Constellation Digital Business Transformation survey highlights potential risks; Checklist for your Enterprise Transformation strategy
Constellation Digital Business Transformation survey highlights potential risks; Checklist for your Enterprise Transformation strategy
Andy Mulholland is Vice President and Principal Analyst focusing on cloud business models. Formerly the Global Chief Technology Officer for the Capgemini Group from 2001 to 2011, Mulholland successfully led the organization through a period of mass disruption. Mulholland brings this experience to Constellation’s clients seeking to understand how Digital Business models will be built and deployed in conjunction with existing IT systems. Coverage Areas Consumerization of IT & The New C-Suite: BYOD, Internet of Things, IoT, technology and business use Previous experience: Mulholland co authored four major books that chronicled the change and its impact on Enterprises starting in 2006 with the well-recognised book ‘Mashup Corporations’ with Chris Thomas of Intel. This was followed in…...
Read more2017 Constellation Research survey on Business Transformation published just before the 2017 Constellation Connected Enterprise event found respondents in 48% of Enterprises surveyed reporting that they have a defined Digital Strategy for their entire organization. Pretty impressive, adding a further 21% stating that they have a strategy for some of their key departments and it seems that 69% of our surveyed Enterprises have mastered this complex matter and are on the home run.
At the other end of the spectrum were the 18% of respondents who said there was no strategy, maybe that’s a deliberate policy to wait and see what happens to others before making a move. The most interesting group are the 12% who stated themselves to be ‘not sure’ if their enterprise had a Digital strategy. Given that there is no common structure in the replies from the 69% who reckoned they have a strategy, it suggests that a sizable proportion are not really clear as to what Digital Business is, and how Enterprise Transformation will be achieved.
Do these points challenge that these Enterprises really have a genuine Enterprise wide transformation strategy?
As a comparison change the question to; do have an Enterprise ERP strategy? The answer would be almost certainly a clear yes and in answering the further questions as to who is responsible for what, etc. replies could be expected to be broadly similar. Of course, ERP is a well understood and mature Enterprise capability, but it wasn’t always so, and many will remember the pain and expensive reworking that accompanied the first years of deployment when similar ambiguities were seen.
To each question the survey exposes significant differences in the responses made, suggesting strategies that are focused on transforming a part of the Enterprise rather than a cohesive and complete strategy for the whole Enterprise. Maybe this shouldn’t be a surprise as past Business changes driven by technology have usually ended up as emerging through piece meal adoption as reality and understanding of the Business requirements changed during deployment.
There is a truism that Business Management talks of ‘adoption’ with a vision of the outcomes, but Technologists talk of ‘deployment’ focusing in the nitty gritty details. The project budget is established around the Business vision and expected outcome whereas the technology costs relate to current actions. It’s hard to undertake an Enterprise wide cohesive Transformation
To lead such an important change with the difficulties of determining the outcome paybacks and against the cost of investments will take firm leadership able to take full accountability. Asked who leads the Digital Transformation Strategy an encouraging 29% stated the CEO which seems to line up with the level of the task. It was must less encouraging to find in joint second place with 19% each was the CIO and amazingly No One. That last response amazing! How a cohesive and effective Enterprise strategy for transformation can take place in 19% of Enterprises with nobody responsible stretches the imagination.
Further responses placed the CTO in the role with a score of 18%, adding that to the CIO score of 19% leads to the conclusion that 37% of Enterprise Digital Business Transformations are expected to be successful without the direction of a Business Manager. The picture looks better if the roles of the CDO and CMO at 8% and 7% respectively are added to the CEO score of 29% bringing Business led transformation up to a respectable 44% of Enterprises.
Unfortunately, when asked the most important goal for the Enterprises Digital Transformation strategy the results again point towards confusion of what Digital Business delivers. Not surprisingly the response goals related pretty well to the role of the person nominated to lead the Transformation!
The roles of the CIOs and CTOs related directly to 27% of responses stating the objective is to modernize the IT systems to reduce cost! Similarly the 9% of Enterprises stated the whole point of their Digital Transformation strategy was to improve collaboration seems to align with the CMO leaders, As does the 41%, looking to reach out and engage customers more successfully for greater revenue relate to the CEO leaders. The remaining 23% are planning to increase visibility into their business to operate better is less clear.
Overall the picture is of substantial execution inconsistency from a group of Enterprises who have stated that they have are taking a business-critical move into a new generation of Business enabling capabilities. The steadily increasing use of technology to engage online through connecting the Enterprise to the Internet, Web, Cloud, and Mobility all illustrate the importance of deployments being made in globally ‘standardized’ manner as much of the Business value lies in support interactions outside the Enterprise.
Digital Business defines a new generation of Business valuable interactions that build on, and massively extend, these initial steps into online Digital business. Driving deployment against internal Enterprise operational targets certainly is a necessary part of the whole, but needs to be recognized as a potential move towards a dysfunctional enterprise as internal goals lead to non-alignment to external market expectations.
Why should this be so, what’s the explanation, does it identify a weakness in strategy execution, and if so is there a recommendation to increase the success factor? All of these points can actually be answered by looking at the success factors of the early adopters who have successfully made some level of Transformation to grow revenues and market share through becoming a Digital Business.
The winners, defined as the well-known Enterprises are noted for having succeeded in disrupting their market place at the expense of their competitors have achieved their success by building an across Enterprise team representing all the roles, and others such as CFO, and Head of Sales, to ensure a cohesive Transformation. The alternative is not an Enterprise transformation but a departmental project, which is likely become a series of departmental projects lacking integration of Business capability to leverage the combined resources of the Enterprise.
Seen this way the apparent confusion on roles and responsibilities that emerged from the Constellation survey starts to be seem more understandable, but the lack of agreement on what is the Enterprise goal for Digital Business transformation is a real danger point. Consider that the goal is a transformed Enterprise into a Digital Business that has mastered and deployed an Business, Technology and Organizational structure built on wholly new techniques such as Machine Learning and Augmented Intelligence.
Reality means the any transformation will be implemented in a series of steps, each transforming a specific high value business element. The danger is that a succession of successful projects will result in a transformation ending in a dysfunctional Enterprise with operations isolated by their individual Digital Business investments.
Business Managers who lived through the last major transformation when Business adopted Business Process Re-engineering and Technology Managers struggled to deploy an aligned ERP technology strategy should recognize this danger. Constellation recommends the Digital Business Transformation Strategy should be treated as an Enterprise wide strategy executed by a cross discipline team ideally reporting to the CEO. Each member has the responsibility to define and contribute their own business unit Transformation objectives to the Enterprise team to ensure alignment around four simple headings;
What;
The definition of the departmental capability transformation in full including Enterprise wide implications.
Why;
The benefits case covering the direct outcome together with internal, external and Enterprise potential.
When;
Identification of any timing issues that would call for prioritization such as external market pressures to compete versus internal efficiency improvement.
How;
Contributing ideas on products and methods to enrich Enterprise knowledge to establish common best practice and ensure individual Transformations integrate to provide the overall Enterprise Transformation
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