In Superman 30, the Man of Steel theorises that the latest incarnation of his enemy Doomsday, emits so much energy that when he emerged he boiled the ocean. Not an easy task, even for a super villain; and certainly out of reach for mere mortals.
So why are some enterprises taking this approach with Digital Transformation projects? Moreover, if overreaching doesn’t work what steps should be taken?
Hitachi recently partnered with Forbes Insights, interviewing nearly 600 C-level executives from North America, Latin America, Europe and Asia-Paciﬁc. The global research revealed that a transition toward digital maturity involves five major steps, some of which are proving easier to take than others.
1. Top Strategic Priority
Half of executives polled said their organisation will be vastly transformed within two years. I expect the figure is actually higher in Europe, where companies are already on the move. One bank we work with even has a permanent board member dedicated and responsible for its Digital Transformation.
The realisation has dawned in boardrooms that growth and survival are now tied-up with digital capabilities.
2. Enterprise-wide approach
The research revealed that cross-functional teams are not adequately involved in developing or implementing strategy, with the bulk of this work done by IT. In our experience this is no longer the case across Europe or the Middle East. According to Gartner for example, shadow IT investments, purchases outside of CIO control, often exceed 30 percent of total IT spend.
I recently attended an IDC event in Dubai dedicated to Digital Transformation in the banking and finance sector. The congress was dominated by line of business executives from sales and marketing rather than IT leaders. Each session and attendee I spoke with shared an active interest in making Digital Transformation, the cornerstone of their company strategy.
3. Focused on business outcomes
The ability to innovate was the top measure of success for 46% of companies polled, and it’s something I hear a lot from customers.
The ability to innovate cannot be achieved through technology alone, enterprises instead should seek partners who they can trust to solve the underlying technical and architectural challenges to deliver a solution that addresses and enables business outcomes.
One thing the report does not consider however, is what will happen to those who fail to invest in digital capabilities. Failure to modernise cyber security systems for example, is an issue regularly covered by media outlets. Prof Richard Benham, chairman of the National Cyber Management Centre has even predicted that in 2017 "a major bank will fail as a result of a cyber-attack, leading to a loss of confidence and a run on that bank."
Digital Transformation isn’t essential to just growth, but survival too.
4. Untapped potential of data and analytics
Only 44% of companies surveyed see themselves as advanced leaders in data and analytics. In my opinion, this is a conservative estimate. Some businesses may be guarding achievements – as poker players do. The term poker face relates to the blank expressions players use to make it difficult to guess their hand. The fewer the cues, the greater the paranoia among other players.
You could speculate that some businesses may be keeping their best weapons secret too.
Besides, nobody wants to be that company who brags one day and is overtaken the next.
But we should take comfort from those companies in Europe making solid progress. K&H Bank, the largest commercial bank in Hungary, has halved the time it takes for new business figures to arrive in its data warehouse, ready for analysis and cut its data recovery time by 50%. Or consider Rabobank in The Netherlands, which has gained “control of the uncontrollable” and mastered the handling of its data for compliance purposes.
5. Marrying technology with people power
When dealing with challenges associated with Digital Transformation, the survey found that people are organisations’ biggest obstacle. Investing in technology is ranked lowest – indicating companies may already have the technology but not the skills. Support from strategic technology partners can help bridge the gap here.
These obstacles also bring me back to my original warning – don’t try to boil the ocean. An organisation might race ahead and invest heavily in technology but without the right culture and know-how, it could waste an awful lot of money at best, and lose senior support at worst.
So, what can your business learn from this research? Here are three things that you could do, within a safe temperature range:
- Hire new talent to challenge the status quo. Your current team may not have the fresh vision needed to shift your enterprise to mode 2 infrastructure. You need an intergenerational mix of young, enthusiastic staff and seasoned experts
- Nominate a senior executive as the Digital Transformation ambassador. Organisations need a senior sponsor to push the agenda. To overcome engrained ways of doing things, you need people with strong messages that can cascade down
- Be bold and take calculated risks. One bank in Europe has even banned its CIO from buying mode 1 IT infrastructure – meaning the bank has no choice but to embrace a more agile digital environment (rather than fall back on the devil it knows). Another bank in The Netherlands took the bold step of replacing its hierarchical structure with small squads of people, each with end-to-end responsibility for making an impact on a focused area of the business.
To achieve Digital Transformation, enterprises need to push the internal idea of ‘safe’ as far as possible. As Mark Zuckerberg declared “in a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks”. If a business does so iteratively and learns from its mistakes, it won’t run the risk of trying to boil the ocean and failing from the sheer magnitude of the task.
If you would like to learn more about the research, I recommend you download the full report here.