Digital transformation butterflies

It’s time to turn digital transformation from buzzword into reality

Image credit: Thamrongpat Theerathammakorn/Dreamstime

The disruption industry has weathered recently won’t stop once the Covid-19 pandemic is over. Now is the time to prepare for what further challenges the future might hold.

The last year has affected our health, social interactions and businesses. From work calls to grocery shopping, every aspect of our lives has been forced online. While we have yet to move out of the pandemic, we are now at a point where we can look back at the dramatic speed of change in the last year and a half, and the impressive rate at which businesses adapted to the ‘new normal’. Indeed, many businesses are questioning how they could ever go back to their old ways of working.

The last year or so has highlighted the need to be agile and adaptable and those that have embraced these principles are well positioned to deal with the unexpected in the future. There are a number of factors that go into making fundamental change a success, from having a culture that is open to new ways of working, to looking at the technological building blocks of a truly connected enterprise.

Implementing change is not just about cutting costs on the balance sheet or making minor optimisations to your business processes. Only by approaching transformation at a fundamental level can businesses make improvements that will last for years to come.

2020 was the year that digital transformation, forever a buzzword, finally began to mean something. Delays to transformation initiatives have limited their impact in the past, but the pandemic required businesses in every industry to quickly put measures in place in response to changing circumstances.

The result has shocked digital transformation into action, with digital businesses proven to be more resilient, more agile and more efficient. Forrester estimates that prior to 2020, only around 15 per cent of companies were ‘digitally savvy’, but the new realities have pushed through technological change at unprecedented speeds – McKinsey suggests digital adoption leapt five years ahead in just eight weeks, while Microsoft estimated two years of transformation occurred in two months. These investments gave businesses the tools they needed to behave in new ways and, with 97 per cent of IT leaders likely to continue 2020’s initiatives into 2021, this transformation is likely here to stay.

Changing consumer behaviour has, unsurprisingly, been a key factor fuelling much of this change. The digital investments of 2020 raised the bar for excellent digitally enabled services, which are now seen as the norm rather than a nice-to-have. Banking is a prime example of an industry pushed into transformation as a result of our changing lifestyles – the pandemic is accelerating the move towards a cashless society, and ModularBank estimates 90 per cent of UK customers now see technology as important when selecting a bank. While the growth of app-led challengers won’t displace traditional banks any time soon, their digital capabilities will steal away some customers. Every business should take heed from competitors who are making strides in digital – once customers get a taste for great experiences, they will seek them out.

The key thing is for companies to channel and focus their digital investments and automate as much of the management and maintenance of new technologies as possible. This will allow the experts to focus on using technology to innovate, which is how real transformation will happen. 

With so much talk around transformation, you could be forgiven for thinking of 2021 as the year quantum computing makes waves. But as ‘big bang’ as quantum could be, it’s not the technological innovation most companies need right now. Not only does this kind of big innovation take time to trickle down, but after a year of unexpected challenges, most companies need stability and resilience, rather than wholesale change.

What’s more, the ever-changing landscape of health, social and geo-political uncertainty will likely bring more unpredictable challenges over the next couple of years. It will therefore be crucial for businesses to focus on building resilience. A key starting point will be reducing the number of dependencies a business is reliant on.

Dependencies can be found in many forms. For example, the pandemic exposed dependencies in supply chains, as companies which were overly reliant on a single supplier for essential components faced huge risks – here, Apple was one of many companies which ran into shortages as a result of disruption to deliveries. Looking into the future, exactly how the UK’s departure from the EU will impact existing agreements on data regulation, or how international policies from the USA and China will impact global trade and technology standards, remains to be seen. The point is that any business overly dependent on data or technology from one country is taking a risk, but the agility gained from solid digital investments will help to resolve these issues.

Limiting the number of dependencies is reliant on a business having the means to identify them, which is easier to do if the whole infrastructure is connected. That said, it is still possible to run risk assessments on fragmented infrastructures with process discovery and architecture management tools. Essentially, having an accurate view of the facts enables businesses to make changes to reduce dependencies, allowing core operations to be shifted elsewhere if any part of a business is compromised. While such changes would have previously taken a long time to implement, the driving forces for technology have changed. With businesses still facing a period of uncertainty, there are compelling factors for a new approach; one where the complexity is removed from the process and companies stay focused on building their own agility and resilience. 

The months ahead will undoubtedly throw more uncertainties and more crises at our businesses. What remains to be seen is whether firms will make the necessary investments in digital foundations now to weather this storm. Building resilience into your business may seem like a large cost when the skies are clear, but in the long run every business can benefit from being prepared.

Sanjay Brahmawar is CEO at Software AG.

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