Digital transformation has received a lot of press over the last few years, and the level of hype makes one suspect: is there something to this or is it another trend that doesn’t lead to the right business outcomes? Research shows the need for digital transformation is real, and is not a question of if you should pursue it. The question is how you should pursue it.

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The Altimeter Group recently published research that provides a great understanding of digital transformation and how companies are making the shift to remain viable. The 2016 State of Digital Transformation Report represents the experience of 528 leaders that have taken on this journey. The report shares practical insight into digital transformation by clarifying the drivers, identifying leading practices, highlighting challenges, and sharing outcomes achieved by companies embracing change. The two Analysts, Brian Solis and Jaimy Szymanski, did a great job messaging concepts in a clear and concise manner.

Below is a summary of takeaways from the report – this only scratches the surface. I highly recommend reading the full report to understand digital transformation and what companies are experiencing.

State of Digital Transformation Takeaways

  1. Changing customer behaviors, growth opportunities, and increased competition represent the major drivers of digital transformation
  2. Mapping the customer journey is required to understand the customer experience, but only 54% of respondents have performed this leading practice. Resilient infrastructure and a focus on understanding the impact of emerging technology are additional leading practice considerations.
  3. The primary digital transformation challenges are understanding the impact of new connected customers and the availability of data to justify initiatives.
  4. Value is achievable when a mature approach is taken. The benefits range from increased market share to a positive effect on employee morale.

According to the report findings, the top three digital transformation initiatives are accelerating innovation; modernizing IT infrastructure to increase agility and address security; and enhancing operational agility to more quickly adapt to change. Modernizing the IT infrastructure (including revamping operational processes) should be top of leaders mind. This establishes the foundation needed to enable business agility. Without it, digital transformation becomes a fantasy.

One area that needs more focus in digital transformation is operational efficiency. Removing friction from internal processes and enabling employees to better serve the customer is critical. Each company must understand customer/product touchpoints and focus on optimizing delivery as best as possible. A great example of this is thyssenkrupp’s initiative to improve the efficiency of elevator maintenance. They have done a great job leveraging emerging technology to predict the need for maintenance and  reduce the time needed to troubleshoot issues in the field. Again, this is a great example of a digital transformation initiative that improves operational efficiency and greatly improves service to the customer.

IT plays a key role in digital transformation. As previously mentioned modernizing the IT infrastructure is essential. As IT pursues technology stack initiatives it must keep the objectives of digital transformation in mind and not get distracted by shiny objects such as serverless computing, blockchain and other “cool” technologies. The business needs of digital transformation become the compass for technology decisions. This is extremely critical because IT can, at times, get caught up in the fever pitch of hyped technologies. Stay focused on the needs of transformation.

Digital transformation can be a powerful tool to maintain business viability. Given the right alignment and investment in technologies, business models, and processes needed to drive value for customers and employees, businesses will be prepared to compete in this ever-changing economy.

I hope you enjoy reading the Altimeter Group 2016 State of Digital Transformation Report. It will be time well-spent.

Posted by Karl

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