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Digital Transformation

Four Guidelines for Success in Innovation in Digital Transformation | Blog

By | Blog, Digital Transformation

A problem afflicts many companies undertaking transformation: they aren’t ready for innovation. But they need innovation to change their competitive positioning in the market. Today, many companies want their IT organizations to partner with the business to create opportunities for innovation and supportive services that drive transformation. And they look to their procurement chief or sourcing organization to ensure that any services they buy support innovation. How important is this? It’s critical. In fact, how your company leverages its IT organization and sourcing organization is a determinant of success in digital transformation.

I talked recently with Gopi Suri, an executive who has a background of successfully positioning IT organizations to be more transformational in nature to support their company’s business. Suri shared with me his four guidelines for a successful outcome in digital transformation.

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Five Traits of Effective Digital Transformation Leadership: Key Takeaways from 500+ Senior IT Executives | Webinar

By | Webinars

45-minute webinar held on Wednesday, June 26, 2019 | 1 p.m. CDT, 2 p.m. EDT

Download the Presentation

Effective digital transformation requires a range of strategic, organizational, operational, cultural and talent-related actions to achieve business success. What are the necessary leadership dynamics and characteristics required to take on digital transformation?

Based upon insights derived from surveying over 500 senior IT leaders across the globe, covering topics such as next-generation infrastructure and cybersecurity, we’ve identified a handful of critical qualifications required to lead successful digital transformation journeys. And we’re going to share them with you in this fast-paced, information-packed session.

Who should attend, and why?
The webinar content is geared toward global enterprise stakeholders responsible for leading IT and related digital transformation efforts, including Chief Information Officers (CIOs), Chief Technology Officers (CTOs), Chief Digital Officers (CDOs), and Chief Information Security Officers (CISOs/CSOs). Attendees will walk away with five key traits required to lead successful digital transformations.
Attendees will walk away with five key traits required to lead successful digital transformations.

Presenters
Cecilia Edwards
Partner
Everest Group

Jimit Arora
Partner
Everest Group

Technology Decisions to Avoid Digital Transformation Exhaustion | Blog

By | Blog, Digital Transformation

Organizational exhaustion is the deadliest enemy of companies undertaking digital transformation. It may be hard to believe, but one reason this happens is that companies do a lot of work to prepare for an unknown objective. Therefore, they effectively dissipate their commitment, resources, money and energy in areas that don’t bring value. This exhaustion prevents companies from completing their digital transformation journey. Let’s look at why and how this happens, and I’ll share how to avoid it. The remedy likely will seem counter-intuitive, and it goes against all that technicians believe. But it works.

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How To Identify What Technologies To Invest In For Digital Transformation | Blog

By | Blog, Digital Transformation

Unfortunately, two common situations in digital transformation cause CIOs (or others leading the transformation) to deliver little or no business value. An Everest Group study last year found that 73% of the digital transformations that we studied failed to provide any value whatsoever, and 78% failed to achieve their business objective. Put another way, only 22% achieved their business objective. In both common situations that lead to delivering little or no value, the executives leading the transformation took a technology-first approach. In this blog, I’ll explain how this leads to digital transformation failures and explain an alternative approach that succeeds in delivering value.

Read more in my blog on Forbes

Technical Debt: Not ALL Bad | Market Insights™

By | Digital, Market Insights™

Technical Debt - good and bad

Technical debt is not necessarily all bad – depending on the type of debt. Because speed-to-value is critically important in digital businesses, organizations may intentionally take on debt to achieve their goals as quickly and responsibly as possible. As long as they understand the risks and compromises, and have responsible plans to address it, assuming this debt can be a smart move.

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Offshore Service Providers Embracing M&A to Regain Market Share from Global Counterparts | Blog

By | Blog, Digital Transformation

Offshore-heritage service providers’ cost arbitrage value proposition served them well in the outsourcing industry’s earlier days. But to gain competitive advantage in the digital age, clients’ expectations over the past several years have evolved to include value-add capabilities, innovation, industry-specific expertise and skill-sets, etc. In turn, offshore service providers increasingly lost market share to global service providers that made heavy inorganic M&A investments in these areas.

Following the global service providers’ lead, many offshore providers took the M&A path to growth. And the results have been astounding. In fact, our Q1 2019 Market Vista report shows that the offshore providers’ revenue grew by 8 percent in 2018, as compared to the global providers’ 2 percent growth.

Offshore heritage SPs increase their wallet share through acquisitions & aggressive pricing

Where have the offshore providers been investing their M&A dollars?

New technological capabilities

Because of clients’ digital-oriented mandate, the majority of offshore providers’ acquisitions have been to obtain new technological capabilities such as cloud, cybersecurity, analytics, and automation. For example, Wipro in 2018 acquired Cooper, a design consultancy firm, for US$8.5 million to expand its design and digital innovation capabilities in North America. And TCS acquired Bridgepoint Capital to expand its capabilities in the financial services and insurance domain, particularly in U.S. retirement services.

Offshore based service provider developments

Start-ups

Due to lack of skills and knowledge about these next-generation digital technologies in the general workforce, offshore service providers are acquiring niche start-ups to:

  • plug gaps in their portfolios
  • quickly enter domains where sizable language and cultural barriers exist
  • improve their agility/flexibility
  • reduce their costs
  • access stronger and better insights
  • improve processes.

In fact, our most recent Market Vista report showed that start-ups accounted for as many as 50 percent of offshore players’ acquisitions in Q4 2018, compared to 42 percent in Q3 2018.

For example, Cognizant acquired Mustache, a creative content agency start-up, to expand its digital content capabilities by leveraging Mustache’s innovative approach to planning, producing, and distributing compelling video content and programming. Infosys acquired Fluido, a Salesforce Cloud consultancy start-up, for US$76 million to help clients in digital transformation and strengthen its position as a Salesforce enterprise cloud service provider.

Talent

Because offshore-heritage service providers’ initial reskill/upskill approach left them far behind global service providers’ inorganic approach, they’ve taken the leap and started acquiring companies to obtain direct access to already-trained talent. For example, Wipro acquired Syfte, a design firm, to strengthen its design and innovation capabilities in Australia and Asia Pacific. Under the agreement, Syfte’s talent will join Designit, a subsidiary of Wipro, to enhance the transformation services offered by Wipro Digital. Similarly, Genpact acquired Barkawi, a supply chain management consultancy, to add talent with consulting and digital technology capabilities in supply chain management and aftermarket services.

To learn more offshore providers’ M&A strategies, key market trends, global locations activity, and service provider activity in Q4 2018, please see our Market VistaTM: Q1 2019 report.

Application Modernization for Digital Transformation: The Rise of Good Technical Debt | Blog

By | Blog, Digital Transformation

Many organizations today treat technical debt like a pariah. They equate it with legacy systems, worry about how subsequent changes will be complex, time consuming, risky, and cost prohibitive, and consider it something that should be avoided in their journey to becoming a digital enterprise.

What they do not realize is that the debt is not bad in and of itself. Indeed, because speed-to-value is critically important in digital businesses, teams may intentionally take planned shortcuts in order to accomplish the task as quickly and responsibly as possible. As long as the teams understand what they are doing and compromising on, and have suitable plans to address it soon, assuming this debt can be a smart move.

Where enterprises err with technical debt is poorly managing it.

In order to manage it suitably and safely in a digital transformation environment, they should classify it into five major buckets.

The Rise of Good Technical Debt

Planned debt

This is when people knowingly become indebted. It is like buying a house on a bank loan. You know you must repay the loan, and you plan for it accordingly. The defining feature of this type of debt is that the team knows it has the capabilities and resources to “pay” it back. This is a good debt that helps you quickly achieve business objectives.

Blind debt

This is a dangerous debt where system teams do not even know they are building the debt themselves. This is generally the result of poor practices within the team, unplanned and haphazard development, and a fundamentally broken organizational culture. This often also happens during M&As when the acquirer does not know what kind of mess it is getting into.

Acquired debt

This type of debt is unavoidable in business environments. Many systems that were developed in the past with improper technology platforms, tools, coding practices, governance models, and frameworks build technical debt over time. These legacy systems hold valuable information for enterprises aspiring to become digital businesses, and cannot simply be jettisoned. Instead, they need to be made “debt free” in a prioritized manner.

Dead debt

This is probably the worst of all kinds, because, irrespective of corrective measures taken, the systems have degraded so far that they do not support digital initiatives. Therefore, rip and replace becomes the only option. Enterprises need to be careful with identifying this debt as they may confuse it with other types of debt that can be “repaid.” They may end up spending good money after bad, with no way out.

Mirage debt

Not many enterprises think about this one. It appears during system analysis, when architects and others mistakenly believe they have technical debt, when in reality they do not. If there is any, it is in small components, not the system itself.

What should enterprises do to address technical debt?

They should start by understanding that modernization should be of system components, not the systems themselves. Then, they should look at each of their systems and identify the components that can meet future digital demand, and those that could potentially create problems. Once they have catalogued all the components, they need to invest in reducing each one’s technical debt in the most appropriate way. For example, we have seen enterprises successfully build component capabilities outside the main system and exposing APIs for backward integration. This can work across core functionalities as well as user interfaces.

Our research with over 190 application leaders suggests that 75 percent plan to continue to invest and modernize their applications. There is no reason to fear technical debt as long as you understand what you are getting into. For digital businesses, taking on good technical debt can be a strategic choice. Though processes have their value, enterprises that are driven by processes rather than innovation, and are scared of risking short-term technical debt, will struggle in the digital world.
What has been your experience with application modernization? Please share with me at [email protected].

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.