The coronavirus pandemic has created human tragedy on a scale not seen before. It has also acted as a catalyst for many businesses to accelerate their digital transformation, with the goal of riding out the storm through moving to the cloud, IT rationalization or simplifications, and other actions. As CEOs, CIOs, and senior stakeholders seek to make informed digital decisions in this time of uncertainty, they should be mindful of several key building blocks for digital transformation and the potential paths their journey might take.
Advancements in digital technologies have created a plethora of possibilities for enterprises. Transformative technologies such as AI and machine learning, the cloud and citizen integration have brought enterprises closer to their customers, building even more intimate relationships and providing a 360-degree view of their interactions and data. Yet McKinsey has found that just 16% of businesses have succeeded with their digital transformation. This low rate of success warrants a careful approach in running digital transformation programs.
The digital transformation journey begins by crafting a compelling vision to act as the organization’s North Star. Once this is created and communicated with stakeholders, executives can begin defining a digital strategy that enables them to realize their vision. One important aspect to consider is whether the organization is ready. Understanding the current status, capabilities and processes of the operational backbone is key to a successful digital program. Digitizing the backbone can take the organization one step closer to completing its transformational journey.
Digitization and Digitalization: Different Strategies with Different Objectives
Digitization and Digitalization are often used interchangeably, but they are two different strategies and address different issues.
Digitalization addresses new business models, new revenue sources, innovative customer experiences and digital solutions that support new customer journeys through modern digital technologies. This usually impacts the System of Engagement applications and can focus on either customer engagements/journey or creating innovative digital solutions that lay the path for new sources of revenue and market growth.
Digitization primarily addresses the internal efficiencies of an enterprise and improves operational excellence. It can encompass elements such as streamlining front-end and back-end business processes, eliminating technical debts, and rationalizing the IT landscape to reduce costs and enable growth. Digitization modernizes System of Records and System of Insight applications, helping enable consumption of structured/unstructured/transactional data and gain new insights through AI and machine learning.
Digitization at its core is not a new concept. Enterprises have been using it since 1990 through the adoption of ERP and CRM technologies to streamline their supply chains, optimize business processes, enhance customer relationship management functions and improve their operational backbone. This has helped companies reduce costs (e.g. IT infrastructure and applications, software licenses, data centers, storage), eliminate redundancies (e.g. business processes, duplicate applications), and improve operational efficiency (e.g. consolidate and improve data visibility, and untangle applications). If not addressed upfront, these hurdles will rob the enterprise of the flexibility and agility it seeks through digital transformation.
Perception, speed and the agility of a company’s digital experience are defined by the lowest common denominator of its operational backbone capabilities. If the operational backend is strong and responsive, new emerging technologies can be onboarded. New business models can be created, and existing ones can be morphed and changed with the confidence that a strong foundation can support it and ensure its success.
Choosing the Right Digital Strategy
With operational excellence achieved, the business must choose a digital strategy that focuses either on enhancing customer engagement / customer journey, or on creating digital solutions that foster collaboration and result in new business models and revenue. A gap analysis can help gain an understanding of the organization’s digital capabilities and identify which ones are required to successfully complete the transformation.
Understanding the anatomy and journey of digital transformation enables an enterprise to focus on the right engagements and initiatives. Each organization, based on its unique DNA, will define a digital roadmap tailored to its specific needs. No two organizations, even within the same industry, will have the same roadmap. The steps and sequence of the actions will be different as well.
Wipro’s Enterprise Digital Journey (EDJ): A Framework for Transformation
Our Enterprise Digital Journey map can accelerate a company’s transformation journey. Our analysis and work with 25 global clients across industries has identified five common dimensions that lead to successful transformational outcomes:
- Value Stream – Redefining how the company adds customer value in a digital economy
- Cloud/Architecture – Reshaping the enterprise’s IT landscape with digital capabilities
- Intelligence/AI – Enabling AI to take the driver’s seat for intelligent operations and experiential customer journeys
- Culture/People – Introducing new ways of working across the enterprise
- Delivery/Sourcing Model – Leveraging transformative models to source digital skills
Organizations may initiate one or several dimensions of the EDJ map to keep their digital initiatives on track and create digital capabilities that transform them into an adaptive smart organization.
Once an organization has defined its digital vision and strategy, we gather information to better understand its current state and location on the EDJ map. Questionnaires are a starting point to engage stakeholders across the defined Lines of Business, followed by assessments during workshops held during a period of 2-3 weeks. These workshops and discussions result in a detailed roadmap and implementation plan, complete with recommended digital initiatives that can be spun-off as transformation programs across the enterprise.
Transformation Success with the EDJ
One of the largest banks and brokerage firms in the US, a Wipro customer for more than 17 years, began its transformation journey by transitioning from monolithic apps hosted in on-premise datacenters and a four-decade-old mainframe to a microservices approach with reengineered apps decoupled from mainframes and an agile-scrum framework for app-development projects.
This journey resulted in an unprecedented decrease in release cycle times, new levels of efficiency and productivity, and a reignition of upskilling and cross-training throughout the organization. Adopting AI and machine learning also helped the client significantly improve its self-healing features and achieve the scale, efficiency and cost-effectiveness it envisioned as an outcome from its transformation journey.