It’s a term we hear a lot today, but what is digital transformation. Alan Brown FBCS explores transformation’s key elements and discusses some important questions organisations should ask themselves as they consider change.
Digital transformation is more than a modernisation of technology, it is also a change of attitude and approach which spawns new business practices and structures. Yet the question arises as to whether and how this wave of change can make a substantial difference to large established organisations (LEOs) slowed down by their scale, heritage and complex decision-making structures.
The first hurdle they face is to get their arms around the size of the task at hand and to decide on the priorities for action. This task is proving to be far from straightforward. What should be the focus for digital transformation efforts, and how do we measure our progress? With so much excitement and hype being generated in this area, we are already in danger of the term ‘digital transformation’ losing all meaning and utility.
What is digital transformation?
Such concerns have now transferred to the academic world. Attempts to define digital transformation abound. For example, in Gregory Vial’s review he examined almost 300 papers on this topic and observed no fewer than 23 distinct definitions across these articles. In general, they present a broad perspective characterised by using new digital technologies of all kinds to enable major business improvements, streamline operations or create new business model opportunities. He concludes that this complexity underlies the wide variety of interpretations and contexts in which the term is being applied.
Given this confusion, in my work with businesses and public sector organisations, I usually adopt a broad, intuitive perspective using the following definition:
‘Digital transformation describes a broad set of activities aimed at improving efficiency, value, and outcomes in delivering sustainable change in the use of digital technologies for the benefit of business, organisations, individuals, and society.’
This provides a useful guide to organisations in recognising the breadth of the challenge to be addressed in digital transformation. However, it is only useful as a starting point. Many recent surveys across different communities point toward the same conclusion: while business leaders recognise the importance and inevitability of digital transformation in their organisation and throughout their industry, few believe they have sufficient grasp of the core elements that shape such a transformation. This dichotomy is repeatedly highlighted across areas such as marketing, customer service delivery, government IT, and management strategy.
Understand digital transformation
To understand the key elements of digital transformation, I have found it useful to move swiftly away from worrying about how it is defined toward a focus on five questions that form the basis of a deeper understanding of the underlying elements of digital transformation and their priority.
- Digitisation: what progress has been made converting data, transactions and business artefacts into digital formats?
- Digital process modelling: how are you deploying digital technologies and processes to support key business activities?
- Digital value analysis: which digital approaches are being adopted to generate new kinds of value from your products and services, information sources and behavioural insights?
- Digital business model innovation: where in your context do you see restructuring and redefinition of existing markets, customers and supply chains that encourage new digital business opportunities?
- Digital organisational redesign: how are you redefining the organisation’s strategy to be better suited to digital technologies and business models, and changing management structures to ensure it can be effectively delivered?
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By working through these questions, we are provided with a framework for building a deeper understanding of digital transformation. Unlike other such frameworks which emphasise maturity and stage-based improvements, these five questions present a straightforward way to open discussions and build engagement around the key themes of digital transformation. They guide the conversation toward what matters in your organisation to set the right course for success.
Armed with these questions, the next time you’re asked to participate in discussions about digital transformation in your organisation, don’t spend time on broad definitions. Instead, increase the quality of the conversation by focusing your dialogue on these five areas and you will deepen your team’s perspective on this critical topic.
