Understanding the drivers of digital transformation

Remember when IT departments were just a supplier to the rest of the business? A new member of staff needs a laptop? Ask IT. Marketing wants a new website? Ask IT. Accounts need new software installed? Ask IT.

While in-house IT teams still fulfil this transactional role, their remit has widened considerably. Not only is IT now focused on smarter tools and technologies that make their organisations run fast, safe and seamlessly, more and more CIOs are coming into the boardroom to advise the C-suite on how to drive the business forward with digital transformation.

So what do CIOs need?

If CIOs are now being invited to consult at the highest strategic level, the scope of their understanding and their view of the business needs to be correspondingly wide and complex. They’re not just looking at updating legacy IT and streamlining processes; they need to take into account multiple groups of stakeholders – those customers and employees who will be using the ‘transformed output’ from digital transformation projects.

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Three drivers for strategic change

Digital transformation is about exploiting technology and communications to improve one or more key aspects of a business, such as customer experience, internal processes, workforce efficiency, supplier collaboration and so on. Basing a transformation strategy on a partial or erroneous view of the business can result in little or no meaningful change.

So, in order to succeed, the challenge for CIOs is to balance the drivers of strategic change coming from three distinct sources:

  1. Customer needs and expectations
  2. Business requirements for efficiency and productivity
  3. Technology-led change

Customer-led digital transformation

According to a 2016 study, over half (55%) of those leading digital transformation cite “evolving customer behaviours and preferences” as the main drivers for change. However the same research showed that 46% of CIOs have yet to map out a customer journey. Consumers have high expectations for quality experiences across all channels. Only by seeing the business from the customer’s perspective, and aligning technical capabilities around that, can the CIO develop new digital capabilities that will satisfy them.

Business-led digital transformation

Businesses have long used technology and automation to make processes more efficient and scalable. Employee self-service systems, for example, free up HR managers to focus on the more strategic aspects of their jobs. Unsurprisingly, increasing cost efficiency is now a key driver for digital transformation for more than 60% of IT decision-makers in this survey, as they look to free up considerable resource than can be focused on other areas.

Technology-led digital transformation

Digital transformation usually demands rapid adoption of new technology, such as moving to the cloud, exploring IoT or delivering software as a service. However it goes beyond new shiny toys; it’s about bringing the nuts and bolts of a legacy IT base up to speed, along with the mindsets and skillsets that go with it. For IT leaders, the challenge is about how to tie new transformative technologies into their incumbent model, rethinking processes and retraining people.

Most businesses realise that digital transformation is necessary to stay relevant in their marketplace. But bringing in new tech for the sake of new tech is a race that can never be won. Identifying the dominant strategic driver – or drivers – at play will produce a prioritised response, meaningful change – and tangible benefits.

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13 April 2017 | Justin Coombes

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The views in this article are the personal views of the author and are not necessarily endorsed by Gamma.