Digital transformation is on the rise, but not as you know it
Digital transformation (DTX) has long been a priority for business leaders, and in many areas Covid-19 has forced the hands of those who were either on the fence, or had not yet invested in technology as a key part of their business.
For many, the investment is borne out of the sudden ubiquity of remote working, resulting in greater adoption of remote collaboration, time-tracking tools or SaaS platforms to help facilitate the transition from office to home. For others, technology investments may have already been on the agenda pre-Covid are now being accelerated in response to unprecedented market conditions. Whatever the investment, the priority for businesses has been to pivot accordingly and secure their short and medium-term survival.
However, while digital transformation has undoubtedly been accelerated by Covid-19, there is one key difference: its scope. While investment in technology and software solutions should only increase as time goes on, it’s expected to manifest itself in new ways.
In this age of uncertainty, it’s understandable that very few businesses have an appetite for wholescale, high-risk changes. When business leaders are facing existential threats to their organization and focus on surviving from month to month, the idea of ripping out critical operational systems to replace them with an entirely new, untried system will inevitably be too great a risk for most.
With the marketplace being as volatile as it is, and with no confidence in anyone’s ability to predict what the ‘next normal’ will look like, it’s impractical to re-platform an entire enterprise system right now - or indeed in the coming months.
Even if a business is brave enough to take such a decision, there are also several logistical barriers that weren’t present before Covid-19 took hold. Enacting a large-scale digital transformation takes months of work, requiring research into various technologies; meeting with potential software partners; developing pilot projects; ensuring key hires have been made to oversee the project; and much more.
For businesses now facing staff shortages due to increased Covid-related sick leave, forced redundancies, and furlough, the human resource required for a large-scale transformative project simply isn’t available.
And while many businesses have the same (or similar) business strategies that they had pre-Covid, they simply aren’t in a position to commit the funds or time for a scrap and replace digital transformation project of this scale. Large scale investments of any kind are under much tougher scrutiny when the future is so unclear and revenues are so unpredictable.
Yet, businesses still face pain points and must continue to evolve and improve to stay competitive, so what next? According to Gartner, the answer is ‘composable business’: building a business from interchangeable blocks, providing it with greater autonomy and the ability to pivot in the face of market changes and other external issues.
When it comes to DTX, this will mean a focus on small scale, self-contained projects. In practice, this will consist of quicker prototyping of new products and services to test the market, with businesses adopting a ‘fail fast’ approach to figure out what works, what doesn’t, and then iterate accordingly. This approach keeps the risk minimized whilst still offering the potential benefits of bringing digitization to critical areas that see the most benefit.
Bite size in practice
In practice, businesses will look for targeted opportunities to make optimizations to provide greater operational efficiencies, time-savings and increasing their bottom line. With scrap and replace out of the question, smaller, standalone ‘bite-sized’ solutions will instead work integrated with current systems, or independently, at the edge of the enterprise.
Take an example from taxis & courier services: at the height of the pandemic, with the world in lockdown, most services of this nature saw their day-to-day work reduced by at least 50 percent, closer to 90 percent in some areas. At the same time, as passenger numbers were dropping across the country, the demand for online shopping increased significantly as people stayed home.
In response to this huge shift in market conditions, innovative taxi companies refocused on building out new services. Examples include using taxis and couriers for click & collect deliveries to aid those struggling to find delivery slots for their online shopping - something particularly important for the elderly & vulnerable.
The ability for a taxi company to bring new services such as click and collect to market depends on their ability to innovate around their existing business processes and solutions. Click and Collect is a similar process to a courier job, but with some fundamental differences, meaning new requirements and changes to process. Creating new solutions to handle these requirements alongside the legacy taxi and courier processes allow businesses to build on the foundations of their existing systems without the risk of breaking the existing operations. The process of supplementing or altering existing functionality in a standalone project, and then integrating into the live system, is far simpler than installing an entirely new system from the ground up. It’s a small project with a major benefit, with no risk to disrupting business-as-usual operations.
What next for DTX?
Slow and steady might often win the race, but perhaps not in the middle of a pandemic. While we have generally seen and accepted digital transformation as a larger and multi-part process, business leaders face unprecedented challenges that need faster, leaner, and more immediate solutions.
The ongoing uncertainty is likely to continue the prevention of more ‘traditional’ examples of a digital transformation, but the rate of adoption of technology will only accelerate, providing businesses with greater flexibility and agility in 2021 and beyond, ensuring that they can see out the remainder of the pandemic and the effects that will linger long beyond its disappearance.
In the long term it will be interesting to see whether business appetite for large-scale DTX projects returns once (if?) society and the business environment return to a more predictable and familiar rhythm. It would not be surprising if the ‘composable’ approach to tech projects that is proving so effective right now becomes the new normal for enterprise software, even after the effects of the pandemic have faded into the past.