A new report released today by global research and thought leadership organization,Leading Edge Forum (LEF), examines the myths and realities of digital transformation through interviews with over 30 large organizations. The report, entitled ‘A Tale of Two Missions: From IT Modernization to Business Transformation’, provides a solid steer to executive teams through today’s two main digital transformation missions – near-term IT modernization and long-term business transformation.
Key findings of the interviews included all highlighting how difficult both IT modernization and, especially, business transformation can be. It is clear in the report that, although most companies can easily imagine a highly transformed digital future, day-to-day priorities, politics and norms tend to get in the way. The most common reasons for making digital transformation hard were given as:
- Usually not the most pressing short-term business issue
- Mission and goals are often vague, high-level and futuristic
- Payoff is often uncertain, and often hard to measure
- Organizational and customer inertia can be hard to overcome
- Initiatives tend to cut across existing organizational silos
- Motivation and commitment can be hard to sustain
- Legacy/ERP – technologies can be hard to modernize
- Service provider mentality in enterprise IT
- Real and imagined regulatory concerns
- Transformational leadership, ownership and politics are complex
Looking at the definition of Digital Transformation, the report found organizations held a wide range of divisive opinions. For some, it’s a useful way to describe their major change initiatives. Yet, others see it as either vendor-driven hype that distracts them from the real challenges they face, or even as a potentially demeaning way to portray how things are currently done. Digital transformation is a very broad area, so to make it more tangible, LEF segments it into three more tangible areas in the report:
- IT modernization is far and away the most prominent form of change observed, as just about every firm wants to build a more agile and efficient digital foundation, or core.
- Business transformation (BT) is considerably less common, as it occurs when an incumbent organization successfully makes a major shift in strategy, business model, organization or culture. BT is how existing firms successfully adapt to major marketplace shifts.
- Industry disruption is often described as the displacement of incumbent industry leaders by new technology-led rival. While we typically think of disruption as being led by start-ups with new business models, but it can also come from sources such as China, various political/economic shocks and/or natural disasters.
“Information technology has already transformed or disrupted huge parts of the global economy,” said David Reid, programme director at Leading Edge Forum. “The technology community anticipates a powerful wave of change based upon various combinations of smart products, machine learning, industry-specific business platforms, algorithmic processes, robotics, and more self-service, data-driven operations. We also know that the current wave of automation and intelligence technologies holds at least as much – and we think even more – potential than anything we have seen thus far. Taken together, these capabilities provide a vision for transformed, 21st century organizations that look much more like today’s digital giants than the traditional global firm. While there are many uncertainties regarding timing, it’s hard to bet against these developments over the long course of the 2020s.”
The report outlines the skills and techniques being used by organizations to overcome the inertia challenges of delivering on digital transformation initiatives, such as embracing markets that are more inherently digital as a test bed for digital transformation across the legacy organisation.
The full report offers executives strategic approaches, support and action plans designed to give practical advice, giving digital transformation projects the best chance of successful delivery.
You can download “A Tale of Two Missions: From IT Modernization to Business Transformation” athttps://leadingedgeforum.com/research/from-it-modernization-to-business-transformation/.