For the past few years, it seems as though you can hardly turn around in a technical conference without hearing people talk about digital transformation. But while much of the emphasis on digital transformation is on the part that is, well, digital, the most important part of digital transformation is actually the people involved.
Why Digital Transformation is Important
So what is digital transformation in the first place? It’s a means of using technology to increase efficiency by transforming paper-based processes to electronic ones, which organizes paper documents, streamlines business processes, and helps companies save money and become more productive.
This happens through a five-step process:
- Digitize: Convert paper into an electronic filing cabinet for digital archiving and retrieval
- Organize: Categorize documents and manage information in a secure, central location
- Automate: Digitize processes through electronic forms to improve accountability
- Streamline: Gain visibility into operations and increase efficiency of processes across the organization
- Transform: Drive innovation by leveraging analytics to align processes with business goals
Digital transformation is also big business. More than 67 percent of technology leaders surveyed at Forbes Global 2000 enterprises expected their top initiatives to be related to digital transformation – and by 2018, these companies will have digital transformation at the core of their IT strategy, according to the MIT Technology Review.
And with that big business comes big revenue. One IDC study estimates that the worldwide market for digital transformation is more than $20 trillion, writes Tom Sullivan in Healthcare IT News. Specifically in healthcare, Accenture researchers project that organizations can save $60 billion by making strategic investments in digital technologies, he adds. For example, $2 billion in spending could be avoided every year by using technologies to predict and more effectively manage congestive heart failure and diagnose Alzheimer’s earlier, he writes.
Remember the People
If you think digital transformation as just a matter of bolting-on new technology and waiting for new efficiencies and revenue to pour in, you’re not seeing the full picture of digital transformation. A major part of any business process is the people who are in it, and until Terminator comes true, people are not yet digital.
A lot of experts are figuring out how significant this is for success. “Although one could simply link digitization with technology, the organizational and cultural side of the question is just – if not more – important to successful transformation,” writes Cath Everett in Computerweekly.com. In fact, the technical part of the transformation can be the easy part, she warns.
“While the cloud and other new technologies certainly offer IT organizations tremendous opportunities to automate and optimize their systems, those CIOs who become too invested in the technology nuts and bolts are not the IT leaders who are driving digital transformation,” agrees Mekhala Roy in TechTarget. “What they need to do is find people who can automate their IT environments in such a way that allows for efficient and safe application deployment.”
Instead, people are, in fact, analog, writes Philip Watt in the Customer Think blog, and treating them as if they’re digital typically doesn’t work very well. “The very nature of analog electronics meant that 70 percent could often be 0.69 volts or 0.71 volts or even varying between these, but ‘good enough’ to represent the value,” he writes. Similarly, people approximate things and have feelings, and that has to be accounted for. “In the rush to transform everything customer service-related to digital, remember that customers, humans, are analog creatures,” he writes. “They have daily variations in their feelings and behaviors, they often have a low ‘signal to noise’ ratio (distractions, distortions in what is heard, deletion of large amounts of information received).”
Watt’s suggestion is to look at process as a conversion between the analog, which humans understand, and the digital, which computers understand. “Create digital enabled processes that are analogue-centric,” he writes. “Focus less on measurement of return on investment by channel and more on the empathy linkage with emotions, mood variance and perceptions of service that each channel can offer.”
For example, a thirty-second wait in line in a store is rarely a problem, but the same delay in online checkout will lose 90 percent of customers and leave a lasting bad impression, Watt warns. Other examples of processes that can be digitally transformed include Domino’s enabling users to order pizzas from smart devices, Capital One providing a mobile app that supports biometrics for security, and CVS supporting digital prescriptions and even integration with the Apple Watch, writes Clint Boulton in CIO.
To help transform people as well as the technology, some organizations are bringing new types of employees into the organization who aren’t necessarily as tied to the traditional, paper-bound types of corporate processes. For example, the petroleum company BP is bringing in “apprentices” –like interns, who have just recently graduated from high school – to help with digital transformation, writes Caroline Donnelly in Computerweekly.com. As part of the process, apprentices are encouraged to speak up in meetings and are given access to CIOs, she writes. “The apprentices the oil giant tends to attract have a mix of technology and life experience, and have not become ‘indoctrinated’ in certain ways of doing things in the workplace,” she writes. “BP’s apprentices are not starting out by having to unlearn everything they know.”
Who’s In Charge?
This raises the importance of making roles and organizational structure clear and explicit. The different parts of the organization need to be able to work together and the members of the organization need to know what the plan is and who’s in charge, writes Boulton in a different CIO article, citing a recent Accenture report finding that some organizations have as many as six C-level executives working on digital transformation.
“A third of 700 IT and business executives polled by the consultancy said that they didn’t know which leader in their company was responsible for most digital technology functions,” Boulton writes. “The uncertainty over who owns digital assets such as infrastructure operations, application development, ecommerce, analytics and digital marketing stems from companies splitting tech tasks among too many leaders” – which can damage company performance.
If you think this uncertainty doesn’t trickle down into systems themselves, think again. One International Data Corporation (IDC) study found that, in many organizations, content such as documents, images, video and email is scattered across a wide variety of systems. All told, 23 percent of this content is stored in personal computers, 19 percent in cloud file sync and share services, 18 percent in file shares, 17 percent in email, 11 percent in team sites—and only 12 percent is centrally and securely stored in an enterprise content management system, because there isn’t a clear plan for owning digital assets.
One solution? Have the digital leaders report directly to the CEO. “In organizations where the CIO, CTO or any other digital leader has a direct reporting line to the CEO, IT/digital is perceived as more effective than in organizations where they do not,” Christoph Schrey, a Digital McKinsey associate partner, tells Boulton. “This not only has an impact on the perceived performance of the organization, but also improves how much digital leaders participate in shaping the company’s business strategy, a goal desired by both business and IT.”
Organizing paper documents and streamlining business processes offers great promise in saving companies money and making them more efficient. But if companies want to tap the full potential that technology holds, they’ll need to keep their eye on the role of people in digital transformation.