When most people hear the term digital transformation, all manner of cutting-edge technology comes to mind. Depending on the industry you are in and the state of your organization’s technology maturity, digital transformation can indeed require a lot of new, fancy gadgets, custom software, cloud, IoT devices, AI/ML, SD-WAN, low-code/no-code platforms—and a host of other acronyms that represent layer upon layer of technological advancements.
It’s just as likely, however, that digital transformation for your business or organization may be as simple as providing everyone in the organization with new laptops and access to Microsoft Teams or Office365. That’s the thing about digital transformation: there is no one-size-fits-all description or set of technologies that add up to digital transformation. Digital transformation, it turns out, has nothing to do with the sum of its parts.
Defining digital transformation today
So how do you define digital transformation today? In the 1980s and 1990s, digital transformation was all about digitizing business processes and workflows (ERP, CRM, BPO, SCM, and other large-scale software projects were all the rage), making client/server work as advertised (Remember Windows 95?! Grrr.), connecting facilities and branch offices through high-speed wide area and campus networks, finding enough spinning discs to store an ever-increasing mountain of digital data, building out data centers,; and much more.
Even though many of these activities are still ongoing (and still carry mission-critical importance), these types of projects were more foundational than transformative by today’s standards. They were internally focused. The goal was to move the organization away from time-consuming, manual processes, improve efficiency, and save money.
Fast forward to today and much of the groundwork has been laid for what can be viewed as true digital transformation: The use of technology to fundamentally change how an organization operates day-to-day; interacts with its employees, customers, partners, and suppliers; develops new products and services; and, in many instances, modify the business model upon which it was founded. (Product companies becoming service companies, for example. And vice versa. Apple, Microsoft, and Amazon all come to mind.)
While streamlining processes, saving money, and improving efficiencies are still important, the main goal today is to grow the organization’s top line by “delighting” customers so they come back because they want to, not because they have to. Captive markets are increasingly hard to find in today’s digitally-flattened global marketplaces and brand loyalty is fleeting. The next best thing is just around every digital corner.
And then a pandemic hit
It’s no secret that the COVID-19 pandemic supercharged digital transformation. Companies did in days what they were planning to do in months or years pre-COVID. Grocers like Kroger made curbside pickup and delivery center pieces of the shopping experience. Restaurants, hard hit by government shutdowns, also moved rapidly to adopt online ordering, curbside pickup, and delivery as the mainstays of their business models.
Through the use of the cloud, mega-companies with hundreds of thousands of employees managed to send most of them home and still maintain their day-to-day operations.
And, while IT scrambled to find more laptops, headsets, and VPN licenses, business leaders realized that the digital transformation projects they had engaged in pre-COVID were saving their businesses. This was a revelation to many. Technology and IT, it turned out, really were more than just cost centers.
One major telco CIO I spoke with last year said if not for the decision to move to cloud-based telephony a few years earlier, relocating thousands of customer service reps to home offices overnight simply would not have been possible. As it turned out, their net promoter score actually went up during the pandemic.
Another CIO I know accelerated plans to digitize paper invoices from the network of independent suppliers the organization relied on to provide services to its members. Without people in the office, there was literally no one to handle the invoices as they came in. Pre-COVID, this was a back-burner project.
The blurry line between internal and external
The common thread that binds these 2 examples to today’s definition of digital transformation and what makes it so different from days past, is the fact that organizations can no longer choose between internally and externally focused initiatives. They have to do both at the same time.
If an organization ignores modernizing their data storage network while building out a customer-facing app, for example, and that causes long delays, their customers will move to a competitor. And, because there is almost no dividing line separating business from consumer technology today, this happens in both the B2B and B2C worlds with equal rapidity.
Updating the CIO’s role in digital transformation
As the CIO of one of the world’s oldest and well-established tech companies told me recently, digital transformation today is all about the customer’s digital experience. Everyone today expects the same ease of use and speed they experience from digital natives like Netflix and Amazon.
When BestBuy, for example, began to lose significant sales to online rivals in the early 2010s, they fought back by closing underperforming stores and, just as importantly, tightly linking their customers’ online and in-store experiences. It worked. Since its 2012 lows, the stock price has increased 728 percent and the company is doing just fine.
This same CIO said that now that digital transformation is no longer a conversation held in the future tense: The goal for CIOs going forward is to build common platforms, services, and capabilities for the entire company. That way every business unit leader who is thinking about digitalization can leverage a common set of tools. This achieves 2 ends simultaneously: accelerating digital transformation for the entire company and, two, creating a unified customer experience around all products and services.
CIOs need to evolve with the times, she concluded. They need to think not like the technologist or order-takers of days past but more like a CEO or COO—someone who sees the organization holistically. But, unlike the CEO or COO, whose responsibilities lie elsewhere, it’s the CIO’s job to help the organization thrive through the use of technology, not hold it back.