Thanks to increasing digital demands, every business leader today is thinking about how to transform their organisation. Experts predict that by the end of 2017, two-thirds of the CEOs will have digital transformation at the centre of their corporate strategy. The unfortunate reality is most businesses that embrace digitisation over the next five years will fail. Why? Because the enterprise technology companies are using are not fit for the reality of business today or in the future.
Organisations may not be able to predict the future, but they can at least build for it with the right technology. Cloud technology has been at the forefront of that revolution. The idea of businesses adapting to change, and putting the responsibility back on technology vendors to create software that can be rapidly updated to stay in tune with evolving business needs, is still a relatively new one. The proliferation of mobile computing, the consumer internet, ever-increasing processing power, affordable storage costs, have been the real driving forces behind this transformation.
These developments do not complement the old-world enterprise systems that were built for resilience not change. They were designed as monolithic systems to meet specific needs, be highly customised and a challenge to scale should the business grow – leaving little room to think about innovation.
The financial services industry, for example, has completely transformed thanks to technology. Traditionally, the software created was designed to conduct specific jobs such as automating transactions and accounting, providing authorised stakeholders with a basic report on the company’s progress. Fast-forward ten years, financial services software has advanced to the point where jobs have been replaced by computers or robo-advisors, data is crunched and analysed in real-time, with nearly everyone in the business with some level of access. No business today can run on outdated software or technology. Every new development has to quickly and efficiently bring together actionable information around both workforce productivity and financial operations in order to thrive.
Driving transformational change
One of the biggest challenges for organisations today is striking a balance between driving innovation and maintaining legacy technology. Given the level of investment organisations have made in their IT infrastructure, it’s understandable they would be cautious of a “rip and replace” approach.
Insights from a recent survey conducted by Mckinsey found that “the average company has neither sufficiently adapted its corporate strategy to address the new realities of competition nor engaged in a digital transformation at scale”.
Many organisations take a piecemeal approach to their digital transformation, either due to advice provided by technology partners that are struggling to adapt themselves or an inherent fear of what change might do to the business. This usually leads to investment in a variety of add-on technology, all in an effort to supplement any missing capabilities. That approach quickly results in a mess of acquisitions, connections, and middleware that aren’t able to support business transformation.
Organisations cannot afford to be complacent, they need to put new systems in place to effectively transform their businesses. Digital challengers are nipping at the heels of incumbents and transforming industries right in front of our eyes. Just look at how the sharing economy has transformed the automotive and hospitality industry. Uber and Zipcar for example, have ushered in a new business model that makes taxis and personalised vehicles more widely accessible. Automotive incumbents have a choice to either respond or ignore, with the latter usually resulting in a reduction in market-share or profits. German-based Daimler AG, the manufacturer of Mercedes Benz, is a great example of one company that chose to respond. Nearly seven years ago, it introduced a car-sharing service exclusively for its employees called car2go, now the service is available to the wider public and is operating more than 14,000 vehicles across 30 cities in Europe, the United States, and China.
When thinking about digital transformation, companies need to embrace three things: cloud computing, the importance of real-time access to data and agile systems that can support changes to business processes. As we’ve seen with Daimler AG, it’s possible to respond by carving out your own place in the new digital world, but only if you’re willing to let go of the past.
Leighanne Levensaler is senior vice president – products at Workday.