Digital transformation: Navigating the path of technological change
Digital transformation can improve both the top and bottom lines for business, but it also comes with risks
How businesses approach delivering new digital services to customers has become a hot topic, but rushing into radical change is rarely the right approach to take.
Keith Moran, group chief technology officer at CubeMatch, said digital transformation was a necessary response to the reality of the marketplace today, but that it was also not without its risks.
“There are a couple of problems,” he said, noting that understanding at the board level could be better.
Moran noted that consultants McKinsey estimate the risk of failure at 70 per cent: “Which is absolutely staggering,” he said.
“The overall landscape is rapidly changing and senior executives often struggle to understand it: the cloud, blockchain, data analysis, what does it mean? They tend to understand the core concepts, but not the details,” he said.
This is understandable, of course, given the sheer scale of technological change we have seen. In addition, some technologies are, frankly, difficult to conceptualise. For instance, containerisation is simple enough for developers to understand, but explaining its benefits to people outside tech is another matter.
Nevertheless, said Moran, the fact remained that digital technology was becoming more and more important. “We’ve seen tech pretty much disrupt entire industries overnight. It has the potential to deliver breakthroughs too,” he said.
How failure happens
Digital transformations fail for a variety of reasons. After all, every project is different. Nevertheless, there are some commonalities that can be observed.
Among the top reasons for failure, Moran said, the most significant is unclear strategic goals associated with the digital transformation agenda: “Goals that are non-specific and not related to top or bottom-line growth”.
Clear communication is part of the solution to this problem. “Sometimes there can be a lot of soft, qualitative benefits that can actually be very strong, but they can also seem vague and that can result in a lack of senior executive support,” he said.
Another common problem is difficulty around change management.
“Humans tend to, by default, fear what they don't understand. Change is hard and there can be unforeseen resistance,” Moran said.
Both of these problems point to a wider misunderstanding: a focus strictly on technology when, in reality, people should be at the centre of any business process.
“People think it's about technology, but really it's about people,” Moran said.
Unfortunately, this raises a wider issue still: today, staff shortages are apparent in almost all sectors, but as tech has increased its footprint in our lives and in the economy, a lack of talent, whether in terms of recruitment or even partner talent, has become glaringly obvious – and a real brake on innovation.
“There is a global shortage of talent able to handle complex digital transformation projects,” Moran said.
“You have to have the right people in every position, from the top down. People are what deliver success in transformation,” he said.
Notable digital transformations are rare. After all, few companies want to broadcast their woes. Nonetheless, some are known: those at Ford and General Electric in the US were widely reported on, and, in Britain, the BBC’s £98.4 million (approx €114 million) Digital Media Initiative was subject to a 2014 autopsy by the National Audit Office.
Taking a more positive attitude to failure, especially when transformation projects are not carried out as monolithic all-or-nothing efforts, can mean results improve rapidly, said Moran.
“People like talking about success. There isn't a culture of failure, it's still very much frowned upon, but if you’re undertaking a complex digital transformation programme you will fail at something,” he said.
This suggests agile methodologies are ideal, and while they do lower the risk of total failure, Moran said not every project had the same requirements.
“Agile is very fit for purpose for a lot of digital transformations, but it’s not in others, such as new product development,” he said.
However, Moran said that there were some tips for success that could be applied across the board to digital transformation projects in order to improve the success rate.
“First, start with proof of concept. Secondly, I would say you should have the courage to not start the project until you have the right people and partners. Then, do not compromise. That way you reduce risk,” he said.