Transforming to Become a Digital Business

Transforming to become a digital business requires focus beyond technology, leadership beyond the CIO and technology beyond SMAC

- Kapil Dev Singh, Founder-Coeus Age

Businesses across the globe are exposed to both the challenges and opportunities by the digital disruption in consumer behavior and tastes. On the continuum from physical to digital, industries may be at different levels of evolution, but all of them are moving towards being more digitally driven. Believing that digital disruption will not impact a particular industry or business is an ostrich like behavior who buries its head in the sand to avoid accepting the existence of an impending challenge.

Embracing digital in creating new value propositions for the customers and new delivery models is a journey. However, a matured evolution encompassing both value and delivery will require organizations to transform. I intend to briefly touch upon various aspects of digital transformation through identifying important related questions.

What to transform?

Leadership in contemporary businesses needs to address three important questions related to their digital journey-

1.    What is the industry activity around digital and how is the organization responding to it?

2.    What business capabilities digital technology is creating, what is their relevance in the competing landscape and are they being leveraged adequately or not?

3.    What is the internal preparedness of the business to create relevant digital capabilities for gaining competitive advantage?

Kapil Dev Singh,Founder-Coeus Age

In order to answer to these questions, the leadership needs to understand their industry better, ponder over their strategic orientation and gauge their internal readiness. Improving upon the internal readiness includes focus on leadership’s digital vision, inclusion of digital as a strategic focus, new structure to implement digital initiatives, a supporting digital culture, digitization of boundaries of interaction with key stakeholders and an agile digital infrastructure. Without an orchestrated play on all these elements and their simultaneous development, a digital journey may soon become untenable and unfulfilled.

Capability creation is the centre of a digital journey

No two businesses will become digital in similar fashion, they will evolve in their typical ways. Transforming to become digitally led is a journey, which must evolve through creating series of capabilities to compete. These capabilities are not just about digital technology and includes people and process aspects, however digital technology will play increasingly bigger role. There are several reasons for that. One, capability creation is based upon integration of processes across functions and departments, two, capability creation needs process information for real time decision making. Both can be effectively enabled by digital technology.

Capability creation, the main agenda of the question number two also successfully integrates two diverse perspectives on strategy. One, the outside in perspective, represented by the belief that it is the industry position a firm occupies that determines its profitability. Michael Porter has been its key proponent, whose famous five forces model defines the relative attractiveness of a position. Two, the inside out perspective, represented by C K Prahlad and Gary Hamel’s theory of core competence.

However, the need is to integrate both the outside in and inside out perspectives as both are relevant for defining the business strategy. Putting capability at the centre of the discourse, linking industry analysis and internal readiness of an organization serves the purpose.

Who should lead the digital transformation?

Should it be the CIO by default or should it be the CDO who is emerging to lead the digital initiatives or should it be the CMO who is investing heavily on digital in her function? Well, the roles of CIO or CDO or CMO can be debated but a successful digital journey requires focus from the top i.e. the CEO and an active involvement and support of all the other CXOs.

CEO’s involvement becomes important from two perspectives. One, creating capabilities is by nature an activity cutting across functions and hence cannot be left to be handled by a functional head. Two, is the impending power struggle in the wake of digital transformation. Both the perspectives require the involvement of the top management as without that it will remain restricted and embroiled in struggle.

According to a Coeus Age-DynamicCIO research study, businesses where digital adoption is relatively higher also report the active involvement of the CEO and the CXOs. They also have clearly defined roles and responsibilities with a more contemporary governance structure around IT defined and practiced. They also have a more contemporary Enterprise Architecture defined and implemented in their organization.

The digital infrastructure

Many believe that it is all about the new technologies represented by social, mobility, analytics and cloud (SMAC) to create a digital enterprise. Well, SMAC certainly has opened new and innovative ways in which people, information and processes can be converged. However, the yet to be successful SMAC stack needs a robust IT infrastructure underneath. Without a well automated, integrated, optimized, synchronized and secured applications & middleware stack and a core infrastructure stack, SMAC may remain just like one of those initiatives that the organization flirted with. The SMAC, middleware and infrastructure stacks must mesh well to create six layers in order to be effective in creating a digital infrastructure- experience, documents, process, application, data and infrastructure.