7 Major Digital Transformation Pitfalls to Avoid


Singapore, June 2, 2016


 

The digital revolution has created unprecedented challenges for organisations as they try to navigate these changes by embarking on their digital transformation journeys. How can organisations be relevant and competitive as they seek to digitally disrupt the way they achieve operational efficiencies and transition to digital business models?

Organisations need to tread carefully with a solid strategy to navigate their digital transformation journey.
Companies like Amazon, GrabTaxi, Uber and AirBnb have digitally disrupted the market ecosystem, redefining how businesses are done. This digital revolution has created unprecedented challenges for organisations as they try to navigate these changes by embarking on digital transformation.

At the individual level, how we work, live, play and learn has been fundamentally altered, and consumers now have greater control in shaping their interactions with businesses. We have entered a new “Age of Customers” where digital technologies have empowered customers and enabled them to rewrite the rules of business. The connected consumers of today expect to easily access content that is relevant to them – anytime, anywhere and on their device of choice.

For organisations to remain relevant and competitive, they need to be able to engage customers across the various touchpoints. To do so, they need to align their corporate culture, organisational structure and technology to enable such customer interactions.

HOW IT’S DONE

The first milestone for any digital transformation journey is to achieve operational efficiency and this includes an optimisation of enterprise operations, and the workings of the ecosystem of suppliers, partners and employees. Optimisation could involve aspects such as process automation or integration of systems.

With a foundation of operational efficiency, enterprises can then create a more intimate relationship with customers by taking advantage of digital technologies such as social media or analytics to better understand their customers. The aim is to enable a better customer experience and thus reap benefits for the enterprise in the form of customer retention and customer acquisition.

The optimal outcome for any digital transformation journey would be the transition towards digital business models, ensuring that the organisation can remain relevant and generate profit in the ever-changing digital world.

POTENTIAL PITFALLS

However, the path to digital transformation is not a smooth one. Each organisation has its own culture, strengths and weaknesses, and IT systems, which makes the transition to a digitally-focussed business unique to each organisation.

  1. Getting caught up with the technologies.

It is easy to get fixated on the adoption of digital technologies such as social media, mobility, analytics, cloud and the Internet of Things (IoT) which are often touted as having the ability to transform the way organisations engage and interact with their customers and can improve their operational efficiency.

Digital transformation is not just about implementing technology, but is firstly a business transformation where people and behaviours (and not technology) are the most important part of the digital transformation journey.

  1. Delegating the digital transformation to the CIO.

Leadership buy-in is mandatory for digital transformation success. Top management needs to lead the digital transformation process, as the whole journey requires accountability, ownership and support from the very top. Digital transformation is not a project that is left to the CIO or the IT department. Regardless of the type of technologies used, the key to digital transformation is envisioning and driving change in the way an organisation operates. Digital Transformation is a management and people challenge, not just a technology one.

  1. Missing the big (business) picture.

Have a clear end-game business model in mind before embarking on your digital transformation journey. Start by envisioning the end result. Then take stock of your digital assets and use that as a starting point to work towards fulfilling your business vision.

For instance, Airbnb has a radically different business model from the typical hotel and motel chain. It was their business model that dictated that their technology setup is more similar to eBay with its community and rating system than that of an online room booking system for hotels.

  1. Viewing digital transformation as a destination.

Digital transformation is really an ongoing journey. To make good progress, three important factors need to work together: people (both staff and the eco-system of partners), processes (governance, etc.), and technology.

Technology is constantly being updated and digital transformation is like a moving target where the strategy needs to be continually evaluated and updated.

  1. Being slow to react.

Speed is of the essence in the digital world, where agile iterative processes are the approach to take, instead of the previous waterfall method with long drawn development lifecycles. Agile development is more about fast development to deliver results, where you can quickly adapt to user needs in a rapidly changing environment.

Customers are used to new standards of user-friendliness, speed and agility with today’s websites, and so they too expect a similar experience from their banks and shops. The digital business model allows digital products and services to be created much faster than before. An example is how the operating model of DirectAsia.com allows them to react more quickly to customer preferences by enabling users to customise their insurance policies, where the price of the policy depends on the level of cover and which optional benefits suit the users’ needs.

Remember how Kodak once defined photography and represented the latest technology? It was one of the first to develop digital cameras, but it failed to evolve fast enough and its business model became no longer viable.

  1. Believing in a monopoly of people and ideas.

The Internet has connected communities of people, such as researchers, hackers, coders and those with common interests. Organisations who fail to tap the creative ideas and energies of such communities may lose out in the digital transformation of their organisation.

Consider how Wikipedia is based on the contributions of people all over the world, or how many Apple iPhone apps are born out of crowdsourcing. Closer to home, Singapore’s Land Transport Authority (LTA) publishes a variety of transport-related data through DataMall for members of the public and the community to co-create innovative transport solutions.

Harnessing groups can enable an acceleration of your digital transformation project as business demands for digital transformation cannot simply be met in a timely and cost-effective manner with in-house-only skills and resources and traditional delivery mechanisms.

  1. Failing to engage the customer.

It is easy to forget about the customer in the equation, even though your company’s products and services are really targeted at them. Remember to seek customer insight and feedback, and build your products and services for the customer, instead of what the company thinks customers want. For this reason, steps made towards digital transformation must take into account customer experience as it is closely linked to your digital strategy.

Ultimately, organisations need to choose if they want to become digital leaders by riding on the wave of change and move ahead of their competition, or to risk joining the ranks of old-economy organisations by becoming a victim of digital disruption.

Are you ready to chart your digital transformation journey, take the next leap forward, and embark on your digital transformation journey?

At NCS, we use digital technologies (Social Media, Mobility, Analytics, Cloud, IoT) to transform the way organisations engage and interact with their customers and improve their operational efficiency to gain a competitive edge. 

Learn more about Digital Transformation. Email us at reachus@ncs.com.sg for more information.