Five winning plays for digital transformation:
What does digital transformation mean for legacy systems?
Digital transformation might be where companies want to be, but that doesn’t mean IT leaders can afford to forget about their existing infrastructure investments. Gartner says 90% of current applications will still be in use by 2023.
This older kit can be an obstacle to change. Almost half (44 %) of CIOs believe complex legacy technology is the chief barrier to digital transformation, according to the Logicalis Global CIO Survey, with 51% saying they plan to adapt or replace existing infrastructure as a means of accelerating digital transformation.
It is encouraging IT leaders to recognise the replacement of legacy systems with modern, cloud-based systems is not in itself an objective. This process of re-platforming is the foundation for business change, rather than the actual process of digital transformation.
Who is responsible for digital transformation projects?
As the traditional guardians of technology investment, CIOs tend to have a big say in digital change projects. Yet CIOs are far from the only executives with a role in digital transformation management, and the pressure for change has led to the rise of new C-suite specialists, such as chief digital officers (CDOs).
Analyst firms fanned the flames by suggesting the appointment of CDOs could hasten the demise of the traditional IT leadership role. Gartner originally claimed a quarter of businesses would have a digital chief by 2015, and IDC said 60% of CIOs would be replaced by CDOs by 2020.
Right now, those predictions look way off beam. While line-of-business employees are good at buying discrete digital technologies, CIOs have the experience of integrating systems and services. In most cases, appointed CDOs work with their CIO colleagues to exploit advanced technology on behalf of the business.
In fact, CIOs have used their experience to maintain a tight grip of digital transformation. Gartner says more than half (55%) of the 300 top-performing CIOs in global businesses also hold the CDO role. Digital transformation affects the entire business and CIOs help ensure technological elements are understood, bedded down and useful.
What’s the difference between digital transformation and business transformation?
Business transformation is accelerated by and built upon digital technologies. It’s a sentiment that chimes with Phil Lewis, director of digital experience at retailer Boden, who says digital, rather than being a thing you do, is a way of working.
“I think that’s the big difference. I think digital transformation within a business is not about putting in technology that does digital, it’s more about the way that you work with those tools and work across teams,” he says.
Digitalisation, therefore, is a way to help the business transform. Such is the potential power of disruption that debates about digital or business transformation are redundant. “There isn’t an IT or a business strategy; instead, there’s a single digital business strategy,” confirms Lisa Heneghan, global head of KPMG’s CIO advisory practice.
When does digital transformation stop?
It doesn’t. Many people make the mistake of thinking of digital transformation as a discrete project. As Forrester suggests, true transformation is a journey, not a destination. Digital transformation remains a slippery concept that involves the delivery of value to the business and its customers in new and perhaps unexpected ways.
Yet while the demand for change will keep on coming, 21% of business and technology decision-makers believe their digital transformation efforts are already complete. Such executives are deluded, as almost-constant strategic iteration is the new norm. Digital-led change, confirms Gideon Kay at Dentsu Aegis, is likely to go on forever.
“The word transformation implies there’s a beginning and an end – and there isn’t,” he says. “I’ve spoken to peers who are doing projects that are badged as digital transformation with a shelf life of two-to-three years. That’s not long-term sustainability – in fact, you could argue whether any digital system or service offers sustainability.”
How is data transformation evolving as a concept?
Just as digital transformation constantly changes, so do its constituent elements. Right now, most business transformation activities involve the innovative use of data, whether that involves analytics, IoT, or machine learning. In many ways, as digital transformation has evolved it has become more about data-led change than anything else.
This transition can be seen in executive job titles, too. As use of the chief digital officer epithet has waned in recent years, so chief data officers have become more common.
Research company Econsultancy tracked the use of the chief data officer title on LinkedIn for two years. In April 2016, there were 2,899 people who identified as chief data officers; by February 2018, there were 11,418.
So, the form of digital transformation continues to evolve, meaning the process of defining digitalisation remains complex and contested. The one thing we can be sure of is that transformation in whatever form it takes, is here to stay, which means CIOs and the rest of the senior team must build a sustainable business strategy.
The road to digital success is full of challenges, including change management, security, and legacy systems. AI and Internet of Things will drive digital transformation through 2020
Key Words for Digital Transformation
The forces of the digital revolution have shaken company after company. Industries have been transformed. Entire media and product forms have vanished. Pity the enterprise whose fortunes are tied exclusively to the analog world, be it producing film, renting videos, retailing books, or selling packaged software.
By many rights, one might have expected to find Adobe on the register of companies disrupted by digital. And yet the 35-year-old software developer has persevered. Really, it’s done more than that. Adobe has excelled, and it has done so by embracing the very technological forces ― think cloud, mobile, platforms, IoT ― that could very well have been the harbingers of demise for a legacy producer of packaged software designed for the desktop.
Adobe exceeded $100 billion in market cap and joined the Fortune 400 for the first time in 2018, while ranking No. 13 on Forbes’ Most Innovative Companies list. Adobe Chairman and CEO Shantanu Narayen found himself similarly positioned on Glassdoor’s list of top CEOs of large U.S. companies.
- Digitisation: Is the process of converting information from a physical format into a digital one. Conversion (Data)
- Digitalisation: Is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities. It is the process of moving to a digital business. Adaptation (Process)
- Digital Transformation: Is the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers. Digital transformation is imperative for all businesses, from the small to the big enterprises. Creation (Business)
- Business Transformation: Is the process of fundamentally changing the systems, processes, people and technology across a whole business or business unit, to achieve measurable improvements in efficiency, effectiveness and stakeholder satisfaction. Optimization (Business)
- Digital Transformation: Is the process of using digital technologies to create new or modify existing business processes, culture, and customer experiences. These digital solutions enable inherently new types of innovation and creativity, rather than simply enhance and support traditional methods. Innovate or Optimize (Business)
- Innovation: Business model innovation (sometimes in conjunction with a new customer or user value proposition) achieved by leveraging new digital tools.
- Disruption: Digital disruption is the change that occurs when new digital technologies and business models affect the value proposition of existing goods and services.
- Disruptive Innovation: Is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances.