HOW TO SUCCEED AT DIGITAL TRANSFORMATION
Act in haste, repent at leisure. It’s an old saying, but one that still has currency in the IT world, and with lots of companies forced to embrace digital transformation during Covid, an interesting question is raised – did they do so wisely? A recent report commissioned by Microsoft suggested that digital transformation could be worth as much as €300 billion to the Irish economy in 2023. The Digital Ireland report, conducted by Amárach Research for the tech giant, found that 82 per cent of leaders in Irish organisations said that they’d been forced to adopt digital services and technologies faster than they had otherwise planned to as a consequence of the Covid 19 pandemic. While this was far from ideal, 77 per cent said that the investment they’d ended up making will have a lasting positive impact on their organisation. So, good news for them but what of everyone else? “Where there are issues, it’s because when companies are looking at digital transformation, they often consider it to be a technology challenge. They’re thinking in terms of the legacy systems they have and moving from them to the cloud or making applications more accessible and so on,” Nick Connors, group managing director for Tekenable, said. “But the problem is that really that is only one element of the process. The biggest pieces of the puzzle are their internal processes and those are very often overlooked when companies are in a rush to fix a problem or meet a particular challenge like they did during Covid.” For a lot of companies, when a digital transformation process is started it typically involves decentralising a lot of the IT function. Software-as-a-service and cloud-delivered systems empower the individual in the company to make decisions that previously were all made centrally by the IT department. But if that cultural component of the changeover isn’t handled correctly, it can lead to problems.
“Traditionally, people had to put in a request and wait for the IT department to get around to dealing with it, but now you’re empowering them directly. Many of the current platforms are designed at a certain level to be controlled and run by the business function of the company and changed by the business without the need for assistance from the IT department,” said Connors. “And that was something we found that’s had a big impact. During Covid, companies pushed through digital transformation in order to meet the challenges they faced, but they sometimes underestimated the ‘people component’. But to get the most out of it you have to recognise that it’s about more than just technology, it’s also about the people themselves and the processes that will fundamentally change.”
No quick fix
According to Connors, a challenge with digital transformation in general is that there is no quick fix for the cultural component of the process. It can take months and years to reinvent the way a company does business and that’s really a question of getting the relationship between the technology used and the people using it right.
“It’s a journey, but sometimes it can take a while for people to see it that way. Some of them come to it a lot quicker than others, but if you have a good technology partner, then it generally works out,” he said. For Carmel Owens, chief executive of Sidero, a key part of guiding companies through challenging times like this is remaining close to them and keeping a close eye on their needs. “It’s fairly obvious, but it gets lost sometimes in the race for digital transformation. At the end of the day this is all about serving your customers as a business, whether they’re internal or external. Their needs are constantly changing and particularly during the pandemic and afterwards, and if you don’t monitor those changing needs then you’re at risk of creating products, systems or services that don’t solve problems or have no real value for them,” she said. “Probably the most important thing is that you maintain that closeness with your customer, that you use data insights and find out what your customers really need to try and identify trends and problems in advance.
You’re looking to anticipate what they expect from you.” A big issue for companies engaging in digital transformation projects is that they are prone to see them as stand-alone one-time events, rather than ongoing journeys. “You can’t treat digital transformation as a onetime project. The mistake companies make is that they treat it as an ordinary tech project with a start, middle and end, and once they’ve achieved their goals they think that they can move on. But really the last part of the journey is keeping up with technology as it develops and that’s an ongoing process. It never stops,” Owens said. “Embracing a sense of innovation for your customers and for the organisation gives you a competitive edge. The companies that understand that are the ones that can move quickly.”
The ‘sunk cost’ fallacy
In psychology there is a phenomenon known as the ‘sunk cost fallacy’ in which people make the mistake of throwing good money after bad. It describes the idea that when you have heavily invested time, energy and money into an endeavour, it’s not uncommon to want to keep going with that endeavour even if mounting evidence points to it being better to stop. This fallacy finds expression in the technology sector in companies that have sunk money into legacy systems that have been outpaced by current market offerings, either because the same benefits can be realised through cloud-delivered services or because conditions have changed and the factors that made the legacy systems a good investment have changed. However, people being people, sometimes it’s hard to walk away from those legacy systems. “That definitely happens, and I think that sometimes there is an idea that if something works just fine, it shouldn’t be changed. But that might not necessarily be true because while it might seem attractive, there can be consequences that you haven’t considered. For example you can end up ceding advantages to your competitors and having them run past you, or you can end up with employees that are more dissatisfied,” Owens said. “So it’s something that you need to keep an eye on. But at the same time, just because something is new and fashionable doesn’t automatically mean it’s the right fit for you either. Whether it’s new or old or a mixture of both, the key lies in being able to perceive what will drive success for you.” With so much disruption and reconfiguring happening in the market, the only sensible situation is to remain nimble and open to change. What may have been the best way to do something yesterday may not remain so today. From this point of view Covid represented a unique challenge, according to Emil Atanassov, vice-president of internationalisation and accessibility engineering at ServiceNow, and that forced a lot of companies to adapt quicker than they otherwise wanted to. “The Covid pandemic created a situation where essentially companies had to transform overnight. But if they had already at least partially made some commitment to digital transformation and had invested in tools for that purpose, then they also saw some benefits,” he said. “We still have a situation where many companies’ workforces are not fully back in the office or fully remote. For this reason, tooling is important because tooling provides experiences. I think we have to agree that the biggest differentiator is the experience that people get from tooling, from using new platforms or from digital transformation.” Atanassov’s point is that in order to assess a digital transformation project, companies can’t be just concerned with the end results of their actions, they also have to look at how they got there.
“We want to make sure that our internal employees and our external employees as well as our customers are pleased with their experience. And artificial intelligence is part of that. AI is a key term that companies are looking to get benefits from,” he said. “And on top of that, we’re now going deep into natural language processing (NLU) to facilitate conversations and self-servicing, essentially. Customers want to get some of the benefits that the ServiceNow platform already offers but they want to automate and streamline as much of those interactions as possible.” Making natural language understanding a part of AI systems is a huge differentiator for those offering digital transformation. Done well, it allows automated systems to carry out routine tasks without the need for human intervention. “It’s a big deal to allow some things, say like changing a password, to be done automatically through the portal instead of going through a live agent,” Atanassov said
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