When your company undertakes digital transformation, undoubtedly a primary activity will be building a digital platform. As digital transforms companies, their digital platform becomes a differentiator. Building your platform is a crucial activity, as it will enable your company to change to a new digital operating model, and that model is how your company will create new value and new competitive positioning. But digital operations and technologies are still new and evolving quickly, and the business world lacks 10-20 years of experience and benchmarking data that could help your company determine the effectiveness of your platform’s performance. This is one of the reasons so many initiatives fail. To avoid that risk, let’s look at how to understand whether your digital platform will deliver your intended outcome.
Digital transformation gives companies new opportunities to change their competitive position. Typically, the objective for using powerful digital technologies is to create new value that changes the customer experience, the employee experience or the ecosystem partner experience. However, executives become frustrated when they need to communicate to their boards or peers on how quickly they can deliver on the promises of digital transformation. We live in a world of instant gratification, agile methodologies and sprints. This leads to an impression that a company can quickly achieve a new competitive position in the marketplace or quickly get meaningful benefit from the investments. Inconveniently, this impression is not the truth.
DXC Technology yesterday announced its acquisition of Luxoft, a global-scale digital innovator with world-class digital talent. I think this is an interesting acquisition, not only from a services industry perspective but also from the perspective of benefits to enterprise customers undertaking digital transformation.
HR has certainly come a long way in being perceived as a strategic function with significant impact on business outcome. Yet, despite workforce and technology investments, multiple challenges – including the growing talent deficit, problems with skilling and retaining niche talent, and the increasing flexibility and better experience demands of Millennials and Generation Z – are inhibiting HR departments from attaining their full strategic potential on behalf of the enterprises they serve.
The solution is moving to a next-generation HR model with digital transformation at the core.
The inefficiencies of the traditional model – siloed HR systems, a large number of touchpoints, and a disjointed employee experience – are clearly exposed by the challenges cited above. The next-generation HR model addresses these issues with a cloud-based platform at the center, augmented by technologies such as advanced analytics and automation. This results in an intuitive and integrated model that has the ability to provide an enhanced employee experience.
To successfully adopt the next-generation HR model, enterprises should take a structured approach that considers several important factors.
Employee Experience Should be the Focal Point
While the importance of operational cost reduction and process standardization can’t be disparaged, enterprises should prioritize the employee experience when they plan for a digital HR transformation. Be it HR service delivery or technology modernization, the end goal should be to provide an integrated, intuitive, and seamless employee experience to better attract, engage, and retain talent.
Empowerment: HR should offer employees integrated, accessible, and disintermediated workflows and systems that empower them to serve themselves. Methods include employee self-service tools, omnichannel experiences, chatbots, and analytical tools, all of which enable employees to have more control over the decisions they make.
Engagement: Millennials and subsequent generations exhibit different behavioral patterns, are digital natives, and expect seamless employee experiences. Enterprises should adopt solutions that enable HR to engage and retain this ever-evolving talent. Solutions that are integrated, user-friendly, and provide consistent experiences across sub-processes / third-party portals with optimized response times and accuracy should be the key focus areas.
Ensure Orchestration of Digital Technologies to Maximize Impact
Rather than implementing a handful of technologies haphazardly, enterprises must take an orchestrated approach to digital HR transformation that enables the technologies to feed off each other, find synergies, and maximize the impact.
The findings in our recently published report made it clear that while each individual technology lever (see chart below) is powerful, enterprises can realize the maximum transformative impact when all the levers are applied in cohesion.
Why is this? Although the impact of technologies such as Robotics Process Automation (RPA) and BPaaS are focused on enhancing the efficiency of various processes, predictive and prescriptive analytics are capable of deriving net new insights.
On the other hand, cognitive/AI technologies such as Natural Language Processing (NLP) and Machine Learning (ML) can be bundled with other digital levers to significantly improve the stakeholders’ experience, in addition to increasing efficiency and providing net new gains.
Engage Service Providers for Help
To help support buyers’ growing demands and needs, service providers are increasingly offering HR and technology consulting services. Capabilities they offer include:
How to understand and plan for the impact of digital adoption on the enterprise’s workforce
How to adopt and derive value out of digital investments (i.e., third-party cloud solutions such as Workday, SuccessFactors, and ServiceNow, automation, and analytics solutions)
How to optimize HR processes
With technology changing so rapidly, organizations need to make sure that they fully embrace digital transformation, and buckle up to face and be ready for the changes. Many organizations are already working in this direction.
To learn more about this topic, our recent report titled “The Key Ingredients for a Digital-First HR Transformation” identifies and deep dives into five key levers (automation, analytics, cloud, advisory, and employee experience) that will help enterprises successfully transform their HR function.
Is your enterprise planning to undergo a digital HR transformation? Have you completed it? We’d love to hear from you about your experiences, questions, and concerns. Please write to us at: [email protected] or [email protected]
I believe it’s now apparent that all companies will go through one of two different forms of digital journeys over the next 20 years. Why? These journeys are inevitable because of the irresistible forces of competitive advantage and lower cost as outcomes. It’s not a question of “if;” it’s a question of when and to what results. However, the result or potential outcome is an aspect of digital that executives sometimes misunderstand and, in doing so, they end up with failed initiatives. So, let’s clear up the possible misunderstandings and look at what digital journeys are about, the types of results that companies can achieve and how digital platforms fit into that picture.
As IT organizations become more strategic, so too do their partnerships with IT outsourcing providers. Digital transformation, automation, cognitive capabilities, and the data revolution are not just shaking up how IT operates, they are greatly impacting the kind — and quality — of services under contract with IT outsourcing firms.
Here is a look at the technologies, strategies and shifting customer demands shaking up IT outsourcing right now and the once-hot developments that are beginning to cool. If you’re looking to leverage an IT outsourcing partnership, or want to make good on the market for IT outsourcing as a provider yourself, the following heat index of IT outsourcing trends should be your guide.
Fun fact: Many long-established insurance companies still rely on legacy mainframes computers running applications in an outdated programming language from the 1960s. That’s not ideal, because today’s tech-savvy, smartphone-using customers are more mobile and expect real-time information whenever and wherever they are, without the assistance of an agent or a call center representative. Not good, because the modern agent requires new tools and applications to maintain productivity in a mobile environment, including instant policy quotes. And especially not good, because the “insurtechs” – new, innovative, and rapidly growing companies with social savvy marketing and modern technologies – are just waiting in the wings, ready to grab your market share.
You have to adapt and evolve in record time to create a seamless customer experience while improving employee productivity to remain competitive and increase customer retention. By implementing APIs and microservices, you can extend those insurance backend systems to mobile, web, and cloud rapidly, and cost-efficiently, all with low risk. By using the “art” of the API, you succeed where past transformation options failed.
According to an article in Forbes by Peter Bendor-Samuel, “The record of studies on digital transformation indicate a high failure rate, with a notable 2013 McKinsey study finding that 70% fail. That is a lot of wasted time, money and unmet expectations.”
The pivot of third-party services firms to digital is disrupting the entire services industry. Times of disruption always give rise to new competitors, and challengers among service providers can shift share. This is clearly happening now in the demand for digital transformation services. The Big 4 accounting and auditing firms – Deloitte E&Y, KPMG and PwC – are emerging as formidable challengers to Accenture, IBM and the Indian service providers. Here’s what’s happening and what it means for competitors and enterprise customers.
Two champions have emerged among service providers in digital transformation: Accenture and TCS. Accenture is driving business transformation, and TCS is doing a marvelous job of driving IT modernization. TCS’ recent acquisition of W12 Studios, a London-based digital design agency, is worth noting for its implications in the digital marketing space.
W12 will be part of TCS Interactive, TCS’ digital design division. Digital marketing is an attractive, high-impact growth area in digital transformation. It is pivoting toward greater and greater use of technology, clearly calling out for technology companies such as TCS to participate in it more fully. Accenture is building big business in this space quickly. Even so, this acquisition is surprising.
Unlike Accenture, TCS has not driven its success by acquiring companies. But the digital marketing space is growing very quickly, so TCS felt it needed to break its mold and gain a foothold in the space by acquisition. The increasing need for sophisticated technology such as AI and automation to execute well in this space makes it more attractive for TCS. This technology sophistication is well beyond the capabilities of customers for third-party services.
Two factors may be growth hindrances that affect TCS’ strategy for entering the digital marketing space.
First, TCS is late to this party. Companies such as Accenture, Capgemini, Infosys and others already created very large, formidable businesses in this space. Accenture is the prime example and has a big lead. TCS historically proved effective at closing market gaps once it established a foothold. But the firm has a big gap to close in digital marketing. It seems unlikely that TCS will succeed in closing this gap purely without further acquisitions.
Overall, the Indian services firms are late entries and are losing share to Accenture and the domestic players. For the Indian players to challenge for leadership, they will need to invest heavily and continue to grow inorganically.
The second possible growth hindrance involves the delivery model. It seems reasonable that much of the support of digital marketing technology can be delivered from an offshore model. But it’s not clear that the creative aspects are best delivered from a remote location. However, given that the technology and technology support is growing in importance it makes sense that TCS distributed model will work well for this part of the equation. Despite a growing and rich source of creative talent in India, I am skeptical that customers will move their creative work offshore. Why? Because proximity to the business and cultural emersion are critical aspects of the delivery.
I think it’s important to recognize that TCS’ goal may not be to enter digital marketing in a big way. At this point, there is such a fundamental disruption happening in the space that even capturing a small part of this marketplace might be a welcome and lucrative component to the broad portfolio that TCS offers. Even with a small market share, TCS can create a nice book of business given the growing market and secular trend toward technology.
I believe we’ll see significant changes in the third-party services industry in 2019. The coming year will bring some major movements and trends, along with disruptions and bumpy roads.
Bumpy Roads in Digital Transformation
This year has been a move from digital transformation pilots to programs, which led to a full-on wave of IT modernization to support transforming to digital operating models. The question we must examine going forward is whether this wave will survive a recession.
It seems likely that the global economy will slow and even the US economy will come down off its heavy heights. If this happens and the economy decelerates, less capital and less discretionary funding will be available to fund companies’ modernization goals. If this happens – and the question is not if it will happen but when – I think it’s likely that it will start to happen in 2019.