2020 is about digital optimization not digital transformation

Why optimization might be more attainable to enterprises than a full-scale transformation.
16 April 2020 | 11 Shares

Focusing on smaller parts of the business may be more effective. Source: Shutterstock

  • Despite real progress, full-scale digital transformation is a lofty ambition for many an enterprise
  • Instead, focusing on optimization could be more manageable, and yield better results
  • Business leaders can follow three steps to make a start 

Organizations have been allocating resources to going digital for more than a decade now. It’s something that analyst firms like Gartner, Frost & Sullivan, and IDC track and report on — and often, annual spending forecasts reflect trillion-dollar investments.

IDC, for example, forecasted that annual worldwide spending on digital transformation will reach US$1.2 trillion by 2023 and take up more than half of all spending in the information and communication technology (ICT) sector.

“Worldwide DX technology investments will total more than US$7.4 trillion over the next four years,” said IDC VP Eileen Smith.

While the forecast seems simple, the reality is that companies have been investing in climbing the digital maturity curve for a while now and have made various technology purchases, both software and hardware, for its various divisions.

Most human resources teams have an HRIS (human resource information system) platform, which is probably integrated with basic robotic process automation (RPA) to ensure routine tasks are carried out without manual intervention and staff are free to better serve employees.

The same is the case with finance teams, operations, supply chain and logistics, and so on. Every team seems to have gone digital. The question now is, can the organization be considered to have succeeded in its digital ambitions of its teams going digital? Not really.

When teams go digital, they stop doing work manually. However, unless they collaborate, scale tools and processes across the organization, and implement solutions that pool the business’ resources — its data and people — it cannot really reach the peak of the digital maturity curve.

The answer, therefore, lies in focusing on digital optimization instead of digital transformation.

Digital optimization isn’t simple because different teams are likely to have invested in solutions that don’t speak to each other and aren’t easy to integrate with each other.

Further, each team could be going digital at a different pace – those on the front-line dealing with customers every day are under more pressure than those running the organization’s core operations.

However, without digital optimization, organizations will be unable to get rid of the silos in its processes even if teams embrace collaboration in the spirit of digital innovation.

Three steps to drive digital optimization

Getting started with digital optimization is hard because although the mission and vision make sense, setting goals is hard. Further, there’s no golden playbook – every organization must figure out what it needs to do. Here are three steps to drive digital optimization:

# 1 | Assess the state of digital

The first step to optimizing an organization’s digital portfolio and capabilities is to make an assessment, ideally at the enterprise or group level, of all the tools, solutions, and products that have been purchased, implemented, and perhaps, scaled up or abandoned.

Making this first assessment is critical to ensure that mistakes made in the past aren’t repeated, that redundancies are identified, and that the business can get a sense of its actual portfolio size.

# 2 | Map out the future state of the organization

Once an initial assessment is made, the tendency is to start eliminating redundancies and streamlining the portfolio. That isn’t a wrong path but it isn’t necessarily the best path to optimization.

For an organization looking to make the most of its technology investments, mapping the future state and getting a sense of what it really wants to achieve with its technology can work wonders when it comes to deciding what digital projects to keep, what to shelf, what to kill.

# 3 | Create a roadmap with simple milestones

Finally, creating a roadmap is critical for the business, for optimization or anything else it wants to achieve.

The important thing to remember when optimizing digital investments is that the organization has one goal, one mission, and one vision. Hence, the roadmap must be comprised of simple milestones that have an impact, ideally at the enterprise-level.

At the end of the day, organizations must understand the importance of optimizing their investments in digital, and prioritize it over spends that simply expand their digital portfolio.