Digital landscape today
In the past, technology was viewed as a basic requirement for businesses rather than a source of competitive advantage, widely adopted by most companies as a standard part of their operations. However, today's landscape paints a different picture. We are now witnessing a time when technology is rapidly evolving, and its democratisation has made advanced tools and capabilities available to a broader range of individuals and organisations.
The costs associated with accessing and utilising data have undergone a significant reduction. This decline in data costs can be attributed to various factors, including advancements in technology, heightened competition among service providers and the proliferation of data-driven business models. Consequently, organisations today have unprecedented access to copious amounts of data that can be leveraged to drive insights, foster informed decision-making and fuel innovation.
With advancements in architectural frameworks such as microservices and application programming interfaces (APIs) coupled with emerging technologies such as artificial intelligence (AI) and cloud computing, organisations now possess immense potential to develop, manage and scale proprietary applications and products at an accelerated pace. New methodologies such as DevOps and Agile, along with the availability of low-code and open-source software and tools, further empower organisations to streamline their development processes, enhance customer experiences and reduce operational costs. A combination of these factors enables organisations to bring innovative solutions to the market more swiftly, offer enhanced customer experiences and achieve greater operational efficiency.
Reality of digital adoption
Our experience and research indicate that despite the increasing emphasis on digital, numerous organisations struggle to fully realise the benefits it promises. In fact, many of these organisations fall short of unlocking the full potential of their digital initiatives, often achieving less than one-third of the expected outcomes in terms of revenue uplift and cost savings. This shortfall underscores a significant gap between expectation and realisation in the realm of digital transformation.
The obstacles organisations encounter in fully capitalising on the advantages of digital transformation typically arise from various factors, including inadequate delivery capabilities, cultural resistance and challenges in managing scalability. However, a significant portion of the dissatisfaction stemming from these transformation initiatives can be attributed to the initial lack of precision in defining the digital strategy.
Interestingly, a subset of organisations, often referred to as top digital performers, stand out in their ability to extract substantial value from their digital endeavours. These organisations unlock more than half of the revenue and cost potential from their recent transformations, slowly bridging the gap between the revenue earned and the cost incurred. This disparity between top performers and the broader cohort highlights the existence of distinct factors or strategies that enable certain organisations to excel in their digital transformation efforts.
When digital transformation is approached holistically, meaning that it is integrated across all aspects of the organisation and aligned with strategic objectives, it has the potential to yield significant benefits. Adopting a holistic approach to digital transformation can result in uplifting revenues and cost savings.
Drawing from our experience working closely with C-Suite executives across diverse industries and organisations of varying digital maturity levels, we have identified some critical factors for succeeding in today's digital landscape. It's apparent that numerous successful organisations that have embraced digital transformation have successfully addressed the following dimensions of digital strategy:
- Development of a business-led strategy: Organisations need to identify the primary factors driving digital transformation and their impact on their respective industries. They should assess the potential for new products, operational structures and business models facilitated by this transformation. Further, they should consider how this shift may empower competitors who quickly adapt to changing market dynamics and leverage emerging technologies.
- Assess key factors impacted by digital: Evaluate how digital is impacting external and internal factors such as market and industry dynamics, customer demands, regulatory requirements, operational efficiency, growth prospects, etc.
- Business model innovation: Define your business problems and articulate fundamental improvements or shifts in your current business model.
- Vision and strategic objectives: Define your North Star vision for digital based on your business strategy, ensure alignment with key executives and secure long-term commitment.
- Digital portfolio: Identify and prioritise your digital bets that are aligned with your business strategy and key business journeys, considering their potential value, impact on key strategic objectives and compatibility with your ambition and capabilities.
- Analysis of current capability gap to deliver value: Taking into account their strategic decisions, organisations should identify shortcomings in capabilities and systems that need to be developed to attain success.
- Talent: Develop your existing talent pool and build your talent pipeline to drive your prioritised digital use cases.
- Operating model: Develop an operating model that fosters customer-centricity and agility while ensuring the sustenance and scalability of the programme.
- Leverage agile principles and methodologies
- Develop capabilities in product management and customer experience (CX)
- Technology: Build a distributed technology environment for speed and scalability.
- Based on your digital use cases requirements, establish the foundational shifts required for successful digital transformation, adopt API interfaces to move from point-to-point to decoupled architecture, move from manual to automated processes via code for infrastructure, software delivery, etc., move from fixed architecture to evolving modular architecture to drive agility of business and move from batch processing to real-time processing of data.
- Data: Use data to your advantage.
- Productise data: Transform raw data into actionable insights and reusable assets that drive decision-making, operational efficiency and revenue generation.
- Develop the right data architecture: Design a structured framework to efficiently collect, store, process and access data, ensuring reliability, scalability and adaptability for your current digital use cases and future business needs.
- Build a data operating model: Establish practices and processes for managing data throughout its lifecycle, fostering governance, transparency and collaboration to maximise the value and impact of key initiatives.
- Preparation for adoption and scalability: It is imperative for businesses to sustain digital initiatives in the long run.
- Change management: Utilise change management strategies, including communication, training and stakeholder engagement, to ensure the effective adoption of digital initiatives and facilitate the transition to new digital processes and technologies.
- Performance management: Establish robust monitoring and tracking systems, including defining key performance indicators (KPIs), setting targets and regularly reviewing progress. Identify areas for improvement, enable data-driven decisions and optimise outcomes for digital initiatives.
- Governance: Governance mechanisms for digital initiatives ensure clarity, accountability and alignment with the organisational objectives while mitigating risks and maintaining adherence to the established guidelines.
- Risk management: Implement a comprehensive enterprise-level risk management framework, including risk assessment, mitigation strategies and continuous monitoring, to safeguard the success and sustainability of digital initiatives amidst inherent technological, operational, regulatory and cybersecurity risks.
- Culture: Cultivate an organisational culture that embraces innovation, agility and continuous improvement, enabling digital transformation initiatives to operate seamlessly and autonomously.
- Market sensing and portfolio pruning: Continuously monitor market trends, emerging technologies and competitive dynamics to make strategic portfolio decisions, proactively adjusting and optimising initiatives to ensure alignment with business objectives and evolving market conditions.
- Planning a roadmap to the future: Organisations should follow a sequential approach to implement the solutions and use cases, delineating the timelines, objectives and responsibilities for each programme. Additionally, they should consider the necessary actions to finance these programmes.
- Develop implementation sequence/roadmap: Define a structured implementation sequence and roadmap for executing the identified solutions and use cases, outlining the necessary steps, milestones, dependencies and resource requirements to successfully achieve the desired outcomes within the specified timelines and budget constraints.
- Estimate impact and investment case: Assess the anticipated impact of proposed solutions on key performance metrics or levers while also estimating the high-level investment required to implement these solutions, providing stakeholders with a clear understanding of the expected outcomes and investment return.
