Five winning plays for digital transformation

Improving customer engagement and modernizing IT systems are among the digital transformation projects with the highest chances of success. Here's how your business can get started.
Written by Alison DeNisco Rayome, Managing Editor

VIDEO- IT top 5: Essential digital steps for business success

Most organizations are in the midst of digital transformation projects that aim to keep the company competitive in an expanding digital market. However, the definition of a digital project varies from company to company, according to Khalid Kark, managing director of Deloitte LLP and director of research for Deloitte's CIO Program.

It might mean enabling mobile and social capabilities, or getting the workforce to collaborate more, or focusing on customer engagement and experience, or developing and driving a new revenue source. So how can business and tech leaders choose the projects that will yield success?

"You have to look at your business context, and develop an approach that would allow you to drive quick value for your business," said Kark. "It doesn't matter what it is, but there needs to be an urgency around doing it. Go after the low-hanging fruit, build and establish credibility, then go for bigger, more innovative efforts to drive change."

Here are five digital transformation projects with high chances of success.

1. Build a cross-functional digital team

Digital enablement involves setting the foundation for further digital transformation, by adding channels such as mobile, social, and cloud, said Hung LeHong, vice president and Gartner fellow, and member of the CEO and Digital Business Leaders research group.

"It's more of a technology preparing the ground than actual business change," LeHong said.

It seems that many organizations are preparing for digital enablement: the most popular digital measures that companies plan to implement in 2017 are moving systems to the cloud, shifting to online digital tools, using data analytics, and using social media, according to a recent Tech Pro Research study.

Part of this process should include building a cross-functional digital team, said Gianni Giacomelli, chief innovation officer at Genpact, and head of its Genpact Research Institute, which has studied digital transformation. "Your digital projects should cross organizational fault lines -- business people, IT people, and front- and back-office people should be represented," he said.

2. Improve customer engagement

Evolving customer behaviors and preferences are the number-one catalyst driving organizational digital change, according to research from Brian Solis, principal analyst at Altimeter.

"Many businesses are looking to customer experience to bring about organized change," Solis said. "They learned customers are making decisions differently, and are much more mobile and instant, so the tech they're investing in is to serve a particular need."

For example, Sephora went through several customer-focused digital transformation projects, Solis said. The company studied how their customers make decisions, what technology they use and how it fits into their lives. It then created a new customer experience group to bring together employees across departments to develop new ways to reach their market, and revamped their infrastructure, apps, and kiosks. The company also opened an innovation center in San Francisco to test new technologies in a live environment to try and get ahead of the consumer.

"They learned how the physical aspects of customer interaction needed to change," Solis said. "Every aspect -- web to mobile to app to cloud -- was done to create a unified customer experience for a higher and more advanced series of expectations."

SEE: How Sephora is leveraging AR and AI to transform retail and help customers buy cosmetics (TechRepublic)

Research from Deloitte also found that 57 percent of CIOs ranked customers as the top business priority. "My sense is that a lot of companies are gravitating toward customer engagement and experience [projects], because there is a tangible benefit they can see," Kark said.

3. Enhance the employee experience

Improving employee engagement will soon follow doing so for customers in terms of necessity, said Solis.

For example, in recent research, Solis found that most enterprises still provide employees with desktop phones. However, most employees do not use those phones, due to their use of smartphones and other devices in their personal lives.

"Employees are now at the point where if they have a desktop phone and other old technologies they have to work with, they start to view that organization as being archaic, and not as a desired place to work," Solis said."If the customer experience is painful or dated, the employee starts thinking about other companies."

Some 79 percent of companies report that they have reduced paper use by shifting to online and digital tools, while 58 percent said they use online employee training tools, according to a Tech Pro Research survey. But while just 37 percent said they have shifted away from traditional phone and email systems, another 33 percent said they plan to do so in the next year.

4. Enable the Internet of Things

Companies should look to enable IoT elements into systems such as manufacturing, according to LeHong. "It will make your factories more productive, remove costs, increase productivity, and maybe even quality by using IoT sensors and analytics," he said. Doing this does not change the business model, but does add business value, he added.

One example of this is General Electric: The company integrated sensors into its aviation, transportation, manufacturing, healthcare, and energy production businesses, and created software to analyze the resulting data. Its software and services business made about $6 billion in revenue in 2016 -- a 20 percent increase from the prior year.

Utilizing IoT in manufacturing can also pave the way for larger digital transformation efforts later on, LeHong said. For example, a manufacturer may be able to use data gleaned from sensors in order to begin selling their product as a service.

Currently, only 20 percent of companies said they have implemented IoT technology, according to a Tech Pro Research survey. However, 30 percent of companies said they plan to do so in 2017.

5. Modernize the business of IT

Modernizing the business of IT is often a low-hanging fruit for digital transformation projects, according to Bill Briggs, CTO and managing director of Deloitte Consulting.

For example, AIG applied machine intelligence in its IT shop by automating its IT ticket system. Now, more than 140,000 tickets are being resolved without the need for an employee. The company was able to redeploy IT workers to do more impactful projects, Briggs said.

Creating a digital enterprise involves reshaping the way work gets done at the back and mid-office, that will ultimately impact the front end. "You can prove out some of these digital technologies that will have impactful front and back office implications in the IT shop," Briggs said.

It can be difficult to prove backend ROI or a business case to get the needed funding for a project like this, Kark said. "There is a huge amount of back-end effort around legacy systems, capabilities, culture, security, risk management, data, and emerging technologies that need to be in place for digital efforts to be constructive and appropriate in terms of driving value,"Kark said. "If you don't do that, the front end is only going to be beneficial to a certain [point]."

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