Organizations will spend an estimated $2.3 trillion per year on digital transformations by the middle of the decade. But they will spend it in drastically different ways.
Therefore, while it can be tempting to follow the lead of others. Doing so can easily guide digital transformation in the wrong direction.
Three Different Realities
The first has outdated technology, so “digital transformation” means bringing the tech stack up to date. And investing in the strong technical foundation required for a digital-first future. The second has invested in technology for years but is uncertain how to adapt its business model to leverage that technology.
For this company, “digital transformation” is about finding ways. In order to deliver and derive value in a technology-driven world. Finally, the third company has the right technology and the right business model. Still, it lacks the experience to complete the transformation, so “digital transformation” is all about turning new concepts and capabilities into a viable operational model.
The Only Option
These companies illustrate that digital transformation can look vastly different across industries and enterprises.
One size does not fit all
For a successful transformation, a custom approach is the best and really the only option.
The Best Strategy for the CIO
Understanding that all digital transformations are not created equal is the unfortunate reality for most CIOs. They face mounting pressure to make progress on this issue and show results. It would help them to follow a proven playbook — but that doesn’t exist. Instead, intrepid CIOs have to figure out what their company needs (technology, strategy, and/or experience) before building a plan around that goal.
Time and Money
To make matters more difficult, digital transformation must happen while daily operations continue running as normal. That means CIOs have to fight for funding on top of their typical budgets and they must find time to handle new responsibilities without neglecting their old ones. Instead of turning all their attention and resources to digital transformation, CIOs must fit it in wherever possible.
A Holistic View
They must also think in terms that go beyond cost-efficiency. It’s easy to justify digital transformation initiatives that offset their own costs, but those are just cost-neutral — and not necessarily beneficial. A better approach takes a holistic view of ROI and prioritizes whatever initiatives deliver the highest value, even if that means spending a little more upfront.
The Necessary Evolution
Another factor to consider is the dynamic role of people and processes in digital transformation in addition to technology. CIOs will need to consider how mature they are on each of these three fronts — and then plan upgrades accordingly. Full transformation isn’t complete until every part of the company evolves — from the C-suite downward, and from the IT department outward.
Navigating Your Transformation
CIOs may not have a road map to follow or the ability to take inspiration from their peers when it comes to navigating a successful digital transformation. However, they can employ some best practices to make digital transformation equally effective no matter what form it takes:
1. Map stakeholder expectations.
Digital transformation may have one overarching agenda (update technology, gain experience, etc.), but it doesn’t have to be single-minded.
Speaking to different stakeholders across departments and levels of leadership can help uncover what people want (and don’t want) from digital transformation. Recording and then mapping these expectations helps whatever strategy gets put into action have the biggest impact possible.
2. Plan long-term.
Regardless of whether a company needs to focus on technology, strategy, or experience, it will need to address all three during the course of a comprehensive digital transformation. It’s unrealistic to think any aspect is “transformation-ready” on its own.
Furthermore, updating one affects another (adding new tech requires a rethink of the business model, for instance). A long-term plan will identify the highest priority and dedicate resources accordingly without neglecting other areas.
3. Keep changing.
Here’s one way that digital transformation is equal across companies: It’s never complete. From now on, companies will need to constantly evaluate their technology, strategy, and experience level for signs that things are falling behind.
Digital transformation will be a key competitive differentiator. Some companies will use it to surge ahead; others will neglect it and suffer the consequences. Once again, every company will need to evolve and adapt in different ways moving forward. That said, no company can afford to call the process complete and end there. It’s time to stop thinking of digital transformation as a shared experience that companies are going through collectively