Confused by Digital Transformation? Welcome to the Club

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If you feel that you’re falling behind in the race to digital transformation, take heart – you’re not alone. It turns out that a good chunk of enterprise leaders believe they are either coming up short in building the next-generation data environment or are unsure where they stand because the definition of success is too vague.

This should not come as a huge surprise, of course, since digital transformation is unlike technology developments of the past, primarily because it involves much more than technology. This time, the change reaches way beyond the data center and into the very heart of the business model, and the business culture, itself.

A recent study by Vanson Bourne on behalf of Sungard AS, for instance, showed that 52 percent of IT decision-makers say their digital transformation projects are not progressing as fast as the C-suite expects – not surprising given that the people calling the shots are rarely aware of the challenges posed by their directives. But 54 percent also said that the pace of change is failing to meet the expectations of rank-and-file knowledge workers, which is somewhat surprising given that the people doing the work are often the most resistant to change. At the same time, a good 40 percent of IT admitted they lack the skills to implement transformation on their own.

This is backed up by another study, conducted by research firm IFS, showing that while 86 percent of top enterprise executives say digital transformation is vital to their survival, only 40 percent have implemented a strategy to see it through. Key technologies to propel this transformation include cloud computing and the Internet of Things, followed up by cognitive computing, machine learning and wearable devices, although few organizations have adopted these tools, even the cloud, in ways that can lead to meaningful transformation, says IFS’ Mark Boulton.

With any technology initiative of this magnitude, the hardest part is getting started. At this stage, it is often impossible to define a successful outcome, let alone devise a strategy to achieve it. This is why asking the right questions is probably the most important thing the enterprise can do at this point, says OpenMatters’ CEO and digital consultant Barry Libert and Megan Beck, along with UPenn professor Yoram Wind.  Writing in the Harvard Business Review, the trio poses several key questions related to digital transformation, starting with whether the plan on the table is real transformation or just a digital upgrade. Real transformation, of course, involves not just putting new infrastructure in place to make current processes more efficient, but actually converting the business model to reach customers and generate revenues in entirely new ways. As well, does the current strategy have the buy-in of both technology- and non-technology-oriented workers, and are there any metrics with which to define a successful transformation?

As many Fortune 5000 companies who have already engaged in the process can attest, it is not enough to simply achieve digital transformation; it has to be done quickly, efficiently and without breaking the budget. And it has to produce tangible results on the back-end, says Magnum Consulting’s Frank J. Ohlhorst. Transformation poster boys like Uber and AirBnB are impressive, but since they started with a cloud-based, service-driven business model, they can’t claim to have actually “transformed.” A better example would be Caterpillar, which has embarked on an ambitious project to sell data in conjunction with its traditional heavy machinery product lines. By utilizing smart technologies and IoT-style connectivity, the company hopes to not only add value to the things it sells but drive new revenue from a robust suite of service offerings.

In the end, this is the heart of digital transformation: to create new business opportunities from fully digitized process management. New, more powerful and highly automated infrastructure is a key element of this change, but it will be money poorly spent if it does nothing more than make existing business models more efficient and less costly.

This time, the technology revolution is truly about tearing down the old and building up the new.

Arthur Cole writes about infrastructure for IT Business Edge. Cole has been covering the high-tech media and computing industries for more than 20 years, having served as editor of TV Technology, Video Technology News, Internet News and Multimedia Weekly. His contributions have appeared in Communications Today and Enterprise Networking Planet and as web content for numerous high-tech clients like TwinStrata and Carpathia. Follow Art on Twitter @acole602.

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