Tag

Digital Transformation

How to Construct a Digital Transformation Analytics Roadmap | Blog

By | Blog, Digital Transformation

Is data really the new oil fueling digital transformation? Absolutely. A company’s ability to make fast-paced, meaningful decisions in a volatile business environment is key to competitive differentiation. Indeed, industry leading enterprises are using data and analytics to adapt to dynamic market conditions, drive continuous innovation, and accelerate the speed of doing business.

However, many organizations are struggling in their efforts to harness the value of data to aid their transformation efforts. The single most important reason for these failures is their technology-first thought process. They invest in the latest big data and analytics tools, AI and ML algorithms, and visualization technologies, and subsequently determine how to drive adoption.

This approach is flawed. Why?

Technology in and of itself does not provide answers to how businesses must adapt for success in a data-driven future. It’s not enough to have the best tools; organizations need to start with a broader vision built on a foundation of business requirements. Companies that succeed at meeting their analytics objectives let business goals drive the technology, and not the other way around.

The business objectives

To develop an effective and value-generating analytics roadmap, enterprises need to start with their strategic business objectives. These tend to fall into three broad categories:

• Top-line growth – Value derived from better understanding potential target segments to enable greater revenue generation. For example, improved customer satisfaction, creating long-term customer loyalty, etc.
• Cost reduction – Value created by leveraging analytics to identify the cost leaks, such as redundancies and inefficient processes, and trim expenses. For example, minimizing procurement spend, plugging revenue leakage by reducing inventory cost, etc.
• Risk and compliance management – Value gained from monitoring, preparing, and managing risk and compliance on a real-time basis, and anticipating any potential risk-related issues, e.g., fraud detection and monitoring.

 

analytics roadmap

The building blocks

After clearly establishing their business objectives, organizations need to make important decisions about four distinct building blocks:

• Data – At the heart of every analytics solution lies data in its raw form. Enterprises need to have a data strategy in place to cope with increasingly large and complex data volumes coming from diverse sources in a wide variety of formats (text, images, audio, video, etc.)
• Technology tools – Core technology tools and platforms for data ingestion, processing, preparation, and visualization are critical. But they cannot be one-off implementations. Enterprises should focus on building integrated technology ecosystems to address immediate, distinct use cases without considering the mid-to long-term creation of sustainable capabilities
• Talent – This requires the creation of competencies around the specific, expected data and analytics capabilities. Given the huge demand/supply gap for data and analytics professionals, particularly data scientists, e-enterprises must proactively and enticingly attract and retain the right talent
• Infrastructure – The focus here is on ensuring that the IT infrastructure can handle the volume, variety, and velocity of the data and the complexity of the analytics.

Once they’ve laid the business objectives and building blocks groundwork, enterprises can develop their digital transformation analytics roadmap. In order to achieve the desired business outcomes from the analytics process, they need to embrace a structured, five-step iterative approach.

Getting this right is critical, and the stakes are high. The organizations that proactively embark on a data-driven digital transformation journey – i.e., every company– will gain a significant competitive advantage. Those that fall behind risk irrelevance.

For more information and insights on how to create a digital transformation analytics roadmap for your business, or to share what you’ve been able to achieve with your roadmap, please contact me at [email protected]

Digital Transformation ROI: How to Measure the Impact of Your Investments | Blog

By | Blog, Digital Transformation

Organizations around the world have invested millions of dollars on digital transformation initiatives. Yet, many IT leaders struggle to measure how well their companies’ digital investments are performing, and others see just a portion of the ROI picture because they only look at one or two parameters.

Here are Everest Group’s two key recommendations for how IT executives should measure digital transformation ROI.

Think and act like a mutual fund manager or venture capitalist

Mutual fund managers and venture capitalists view their investments through a portfolio lens. They look at the portfolio’s overall performance to understand how it is doing, recognize that underperformance of one stock or seed-stage company doesn’t signal overall failure, and make as needed adjustments to individual stocks or investments that are underperforming.

They also make sure their portfolios are comprised of investments with different risk profiles. This is because higher risk projects create the opportunity for higher returns, and deliver a lot of learning take-aways if they fail. Note that when it comes to measuring digital transformation ROI, IT executives need to look at overperformance as well as underperformance. If every project in the portfolio is deemed a success, the organization is likely not pushing the boundaries enough, isn’t innovating enough, and will likely only reap incremental benefits.

Define a clear set of business metrics before you measure

IT executives should define a clear set of business metrics for the digital transformation effort well in advance of the measurement initiative. The metrics should be rooted in a hypothesis about the various impacts the portfolio of projects will likely have on the business. While it can be difficult to link individual projects to outcomes, . Examples of hypotheses include:

  • Meeting customer expectation – as customer experience a more digital world, their expectations of how to engage with the enterprise will change. An hypothesis that keeping up with the evolving customer expectations could be that it will increase customer retention and potentially new sales
  • Breaking down the silos between IT and the business – secondments between IT and business units can increase and understanding of the links between IT initiatives and business objectives. An hypothesis could be that a greater understanding could enable faster innovation

Many IT executives err by focusing only on cost savings metrics. While the business case for technology projects must include cost savings, organizations that make strategic and operational impact their objective consistently achieve higher returns across all dimensions, including cost. In a recent Everest Group study on next-generation infrastructure, the 88% of the leading enterprises were able to achieve some level of reduction in operating costs from their infrastructure transformation efforts with 65% achieving reductions in excess of 10%. Only 29% of the rest of the study participants were able to achieve savings at that level.

Thus, IT executives should employ metrics that fall into three buckets. This ensures they are looking at the total value of the digital transformation initiative.

  • Strategic impact: revenue growth, increasing lifetime value of the customer, reducing customer acquisition costs, accelerating time to market of new products, etc.
  • Operational impact: productivity improvements, greater scale, operational efficiencies, etc.
  • Cost impact: reduced IT operating costs, reduced business costs, reduced total cost of ownership of IT assets, etc.

Once the measurement effort is underway, IT executives should regularly – quarterly tends to work best – look at every project in the portfolio for signs that it is delivering the anticipated type of impact, or is instead contributing in an unintended manner. This gives them the opportunity to determine if adjustments need to be made to how the project is being executed, if business requirements have changed (e.g. shifting customer demands, new competitive threat, etc.), if they have gleaned sufficient learning from the project (e.g. process optimization, technical limitations, success requirements, etc.), or to terminate the project it if they conclude it will not deliver results.

Please reach out to me directly at [email protected] to discuss how to measure the ROI of your organization’s digital transformation initiatives.

Digital Transformation Changes Role Of Purchasing Organizations | Blog

By | Blog, Digital Transformation

The role of CPOs and their organizations grew over the last 10 to 15 years by institutionalizing consistent disciplines in acquiring products and services. There is no doubt that they made a strong contribution to the earnings of organizations. But in the context of digital technologies and services, the nature of the buying process is changing. Thus, digital transformation poses an existential threat to CPO organizations.

The importance of corporate CPO organizations was based on the foundation that there was tremendous value in introducing consistent disciplines in acquiring products and services. This resulted in a practice of “three bids and a buy,” which is the practice for most current purchasing vehicles and the classic request for proposal process in the case of third-party services. Most products and services, particularly for indirect spend, now are shepherded under the domain of the CPO organization.

Read more in my blog on Forbes

The Three ‘I’s of CX Digital Transformation | In the News

By | In The News

Ask any retail CEO what keeps them awake at night and most will come up with a list that includes:

  • how to transform customer experience, infrastructure and operations at the same time as reducing costs
  • demands on them to facilitate new business opportunities and better customer experience at the same time as implementing an agile, flexible, scalable digital platform
  • how to nurture innovation and creativity to attract and keep customers and the kind of employees who can build a digital future

They’re big issues which demand bold solutions, yet according to analysts Everest Group, only 10% the C-suite are ready to take action and make digital transformation happen. It takes a degree of business bravery to set the digital store ball rolling, knowing that it may take out a number of existing structures on its way through the business.

Read more in MyCustomer

As Offshore Outsourcing Grows, HR Tries to Measure Impact | In the News

By | In The News

Offshore outsourcing can be a traumatic event for employees — both for those who lose their jobs and for those who survive. It’s HR’s job to figure out the real impact it’s having on employees — a task that may benefit from new technology.

In response to the Trump administration, but also for other business reasons, outsourcing firms are making adjustments.

They are increasing their hiring of U.S. workers and investing more in local facilities, said Chirajeet Sengupta, analyst and partner at Everest Group, an outsourcing consultancy and research firm in Dallas.

Some of these changes were prompted by client necessity that resulted from digital transformation efforts — work that involves changes to a firm’s core business model. For that kind of work — which could involve changes not just in tech, but in business culture — outsourcers have to be in close proximity to the business. “You really need to understand the business; you need to understand the business processes,” Sengupta said.

Read more in TechTarget

Digital Transformation: 8 Best Practices for Building an Analytics Roadmap | In the News

By | In The News

The idea of creating an analytics roadmap for the enterprise can be daunting, what with the expansion of new data sources, the proliferation of new analytics systems and tools, and the tremendous demand from the business for faster insights.

“The biggest challenge we see with organizations going down the analytics journey is that they start with a technology-led approach,” says Jimit Arora, a partner with Everest Group. “For example, companies feel invested to buy the latest big data tools and visualization technologies, and then determine how to create optimal usage.” Those seeking to create an effective analytics strategy should start with key business objectives, such as top-line growth, cost reduction, or risk management.

Read more in The Enterprisers Project

Digital Transformation ROI: How to Check a Project’s Payoff | In the News

By | In The News

Measuring the return on digital transformation investments is a tricky business. Digital change transcends functional and business boundaries, from how a company goes to market, to the ways it operates, to how it interacts with customers or even its own employees. While some individual initiatives may have a definitive and short-term payoff, others may only cost money in the short term in the service of potential long-term business value.

“When determining how well digital transformation investments are performing, it’s best to take a portfolio view and not a project level view,” says Cecilia Edwards, partner with digital transformation consultancy and research firm Everest Group. Just as a mutual fund manager or venture capital firm would look at overall performance to determine how well things are going, digital transformation leaders must take a holistic view of digital change efforts.

Read more in The Enterprisers Project

How You Handle Digital Transformation Challenges Matters | Blog

By | Blog, Digital Transformation

Digital transformation disrupts the way companies create value that improves the customer, employee or partner experience. But it involves a multiyear journey and changing a company’s operating model, which is painful and difficult. Building executive and organizational conviction on the vision for what the transformation is and sustaining it over a three-to-five-year journey requires thinking differently about business transformation and its challenges. Let’s look at the “moments that matter” in how your company must handle challenges on that journey and sustain the conviction that the pain is worth it.

Read more in my blog on Forbes

Digital Transformation: The Perils of the “Get Digital Done” Culture | Blog

By | Blog, Digital Transformation

The “Just-in-time” methodology focuses on achieving an outcome through defined structured processes that also build organizational capabilities. “Somehow-in-time” focuses on somehow achieving an outcome, irrespective of the impact it has on the broader enterprise.

Most enterprises reward leaders who embrace “get it done” approaches. Unfortunately, the ideology is becoming part and parcel of more enterprises’ digital transformation initiatives. And while “get it done” may seem like a glamorous virtue, it is detrimental when it comes to digital.

Get Digital Done Doesn’t Build Organizational Capabilities

Everest Group research suggests that 69 percent of enterprises consider the operating model a huge hindrance to digital transformation. Leaders are in such a hurry to achieve the intended outcomes that they neglect building a solid operating model foundation that can enable the outcomes on a consistent basis across the enterprise. This leaves each digital initiative scampering to somehow find resources, somehow find budgets, and somehow find technologies to get it done. And because no new organization capability – think digital vision, talent, or leadership – is developed – these initiatives do not help build sustainable businesses.

Get Digital Done Rewards the Wrong Behavior and People

Much like enterprises’ fascination with “outcome at all costs” creates poor leaders, digital transformation initiatives are plagued with the wrong incentives for the wrong people. Our research suggests that 73 percent of enterprises are failing to get the intended value from their digital initiatives. The key reason is while the leaders are expected to “somehow” complete them, there is no broader strategic agenda for them to scale it beyond their own fiefdoms. Our research also indicates that while enterprises want to drive digital transformation, 60 percent of them lack a meaningful digital vision. They’re obsessed with showing outcomes, and cut corners to achieve them. They take the easier way out to get quick ROI, instead of getting their hands dirty and addressing their big hairy problems.

Get Digital Done Does not Align People towards Common Goals

Obsession with outcomes makes leaders leverage their workforce as “tools” for a project rather than partners in success. Because the employees are not given a meaningful explanation of the agenda and the impact, they become execution hands rather than people who are aligned towards a common enterprise objective. This ultimately causes the initiative to fail. No wonder our research indicates that 87 percent of enterprises that fail to implement change management plans see their digital initiatives fail.

To succeed in their digital transformation journeys, enterprises must put their “get it done” obsession away in a locked drawer and focus on three critical areas:

  • Build a digital foundation: Although easier said than done, this requires a revamp of internal communication, people incentives, and a shared vision of intended goals. Each business unit should have a digital charter that aligns with the corporate mandate of leading in the tech-disrupted world. And it requires strategic, yet nimbler, choices on technology platforms, market channels, brand positioning, and digital vision.
  • Have realistic timelines: Expectation of quick ROI is understandable. However, a crunched timeline can backfire. Enterprises must work towards a pragmatic timeline, and incentivize their leaders to meet it without bypassing any fundamental processes.
  • Involve different stakeholders: Our research shows that a shocking 82 percent of enterprises believe they lack the culture of collaboration needed to drive digital transformation. That means the initiatives become the responsibility of just one leader or team. And that simply won’t work. Instead of driving everything independently, the leader or team should be an orchestrator of the organization’s capabilities. This is the key reason more enterprises are appointing a Chief Digital Officer, as one of that role’s key responsibilities is serving as the orchestrator. Additionally, the team needs to leverage the organization’s current capabilities, and enhance them for the future. It should build a charter for its digital transformation initiative that includes impact on fundamental organizational capabilities such as talent, business functions, compliance, branding, and people engagement.

In their race to “get it done” and appease their end customers, enterprises have forgotten the art of building organizational capabilities that will sustain them in the future and create meaningful competitive advantage. And they can’t succeed unless they change their approach and ideology.

Does your organization have a “get it done” culture, or has it built the right organizational capabilities to achieve true transformation with digital? Please share with me at [email protected].

Video: Digital Transformation and The New Breed of CIO | Blog

By | Blog, Digital Transformation

Over the last year, it seemed that CIOs faced an existential threat. This threat was coming from new roles – Chief Digital Officer, Chief Security Officer, Chief Data Officer – as well as the business becoming more and more involved in digital transformation, and looking to inject its influence into IT.

It even got to the point early on last year, where there were questions as to whether or not the CIO’s role would continue, or would it dissolve or devolve into these different roles.

During the course of the year, we investigated this, and have come up with a strong point of view that in fact, the CIO has survived this challenge, redrawn its charter, and has emerged as a very powerful and sustaining executive role in the organization.

You know, in this new charter, what we find is there is no other executive in the organization that has the breadth of vision across all the different operating parts of the organization or the depth of resources to be able to deliver on digital transformation and support the new digital operating models that are emerging – leaving the CIO as the natural place for this responsibility to stay in.

And the new breed of CIO, therefore, is redrawing their charter to support this new vision. Now, redrawing this charter is not easy, and it requires substantial changes in organization, IT organization, as well as a substantial commitment to deepen the relationship with both the business and the board so that the CIO in the organization can play this transformative role.

I look forward to hearing from you this year on how your progress toward this new charter and your experiences as you build this very important role in your organization.