Digital transformation has long been used as a form of executive shorthand for the idea of exploiting technology to make-over a company that is struggling to adapt to a changing business environment. But a concept that once seemed to promise radical change has now mostly come to mean business as usual, with added computers – and cost.
"Digital transformation has become an increasingly meaningless term, thrown around by analysts and perpetuated mainly by consultants to describe almost anything they think a company is doing, or should be doing, with existing or emerging technologies," says Ian Cohen, chief product and technology officer at transport company Addison Lee Group.
Customers and employees are becoming increasingly disillusioned by overuse of technology – and its over-promises and under-delivery, he says: "We need to do better."
Part of the problem: too many companies are still making the mistake of buying technology without really knowing what the challenge is that they are trying to solve. Many businesses are concerned about the threat of disruption and determined to go through some sort of digital transformation – which leaves them open to the hype of vendors keen to make sales.
Certainly, Frost & Sullivan's analysis of top end-user IT priorities says digital transformation is actually one of the top reasons why companies plan to replace the technologies they currently use.
But progress has been slow. Industry body the Cloud Industry Forum (CIF) notes in its analysis of the changing role of the IT department that it's been many years since organisations first started to embrace digital transformation. Yet despite this time in gestation, CIF reports that development is poor – just a quarter (28%) of UK businesses now have a fully-formed digital transformation strategy in place.
That figure's low, even if – as CIF suggests – digital transformation remains a constant work in progress. Its analysis reports a lack of resources, like a skills shortages and a lack of budget, as the biggest challenges hampering further digitisation. But crucially, there's little evidence in the report of why businesses are pursuing a digital transformation strategy in the first place.
And therein lies the key problem: digital transformation is too often set up as an end in itself, rather than as a pathway to a defined business goal. Too many executives still believe digital transformation is a way to deal with the threat of disruption that lurks menacingly on the horizon, when in fact digital transformation is nothing more than a means to get there. Even worse, digital transformation projects have even been blamed for an increase in systems outages as new projects create problems for organisations' existing tech infrastructure.
Cohen says business leaders need to stop being caught up in the hype. They need to pause and focus on how technology might be able to change their businesses for the better, rather than concentrating on simply which technologies their business should buy.
"Companies need to start their 'change programme' by asking what they want to be at the end of this change and why their customers should care. And I use the term 'change programme' rather than 'digital transformation' deliberately because very few companies want to genuinely transform – that is, to become something entirely different," he says.
"Sure, some may want to transform some processes or transform the way they engage with their customers, and that level of focused removal of the redundant and outmoded should be applauded. But even that is not 'transforming the business'."
So what does such a change programme actually involve? He says it involves using digital systems and services, whether that's cloud, analytics, artificial intelligence (AI) or whatever else, to meet clear business objectives, which normally means boosting customer experiences, improving revenues and satisfying shareholders.
"If, as they should, companies want to use these technologies to become a responsive, adaptive, engaged and connected organisation – with an obsession for delighting their customers – then they need to obsessively do things to get there. There is no benefit in hiding behind an ambiguous and meaningless 'digital transformation' label. You need to get specific if you're going to succeed," says Cohen.
At his own firm, Cohen – who joined as group CIO at Addison Lee in July 2017 – now has responsibility for all product and technology activities. This focus is about recognising that everything his business does should be directly related to creating better customer experiences.
Cohen's aim is to use technology to deliver engaging services for customers, whether that's passengers, bookers, or the firm's drivers. Projects might include using technology to automate car allocation and dispatch or the development of high-end chauffer services, but technology is simply a conduit to help the firm develop products and services for its customers.
The notion of outlining the business challenge before thinking of the potential technology solution is something that appeals to Neil Ward-Dutton, vice president at analyst IDC. His firm's research shows that 65% of European CEOs are under significant pressure to deliver results from digital transformation, but Ward-Dutton says that European organisations have a long way to go in these initiatives.
IDC research shows, for example, that only 20% of European organisations currently believe they deliver consistent, empathetic experiences to customers; just 23% of European organisations have intelligent, cross-functional processes in place driving their operations today. Ward-Dutton says companies must take a more joined-up approach to change.
"Transformation in the digital age is technology-driven, but people-powered – it can't be only about technology," he says. "Digital transformation must be guided by a clear business vision – because only then can the organisation really get behind the change: it has to make sense to everyone."
Another problem: a term like digital transformation means different things to different people; it leaves non-IT people cold and ends up being a superficial promise to hopefully deliver something better in the future.
We can use technology to change business for the better but we shouldn't just assume it will happen. Proper, digital-enabled change requires clear objectives, strong actions and then – and only then – the application of existing and emerging technologies. And while the concept of digital transformation might be tarnished right now, there is a real argument for technology-assisted change to be made.
"There is an industrial and cultural revolution underway, but it's about the nature of 'connected everything', the resulting abundance of data and the intelligence – artificial or otherwise – applied to that data for social and commercial benefit. Now, if we achieved that then we'd really be talking about a transformation," says Cohen.