Overnight digital transformation: Welcome to the year 2025, 60 months early
Back in the early 1990s, in the aftermath of a tough economic recession, I had some long heart-to-heart chats with the CEO of an ERP software company. His mood was pessimistic, as the sour economy had slowed down his business, and he was uncertain about support from IBM, which had its own problems at the time, and also controlled the underlying platform of his applications.
Those were still the days of first-generation corporate IT -- whose sole purpose was to improve the efficiency of business processes, keep customer records, and deliver reports.
Then, in the mid 1990s, something incredible happened with the IT profession. The technologists became market makers. They leapt from their roles as corporate efficiency drivers to business revolutionaries. With the advent of the commercial internet and web, IT professionals led the way in creating entirely new companies with different ways of engaging with customers and markets. Jeff Bezos, with his engineering and computer science background, launched Amazon. Larry Page and Sergey Brin, with their computer science degrees, launched Google. LinkedIn was launched by Reid Hoffman, another computer scientist. Of course, all had sizable and growing IT teams behind them.
In essence, IT professionals helped take what was a moribund, stale economic system and turned it into something dynamic. We've seen this at work in current times, as tech and data-driven disruptors such an Indigo Ag apply AI to improve seed quality, Rent the Runway apply data and AI to keep people well-dressed, and Stripe apply AI and connectivity to facilitate global e-payments. Behind every industry disruption are visionary IT professionals ready to change the world -- or at least the way we interact with the world.
Which brings us to the current state of affairs. The disruptors are being disrupted. The dispersal of corporate offices across a diaspora of home-based offices and the shutdown of economic activity due to responses to the tragic COVID-19 pandemic -- and its uncertain aftermath -- is creating a new environment and new challenges for IT professionals. Just as technology-savvy innovators upended the rotting economy of the 1990s, they will alter the course of business models in this era in ways we cannot predict. The question is, what do IT professionals need to do to keep things on track, keep their careers on track, and prepare their organizations for the post-COVID landscape ahead?
"If the pace of the pre-coronavirus world was already fast, the luxury of time now seems to have disappeared completely," relates a recent analysis from McKinsey Digital. "Businesses that once mapped digital strategy in one- to three-year phases must now scale their initiatives in a matter of days or weeks." As explored in our previous post here at ZDNet, the COVID-19 crisis is an accelerant that is pushing even the most reluctant businesses into hyper-digital mode. McKinsey notes that "Asian banks have swiftly migrated physical channels online. How healthcare providers have moved rapidly into telehealth, insurers into self-service claims assessment, and retailers into contactless shopping and delivery."
This means it's a time for action not only among tech entrepreneurs, but also for the IT professionals providing the basic services related to process efficiency, customer records and reporting. Overnight, every company has been thrust into "a world in which digital channels become the primary, and, in some cases, sole, customer-engagement model," the co-authors of the McKinsey analysis -- Simon Blackburn, Laura LaBerge, Clayton O'Toole, and Jeremy Schneider, state. "Automated processes become a primary driver of productivity -- and the basis of flexible, transparent, and stable supply chains. A world in which agile ways of working are a prerequisite to meeting seemingly daily changes to customer behavior."
Welcome to the year 2025, suddenly pushed 60 months forward. It's time to make bold moves forward with technology. Those digital dreams that have been simmering on the back burner need to be brought forward -- and IT professionals need to step up and lead the way. Blackburn and his co-authors even have data that shows boldness with technology moves keeps businesses ahead of the game. Almost half of incumbent companies adopting new digital ways, 47%, saw revenue growth exceeding 10% annually over the past three years, versus 30% of their slower-to-adopt counterparts.
To accelerate digital adoption and meet the needs of a suddenly changed world, the McKinsey analysts make a series of recommendations -- which again, mean new roles and leadership opportunities for IT professionals:
- Be bolder with technology proposals. In normal times, the costs of talent and technologies was a roadblock, and required ROI analysis for corporate leaders to sign on. Ironically, Blackburn and his team note, companies are "temporarily free from the tyranny of quarterly earnings expectations," and executives may be open to bolder new approaches. "The abrupt shift to virtual operations and interactions also provides an opportunity to accelerate your pace of learning about, and adoption of, technologies with which your organization might have only begun to experiment. As experimentation scales, so does learning."
- Test and learn: "In normal times, experimentation might sometimes seem a risky game," McKinsey states. "Changing the working models to which employees, customers, or business partners are accustomed can seem to risk pushing them away, even when those experiments take aim at longer-term gains for all concerned. The COVID-19 crisis, however, has made experimentation both a necessity and an expectation."
- Observe interaction effects: Experiments and pilots with digital rollouts usually "only test one dimension at a time, like the conversion/engagement/satisfaction rates of individual customers, the unit economics of a single transaction, or the user experience of a given digital solution. Whether they want to or not, companies in crisis mode find themselves in a different type of pilot: one of digital programs at massive scale."
- Focus on remote workforces and automation. "Learning how to maintain productivity -- even as we return to office buildings after the lockdown ends, and even as companies continue to automate activities -- will be critical to capturing the most value from this real-world experiment that is occurring. These investments won't be undone post-crisis, and those that have done so will find themselves in advantaged cost structure during the recovery."
- Start with the customer-facing initiatives that, while more complex, offer a larger upside. "Use automation and predictive analytics to quickly and effectively isolate difficulties. Look for opportunities to standardize what you're learning to support scaling digital solutions across core business processes. Standardization can help accelerate projects by reducing confusion and creating common tools that broad groups of people can use."
- Quicken your data reviews: "Review multiple sources of data on a weekly -- or more frequent -- basis to evaluate the shifting needs of your customers and business partners -- as well as your own performance. Look to a crisis nerve center as a single source of truth for newly emerging data about your employees, your customers, your channel partners, your supply chains, and the ecosystems in which your company participates. Then turn to secure file-sharing technologies like Box and Zoom to remotely share and discuss insights from this faster pace of data review."
- Work toward supply chain transparency and flexibility. "It's clear that retailers with full supply-chain transparency prior to the crisis -- as well as algorithms to detect purchase-pattern changes -- have done a better job navigating during the crisis. Other sectors, many of which are experiencing their own supply-chain difficulties during the crisis, can learn from their retail counterparts to build the transparency and flexibility needed to avoid, or at least mitigate, supply-chain disruption in the future."
- Focus on usability. "Right now customers and business partners often have little choice but to access your products or services through your new digital offerings. Their options will expand as we move beyond the crisis. How well will your new offerings stand up? If your current usability is low, experiment to improve it now, while you still have a captive audience to partner with and learn from."
Digital Transformation
This is the time to simplify and focus to avoid being overwhelmed, the McKinsey team adds. "This is perhaps the first global crisis in which companies are in the position to collect and evaluate real-time data about their customers and what they are doing, or trying to do, during this time of forced virtualization. Pruning activities and offerings that are no longer viable while aggressively fixing issues that arise with your offerings will help increase the chance of keeping a higher share of customers in your lower-cost, digital channels once the crisis passes."