Digital Transformation also affects culture

"Digital transformation is about reimagining a business through technology."
25 December 2019

Digital transformation is changing the ways of businesses. Source: Shutterstock

New technology refines the ability of businesses to reach in-market audiences. It illuminates customer pain points, as well as the dysfunctions and breaking points of operations that are meant to efficiently serve those customers.

“Digital transformation” runs the risk of being meaningless corporate jargon but even jargon is meant to do something. In this case, it’s an attempt to encapsulate the change that is introduced across the entirety of an organization as it acts on new inputs, integrates tech solutions, and realigns activities and resources with objectives. In the 90s, “business process re-engineering” tried to communicate a similar sentiment.

These days, most companies are moving away from investments in on-premise technology and migrating to hybrid or multicloud environments, which in many ways epitomizes their organizational desire to scale quickly, remain agile, and avoid obsolescence. The cloud isn’t an isolated technical consideration. It’s something more, which is really what the term “digital transformation” is trying to get at.

Reliance on an obsolete tool isn’t just a poor IT buying decision. It restricts the ability to deliver value to customers, which restricts growth and adaptation, and eventually leads to an obsolete business model.

Many conventional travel agencies went out of business. And yet, Crunchbase has thousands of digital travel companies listed with aggregate funding of US$63.5 billion. Expedia Group is currently trading at US$112.76 a share, with a revenue increase of 9 percent year-over-year to US$3.6 billion.

Travel agencies that fell by the wayside were preoccupied with trying to stem losses and they lost the opportunity to perform their services better over a new medium. They had all the advantages of domain expertise and clientele but they failed to acknowledge or implement the right digital transformation.

And even these new, high-tech incumbents will need to adapt. In an earnings call, Expedia Group CEO Mark D. Okerstrom said that the quarter did not play out as planned.

“We saw incremental weakness in SEO volumes and a related shift to high-cost marketing channels,” he revealed. CFO Alan R. Pickerill also remarked that organic visibility had become less dependable: “And so going from free to anything, especially the other Google paid placements, can create a sizable headwind for us.”

CIOs sitting at the critical interface of needs and information often feel this sense of stakes as they navigate the growing ecosystem of B2B tools and services.

They’re also balancing different risks — the risk of complacency, and the risk of over-reliance on the latest panacea, be it AI, big data, VR/AR, or anything else.

On the Expedia Group earnings call, Okerstrom also stated, “With respect to the VR category, right now, it’s pretty small. And it’s something that we are actively looking at in terms of evaluating that product and looking at whether it’s something that we think is going to be a good thing for us over the long term or not. But right now, it’s still pretty small.”

The rate of technological change is very rapid and as it affects broader change, the opportunities and problems also change. IT leaders need to ensure that their solution stacks are solving the most modern and relevant problems. And they need to maintain an overarching security capability to monitor all of this spread-out digital infrastructure.

In a recent ITProTV whitepaper titled “Digital Transformation: A roadmap for leadership teams,” author Jo Peacock wrote, “Modern customers are accustomed to frequent change. Think about your cell phone; how often does it update? Customers are used to new functionality being dripped out to them on a regular basis. The modern customer becomes disillusioned with a product very quickly if it doesn’t update frequently. Companies are constantly trying to keep up with the high velocity of change that customers demand.”

Of course, customers aren’t actually demanding change for the sake of change. They want something useful or engaging. SaaS is beneficial in the sense that it puts customers in constant alignment with businesses trying to address their needs, with the maintained subscription as the metric of success.

But — prepare for some heterodoxy here — SaaS isn’t always in the interests of consumers. Some simple tools don’t need to change as often. I’ve heard many people long for the days of one-time software purchases. Sure, individual customers want their accounting software to be up-to-date with the latest tax laws and benefits when it’s time for them to file, but do they really want their credit cards to be hit with a bill every single month out of the year?

Transformation is rife with challenges. Sometimes, businesses underestimate the difficulty. They need the right attitude, management, and culture to keep spirits high and get to their desired end results. Because again, it’s not just about getting things technically right. You have to do right by your people. You’ll need them to persistently implement, maintain, and adapt.

After all, digital transformation is about reimagining a business through technology, not withdrawing from daily acts of imagination and meaningful engagement. Good analytics don’t eliminate the need for good judgment. Teams need to take a step back from the flashy displays of numbers, regularly, and ask: Okay, how are we progressing? Are these new tools supporting our product, or fundamentally changing it? Are the analytics actually sharpening our focus, or causing us to overlook something critical? What’s the social impact?