The urgent need for Digital Transformation
Traditional business models are unable to drive growth in the new normal. Research conducted by Accenture Global found that organizations that doubled down on tech investments before the pandemic are now growing 5x faster than their non-tech counterparts. The data further goes on to reveal that 18% of the entire sample of “high-performing” organizations broke previous performance barriers.
COVID-19, disruptive technologies, shifting consumer behavior, and increasing awareness of the societal and environmental impacts of business and technology have forced companies to rethink their entire operation. Enterprises need digital transformation to grow, improve operational agility, create more value, and provide better experiences for customers.
Failure is not inevitable
Many transformations fail because the starting point is technology instead of business outcomes. Digital business transformation is nothing but transforming the business for the digital age. It is a holistic approach to changing the way an organization thinks, organizes, operates, and behaves. The number one rule of business is to be easy to do business with and deliver value. This principle of customer-centricity is central to all successful digital-native businesses. It is the fundamental driver of digital transformation.
Although the objective looks simple, looks can be deceiving. A study by Forbes indicated that up to 84% of digital initiatives fail in the very first year. This is a loss on investment returns to the tune of an estimated $3.3 trillion. Another study by the Everest Group found that 73% of companies failed to provide any business value from their digital transformation process. Failed transformation efforts are keeping well-intended businesses from taking the necessary step to move digital. So, what is keeping organizations from transforming successfully? And (more importantly) why do some businesses succeed in realizing their digital transformation goal where others fail.
Steps Towards Success
The first major step towards success is being realistic. It is a fact that most organizations lack the necessary experience, knowledge, skills, and other resources needed to achieve the desired outcomes. An article published by McKinsey titled “Unlocking Success in Digital Transformations”, highlights fundamental missteps when implementing a strategy around current resources and the goals set. Most organizations that held unrealistic expectations were destined to fail from the get-go.
Digital transformations are more difficult than traditional change efforts to pull off. The journey is both complex and hazardous, with many forks in the road. Organizations should look to partner with a guide who does digital transformation as their day job and has a proven track record of successful transformations. This will ensure they stay on-track to a successful transformation and not lose out on valuable time and money in the process.
The Canvas Model of Transformation
The canvas model is deceptively simple at first glance, but used the world over by smart enterprises of all kinds. The left side of the canvas – like the left side of the human brain – is about logical, efficient connections within the internal processes. The right side, like the right side of the human brain, covers creativity. Organizations that are getting started on their transformation journey need to populate the template, clarifying their strategic goals.
How Does The Canvas Work With Business Architecture
The architecture is the actionable blueprint of the strategy set out on the business model canvas, according to The Business Architecture Guild. The business architecture shows a cross-organizational design of the whole business. It breaks (decomposes) key elements down into four components, also known as the four pillars.
Capabilities are building blocks abstracted from the organizational model, to achieve the desired outcomes. Like Lego bricks, they are independent of each other and can easily be swapped, replaced, and reused. This modularity avoids integration tax and supports automation – a key goal of any digital transformation.
Value streams are a high-level view of business processes that help customers align them and understand inter-relationships. Every sector has specific value streams – for instance, vets treat animals, telcos run networks, insurance firms process claims, etc.
The organization defines the organizational structure. This means the roles, responsibilities, and locations it needs to function efficiently and effectively.
Information represents the relationships between data sources and data formats. It describes entities that an enterprise is likely to collect information from or about. It articulates the relationships between them and their associated data. It avoids the details of system-level constructs. It includes all business information, not only computerized data.
Capabilities Trump Technology
Many transformations fail because the starting point is technology instead of business outcomes. Capabilities include technology and the other ingredients – such as domain design, modular/composable business based on capabilities, and knowledge and experience – needed for technology to deliver what is required by the business. This is why capability roadmaps have replaced or are used to complement technology roadmaps. THIS uses the capability roadmap with clients to expand the capabilities element of the business architecture.
Benefits of Capability Roadmap
There are a number of benefits that capability roadmaps offer to organizations expanding their digital capabilities.
- It helps organizations gain a deeper understanding of what capabilities they need now and in future.
- Capability roadmaps define the underlying capabilities as well as encapsulate how they could be developed.
- Capabilities are the ‘what’ of business needs, whereas processes are the ‘how’.
- Capabilities are overarching, stable, and long term; they help overcome the issue of different units wanting to change the same things at different times, which often generates much reworking.
- Reworking is counter to digital practices because it pulls IT resources in many directions, slows progress, and duplicates effort, squandering money, time, and resources.
- Capabilities are all about modularity, replication, configuration, integration, and automation.
APIs Enable Smart Integrations
A critical building block in building digital transformation issmart integrations through application programming interfaces (APIs). Smart integrations use applications programming interfaces (APIs) which McKinsey says, “are the connective tissues in today’s ecosystems”.
The most critical APIs, business APIs, are the digital services offered by each business capability domain. They are the business building blocks of your digital transformation. THIS believes that any service that has a business meaning or business use case should be viewed and treated as an API. The real value comes from reusing APIs wherever possible and automating smart integrations.
Automating smart integration is essential for digital transformation because:
- It provides a consistent way of doing things, which supports replication and reuse instead of re-invention and retro-engineering. It enables configuration rather than requiring customization.
- It provides visibility across processes and the entire lifecycle.
- It means being able to provide a better customer experience.
- It shortens the time from concept to cash.
- It cuts costs, including massively reducing human error.
As seen above, APIs have terrific potential for every business. Unfortunately, they are frequently wasted, often through low API reuse as a result of poor governance, which is not widely understood.
Digital transformation is, at its core, about changing the way you think and operate as an organization. While technology is implicit in your digital progression, technology by itself does not provide a competitive advantage. Your digital progression is the sum of the capabilities you put in place to navigate change, create value, and be competitive in the digital world.
What you build and the way you build it will be different from howother organizations might perceive their transformation journey. It’s important to have a clear blueprint of how you plan your approach and see it through till the very end. In the grand scheme of things, it’s best to have a partner who can guide you every step of the way.
Torry Harris Integration Solutions (THIS) has a reputation for digital transformation consulting based on more than 23 years’ experience. It co-creates a digital transformation lifecycle for each customer to make sure they arrive at their desired destination on time.
This approach fuses a customer’s deep knowledge of their business and operations with our expertise in leveraging universally recognized tools and methodologies. It means customers don’t have to navigate the tools themselves; they just get the best value from them. Together we create a coherent, comprehensive, flexible transformation strategy.