Everywhere you turn, businesses are reinventing themselves around new apps, new digital processes and new ways of reaching customers with 21st-century products and services.
At the end of last year, CIO Magazine ran this article listing eight top digital transformation stories, which included household names like JetBlue, Target, Wal-Mart, Subway and Domino's. Here’s an excerpt:
“CIOs are spending 18 percent of their budget in support of digitalization, a figure expected to increase to 28 percent by 2018, Gartner analyst Andy Rowsell-Jones told CIO.com in October after surveying 2,600 CIOs worldwide. Going digital often means significant challenges and consequences, says Rowsell-Jones, adding that companies are overhauling their business models and allocating more of their IT budgets to catch digital disruptors.”
Living in Michigan, I find the Domino's story to be especially compelling. Watch this video to see how the pizza-making business has become so much more than baking cheese, dough and tomato sauce — by using technology to grow the number of customers, improve service and increase revenue.
At the same time, time technology is being applied to virtually every global industry in new innovative ways. For example, the global construction industry is using mobile technology to save hundreds of millions of dollars on changes to construction designs and the building process. This Market Watch story explains how.
Exclusive Interview With Andrew Haggard
In order to dig deeper into this topic and learn how more about how these changes are actually occurring “behind the curtain,” I turned to Andrew Haggard, who is a leading business transformation expert from PricewaterhouseCoopers (PwC).
Mr. Haggard is a PwC director based in Boston who specializes in IT strategy and business transformation all across the USA. Prior to joining PwC, Andrew’s experience includes over three years as a senior manager at EMC consulting, helping clients build out technology infrastructure in the public and private sectors. Earlier in his career, he was the founder of White Mountain Strategy.
Dan Lohrmann (DL): What are the biggest obstacles you see for businesses transforming and becoming more innovative using technology?
Andrew Haggard (AH): One of the biggest obstacles for companies looking to leverage technology to innovate their business is a gap in the investment necessary by business and technology leaders to prioritize scarce time in structured strategy and planning process. Without this thoughtful coordination and prioritization, it is challenging for teams to create the capacity for piloting innovative capabilities and building into a technology blueprint that will deliver both near-term and long-term business results. With continuous pressure to deliver new projects, maintain the existing technology platforms, and address emerging enhancement and reporting requirements, tasks will always fill up the available capacity. Therefore it is critical to shape demand for technology resources, limit or eliminate low-value add work, and create accountability to focus to deliver on the foundational improvements and new business technology capabilities that have the highest probability to generate a return on investment and move the business forward.
DL: What are the main impediments to successfully changing the way business and IT collaborate to deliver value?
The biggest business and IT collaboration challenge faced by our clients is a lack of a clear alignment across business stakeholders and between business and IT teams of what capabilities are a true enterprise priority. Without a blueprint of the future, and a clear roadmap to sequence new capabilities there will be ongoing pressure to address the “squeaky wheel,” spin off “shadow IT” projects, and generally sub-optimize a company’s technology investments.
Another issue arises when the roles of business and IT team members in business technology delivery are not clear. We recently were conducting an IT capability assessment at a mid-sized pharmaceutical company and we interviewed over two dozen business leaders to gain perspective on how they interacted with IT and what were the gaps in IT capability delivery. Over half the issues and pain points that were raised when about how technology capability is delivered were business process, policy or requirements issues.
Business Stakeholder: “We don’t get the reports and data that we need from our systems.”
Interviewer: “What reports and data are the highest priority to track and manage your business operations?”
Business Stakeholder: “There is not a lot of agreement on that across the leadership team. I would say it varies.”
So here is a company that is moving fast, with significant gaps in their ability to track business performance in their core systems, yet the leadership team has not fully articulated what are their priority metrics and how they want to measure their business. This was a clear example of the need to invest the time to gain alignment and clearly define what the priority data needs for the business are before trying to craft a technical solution. The technical solution, in this one instance a standard financial dashboard, is technically solvable. But the requirements needed to be prioritized, clearly written and testable before beginning to patch together a solution.
DL: What are the biggest challenges to change the way companies use technology in the ‘traditional’ areas of people, process and technology?
AH: For people, the biggest challenge to deliver leading business technology capabilities is that the needs of a modern IT delivery model are evolving, and the people with the skills required to operate in the emerging landscape are scarce and challenging to hire and retain. As companies shift to more modern platforms, invest heavily in Web and digital capabilities, and elevate the maturity of the planning and collaboration processes between IT and business leaders, a new set of both hard and soft skills are required. Skills required by companies modernizing the way they deliver new capabilities requires more than just converting Test Analysts positions to Test Engineers as one example, or simply growing your Web developer teams. Successful transformation also needs to be a more comprehensive change effort that includes both business and IT stakeholders. Skills that future IT organizations will need to invest in more heavily include architect roles, digital skill sets, data scientists, test automation expertise, developers adept at agile operations, business analyst with platform specialties, and technology vendor management, to name a few.
The biggest challenge in the area of process design, both business processes that are integrated with system design and configuration as well as IT delivery processes, is to make effective change that is connected to a broader design. The most successful companies start with a macro, high-level vision of how all the processes should fit together in the end state, then prioritize the levers of change that will make the biggest impact and create the most value. Companies that do detailed process design incrementally and use the “do — learn — do” iterative approach to process improvements have the ability to course-correct and also see incremental value that creates more momentum for more constructive change.
One issue is that we often see in addressing technology is teams drilling down quickly into a discussion on the merits of various tools, SaaS solutions, and software packages before investing in a clear definition of what the priority business requirements are. Or business stakeholders will come to IT with a request to deploy a specific solution. Technology investments should be evaluated based on the most efficient way to deliver the required business capability. This requires involvement of the enterprise and solution architecture teams to evaluate design options, make / buy assessments, and potential for re-use of existing code or to apply the solution more broadly to meet similar business demands. Skipping straight to a tool solution does not provide the latitude to evaluate the solution options in the broader context of the entire business technology portfolio.
DL: What are common characteristics of leadership teams of companies that have successfully undertaken significant change to the way business technology is delivered?
AH: Companies that are successful share a few traits:
- Have visible senior business executive sponsorship of business technology transformation initiatives.
- Exhibit and foster a culture that is willing to embrace change and sometimes fail.
- Engage diverse teams in the strategy, planning and design phases.
- Build a strong network of change champions across the business.
- Put career progression opportunities and development of people at the front of the change agenda.
AH: Emerging technology delivery trends we see now include:
- Scaled adoption of industrial agile delivery models.
- More appetite to move away from dedicated infrastructure in health and financial services sectors.
- Increased use of AI and automation to automate routine tasks, to enhance predictive monitoring, and to increase productivity of L0 / L1 support operations.
- Evolving role for digital innovation delivered a highly matrixed fashion to cross-cut lines of business and legacy IT systems silos.
- Significant increase in the willingness to adopt and tailor package solutions and a move away from custom-built solutions as the default delivery path.
AH: The first movers in technology transformation are getting evaluating and getting ahead of the following trends:
- Leveraging automation, AI and machine learning.
- Creating a people strategy that addresses the recruitment, retention and development of scarce IT and data talent.
- Creating a specialized, integrated sourcing, procurement, HR and IT strategy to manage the partnership and orchestration of complex and evolving third party technology ecosystems.
You may be asking: “Where are the government examples?”
While I firmly believe that these same business transformations principles apply to the public and the private sector, I deliberately focused on the private-sector digital transformation examples in this piece. Later this summer, I plan to come back to this topic with compelling government examples from around the world.
One more resource to help. This MIT Sloan School of Management article offers nine elements of digital transformation. I urge you to think through these important elements as you move forward.
Finally, I really like this CNBC.com article which describes why Malcolm Gladwell thinks we all should slow down and do less, in order to be great at what we do.
I think Gladwell’s insights apply to this business transformation process using technology. We need to take the needed time to engage the business as Andrew Haggard describes in his answers.
If you do, what will be the result? You will see more effective digital transformation and the business benefits displayed by the leading companies who keep reinventing their customer service.