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FOCUS - THE DIGITAL IMPER ATIVE

The need to drive a digital transformation is on the agenda for all companies. And from now on, it is no longer the so-

called ‘digital natives’ that will be setting the pace. We are seeing more and more traditional companies reinventing themselves and challenging tech-only companies for digital dominance.

These reinventions are enabled by technology trends that are disrupting companies in every industry sector – from mobility, social and data analytics to connectivity, the internet of things and digital manufacturing. But while all companies have incorporated at least some of these technologies into their customer relationships and operations, that doesn’t mean they have become digital businesses. Digital transformation takes time and every company undertakes this journey at its own pace.

The journey To digiTal maTuriTyIn order for organisations to understand their progress, they need to develop a robust digital maturity framework that sets out the four key stages through which all companies progress during digital transformation.

1. discovery and adoptionIn this earliest phase, organisations have not yet begun to structure their digital transformation programme. That does not mean, however, that there’s any shortage of activity. Individual areas of the business have often launched multiple digital projects – perhaps by launching a new customer facing website or introducing BYOD mobile policies – but these initiatives are generally uncoordinated. For obvious reasons, the lack of any joined-up digital approach is often most prevalent in companies that have decentralised governance.

2. ‘Structuration’This phase begins when companies recognise the need for a structured and coordinated approach to digital transformation. At this point, they have to define their ambition, set objectives for a programme that will enable them to achieve it, establish governance and start to acquire the capabilities they will need to drive it forward. In many ways, this structuration phase, which usually lasts around a year, is a honeymoon period. Everything looks possible. But then real challenges start to appear.

Digital tr ansformation:

managingthe journeyPierre Péladeau, Partner at PwC Strategy& Digital, gives an overview of the stages of digital transformation that every company has to – or is – going through

3. industrialisationWith their digital action plans clearly defined, companies launch into implementation. This is when they realise that they have not always put the right enablers in place to allow them to achieve their goals. In this phase companies need to industrialise their digital capabilities throughout the organisation. Threekeyindustrialenablersneedtobeputintoplace:

a. A governance and supporting organisation to drive the digital transformation across the companyb. An articulated talent and cultural change programme: to acquire and retain the right digital talents, to train all employees to the new digital tools and methodologies and a cultural change approach to embed the new ways of workingc.A transformed IT architecture and capabilities to enable agile digital developments (service design, mobile first, etc.) and a data management approach that includes infrastructure, data governance and analytics capabilities.

4.digital is the normFor digital natives, this phase is already business as usual. For any other company, it is the destination for their digital transformation. With digital in the organisation’s DNA, there is no need for a Chief Digital Officer. The entire business – across the workforce, its partnerships and its customer relationships – uses digital to deliver products and services in new ways. We will soon start to see traditional companies reaching this point. None have yet, however.

Key challengeS en rouTeOrganisations face a number of common challenges on the road to becoming more digitally mature – and particularly so in the ‘Industrialisation’ stage when they’re attempting to drive digital transformation across the business.

Having recently analysed over 60 companies to track best practices in digital transformation, we have identified three building blocks that are fundamental to a successful outcome:

• ITarchitectureanddatamanagement – under this banner lies the infrastructure to separate the core IT from the fast IT through the use of standardised APIs (Application Programing Interface), outlined below, in order to allow for agile digital development while protecting the core IT. This brick also requires the build-up of data analytics capabilities and data infrastructure. Organisations must develop clear policies for data governance, spanning open data and data that is not shared outside the business. And clarity over who assumes responsibility for data usage is essential (whether this is the CIO, CMO, Chief Digital Officer or Chief Data Officer).• Organisation and governance – achieving a higher level of maturity requires some level of centralised governance. Because digital is inherently transversal, responsibilities and interfaces need to be clearly defined, particularly in large decentralised companies with multiple Business Units having separate P&Ls. Without a more shared/centralised approach, such companies lack the scalability that is inherent in digital. It is in direct contrast to the way in which a digital native would rapidly and simultaneously launch a new OTT service.• Culture and change management – critically important, but often overlooked, this can make or break any digital transformation. Companies need to use a wide range of levers and tools to change their cultures (see graphic below). This includes adopting a strategic approach to hiring scarce digital talent, centralising these critical skills, and leveraging them enterprise-wide.

WhaT nexT?By following a structured approach to digital transformation, organisations will accelerate their progress towards breakthrough benefits. Massive improvements in flexibility, agility and scalability are all within reach.

For most traditional companies, these capabilities are still some way off. For digital natives, they are already second nature. That’s why digital transformations must start now. I