-imagines how an enterprise can work by putting the business users and business needs ahead of the technology. So the real value of digitization is not just how it will enable organizations to make a quantum leap in how they function, the data they have access to in real-time, but in their ability as digitalized enterprises to continuously adapt.
Thus digitization is not a destination but the start of a radical transformation, an adventure where the business will be in the driving seat defining new processes, products, and solutions that will revolutionize how it can function as a joined-up enterprise beyond its current model. Not every organization will be capable or willing to commit, and many will assume they can continue business as normal, but they are likely to pay a high price as others have before. The commitment to digital transformation is the commitment to embark on an evolutionary journey, creating a shared vision of where it can take a business this year, next, in five years or a decade.
How many enterprises are mission-ready for such a radical shift? Have they identified the right people, created teams, and encouraged them to think beyond the obvious to define a future vision?
IT should still lead in defining digitization strategy, but to truly deliver, requires a fusion of ideas, skills, and knowledge drawn from the wider organization. With a vision of how the expedition will proceed, what benefits can accrue from short-term projects and goals identified, ensuring the metrics are in place to measure these, and the commitment to carry forward, the chance of delivering value is far greater — even if the final destination remains unclear.
The COVID-19 crisis has created an imperative for companies to reconfigure their operations — and an opportunity to transform them. To the extent that they do so, greater productivity will follow.
The next normal arrives: trends that will define 2021 and beyond
McKinsey & Company
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Originally published at Upstack.co on Jul 19, 2021, by Symon Blomfield.