Digital transformation: A balancing act

Only 12.2% of the companies listed on the first Fortune 500 list in 1955 remained there in 2014. While some slippage was caused by rebranding or M&A activity, much of it reflected the fact that many one-time big names failed to survive into the modern era.

In markets that evolve and thrive from innovation and technological advancement, failing to embrace change in the right way is laid bare by such illustrations.

IT leaders must find a strategy that allows them to invest in digital transformation, while still protecting existing operations that are already under significant strain. While no two stories are the same, the threat of fresh competition is constant. But companies do survive, and thrive.

Solving the digital dilemma

As any good change management professional will tell you, you are never done. Change is a constant. The lofty-sounding term digital transformation typically covers a strategic, enterprise-wide program of change that includes a range of disciplines and operational requirements, which will require an incremental review-and-improve approach.

A balanced approach that leverages proven investments yields the best results. Existing, highly complex operating models and IT systems cannot be simply ripped out; the risks are too great.

Digital transformation projects, as Behnam Tabrizi and colleagues write in Harvard Business Review, require as much cultural change as they do new technology. And, as Steve Denning writes in Forbes, "Companies are pouring millions into 'digital transformation' initiatives—but a high percentage of those fail to pay off."

Few organizations of any size have ignored the importance of digital transformation. Many were forced to quickly implement fundamental digital transformation activities in order to survive the first waves of COVID-19. Others that had already begun the process found themselves accelerating their efforts because of a drastic change in the markets. As an illustration of enterprises' anxiety to transform, IDC predicts the digital transformation industry will reach $6.8 trillion by 2023.

The tricky part is finding the balance that lets you solve the digital dilemma of how to run today and transform for the future at the same time. Companies need to find the balance between the risks and uncertainties that change engenders and the need to continue to deliver the goods and services their customers demand.

It’s a difficult—but not impossible—riddle to solve.

Run and transform

So how do you go about running and transforming? Here are five key areas where IT can deliver value with digital transformation while running the day-to-day.

Accelerate application delivery

IT teams must deliver greater application value more quickly than ever before. To do this, they must reliably scale agile and DevOps practices across all their environments, from mainframe to cloud, and all hybrid points in between, to sustain delivery velocity.

This requires supporting transformation by combining value-stream principles and enterprise scale to make the software factory more intelligent and efficient.

Software and services company Amdocs is in a digital transformation involving cloud adoption and a "shift left" approach in its DevOps cycle, plus the introduction of agile application testing for enhanced collaboration, reporting, and management visibility.

Amdocs Quality Engineering (AQE), part of Amdocs Services, holds continuous improvement as a central theme while managing up to 200 active projects. It provides various engineering services to a client base in the telecommunications, media and entertainment, banking, and fintech sectors, as well as Amdocs' own internal development teams.

AQE achieved this by adopting an all-in-one tool that aligned with the organization's corporate transformation initiative. The resultant implementation is "accelerating our digital journey with agile development," said Gidi Yaniv, program manager of global IT at Amdocs. At the same time, the tool is helping provide "an open and secure collaboration, testing, and reporting environment that is fully aligned with our corporate goals," he added. 

Modernize your core

Many organizations' core consists of legacy infrastructure, applications, IT processes, management, and culture that are trusted to keep the lights on. Evolving and innovating these often very dependable systems, to continue delivering incremental value across the entire organization, is a transformational journey.

Bridging the old and new to create greater value from existing IT investments can achieve faster speed to market, competitive advantage, and cost savings, enabling your digital transformation journey from mainframe to cloud and beyond.

Infrastructure modernization is often a primary driver for broader modernization efforts. Examples include moving from a mainframe to a distributed or cloud platform, or taking an existing on-premises application to the cloud. Reasons vary, including limitations of the original platform, cost, operator skills, or long-term availability of the hardware or operating system.

When moving from the mainframe to the cloud, organizations aim to reuse application logic, data platforms, and apply best practices to improve mobility and decouple dependencies.

Delivering new business functionality often requires application modernization. This might include wrapping legacy software with APIs or providing other digital interfaces to support extension and reuse. 

Today's customers demand digital interfaces—web and mobile access to new, transformative capabilities. The applications themselves often need to be modernized to deliver those new, modern interfaces, with the ability to connect with external services and platforms. Their modernization will also help protect against disruption from competitors.

Delivering applications more quickly and with higher quality requires modernization of development processes. Improving the quality of code and speed of delivery requires a process that supports automation, continuous integration, and continuous deployment.

Treating the infrastructure as you would code development, by automating build, test, and platform deployment, requires repeatability and helps yield greater productivity. This can happen when applications deploy containers or public cloud environments.

The shift to a more rapid process also helps in the response to changing regulations, market conditions, or competitive pressures. It allows organizations to quickly deliver new capabilities to maintain a competitive edge. A move to DevOps is often paired with a move away from a monolithic application structure, helping create more focused development efforts led by smaller, agile teams.

If you are modernizing infrastructure, application, and development processes to deliver value, you also require people and the organization to change. That's an uncomfortable proposition and is prone to resistance.

It is key to have an organizational sponsor as well as buy-in from the team for updating both systems and processes that support new ways of working. Building responsiveness to customer requirements and making your systems more appealing to workers will drive innovation within an organization, in turn sparking management and culture changes.

Charting the path of change isn't easy; it requires many important conversations about your digital strategy and where you sit on the Modernization Maturity Model framework.

Simplify IT Ops to help with transformation

Managing ever-changing IT operations remains a key ingredient to successful IT provision. An organization can simplify running both traditional and cloud services, and doing so frees up resources to accelerate transformation by integrating or replacing incompatible tools collected over decades within a unified IT "center of excellence" platform.

Mohammed Shata, ITOM solutions architect at Vodafone Technology Shared Services, recalled a time when different tools and consoles were used for system monitoring. "It was siloed consoles," he said. Alarms would go off to indicate an outage, and the team would have to expend much effort to understand whether it was the firewall, a database, or a key application running between different consoles.

"The potential business impact of an incident wasn't known," Shata said, "and there was no end-to-end visibility into any of the systems."

A fragmented monitoring model such as this leaves IT unable to support the business as effectively as it could. The goal should always be to align IT closer to the business and deliver new services fast.

Automating the monitoring of hybrid IT systems creates end-to-end visibility in a single pane of glass through which the entire infrastructure can be viewed. This reduces the noise level in a consolidated environment, increases collaboration as teams can work more effectively together, and create visibility into the end-to-end application lifecycle.

"By automating our monitoring," Shata said, "we freed up our engineers for actual development and service enhancement." Root-cause analysis (RCA), which could take hours to resolve, is now managed automatically in just a few minutes. "We have also noticed an alarm reduction of over 70%." 

Automation helped the company free up time and resources, align to the business, and deliver new services faster to attack the opportunities ahead.

Strengthen cyber resilience

Cybersecurity failures make unpleasant headlines. Organizations must protect what matters most by detecting, responding to, and assisting with recovery from threat actors. This needs to happen as companies run their day-to-day operations and intelligently evolve security to prevent advanced threats for hybrid environments and provide new routes to market.

Netstal, a Swiss producer of high-performance injection molding machines and system solutions, started seeing a trend toward more Internet-connected solutions, said Stefan Winterberg, the company's head of IT. 

To stay ahead of the innovation curve and offer customers more flexibility, Netstal embarked on an ambitious digital transformation project. Its first step was to introduce a web-based online sales and machine configuration solution. "However," Winterberg said, "our customers' data and privacy protection is key and we needed to ensure state-of-the-art data encryption." This was needed to provide secure end-to-end connectivity for customers to access Netstal's systems, select products, define configurations, and place orders.

In addition to reinforcing and developing security solutions to support their project, Netstal's IT security team accomplished many other goals:

• Supporting a sophisticated customer e-service platform that included mobile delivery 
• Automating user provisioning and an employee self-service portal 
• Maintaining GDPR compliance and responding to audits more easily 

Ultimately, strengthening security helped the company transform and evolve at the speed of change. Now, having tackled cloud, mobile delivery, big data analytics, and visualization, Netstat is doubling down on the Internet of Things (IoT) and smart machines.

Analyze data in time to act

The volume and variety of data has further diverged and accelerated. Organizations are looking to unify analytics without the need for all the data to be in one place. Current trends in running analytics practices more efficiently include providing the ability to connect to any source, including external data, and driving critical insights and delivering data where it’s needed.

As IT leaders transform their organization to grow, they need to ensure they're able to support more users and greater data volumes and maintain performance and scale, for accurate and actionable predictive insights.

Unlocking the value of the data is key to grow the business and ride the waves of change. A Capgemini report says that "data masters" enjoy up to 70% higher revenues per employee and achieve 22% higher profitability.

In recent years, global supply chains have experienced unprecedented disruption, creating knock-on negative effects for businesses across multiple sectors. This spurred ThinkData Works to partner with Palantir Technologies Canada to build a supply chain resiliency platform.

Bryan Smith, co-founder and CEO of ThinkData Works, outlines the initiative, which includes combining his company's platform with Palantir automation and analytics tools. The goal is to automatically predict the likelihood of disruptive global events and to warn users before they occur. Martinrea International, an automotive manufacturing provider, "will be the first adopter of the solution, and the company predicts savings of $40 million in just the first year of adoption," Smith said.

Data analysis helps companies adapt to new challenges, reduce business risk, boost efficiency, and drive innovation. Martinrea and other data masters can evolve and thrive by using innovation and technological advancement.

Act, don't just think about it

The rules of business have changed dramatically in the last couple of years. Upheaval in technology usage, engagement models, supply chains, organizational structures, and customer expectations have forced an abrupt review of IT strategy.

Those who can quickly transform to create new business opportunities are most likely to achieve long-term success. But it's only possible by continuing to support the very dynamic demands of today. An approach that balances both shorter- and longer-term goals is vital.

Successful organizations will embrace the dual necessities of current and future IT requirements; they must balance running and transforming at the same time.