Tag: Digital Transformation

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

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

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 Changes Role Of Purchasing Organizations | Blog

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

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

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

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

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

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

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

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. 

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