Digital isn’t a choice
By: Tarun Dhot
Tags: New Ways Of Working, Digital Transformation, Digital, Customer Experience, Digitization

Co-authored with Vikram Sandhu

There’s a difference between Digitization, Digitalization and actual Digital

Transformation.

Digital transformation is not something that enterprises can implement as projects. It is a CUSTOMER-driven strategic business transformation that requires cross-cutting organizational change and isn’t simply a project with a defined scope and timelines. (Forbes).

But far too often introducing digital technologies (i.e. projects) became a substitute for digital transformation and the pace of change was slow. That is, until our lives changed forever with the unexpected start to 2020.

How we work, how we live, how we consume…it all changed. Cooped up in our homes for months on end, and with the world’s leading digital journeys at our fingertips (Amazon Prime, Netflix) we, the customers, who experience these best in class digital journeys multiple times a day, drove the need for the change about to happen.

Hence unsurprisingly, the most obvious effect of the pandemic on the industrial world was a brutal acceleration in the process of adopting digital capabilities and laying the foundation for true digital transformation. This truly is a come to Jesus moment for many businesses globally.

Digital transformation is no longer a long-term goal or a notional abstract, it is happening right now, and in a very Darwinian model. The companies that adapt quickly will thrive, those that don’t will become cautionary tales.

The pandemic has also made clear that that there is no one size fits all digital

transformation strategy for every company, rather a tailored digital journey based on the market conditions they are navigating in.

While the immediate impact of the pandemic saw companies focus on enabling remote work for their workforce, the remainder of the year saw companies re-adjusting plans and budgets. Some trends are now appearing as companies globally fast track their digital transformation journeys.

What is apparent is that the time for experimentation is over.

Digital transformation put on the fast track: Initial economic downturn forced companies to make difficult budget cuts. Simultaneously, companies fast tracked their digital efforts due to accelerated customer demand, limited in-person interactions, and remote employee needs.

Initial economic downturn forced companies to make difficult budget cuts. Simultaneously, companies fast tracked their digital efforts due to accelerated customer demand, limited in-person interactions, and remote employee needs. Accelerated Digitalization of Customer Interactions : A McKinsey survey found that 58% of customer interactions were digital as of July 2020, compared to 36% in Dec 2019 and 20% in May 2018 [1]. It indicates a greater acceptance of customers to interact with companies digitally and is only expected to go up.

: A McKinsey survey found that 58% of customer interactions were digital as of July 2020, compared to 36% in Dec 2019 and 20% in May 2018 [1]. It indicates a greater acceptance of customers to interact with companies digitally and is only expected to go up. Additional IT spend: Global IT leaders reported a median additional spend of 5 percent of IT budget to deal with the COVID-19 crisis [2].

Global IT leaders reported a median additional spend of 5 percent of IT budget to deal with the COVID-19 crisis [2]. Going all in: A KPMG CIO study found almost half (47 percent) say the pandemic has permanently accelerated digital transformation and the adoption of emergent technologies [2].

A KPMG CIO study found almost half (47 percent) say the pandemic has permanently accelerated digital transformation and the adoption of emergent technologies [2]. The largest changes are most likely to stick in the long term: On similar lines as the KPMG study, the McKinsey study also suggested that companies are making the pandemic-related investments with the long term in mind [1]. For most, the need to work and interact with customers remotely required investments in data security and an accelerated migration to the cloud. Now that the investments have been made, these companies have permanently removed some of the pre-crisis bottlenecks to virtual interactions.

Our reflections:

This is the opportunity to fully commit to digital transformation, accepting the “good costs” that enable future capabilities

For many companies, this is the opportunity to fully commit to digital transformation , accepting the “good costs” that enable future capabilities, things like cloud, low code, ML/AI and modern data architectures. This is the moment for leaders to challenge status quo.

, accepting the “good costs” that enable future capabilities, things like cloud, low code, ML/AI and modern data architectures. This is the moment for leaders to challenge status quo. Cyber to the forefront: Not the most obvious, but the sheer reliance of current and future digital solutions underscores the importance of cyber security. While cyber-attacks are at an all-time high, they are nothing new, but the insider threat i.e. the lack of awareness about what attacks look like, is the biggest cause of cyber security issues right now. We anticipate a lot of investment in awareness programs, an increased emphasis on zero-trust architectures and a new generation of AI-powered tools to monitor and proactively manage the threat landscape.

Not the most obvious, but the sheer reliance of current and future digital solutions underscores the importance of cyber security. While cyber-attacks are at an all-time high, they are nothing new, but the insider threat i.e. the lack of awareness about what attacks look like, is the biggest cause of cyber security issues right now. We anticipate a lot of investment in awareness programs, an increased emphasis on zero-trust architectures and a new generation of AI-powered tools to monitor and proactively manage the threat landscape. To move out of reaction mode and enable the new reality, the need to be world-class at ruthless prioritization is the need of the hour. Regardless of the chaos in the moment, companies need to invest immediately in the foundational things that matter to the business in the future.

and enable the new reality, the need to is the need of the hour. Regardless of the chaos in the moment, companies need to invest immediately in the foundational things that matter to the business in the future. Digital technology initiatives will be at the top of Board of Directors’ priority investments for the near future.

for the near future. Policies to prepare for the future of work: While many companies are well and truly on course to digitally transform, it is important to recognize that many, especially in developing economies, remain digitally disconnected. They may not have access to workers with the right skills and face challenging business environments. Workers, on the other hand, have little protection and do not have the skills or flexibility in labor markets to adapt. To face these challenges, governments will need to step up to ensure the budding potential of these businesses are realized. This is their opportunity to think bold and accept the “good costs” of infrastructure investments needed for digital economies.

The Human Element: While digital transformation is nothing new to the industrial world, it is the digital transformation of our personal lives that the pandemic has played catalyst for.

Companies that can make this as seamless for the average unassuming customer will have future authors deciphering business models and secret sauces for the coming ages.

Sources:

2. Harvey Nash / KPMG CIO Survey 2020

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Disclaimer: Views, thoughts, and opinions expressed in this article belong solely to the authors in their personal capacity, and do not represent the author’s current or past employers or any other groups or individuals.

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