In the first blog in our series on digital maturity, we examine how to understand where your company falls when it comes to digital maturity, giving you insight into approaches that will help you most effectively navigate Digital Transformation to your advantage.
Digital Transformation remains a priority
Digital Transformation remains a top strategic priority for almost every organization. This is clear from the level of investment in Digital Transformation. Global investment in Digital Transformation projects is forecasted to continue increasing, reaching $2.3 trillion in 2023, and totalling more than $7.4 trillion in total over four years. According to this model, this will be the first time DX spending will represent more than half (53 percent) of worldwide technology investments.
One of the many reasons for Digital Transformation is the need for more data and intelligence to allow businesses to truly understand where they stand. Leadership can use this insight to define clear business objectives that will accelerate and future proof their business. The goal is to identify effective and measurable methods to continuously improve and grow.
Another pillar of DX initiatives is the need to create a better customer experience, one that is personalized, connected, and efficient across all channels (multi-channel and/or omni-channel). These outcomes are essential for organizations that wish to remain viable and stay competitive. In addition, when markets suddenly shift in the face of unforeseen events, successful Digital Transformation initiatives make it easier for companies to remain agile, pivot, and adapt.
DX is a mega-trend in part because of the many competitive advantages it can create for organizations. But it’s also difficult to define, plan, and carry out effectively. This is particularly true when there’s a lack of clear understanding of the business outcomes that Digital Transformation can and should drive. This is why we always state that Digital Transformation projects should never start with technology, but instead with strategy.
The key to successful initiatives comes in understanding your business model, your desired business outcomes, and then using that information to assess your digital maturity. We discuss digital maturity in greater depth below, but digital maturity includes an organization’s readiness to have a big picture, long-term strategy for transformation. This has to include provisions for promoting cultural change and adoption as major components, and to include plans for progressive and achievable projects as steps in the process of Digital Transformation. When you can evaluate your organization’s digital maturity overall, you get a clear perspective on your current state and how to move up to the next level of digital maturity that will ensure DX success
Why so many DX initiatives fail… and how to avoid failure
Consider this fact. While 97 percent of companies surveyed worldwide already have a strategy for Digital Transformation, only half of those initiatives are successful. In Europe, where 98 percent of companies have a DX strategy, the success rate is even lower, with only 43 percent of successful transformation projects. One reason for the failure of so many initiatives is a common mistake that many organizations make when they formulate their approach to Digital Transformation. Many transformation strategies are planned based on technology. In other words, the technology is chosen first and forms the basis of the planning or strategy.
Organizations that begin with a well thought-out strategy, and then plan actions (including which technologies to implement) in order to support that strategy, have much greater instances of success. A key step in formulating an effective DX strategy is to measure where the organization (or even the team or group) currently stands. More often than not, this will mean choosing and working on an essential process that has a strong impact on the success of the organization, such as revenue generation or sales processes. Creating a strong strategy also means addressing the people and teams who will be involved in the change process, in order to ensure adoption and support. It also has to include planning projects which are not too ambitious in scope, so that they are achievable, and can show some concrete gains.
In considering what their strategy should be is where companies must weigh their own level of digital maturity. When companies have a clearer understanding of their own transformation capabilities and needs, they will also better understand how to move forward on the journey to transformation. Thinking across processes and departments is not only of great importance for companies with established structures: start-ups and less well-established businesses can also benefit significantly from this approach.
The importance of digital maturity
Traditional and digital business models are fundamentally different. The concept of digital maturity points to how well companies adjust to a digital business environment, recognizing the need for change and developing a Digital Transformation strategy that defines new approaches, needed outcomes, and identifies workable methods to implement them successfully.
Companies with a high degree of digital maturity define goals for the further development of the organization and in this way identify and overcome outdated approaches, old ways of thinking, and obsolete technologies. In companies that are more mature, employees often work together effectively across departmental boundaries so that new structures, methods, or products can emerge and develop. Companies with strong digital maturity are more agile and adaptable, and are able to realize faster time to value in their business cycles and transformation initiatives. Digital maturity also directly impacts customer experience, where better, more connected systems lead to a more personalized, streamlined approach to customer interactions.
Companies that want to improve their digital maturity need to take measure of where they stand. Even if an organization is less mature, the key is to arrive at a clear understanding of how and where change needs to occur in order to move up in maturity level. This leads to many of the benefits and positive outcomes of Digital Transformation, such as promoting more effective functioning while embracing ongoing innovation and change.
The steps for measuring digital maturity—and undertaking effective transformation
When companies want to evaluate their own level of digital maturity, and based on that evaluation, establish a strategy for Digital Transformation, there are a number of steps they need to follow.
Step 1. Start with the strategy, not the technology
For the further development of digitalization, it is essential to recognize where the company stands currently, i.e., to determine the digital maturity level. To do this, companies should establish what their current business model is, and ideally, seek expert advice on measuring their current state. They should determine clear business outcomes they need to achieve and build a strategy to achieve them. These outcomes must be meaningful, measurable, and attainable.
Step 2. Streamline and simplify the process
The less mature a business process is, from a digital perspective, the more complex it is. Or, the more complex without serving any purpose. Take the example of documents and contracts, which drive the sales process. A full 89 percent of companies believe that the way documents and contracts are created, managed, and stored across the organization is critical to the success of Digital Transformation initiatives. Simplifying and streamlining a critical business process is a key part of the strategy that makes Digital Transformation projects more successful. It is essential to involve affected teams early in this process, and good practice to call in outside expertise to help provide perspective.
Step 3. Choose the technology
Once a company evaluates its current business model and finds ways to simplify and streamline its processes, then it is prepared to consider which technologies can best address its needs. In the case of sales or revenue processes, key technology could provide departments with instant access to information, help communicate information to customers more quickly and effectively, and provide methods to complete business interactions automatically or electronically (an example would be the implementation of electronic signatures). It is vital that you select technology that drives your business outcomes and implement in a phased approach, don’t advance into features that your business is not ready for, implement in short-term, agile cycles, focus on speed to value!
In a world where the investment in Digital Transformation only continues to grow, companies can no longer afford to squander their investment in new technology. Companies that understand the concept of digital maturity and taking steps to evaluate where their capabilities lie—and what the best strategy is to improve that maturity—will benefit most from their investments in Digital Transformation.
In the next blogs in this series, we will continue to explore the steps companies need to take to achieve the digital maturity that is the key to success.
To learn more about how your organization can navigate Digital Transformation successfully, attend our upcoming webinar, What’s next: navigating a successful Digital Transformation. Register here and join us on Wednesday, July 22nd.