We Want to be Digital, But What Does that Mean?
A few weeks ago I got a call from a client “Owen, we presented our digital strategy to the board yesterday. It went well but the board wants us to go quicker and are prepared to invest in that. Can we talk?”
“Of course we can talk” I replied, “but before we dive into it, what exactly does the board mean when they say digital?”
I have asked this question a lot over the last few years. I asked this question initially because I didn’t have a clear definition of what digital meant. Researching digital didn’t really help as the literature contains nearly as many different views of what digital is as there are commentators out there talking about it and in case you’re wondering, that’s a lot. So here we were, everyone wanting to be digital but no real consensus of what that meant. It made me wonder, how can an organisation become digital if they can’t agree on what digital means? If by chance you do become digital in the face of little agreement on what it means, what’s the chance it will actually add value to your organisation?
The answer it seems is very little as most digital transformations fail. Forbes believes that 90% of global organisations have initiated a formal digital transformation initiative and that 84% of these have failed to deliver the desired results. Mckinsey put that number at 70%. Accenture at 73%. It probably doesn’t matter which number you pick it’s pretty nasty. Most digital transformations fail. Defining a total solution to this ongoing failure will need to wait for another blog, but I think a good step towards improving your odds of success is to have a common understanding of what digital means for your organisation.
Having asked many people what they mean when they say digital there appears to be three common answers.
The first view of digital is that it is all about customer engagement. For many digital means using technology to support the business to proactively engage with their customers as and where customers like to be engaged. This is headlined by social media and mobile and supported by analytics and increasingly artificial intelligence. Customer engagement is a good place to start for any initiative and digital is no exception. After all, as Peter Drucker said the purpose of business is to create and keep a customer. It’s a good place to start and for many organisations will be a strategic focus, however as the other views show it perhaps isn’t a complete definition.
The second view is the digital is all about the “post ERP” new and emerging technologies. Collectively these emerging technologies have been labeled SMAC (Social, mobile, analytics (or big data), and cloud) for short. In 2017 we likely need to update this acronym to include artificial intelligence (SIMAC anyone?). As IDC and a number of other analysts have said, it’s not so much the individual technologies that are important so much as the interaction between them. The magnifying effect of the interaction between them has led IDC to name this era the “third platform”. This view seems to be mainly pushed by vendors and analysts. At the risk of being seen as slightly cynical I reckon this is driven in part by self interest as this is where their growth will come from. That said, this view seems to be a fuller view of digital than customer engagement and provides some logic for digital to be in some way different from all of technology.
All of technology. That is the third common definition of digital. At one level of course it’s true. New technologies come and go as fast as the latest trendy bar or restaurant. SIMAC is simply the latest trend. It’s all ones and zeros after all. This view is most often held by IT professionals. They have seen it all before. This is simply another evolution. Time will tell whether this is simply another evolution or a more seismic change for the IT professional.
Most people describe one of these positions when asked what is digital. While I find it fascinating that there is still diversity of opinion around what digital is, in the end there are a number of issues that organisations need to consider:
- It is difficult to achieve a goal that you cannot clearly define. If you are committed to digital for your business (which you should be) you need to ensure that everyone in your organisation, starting with your executive leaders, has a clear and agreed view of what digital means for your organisation.
- In the end digital is not about digital, it’s not about technology at all, it’s about value. Rather than focusing primarily on digital, focus on how your organisation creates value and then think about how digital can contribute to this.
- While the definition of digital may not include traditional IT investments such as ERP, to realise value you need all of your technology working together. The new SIMAC technologies need to integrate and use your core data and when / if this results in a business transaction (e.g. a sale) then that transaction and associated data need to flow back to core systems.
One final point. This is not a game where follow the leader will be successful. “Standard” or “normal” approaches to digital routinely fail to deliver value. Often organisations describe digital programmes as if they are one off changes, similar to my client I referred to at the start of this article who wants to get to digital quickly. Digital programmes are anything but one off and you need to ensure you do not treat your digital programme as a one off “project”. Why?
Even ignoring the failure rates of large change projects (see the statistics above, 70% + failure rates) technology changes so fast that what you do today is likely to be out of date in a year or two. This rate of change means that your digital strategy cannot be based on technology. If it is today’s hot technology it is tomorrow’s legacy anchor. What should it be based on? Well, that’s a story for another day.