Product Development
The Two Common Failings of Digital Transformation (and how to avoid them)
Steven Lawrence, Digital Director
17 August 20227 minute read
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Product Development
Steven Lawrence, Digital Director
17 August 20227 minute read
Successful digital transformation is rare. According to Bain & Company, just 5% of companies reported that they had achieved or exceeded the expectations they had set for themselves.
Executives are quick to see the business benefits of a customer-centric strategy: more satisfied customers, increased loyalty, a lower cost to serve. The payoff from digital transformation can be impressively high, but the success rate is regrettably low.
This gap between aspiration and reality may help explain why a great many executives are sceptical about investing in digital technologies and capabilities, and whether their organisations can translate the buzz around digital into meaningful improvements in business performance.
In our experience there are two fundamental reasons why digital transformations fail:
1. Blue sky thinking, which fails to consider the technology context and operational impact of the proposed solution and all too often results in abandoned projects.
2. A complex or legacy IT estate, that is difficult to change which usually leads to a drastic lowering of digital ambitions that ultimately delivers little business value.
Many executives are keen to launch disruptive initiatives aiming to delight customers with enhanced services and innovations.
But without a quantified link to value and a firm grasp of the operational and technical challenges, such efforts often can’t show early gains and build momentum. They stall before they ever really get going.
This is exacerbated by digital agencies, who are often bought in to bring the vision to life, but their singular focus on the customer and a reluctance to engage with operational management and IT all too often results in designs that are never delivered.
Many customer experience initiatives don’t meet their full potential — or worse, fail completely — because neither employees nor partners have a complete picture of what the customer experience entails or the dynamics that go into creating it. This includes those parts of the service that are in plain view of customers as well as those parts that influence the customer experience from behind the scenes.
As a result, many digital agencies, and the experiences they are responsible for, are blind to the line of visibility — the critical divide between what customers see and don’t see during service delivery.
This failure results in unintentional exposure of service elements, it hides elements that could add value and corrupts experiences with counterproductive policies and processes.
Worse still the vision is often not deliverable at all.
The two key metrics for any new product development are the business value it will bring and the implementation cost it will incur. What might demo great, may be difficult or impossible to implement.
Every new development project faces technical constraints in the frameworks to be used and most critically in the legacy applications that need to be integrated to. These must be brought front and centre.
It is critical to identify the set of complex interdependencies that shape all their interactions with customers. This includes those parts of the ecosystem that are in plain view of customers as well as those parts that influence the customer experience from behind the scenes.
To ensure that customer needs are met and avoid outcomes which the complexity of the technical implementation would hamstring, the design phase should be comprised of experts in both design and engineering to ensure the designs are technically feasible within the constraints of the project, and at the same time, watching for innovative new technologies that can make the experience more seamless and rewarding.
Sooner or later, every company trying to go digital will run headlong into roadblocks, likely due to legacy IT. Companies have discovered that their legacy IT is not ready for digital.
Companies often get tripped up when they try to connect their digital initiatives with the organisation’s dozens or hundreds of legacy IT systems and databases.
In many cases, those systems have been in place for decades and can’t interface with new digital apps and solutions. And while these legacy systems are packed with potentially useful data, digital products often can’t easily access it.
Digital transformations often disappoint due to layering solutions onto broken processes and systems that are resistant to change.
The complications created by old and outdated systems can make integrating new digital products and capabilities prohibitively costly. This results in a complexity tax that every digital project pays today.
It derives from the need to work through fragile point-to-point or batch data integrations, harmonize nonstandard data, and create workarounds to confront risk and meet business needs.
These frictional losses inhibit companies’ long-term velocity and productivity and harm current budgets and returns on investment.
As a result, many executives lose faith in IT and lower their digital ambitions, settling for a dilution of business value and mediocre performance.
Most companies don’t have the luxury of starting with a clean slate; they must build an architecture designed for the digital enterprise on a legacy foundation.
IT architecture needs to support two different speeds. The customer-facing technology needs to be modular and flexible enough to move quickly - for instance, to develop and deploy new microservices in days or to give customers dynamic, personalised web pages in seconds.
The core IT infrastructure, on the other hand, is designed for the stability and resiliency required to manage transaction and support systems. The priority here is high-quality data management and built-in security to keep core business services reliable.
Digital in the context of IT is focused on creating an environment that decouples legacy systems - which support critical functions and run at a slower pace - from those that support fast-moving, often customer-facing interactions.
This approach is embodied in a continuous-delivery model where cross-functional IT teams automate systems and optimise processes to be able to release and iterate on software quickly.
A Digital Architecture is the foundation that enables businesses to better connect with clients and partners, reach new channels, monetise data and services, provide customers with digital and omnichannel experiences, develop platforms for partners, boost innovation and create viable products that reach the market quickly, enhancing customer experience.
As such, it is critical to the success of digital programmes, it is the backbone of an enterprise’s digital strategy.
You cannot achieve digital transformation by focusing purely on an outside-in or inside-out approach.
Success in digital initiatives is ultimately based on a deep understanding of the interplay between design, technology, and user behaviour in satisfying business goals.
More importantly, it is critical that all these specialities that contribute to a digitalisation effort; product experts, UX designers and engineers, work as a single team throughout the life of the product, from day one to post-go-live.
To pull away from the competition you need to link bold digital ambitions to the internal capabilities and behaviours needed to achieve them.
To ensure success, before launching into product development, you need to consider three stages:
The product vision establishes a common understanding of the business and digital objectives, what success looks like, and agreement on the key elements that will enable or constrain success.
With awareness of the full picture, you must establish where the challenges will be and map out a roadmap to deliver the vision in defined waves of practical, achievable stepping-stones that build to sustained levels of superior performance.
Before committing to development, a proof of concept helps to validate assumptions, establish viability, technical issues, and overall direction, most importantly, they help to build the necessary confidence before committing to a much bigger investment and organisational disruption.
We can take you through this process within two to three months. From this point, we can help you scope a transformation project with every chance of success. It will deliver meaningful value to your customers and tangible benefits to your organisation.
Are you struggling with your digital transformation process?
If you are, then please get in touch for an initial chat, we’d love to hear from you.
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