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Friday, August 17, 2018

Why Real Digital Transformation is Hard to Achieve

Becoming a Digital Business is very challenging because it demands new thinking, a willingness to evolve and bold ideas. As market leaders continue to embrace a digital transformation agenda, they're finding that the transition requires significant changes to organizational culture and internal systems.

A recent Gartner survey found that a relatively small number of organizations have been able to successfully scale their digital business initiatives beyond the experimentation and piloting stages.

"The reality is that digital business demands different skills, working practices, organizational models and even cultures," said Marcus Blosch, research vice president at Gartner. "To change an organization designed for a structured, process-oriented world to one that's designed for ecosystems, adaptation, learning and experimentation is hard."

Gartner has identified six barriers that CIOs must overcome to transform their organization into a truly digital business. Savvy CEOs and line of business (LoB) leaders will expect meaningful plans to fix these known obstacles to progress.

A Change-Resisting Culture

Digital innovation can be successful only in a culture of collaboration. People have to be able to work across boundaries and explore new ideas. In reality, most IT organizations are stuck in a culture of change-resistant silos and hierarchies.

CIOs aiming to establish a digital culture should start small: Define a digital mindset, assemble a digital innovation team, and shield it from the rest of the organization to let the new culture develop. Connections between the digital innovation and core teams can then be used to scale new ideas and spread the culture.

Limited Sharing and Collaboration

The lack of willingness to share and collaborate is a challenge not only at the ecosystem level but also inside the organization. Issues of ownership and control of processes, information and systems make people reluctant to share their knowledge.

Digital innovation with its collaborative cross-functional teams is often very different from what typical enterprise employees are used to with regards to functions and hierarchies -- resistance is inevitable.

The Business Isn't Ready

Many business leaders are caught up in the hype around digital business. But when the CIO or CDO wants to start the transformation process, it turns out that the business doesn't have the forward-thinking talent skills or resources that are needed to succeed.

"CIOs should address the digital readiness of the organization to get an understanding of both business and IT readiness," Mr. Blosch advised. "Then, focus on the early adopters with the willingness and openness to change and leverage digital. But keep in mind that digital may just not be relevant to certain parts of the organization."

The Ongoing Talent Gap

Most organizations follow a traditional pattern -- organized into functions such as IT, sales and supply chain and largely focused on operations. Change can be slow in this kind of legacy  business environment.

Digital business innovation requires an organization to adopt a different approach. People, processes and technology blend to create new business models and associated services.

Employees need new skills focused on innovation, change and creativity along with the new technologies themselves -- such as artificial intelligence (AI) and the Internet of Things (IoT).

Current Practices Don't Support the Talent

Having the right talent is essential, and having the right practices lets the talent work effectively. Highly structured and slow traditional processes don't work for digital business. There are no tried and tested models to implement, but every organization has to find the practices that are best suited to their needs.

"Some organizations may shift to a product management-based approach for digital innovations because it allows for multiple iterations. Operational innovations can follow the usual approaches until the digital business team is skilled and experienced enough to extend its reach and share the learned practices with the organization," Mr. Blosch explained.

Change Isn't Easy

It's often technically challenging and expensive to make digital business work. Developing platforms, changing the organizational structure, creating an ecosystem of partners -- all of this effort requires an investment in time, resources and money.

Over the long term, enterprises should build the organizational capabilities that make embracing change simpler and faster. To do that, they should develop a 'platform-based strategy' that supports continuous change and design principles and then innovate on top of that platform, allowing new services to draw from the platform and its core services.