Digital technologies create opportunities to develop new business models, serve customers in innovative ways and run organisations more efficiently and profitably. However, many digital transformation case studies relate to new startups or digital entrants such as Uber, which bear scant resemblance to more traditional businesses with complex technology infrastructures that have developed over decades.

The challenge for established organisations initiating digital transformation is complex and multidimensional, not least because they have to tackle it at a different starting point from the digital entrants. Information technology is critical to the transformation plans of any organisation, however many encounter challenges with their infrastructure and capabilities when seeking to take advantage of the opportunities that digital technologies create.

International Data Corporation (IDC), the independent market research firm, believe that many organisations are not moving fast enough to address this challenge and predict that over the next three years a third of the top 20 companies in every industry will be “disrupted” by new entrants. Whilst this doesn’t necessarily mean they will go out of business, it does mean their revenue, profits and market position will be under threat. A great example of this happening in the Financial Services sector is TransferWise, one of the UK’s most successfull fintech startups, that provides an international money transfer platform based on peer-to peer technology.

There is significant market hype around digital transformation, however the reality is that most organisations still have some way to travel to realise their digital ambitions, if indeed they have defined what these are. So what are the key areas that need consideration for digital transformation initiatives? Based on our experience of working with clients across different sectors, we believe that, whilst no means exhaustive, the following areas are absolutely key to creating and delivering a successful digital transformation strategy:

Leadership – social, mobile, analytics, cloud and the Internet of Things (IoT) offer innovative business opportunities, however in order to realise benefits from these technologies, organisations need to reimagine their business. This requires executive buy-in and management effort from the top down, to create the vision and roadmap and drive through the associated operational changes. Leadership drives transformation, not technology.

Capability – many organisations have yet to determine the most effective way to organise and skill up their IT department for the digital age. Often they don’t have the requisite in-house skills and developing these internally can take years. Additionally, whilst most organisations have development and service management methodologies in place, these are likely to have been designed for traditional waterfall and requirements led initiatives. These methods are inadequate for digital transformation, where projects require rapid, iterative delivery cycles to assess what will work in the market or work place. Understanding what skills are required, sourcing these skills and ensuring appropriate delivery methods are implemented is critical for digital transformation success.

Architecture – organisations will need to assess the impact that newly developed digital services and products will have on their infrastructure. Like all change, digital transformation comes with a price tag. The architecture and operating model necessary to support digital technologies requires significant planning and must allow for the rapid integration of new technologies to support the transformation objectives. Many organisations will also need to consider how they simplify and rationalise their existing architecture, as overly complex, legacy infrastructure can hinder progress towards your digital goals. If the transformation is not developed towards an agreed architecture framework there is a risk that costs, complexity and availability could all be adversely impacted.

Governance – who owns the digital strategy, who is leading the transformation and are there agreed policies that underpin design, development and delivery? As well as having an integrated strategic vision and roadmap, it is essential that supporting decision-making and governance is implemented to ensure that competing ideas and implementations do not undermine the overall business objectives. Designing an underlying operating model that is fit for purpose and defines ownership and governance for digital is a key consideration.

Whether your goal is managing innovation, digitising your core business, reducing complexity or delivering mobile first applications, our Digital and Technology consultants can help define and deliver the digital strategies, architectures and plans required, through a collaborative, relationship-based approach.

If you are embarking on a digital transformation or are looking for expertise to support your current initiatives, contact Exception today.

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