I’ve recently been experiencing the wide disparity in the readiness of different businesses to embrace the digital economy. In May, I moved from an urban area to a much more rural one—bucolic really—and I’ve been taken aback by the number of checks I’ve written in the few months since the move. Before, I almost exclusively made payments electronically—either online, through apps, or sometimes through third-party payment services. In my new location, cash (and cash via check) still reigns king.
Many of the area's small, sometimes family-run businesses don’t want the risk or the expense of moving to digital payment systems—or digital systems of any kind. But what effect does that have on their operations for the long run? Are they missing out on the chance to broaden their business because they're clinging to what they know works?
In much the same way, enterprises have disparate appetites for digital transformation. Larger entities may be able to more readily absorb the risks and expenses of a transformation strategy that requires new technology, processes, and cultural shifts. But many IT organizations still see and leverage value in what’s already been built—because it’s still delivering business value. For them, transformation away from what they have is especially risky; failure could mean the end of the business altogether.
So how do these risk-averse organizations confront the reality of the need for digital transformation—one that engages with today’s technologies and digitally based economy?
It starts with a shift in perspective.
Is Digital Transformation a Trap?
To enjoy the benefits of new digital technologies and business models that can propel a business ahead of the competition, organizations must overcome the risk, cost, and—let’s face it—fear of transformation.
For organizations that have embarked on transformation journeys, the success rate is astonishingly low. According to research from 2017 by Bain & Co., a conventional transformation meets or exceeds expectations only 12% of the time. Even less successful are digital transformations, which came in at a paltry 5%. It’s enough to make even the toughest CEO’s shoulders slump a little bit.
The term transformation itself implies a repeated, ongoing journey that replaces one thing (technology) with another. At the end of it, what you started with may not be recognizable in any form. The transformation may not be as drastic as “rip and replace,” but it is eventually and essentially jettisoning the old for something new—with all the time, effort, and uncertainty that that entails.
This approach represents the digital transformation trap. Gaining an innovation mindset can be the key to avoiding it.
Digital Innovation? Yes, Please.
In contrast to transformation, innovation focuses on value. It looks at the benefits of both what exists and what could be. Synonyms for innovation include addition, alteration, shift, and variation. At the root of innovation, something stays essentially the same, with something better added to it—working better, doing more, or acting in a new way.
A familiar example is the smartphone. Twenty years ago, nobody thought there would come a day where we wouldn’t have landlines in our homes. Cellphones were available, but they were just another piece of hardware to carry (phones, PalmPilots, tablets, etc.) and weren’t reliable enough to count on for all of a user’s communication needs. Then, as newly requested features and functions were developed and more reliable technologies became available, people started to cut the landline cord. Today, it’s a rare occurrence to see an individual with a landline—and even some businesses are moving in that direction.
In IT terms, innovation means looking at what existing systems provide value, determining what a new technology could add, and weighing the benefits of what can be gained. It means building on the good of what already exists—and trying to comprehend if there’s something that could make it even better—evolution, not revolution, if you like. The results move you toward the new without sacrificing the accomplishments that make you great today.
Now let’s look at some examples of digital innovation in the IT world.
Modernize Legacy Systems with the Cloud
Many organizations that rely on older technology such as mainframes and COBOL have to interact with newer technologies that were unimaginable when those older technologies were created, such as the modern cloud. The business and technical value these older technologies bring to the organization is still cost-effective, with easily managed risks, but new initiatives and opportunities require those core systems to work in a cloud world.
Fortunately, there are low-risk options to modernize critical business systems and bring them into a cloud-ready, container-friendly environment. Frameworks such as the Micro Focus Modernization Maturity Model can help organizations determine how to best modernize core systems—leveraging the value of older technologies while using modern technologies to boost innovation. Whether through advanced data insights, process automation, or accelerated application development, innovation for the business can’t happen without harnessing the value of older IT systems in combination with the power and functionality of new technologies.
Improve ITOps with RPA
Operational budgets are straining at their seams. As part of the cost of doing business, organizations must always be on the lookout for innovative ways to save money and increase the ROI of their IT operations teams. Often, this means reducing process complexity and increasing resilience. Automating processes can accomplish these goals.
Software robots—also known as robotic process automation (RPA)—can mimic human actions to perform and automate everyday tasks. Using AI and machine learning, they can also adapt to change. RPA helps save time, cuts costs, and frees employees to focus on important things like digital and business innovation. Put the robots to work so people can work to stay ahead of the competition.
Value Stream Management
A value stream is a linked set of activities that delivers value to a specific group. Business value streams (BVSs) focus on value for end customers, suppliers, or employees. For IT, the software development lifecycle is critical. Digital value streams (DVSs), a subset of BVSs, deliver software-based capabilities in service of BVSs.
Both BVSs and DVSs are important in digital innovation efforts because end users' demands for modern technologies, new functionalities, and tight deadlines constantly push the boundaries of innovation. While BVSs evaluate and prioritize the demands of the end users, DVSs evaluate and prioritize the software capabilities needed to satisfy those demands.
Therefore, being able to harness existing value as new software is created and delivered is crucial. A good value stream management solution can help accelerate innovation across the organization by maximizing the flow between the BVS and various DVS components.
Time to Decide: Transformation or Innovation?
Is transformation—digital or otherwise—a trap? No. And for the long term, it’s a necessary reality.
But when you approach transformation with an innovation mindset—finding the value in the existing and building upon it—you create a springboard for future success. Digital innovation concentrates on just-in-time delivery of innovative products and services based on the technology already in place. This allows digital transformation to happen in a more organic, incremental fashion.
Evolving and improving proven systems is not only a safer approach in both the short and longer term, but it’s also the very definition of innovation—and the best way to avoid the transformation trap.
Keep learning
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Download this free IDC white paper, "Enabling End-to-End Digital Transformation".
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