The Challenge of Digital Transformation

Let’s begin with the near-cliched term “digital transformation”. It’s often used to refer to any technology or business change where software is the catalyst. I recently attended a seminar where digital transformation was explained as any implementation of new digital technologies such as AI, deep learning, augmented analytics, blockchain and others to enhance productivity, customer experiences, or operational efficiency. “Digital transformation,” in those terms, is the adoption of new tools — an IT project portfolio bent on transforming how we work. 

The flaw with that thinking, in my view,  is it loses sight of the “transformation” — both the business case for change and the change in thinking that it entails — and shifts attention from people to the technology they will use. As organizational change management has taught us, as soon as you frame an initiative as a set of tools, you risk losing sight of the people who will (or will refuse to) use them. 

“Digital transformation” is first and foremost a business transformation: a rethinking of how an organization uses technology, people, and processes in order to fundamentally change business performance. The disruptions brought by Uber and Amazon are well-known. Others, such as John Deere’s success in leveraging big data to offer a data platform that “help[s] farmers manage their fleet, reduce downtime inefficiencies, and save on fuel costs.” This meant reinventing themselves from being a manufacturing-led company to a data science driven software engineering company, in turn profoundly impacting the core competencies needed of the organization. Starbucks confronted declining retail sales in the US with a four-pillar digital strategy that integrates digital technologies into the customer’s in-store experience to personalize the customer’s experience, leading to key changes in buying habits such as pre-paying for drinks, increased spend per customer, and widespread adoption of their loyalty program to enable them to further track, analyze and influence consumer behaviour.

Transformation is thus driven by a need to profoundly change business processes to satisfy rapidly changing customer expectations, launch new products and services, or fix deep-seated operational issues. It begins with an organization needing to re-invent itself to realize its goals and remain successful in a rapidly changing environment. Technology, specifically an ever-expanding array of digital services, is an important enabler of that change. 

PMI reports that “a majority of senior leaders acknowledge that their organizations often struggle to bridge the gap between strategy formulation and its day-to-day implementation. Moreover, the executive leaders we surveyed reported that in the last 12 months, only 60 percent of their strategic initiatives met goals.” We often fail, then, to realize our strategic goals when we implement new technologies, while at the same time those same organizations face rapidly evolving customer expectations, growing competition to offer innovative products and services, and are pushed by these pressures into very rapid development cycles that demand that new processes and technologies be tested and mobilized faster than ever before.

To summarize:

• Organizations are facing existential pressures to reinvent themselves to meet customer expectations for better experiences and new products and services. 
• Those pressures drive deep changes to business processes as new methods — and the technologies that enable them — are rapidly and iteratively implemented and tested.
• A large number — if not the majority — of these efforts fail to meet their goals. I suggest that this is largely due to a focus on technology over processes, on software over people, on tools over the outcomes they are meant to deliver.

It’s in this context that I’ll share my own experience, having worked in the enterprise commerce and billing space for about 11 years. Billing, alongside customer relationship management and finance, is one of the vital core systems that keep an organization alive. It is difficult to think of a case where digital transformation would not also bring changes to an organization’s billing system: new pricing models, product offerings, payment options, real-time charge and utilization dashboards, self-service tools, and service provisioning mechanisms just begin to scratch the surface. Billing is often a core enabler of digital transformation or it’s an obstacle to be overcome when other integrated enterprise systems are updated.

As such, it is interesting to consider how most organizations approach a billing transformation. What does a billing system provider usually receive from an organization embarking on a billing transformation journey? What priorities do they have?

Very often, a prospective vendor receives a list of desired features, often grouped as “must have” or “nice to have” capabilities, against which their features are measured. This appears to be an entirely reasonable and appropriate way to compare the suitability of the huge array of billing options available to an organization. It also is quite convenient for the software vendor. I’m guessing that this process is pretty typical across most vendors for billing, CRM, accounting software or other enterprise systems.

So what’s the problem?

I’ll return to what I’ve noted already: the digital transformation challenge is to adopt and evaluate new systems rapidly, and to make deep changes to business processes to respond to rapidly evolving customer expectations or operational inefficiencies. So when I see a list of desired billing capabilities from a prospective customer, I wonder:

How did the organization develop such a list? Have they been able to clearly define their needs for the coming months and years and map out the system capabilities needed to align with this strategic roadmap? Have they been successful in engaging stakeholders across the company to identify the needs of each, from sales, product management, marketing, accounting, regulatory and compliance, and IT? How did they prioritize those features? How confident are they that these features are really what they need?

These questions suggest that landing on the right set of features to enable digital transformation is in itself a significant cross-functional effort with potentially high stakes and that seems counter to the need to quickly implement and iterate upon solutions in a highly competitive and changing landscape. 

But what options are there? And how can you mitigate the risk of getting it wrong?

That’s what I’ll look at next.

In the meantime, please share your experiences and comments. I’d love to know if these challenges resonate with you.

Please note that the views expressed in this post are my own alone, and do not represent the views of any of the organizations I have worked with, past or present.