Kathy Gibson is at IDC CIO Summit in Chartwell – As business embraces digital transformation, the IT industry is being driven by the need to create new and compelling systems that can increase revenue – and to do this quickly, at scale.
This is word from Jyoti Lalchandani, group vice-president and regional MD: Middle East and Africa at IDC, who points out that CIOs today are faced with the need to become operationally efficient and agile, transforming customers experience and expectation.
“We are essentially going through the second chapter of the 3rd Platform,” Lalchandani says.
The first chapter was the experimentation phase; the second phase is where we are seeing pockets of opportunity as dynamic changes in the technology industry change the way technology is delivered and consumed.
“The third phase is autonomous computing, and will change how companies look from 2022 onwards,” he explains.
During the first phase, organisations and individuals experimented with new technologies, but the IT department was responsible for integrating them into the legacy infrastructure.
“Just three years ago we were all experimenting,” Lalchandani says. “Organisations were trying to create new customer experiences. But they were proofs of concept and not really able to scale or transform the business.”
The second chapter – what IDC calls the multiplied innovation phase – platform wars started to develop and Internet of Things (IoT) started to become a game-changer.
Companies also started to look at how they could leverage data. “Organisations become more modular to find new ways to collaborate and work together,” Lalchandani says.
Consumer technology has also taken off, with the adoption of voice and consumer technology.
“It’s no longer about ow to create an omni-channel experience, but about blending the physical and virtual in a customer environment. How to not just use data, but create revenue streams? And how can I deliver personalised services at scale?”
Scaling systems has now become an issue – and some of the projects now in deployment are massive.
IDC research indicates that many organisations are at a digital transformation deadlock.
Inn its maturity benchmark, it found that 16% of companies are digital resisters, and don’t believe they need to transform. Lalchandani predicts that 70% of these organisations will fail.
A further 30% of companies are exploring digital transformation, with a couple of projects underway.
Digital players account or 29% of companies, which have implemented digitalisation projects.
The fact that these two groups are not fundamentally disrupting their industries, or expanding into new industries suggest that they are at a deadlock now, and don’t know how to go forward.
They are probably using outdated KPIs, siloed digital transformation initiatives, they have short-term tactical plans, limited expertise, and they still operate in siloes of innovation.
What companies should aim for, Lalchandani believes, is to become a digital native enterprise – where disruptive business is business as usual.
To do this they need to create new, digital KPIs. “If you are still using outdated KPIs to describe a business that is rapidly evolving?”
Digital leaders track the digital business as part of the overall business; they compete in a number of digital marketplaces, and they recognise digital leadership.
The KPI metrics they use include the rate of innovation, customer advocacy, data capitalisation, business operations and workforce.
“In terms of innovation, successful digital businesses allocated 40% of their capital budget to digital transformation,” Lalchandani points out.
Other specific metrics include improving customer satisfaction scores, the introduction of new digital products or services, and the way they compensate staff and executives.
“The digital transformation leaders all have this in common: a new set of KPIs aligned to digital business.”
The second element is to make sure the organisation is structured for digital transformation, with digital embedded in the business.
In digital leaders, there are four main operational teams feeding into the strategy, Lalchandani says.
These are the digital transformation special projects team that discovers new use cases; the office of digital transformation that establishes the governance of projects; the embedded digital transformation business is embedded in the business and accelerates transformation; the digital business unit is responsible for creating innovative offerings alongside the traditional business.
These teams would evolve as the organisations becomes more mature in its digital transformation.
Leaders tend to have digital roadmaps that are long-term and strategic rather than focusing on a short-term wow factor projects.
Lalchandani points out that many of the organisations stuck in the digital transformation deadlock have short-term roadmaps, while leaders have a clear alignment between IT and the business.
“Business has a clear vision for the next few years; and IT has a clear idea of how to do this.
“Leaders make bets on where they are going, what they have in the organisation, and what technologies are available.
“So build your digital transformation roadmap by horizon,” Lalchandani advises.
To be successful in digital transformation, companies need to make sure they have digital capabilities embedded in the business.
“Each of the digital transformation capabilities companies need to think about need to be centred around processes, technology, governance and talent,” Lalchandani says. “But the most important element is that data has to be at the core.”
Most of the leaders employ design thinking; other techniques that successful companies use include value stream mapping, startup practices and journey maps.
The final link is creating a digital architecture, Lalchandani explains. And this architecture needs to be to scale.
IDC predicts that, by 2020, companies that are successful with digital transformation will have increased their size dramatically.
Digital leaders use disruptive technologies like artificial intelligence, robotics, blockchain, drones and augmented reality/virtual reality.
“About 60% of organisations are at a digital impasse now,” Lalchandai concludes. ‘As we move to 2020, we believe most organisations will be getting digital done – about 20% of technology spending will be around data. But 2022, we will reach the level of innovation realisation, where 80% of revenue will be around digital offerings
“By 2027, we will be in the era of full digital transformation, where 75% of organisations will have transformed.”
How IT can drive digital transformation
