Digital Transformation: How to Make it Happen?

by June 10, 2016 0 comments

An on-the-ground perspective on how companies should undergo digital transformation, with insights from solution providers, and senior leadership of enterprises who’re actually doing it

Indian enterprises have definitely become serious about digital transformation (DX), thanks to the changing technology landscape and the resulting change in consumer behavior. Add to that the onslaught of smaller, niche companies, who’re gradually pulling away business from larger enterprises, and the seriousness to undergo DX becomes even more intense. Therefore, doing digital transformation is on just about every organization’s agenda today. While it’s easy to understand the need to leverage digital channels, the difficult part comes in its implementation. Simply launching a mobile app is not digital transformation, nor is doing digital marketing on social media, or embracing the cloud.

A lot has already been said about the topic, with lots of strategic advice making rounds on the subject. However, very little is really covered on how it’s actually being done. So, our objective of doing this story is to take a deeper dive into how Indian companies are doing digital transformation, what sort of challenges they’re facing on the journey, what sort of technologies and tools are they using, what sort of skillsets are they adding, whether they are doing a complete overhaul or tackling specific issues, which industries is it happening in more, how does it differ from the rest of the world, and much more.

To do this story, we interacted with various experts working at different levels in ThoughtWorks India, a global company that provides software design, delivery and consulting services. Plus, we spoke to the Chief Digital Officers, presidents, and CIOs of various enterprises who’ve already been on a digital transformation journey for a while now to understand how they’re doing it, the challenges they face, and how they’re dealing with the same.

This story therefore gives an on-the-ground, brass-tacks perspective on how organizations should undergo digital transformation.

To get insights into where various Indian enterprises are on their journey toward DX, and how should they speed it up, we spoke to Sudhir Tiwari and Sameer Soman, Joint MDs of ThoughtWorks. We also spoke to other key members of the ThoughtWorks team to understand operational and other technical aspects of digital transformation. Here’s the takeaway, with examples of how it’s happening across different industries.

Transformation: A Common Word in Most Enterprises Discussions

As ThoughtWorks is a tech heavy company, a lot of companies approach them with a lot of interesting problems. “We’re seeing the word ‘transformation’ become a regular word in global customers’ dictionary”, said Sameer. To this, Sudhir added that “today, though everyone is talking about digital disruption, I think it’s not digital, but business disruption that’s happening because of IT. That’s quite significant, so the digitization or building foundation blocks is one thing, but fundamentally changing your business because of IT is the other big thing.”

Sameer Soman

“Companies (particularly services organizations) feel that un-bundling services is extremely crucial for them…because competition will primarily come from there, probably by a smaller player who’ll start offering some of your sub-services in a much better fashion and then gradually disrupt your business. -Sameer Soman, MD, ThoughtWorks

He said that about 4-5 years ago, Indian businesses didn’t care much about digital transformation. As e-Commerce hadn’t really taken off, retailers felt that people would only browse for products online, but finally come to physical stores to buy. Unfortunately for these retailers (and many others), companies like Flipkart, Uber, Amazon, etc. changed all that. Now, companies across industries are worried about getting disrupted and seriously thinking about how to tackle this.

“There are several reasons for this”, said Sudhir. “One is the way technology has quickly evolved over the last few years and become cheaper and far more accessible”, he said. A mobile today for instance, is more powerful than computers NASA used to put man on the moon. Second is the huge change of demographics. “We may feel comfortable exchanging visiting cards today, but tomorrow, people may tap phones instead and think of exchanging cards as a silly idea”, he added.

How Tech is Disrupting Banks

To understand just how DX is happening, Sameer used the example of banks and FIs (Financial Institutes). Consumer behavior is changing across all types of banking, so banks now want branchless banking and digitization even for services that were once believed to require human intervention, like personal wealth management, trading, etc. They’d like to offer them over digital channels, much beyond the look and feel, and into improving efficiency and correctness of its delivery.

“Banks fear that if they don’t take the lead, their competition will”, added Sameer.

Sudhir Tiwari, MD, ThoughtWorks

“Today, though everyone is talking about digital disruption, I think it’s not digital, but business disruption that’s happening because of IT. That’s quite significant, so the digitization or building foundation blocks is one thing, but fundamentally changing your business because of IT is the other big thing.”                                             -Sudhir Tiwari, MD, ThoughtWorks

Compliance interestingly, is another reason for banks to consider DX. Many public sector banks were started with tax payers’ money to offer a particular service as per a govt. mandate (like provide banking to unbanked masses in rural areas). Over time, as a bank meets its mandate, it ends up becoming the sole service provider, which is not a good thing to have. So now, it tries to use digital technologies to white label its financial services and allow smaller FIs to use them. A third reason banks are talking digital transformation is to start competing at an international level.

Sudhir further explained that banks would like to move beyond basic automation and use digital technologies to provide alternate means of banking, which existing tech doesn’t allow. This is because smaller players, like mobile payment providers (PayTM, etc.), have started taking away huge sums of transactional money and further investing it, thereby creating competition for traditional banks. In China, P2P lending market is big, and it’s gaining in India, because regulations are not there. It has reached a scale where banks want to become the middle person to facilitate the transactions.

These new players are doing well because there are no regulations, and till the time regulators decide to bring them under banking norms and give them a license, traditional banks have a reason to worry. There’s a positive side to it as well, that if given a license, they might become a bigger threat. So, regulations are also helping existing banks by preventing new players from entering in a bigger way.

Just like banks, every domain is getting effected. “The Airport, transport, and travel domain in general is also getting disrupted”, said Sameer. “Instead of calling an airport as a terminal or port, which signifies an end-point, imagine if it was considered to be the start of the journey”, added Sudhir. The entire journey could then be re-imagined in a manner that was impossible a few years ago.

Where’s Demand Coming From?

There are a few cases where businesses ask for help to totally re-imagine their business, but it’s not very significant right now. The real demand for digital transformation is coming in the following areas:

Enhance customer experience: This includes providing a seamless experience across multiple channels. Companies want to use tech to engage better with their consumers. Satyam cinemas for instance, wants to put an iPad on every seat to give customers a better experience and make money in the process because there’s a cap on ticket price in Tamil Nadu. US has started in-cinema dining, so that you come to the hall two hours before, have food, let kids enjoy in the play zone, etc. So the film becomes a small part of the overall experience.

Need to compete globally: Customers want to do both internationalization and localization to provide services in India and elsewhere.

Unbundle services: Companies (particularly services organizations) feel that unbundling services is extremely crucial for them. In an airport for instance, bags are charged separately from tickets, and differential pricing has started in tickets, based on seat location. This is applicable for any type of service. Banks for instance, offer so many services—account opening, cheques, ATM, online, etc. They could allow free processing for the first three cheques, but charge from the forth one onwards. A key reason to unbundle is because competition will primarily come from there, probably by a smaller player who’ll start offering some of your sub-services in a much better fashion and then gradually disrupt your business.

Hyper-localization with connected devices: Companies want to know how connected devices can create a high level of hyper localization and personalization to service their consumers. Delta airlines for instance, has asked to put connected devices on their largest airport in Atlanta. So if a flight is delayed by say, 25 minutes, then the company wants to send an instant coupon for a coke vending machine right next to each affected passenger. There’s no point sending it for a spa service at the other end of the airport for a short delay.

To Innovate: Companies are also setting up labs and innovation centers to experiment with digital technologies. Once an experiment succeeds for say, 100 people, it can be scaled up for the entire organization. Retailers for instance, are making one store from the entire chain as digital to experiment with things like magic mirrors, etc. They’re experimenting with infinite aisles on websites, mobile PoS, using IoT to augment the customer experience, etc.

Who Drives the Journey?

According to Sudhir, opportunity for DX lies on the business side, so most DX conversations typically start at the CEO or CxO level instead of IT. Businesses are worried that competition can come from anywhere and any format, and he cited the example of Google investing in technology to make contact lenses that can detect blood sugar levels. This may reduce the need for people to get diabetes tests done, causing disruption of medical labs business.

On the CIO front, those who understand how IT can act as a differentiator to business will become a crucial part of the DX journey. According to Sudhir, the term their company uses internally for them is the ‘courageous CIO’, as it requires a lot of courage to bring and lead change. Those who don’t will continue to provide back-end support.

The role of partners is also critical, according to Sameer, as customers expect their partners to come up with innovative ideas. Sudhir further added that IT is so central to change on the business side, that partners are needed to explore ideas on how tech can be used.

The Need for an Adaptable Platform

According to Manish Kumar, Delivery Partner, ThoughtWorks India, Digital transformation is about building a platform that can be consumed by various channels. That’s because today, mobile is the most used device, but tomorrow, it could be a wearable device. The platform has to therefore, be adaptable and re-usable. Plus, developers and ops must work together from the beginning, because the importance of quality and testing increases on a digital platform. This is because they have to deliver value instead of a bunch of test reports. Performance appraisals should be changed to reflect that.

Essential Skillsets Required

According to Mayur Wadhwa, Delivery Partner, ThoughtWorks India, some skills that are essential in a digital team include cloud computing, data science, security, and polyglot skills. That’s because IT infra is no longer a procurement problem because you can quickly set it up. What matters is to treat your IT infra as code, because it’s a platform with multiple technologies. You need polyglot skills to do hardware interfacing so that you understand the solution to a problem and aren’t too fixated on one technique. Data science is important to understand how to visualize and consume data. Continuous delivery has been there for a while, but how quickly you go about doing it requires work. A lot of skills can be re-purposed/enhanced in some sense. Earlier, people worked on mobile app development, but now, they need to work keeping the overall mobile strategy in mind. Sometimes you also need to bring in a particular skill and inject it into the rest of the team. Security expertise for instance could be brought in, but when the team starts working with these folks, you start seeing new vulnerabilities you never thought existed. That thought process then started getting injected into the system.

The key is to encourage long term thinking. Instead of creating something that solves a simple problem, look at what it’s going to do today, and where should it be a few years down the line. If you only try to augment your existing business with mobile capability for instance, then it would not last long, and would be an opportunity lost.

So, don’t start conversations like build me an app because it’s not about solving a delivery problem, but a transformative problem.

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