Digital transformation — the term means many things to many CIOs. Hear their take on how digital transformation can offer tangible value.
“Digital transformation.” If there’s one constant associated with the term, it’s that you’ll likely never hear the same definition twice. As Jim Swanson (CIO, Bayer Crop Science) puts it: “Digital is a loaded word that means many things to many people. When you discuss digital transformation (DT), you have to unpack what digital means to your organization.” There are good reasons for this. For one thing, nearly every industry has its own version of digital transformation — retail is bound to define the process much differently than, say, the military. For another, the definition of digital transformation changes as technology itself evolves.
In more than a few instances, the term has been misapplied to endeavors that are simply digitization. But despite its many definitions, the reality is that digital transformation matters. CIOs and IT departments already tasked with DT do, in fact, know what the term means to them. They’re likely in the midst of strategizing, designing, and implementing highly complex digital initiatives themselves, and, if they’ve done their jobs well, they are seeing positive transformations.
What is Digital Transformation Really?
Akash Khurana, CIO and CDO at McDermott International, argues that digital transformation and its related terms “are not just the latest buzzwords — we see tangible value coming from these technologies in terms of improving product optimization, increasing production output, and tackling operational efficiency challenges.”
Put simply, digital transformation is about modernizing and improving services and processes via the implementation of digital technologies (think: IoT, AI, big data, and so on). As George Westerman, author of Leading Digital: Turning Technology Into Business Transformation, frames it, “Digital transformation marks a radical rethinking of how an organization uses technology, people and processes to fundamentally change business performance.”
The key here is “radical rethinking” rather than simply making minor digitization and optimization efforts. Westerman further suggests that this transformation should be executive-led, with collaboration across departments. Indeed, it may be CIOs who currently have the most in-depth, hands-on understanding of what DT initiatives can deliver. And while the term “digital” may evoke startups and Silicon Valley, case studies suggest that the old guard has a great deal to gain from digital initiatives.
For instance, casual dining chains that have seen slumping sales are turning to digital transformation in a bid to earn customers. Dine Brands Global Inc., — the U.S. owner of TGI Fridays and IHOP — is testing technologies for better customer service. Dine Brands’ CIO, Adrian Butler, considers it a digital executive’s job to turn “technical language” into “a discussion of business capability” around digital, e-commerce, and mobile.
Dine Brands is leveraging digital technology to “provide a true omnichannel experience” for customers on a one-to-one basis. The initiatives are personalized and wide-ranging — for example, consumers can use Google Assistant to order from home or from a car (General Motors offers this integration). TGI Fridays is also using AI to help mix drinks and offer personalized offers to consumers.
Similarly, Idaho-based grocery chain Albertsons Companies is making moves to begin a digital transformation led by their CIO. After early efforts toward e-commerce in the 1990s, the company is now focusing on creating a unified, personalized digital experience for customers. CIO Anuj Dhanda says that partnering with Microsoft has allowed them to launch cloud-based digital innovations involving customer data, AI, and connected sensors. This partnership, based on the smart use of data, has also allowed the company to streamline its supply chain, from manufacturing and growing to shipping and inventory. “Clearly, data is the lifeblood for optimization of the flow, and carrying the widest, smartest variety of products,” says Dhanda.
Pursuing Digital Transformation in Your Organization
Digital transformation puts CIOs front and center when it comes to envisioning the company’s future. As VMware CIO Bask Iyer notes, “Thanks to digital transformation, IT is now taking a front seat in driving innovation, accelerating growth, and shifting core aspects of the business.” The numbers back this up — worldwide spending on digital transformation technologies will hit $1.78 trillion by 2022.
CIOs are perhaps best equipped to advise other CIOs and IT departments on how to lead a digital transformation. The first step is to understand not just how your current processes and workflows can be optimized, but how technology can enable new ways of doing business, interacting with partners, and serving customers. This means developing digital tools that are aligned in lock-step with your business model.
The next step is to ensure that changes become integral to the organization. No matter how brilliant an idea may be, technology that doesn’t reach beyond the walls of the IT department cannot elicit real transformation. As Genpact CEO Tiger Tygarajan notes, “If a clever CIO comes up with an idea to change something with new tech, that’s great. The next step is bringing it to the business and having the business own the process. When they own the process, you drive end-to-end transformation that includes processes, people, policies, and tech. The siloed approach always fails.”
On a similar note, it’s important that the organization as a whole is working to support and implement digital transformation initiatives. Mattel CTO Sven Gerjets notes, “If you don’t have an organization that is supportive and fully onboard with the transformation efforts, it’s impossible to succeed.” Of course, that support goes both ways. Simply generating large pools of data or expecting workers to make maximal use of IoT devices isn’t likely to produce the desired outcome.
CIOs must ensure that their DT initiatives are unified under a broader strategy, and supported across the entire organization — which means taking concrete steps to invest in technologies that fit within the organization’s existing processes.