Cohere Consulting - Perspectives #Strategy

Digital Transformation - Keeping up the Momentum

Fri, 05 Aug 2022 10:10:03 +0000

Momentum is a key quality that define digital transformation. Businesses need to be aware of the consequences of losing pace of digitization and if they slow down should consciously make key shifts in their approach to gain momentum.

Digital Transformation (DX) n is no longer a buzz word today and has become central to growth of the businesses. While the importance of DX is evident, companies move at different paces in their journeys based on their respective capacities and capabilities. Businesses who make modest but meaningful progress in their DX programs, reach a stage where they ponder over two major questions; ‘How have I been doing till now?’ – a report card of sorts that can indicate their position in the journey and ‘What should I do next?’ - a roadmap that can point out opportunities that need to be pursued. As they grapple with answers, some companies tend to get stuck, spend more time than required in finding the right answers and realize their progress impeded only to see the competition rushing past them. There could be many reasons for the slow down. It could be one flourish of an investment that becomes overwhelming for the organisation and they take time get it, or the management is called to justify the investments till date and address the gap between where they are now and what they set out to do or the management is forced to turn its attention to higher priority tasks, business or environment related. Businesses need to evaluate whether the compromise they make because of the slow down.

This article attempts to identify certain actions companies can take to bridge the gap, pick speed, and move towards their desired levels of digitization. There are atleast 5 areas that companies can look at.

1. Escape from the ‘Run’ Mode Swirl

When a significant implementation gets done with, companies move in to a ‘run’ mode to sustain the investment. The management attention is drawn heavily towards fixing internal and external issues, addressing gaps, and bringing some sort of stability. In short, they get caught in the swirl of maintenance. The pipeline projects get impacted and move slowly than planned leading to time delay and cost overruns. Business should consciously avoid getting bogged down in the ‘Run’ mode instead move towards rethinking the traditional Run, Grow, Transform model. A related challenge some companies face is the reluctance to let go of incumbent solutions that cannot scale to serve the growing needs of the business. An impartial evaluation of what works and what doesn’t need to be carried out to take some tough decisions in getting rid of inefficient investments.

2. Strengthen the Governance with Cross-Functional Teams

Certain businesses tend to rely heavily on CIO to sustain the pace of digitization. While on one side, the market forces expect more and smart investments, on the other side, as the stakeholders realise the benefits of the early successes, they see the potential of digital and raise their demands. The IT may soon find itself overburdened managing existing programs and planning for the future projects. Companies may benefit by establishing a cross functional team consisting of star performers to support the business and the CDO / CIO in the transformation journey. The team should be made accountable for the outcomes of the digital investments. Their roles could include:

· Evaluate ideas and build business case for the management to commit.

· Act as change agents who work with employees to adopt new ways of working.

· Ensure coordination across the functions for an inclusive approach to investments

· Benchmark their progress against competition and other players.

3. Adopt more dynamic and flexible methods

A key roadblock in the digitization journey is the pre-set practices of planning, budgeting, and deployment of the digital programs. Businesses need to adopt a more dynamic and flexible working methods by taking the following actions:

· Practice a Monitoring, Evaluating and Learning cycle of key aspects of digitization including stakeholder communication, performance reviews, data management and project management.

· Refine customer journey as often as possible to ensure the changing behaviours and expectations are understood early on and the knowledge ploughed back to redefine digital programs as appropriate.

· Adopt a continuous change process that need to keep pace with the intended business changes and also minimize the side-effects of disturbances to the day-to-day operations and employee involvement

· Be flexible in resource allocation – budgets, human resources – even within the tech budget it could be new softwares or just training to bring people on equal footing.

4. Bring periphery ideas to the core

In any business, there could be a number of opportunities for digitization that lie on the edges of the on-boarding spiral. The management should consciously focus on those opportunities that lie at the edges and bring them to the core by a process of evaluation and shortlist and executing them as a continuous stream of engagements. The management can consider the following:

· Encourage employees to suggest ideas on how their respective functions can do with digital.

· Build a digital lab that brings solutions and partners on a pilot basis and once validated, scale quickly to have a wider footprint of the solution.

5. Build on the Basics

Irrespective of the efforts in the above areas, what may tip the scales towards productive outcomes are the basic ingredients of DX; commitment not just from the management but also from the Board, an inclusive approach to employee participation, a rigorous evaluation of products and solutions and a disciplined on-boarding of the selected products and solutions.

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Losing the pace of DX can be damaging for a business as the recovery can be fraught with risks. By adopting a more flexible and inclusive approach supported by a strong governance can help them gain momentum and realise their DX goals.

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Wither IT Strategy?

Wed, 22 Jun 2016 10:23:51 +0000

Organizations need to shift to Digital Strategy from IT Strategy to create greater impact on their businesses through technology. The shift involves changes in traditional methods of IT investment planning.

There were a number of implicit assumptions that went into the such an exercise; that the business environment would be more or less stable, technology advancements would be predictable and organizations would benefit from a longer term investment plan. Cut to today’s times – businesses operate in an increasingly volatile and complex environment; the role of technology is changing and in certain cases driving the business models.

In such a situation, how should organizations approach their technology strategy? Can we hold on to these assumptions of stability? Can we still follow a hardcoded 2-3 year approach when the pace of change outside is drastic?

Digital disruptions we see suggest that organizations need to follow a radically different approach to formulating their technology strategy. Disruptive technologies have brought in new business models with the likes of Uber or Airbnb. Convergence of devices, connectivity and information availability have greatly enhanced the way we see and use technology. These developments have far reaching impact on the role of IT in the organization and thus the approach to IT Strategy.

To navigate through the complex and dynamic environment, businesses would gain by shifting from developing an IT strategy to promoting a Digital Strategy. An important aspect of this shift is the recognition of the potential of technology in determining business direction, a radical change from viewing IT as a mere function of the organization.

Key Considerations for Moving from IT Strategy to Digital Strategy

Not business strategy driving IT but IT driving business strategy

In the traditional sense, IT was always considered as a business enabler which implicitly meant it would require business clarity that comes from business strategy. In other words, IT would trail business specifications. Well-defined processes and associated business rules were considered as pre-requisites for large IT investments such as ERP and CRM. A time delay in bringing appropriate IT was inevitable had its share of issues.

Digital strategy premise is that the boundaries between business and IT strategies have blurred. They go in tandem and think of Uber or Airbnb, technology may define the business strategy. Business specifications are not mandatory to select IT. Organizations may choose to follow processes defined by a business application or depend on a cloud service provider who provides business services built on strong technology.

Not long term hard coded but short cycle and dynamic

IT strategy would typically cover a 2-3 year plan providing a roadmap for IT investments with a provision to review on a frequent basis and re-word the strategy where required. It was easier for the CIOs to follow the plan, make suitable budget provisions and go through a justification and approval process. To a large extent, the plan remained static and execution would have the plan as the basis.

In the changing circumstances, a long term plan that is hard coded will have no meaning to organizations. While the planning will still have a multi-year visibility, CIOs need to be pro-active or react with agility to unforeseen business situations. Towards this, they may need to plan and execute for the short term and ensure that such plans all tie-up to provide long-term benefits. Such situations would correspond more to market actions – either providing an additional service to customers or quelling a competitor’s actions and may span tactical and transaction levels. For instance, a bank may completely overhaul customer on-boarding process not envisaged initially, taking care that such unplanned programs tie-up to the overall customer engagement process.

Not comprehensive bulky but focused lean

Traditional IT strategy would cover all aspects of IT – applications, hardware, other infrastructure like networks and IT teams – that would be required to enable all areas of businesses, tied up vertically and horizontally to present a comprehensive plan. The dependencies would be laid out and hence investment decisions would cover all the dependencies.

Digital strategy is aimed at focused aspects of business such as customer services or backend logistics or regulatory compliance. These business areas can be seen as independent components and decisions taken as per the demands of these business components.

Not CIO centric but business centric

The custodian of an IT strategy would be the CIO in most organizations. He would own the plan and initiate changes when required. The requirements from the business would queue up in the CIO’s office and prioritized as per the plan document.

The digital strategy need to follow a more inclusive approach where the plans would be drawn up in close coordination with business and even customers or vendors. In progressive organizations, the involvement of business would also extend to execution where they may be allowed to take investment decisions (operating under an overall governance structure) that may span selection of applications, infrastructure and service providers. We see this change already in effect. In a survey conducted by McKinsey on IT strategy, more than 83% of IT executives indicated that their company’s IT strategy was developed collaboratively between IT and business.

Conclusion

A shift from older methods of IT strategy to a radically different approach of Digital is vital to the organizations operating in the ever changing markets to take full advantage of the advancements in IT. The change impacts all areas of organizations and need to be initiated at the top. CIOs need to work towards getting the buy-in of the businesses through their close involvement and ownership in key IT decisions.