Communications of the ACM
Digital Transformation: A Business Imperative
Digital transformation has become a business imperative for virtually any organization that wants to stay competitive and meet customer needs.
Credit: digital2point0.com
Digital transformation, in which companies utilize advanced technologies like artificial intelligence (AI), cloud computing, and the Internet of Things (IoT), has become a business imperative for virtually any organization that wants to stay competitive and meet customer needs.
Many organizations have moved beyond Digital 1.0, where improving the speed of response was the strategic imperative, to Digital 2.0 and being able to anticipate customer requirements, according to Jamie Snowdon, chief data officer at HfS Research.
"Having the right data to anticipate customer needs and support decisions that serve customers ahead of time delivers significant digital competitive advantages," Snowdon says.
Companies' chief information officers (CIOs) continue to drive digital transformation initiatives most often (28%), although CEOs are increasingly playing a leadership role in such transformation (23%), according to Altimeter's 2018-19 State of Digital Transformation.
Yet organizations often struggle with digital transformation initiatives, and have varying degrees of success. A 2018 Capgemini study of 1,300 executives found that only 39% have the digital capabilities required, and only 35% have the right leadership capabilities (mainly because digital isn't in their DNA).
In terms of the aftermath, a September 2018 survey by management consulting firm McKinsey of 1,733 executives involved in digital transformation efforts at their companies found that only 3% of respondents have had complete success at sustaining their digital efforts.
Some 89% of Information Technology (IT) decision makers said their digital innovation investments have been "moderately or very successful," according to Insight's 2019 Intelligent Technology Index.
Nevertheless, organizations are forging ahead, and those with well-defined objectives and goals and a digital mindset are reaping the benefits.
At Oral Roberts University (ORU) in Tulsa, OK, where the students effectively are the customers, the impetus for starting its digital journey five years ago was threefold, recalls vice president of technology and innovation Michael Mathews.
"We knew that our students would be better served by leveraging all the standard campus technology from one standard interface, which required us to get all of our systems in the proper digital accessible format,'' Mathews explains. In addition, he says, he knew that being fully digitized would become a competitive advantage, and "if we did not begin this process, the IT department would eventually [be] unable to sustain the technology."
ORU first needed to select a central authentication platform that would allow IT to integrate any and all systems. Because ORU requires students to track 10,000 steps a day along with their heart rates, it provided Fitbit activity trackers to freshmen and transfer students. IT then integrated the Fitbit watch data with the university's ERP system.
"The Fitbit data flows from the wristband to the Fitbit site to the Student Information System (ERP) gradebook to automatically log how many steps each student takes each day, and their heart rate three times during the day,'' Mathews says. This information is required as part of ORU's Whole Person Education program.
The initial challenge, however, was that this initiative "required a different way of thinking for the digital age," that "all data can be personalized and digitized."
From there, IT began integrating all systems and tools "to ensure no matter where the device futures end up, we could integrate all systems in a digital format,'' he says. This has included integrating augmented and virtual reality into ORU's systems to ensure an immersive learning experience could be applied to a global audience through its learning management system.
Mathews says ORU now can leverage all current devices.
In the five years since launching its digital transformation, the university has gone from serving students from 85 countries to having a student body that includes citizens of 108 countries according to Mathews, who added, "we have records of individuals from 185 nations touching our data ecosystem."
Other organizations also are embracing the potential of digital transformation.
JetBlue Airways, for example, is expanding its brand beyond travel and reinventing itself as "a tech company in the customer service business,'' said Eash Sundaram, JetBlue executive vice president and chief digital and technology officer, during remarks at the Massachusetts Institute of Technology CIO Symposium in May. The airline's customer strategy has become "personal, helpful, simple," and "not more tech; better tech," Sundaram said.
That sentiment was echoed by Kris Rao, CIO of Ricoh USA, who said his firm is moving away from its roots as an office equipment provider to become a digital company "empowering digital products." Reaching across the aisle [from within the silo of IT to the business] is the job of a technologist," said Rao, who also spoke at the Symposium.
McKinsey's April 2019 survey found that organizations reporting the greatest levels of success in their digital transformations "ruthlessly focus on a handful of digital themes tied to performance outcomes." Additionally, these organizations "boldly establish enterprise-wide efforts and build new businesses."
In addition, McKinsey found such companies create an adaptive design that allows for flexibility in the transformation strategy and resource allocation, and adopt agile execution practices and mindsets by encouraging risk taking and collaboration across parts of the organization.
Perhaps most importantly, the management consulting firm wrote in its summary of results, "In successful efforts, leadership and accountability are crystal clear for each portion of the transformation."
Esther Shein is a freelance technology and business writer based in the Boston area.
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