Changing How the C-Suite Understands Digital Transformation

Dr Stefan Sigg, CPO at Software AG, breaks down the steps to a successful digital transformation and how the board can set them in motion.

Digital transformation and innovation aren’t new concepts. They didn’t just emerge in 2020 as novelty notions in reaction to the pandemic. No, they have been a part of every boardroom discussion for years. Indeed, the word ‘transformation’ gets thrown about so much that it has become white noise to many onlookers. How often, though, do we find that speaking turns into action? Well, that must end here. Companies need to show their commitment to genuine change, rather than endlessly procrastinating and building hype.

To achieve this, they require a clear and achievable plan in which technology and culture go hand in hand. The point of transformation is to make perceptible improvements in the real world, whether that be customers or employees. Here are the three key trends that we think will bring tangible benefits to everyone involved.

Prioritise digital foundations over big bangs

Far too often, the hype around a new technology outstrips its potential to make genuine improvements to the employee and customer experiences. This is especially pertinent when there is a significant lag between the announcement of new digital solutions and tangible benefits feeding through.

There are several steps companies should take in order to shorten this disparity between expectations and reality. Firstly, companies need to set up a solid foundation of enabling and connecting technologies such as cloud and data integration. Without them, any new additions will sit idle or not fulfil their potential. Secondly, companies must find the right balance between technology and industry focus. It is not efficient for specialised companies such as banks or retailers to try and build their own proprietary base technology. They’d be far better off leaving it to the experts, using existing technology and start adding industry-specific logic at the topmost possible layer of the tech stack.

It is not efficient for specialised companies such as banks or retailers to try and build their own proprietary base technology.

This is about taking complexity away from businesses and letting them get on with what they do best. Many software vendors specialise in this very process by helping companies transfer their data, application, and integration platforms to the cloud – a very complex job for an internal team. By outsourcing this work, the other companies can focus on creating value for their customers and empowering their workforce.

Building this solid digital base will be more important than ever over the coming year. Despite ongoing uncertainties around the pandemic, the new US administration and long-term geopolitical uncertainties, businesses can overcome these challenges if they prepare now.

Putting words into action

2020 saw a rapid acceleration in the uptake of new tech. McKinsey have suggested that both consumers and businesses advanced their digital adoption by five years in just eight weeks. Microsoft argue that the incredible uptake in virtual collaboration during the pandemic equated to two years of digital transformation in two months. This came down to companies needing to adapt in order to keep operating. Nevertheless, it exemplifies what companies can achieve when they put their mind to it.

Becoming a digital company is not a simple matter of buying the latest shiny tech and throwing it at your employees. Reforming the culture in the business is a crucial hurdle on the route to transformation. Take data collection, for example – data storage company Seagate estimates that 70% of data businesses capture goes unused. Without building a culture that encourages people to take advantage of these new assets, they simply become an added complexity and cost. Firms must make well-considered plans about how they integrate these new tools into their current work practices, and when the latter need to be adapted to the technology. If management can handle this well, it will allow employees to make far better use of the tools and customers will feel the benefit. For example, industrial companies discover their IoT data as assets and transform (at least partially) into software companies. The opportunities to leverage the scale and profitability of software-based services are real.

Generational shift and what it means

Millennials have arguably become the most influential generation, taking over as the largest age bracket the US labour market in 2015. Indeed, Millennials are becoming leaders themselves, making up over a third of business decision makers. As such, companies should consider both who their employees and customers really are, what they need, and how to satisfy their preferences.

Having a digital native group in the majority and increasingly in positions of influence, will undoubtedly affect how many companies approach technological transformation. This generation wants more than barebone digital initiatives. Technology has previously been used out of necessity or designed to fit existing structures. Now, most of the workforce has a new perspective. They are open to novel concepts and using technology in innovative and efficient ways.

Software and hardware will transition from being shoehorned into the workplace to becoming its very foundation.

What lessons do we need to carry through 2021?

The truth is that no one knows what lies ahead. All we can be certain of is of more uncertainty. What is important now is not being an oracle but preparing for the unforeseeable. Invest in your digital foundations, understand your workforce, make realistic plans. If you do all of these now, you will be in the best possible position to use technology to not only survive but prosper.