Transforming your perceptions of digital transformation

Person in suit with grid covering half of body stands next to monitors - digital transformation
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The concepts of digital transformation and innovation did not just appear in 2020 as the world was thrown into chaos. Rather, they have been bandied about relentlessly for the last decade. Often, however, this has led to the ideas becoming background noise or well-intentioned daydreams, rather than practical changes on the ground. How, then, should business leaders transform how they think about transformation? How can they show they are committed to change by taking action?

About the author

Dr Stefan Sigg is CPO at Software AG.

Turning the theory into a reality will require more than simply investing in the latest tech. It will require mundane, but critical, work to build digital foundations, a cultural transformation, and swimming with the generational tides.

Foundations over bells and whistles

Far too often, the hype around a new technology outstrips its potential to make genuine improvements to the employee and customer experiences. This is especially pertinent when there is a significant lag between the announcement of new digital solutions and tangible benefits feeding through.

There are several steps companies should take in order to shorten this disparity between expectations and reality. Firstly, companies need to set up a solid foundation of enabling and connecting technologies such as cloud and data integration. Without them, any new additions will sit idle or not fulfil their potential. Secondly, companies must find the right balance between technology and industry focus. It is not efficient for specialized companies such as banks or retailers to try and build their own proprietary base technology. They’d be far better off leaving it to the experts, using existing technology and start adding industry-specific logic at the topmost possible layer of the tech stack.

This is about taking complexity away from businesses and letting them get on with what they do best. Many software vendors specialize in this very process by helping companies transfer their data, application, and integration platforms to the cloud – a very complex job for an internal team. By outsourcing this work, the other companies can focus on creating value for their customers and empowering their workforce.

Building this solid digital base will be more important than ever over the coming year. Despite ongoing uncertainties around the pandemic, the new US administration and long-term geo-political uncertainties, businesses can overcome these challenges if they prepare now.

Building a transformative culture

2020 saw a rapid acceleration in the uptake of new tech. McKinsey have suggested that both consumers and businesses have advanced their digital adoption by five years in just eight weeks. Microsoft argue that the incredible uptake in virtual collaboration during the pandemic equated to two years of digital transformation in two months. This came down to companies needing to adapt in order to keep operating. Nevertheless, it exemplifies what companies can achieve when they put their mind to it.

Becoming a digital company is not a simple matter of buying the latest shiny tech and throwing it at your employees. Reforming the culture in the business is a crucial hurdle on the route to transformation. Take data collection for example - data storage company Seagate estimates that 70% of data businesses capture goes unused. Without building a culture that encourages people to take advantage of these new assets, they simply become an added complexity and cost. Firms must make well-considered plans about how they integrate these new tools into their current work practices, and when the latter need to be adapted to the technology. If management can handle this well, it will allow employees to make far better use of the tools and customers will feel the benefit. For example, industrial companies discover their IoT data as assets and transform (at least partially) into software companies. The opportunities to leverage the scale and profitability of software-based services are real.

Digital natives in the driver’s seat

Millennials have arguably become the most influential generation, taking over as the largest age bracket the US labor market in 2015. Indeed, Millennials are becoming leaders themselves, making up over a third of business decision makers. As such, companies should consider both who their employees and customers really are, what they need, and how to satisfy their preferences.

Having a digital native group in the majority and increasingly in positions of influence, will undoubtedly affect how many companies approach technological transformation. This generation wants more than barebone digital initiatives. Technology has previously been used out of necessity or designed to fit existing structures. Now, most of the workforce has a new perspective. They are open to novel concepts and using technology in innovative and efficient ways.

Software and hardware will transition from being shoehorned into the workplace to becoming its very foundation.

Plotting the route ahead

The months ahead are ridden with uncertainty, but what we can be certain of is that the value of genuine digital transformation is not going anywhere. Building resilience, efficiency and agility into your business will continue to put you in the best position to overcome any new obstacles and take advantage of new opportunities as the world gets back to business.

Dr Stefan Sigg is CPO at Software AG.