By Shahrul Kamal Kamaruddin
Many organizations want to embrace digital transformation. And then they do – and wish they had thought it through from the get-go.
For quite some time now, organizations, big and small, have discussed the adoption of digital technology to transform their services or businesses. Some commence the journey using a big bang approach, looking to embed emerging technologies across their front-middle-back office in one large transformational project. Others opt for the iterative approach of “fail fast-learn quicker”, for example, automating processes via Robotic Process Automation (RPA) technology one function at a time and replicating the same in other functions if proven successful. There is no right or wrong approach, as organisations have been content to take whichever route suited best, based on individual appetite and pace. In the latest Harvey Nash/KPMG CIO Survey 2020, it was reported that investment in technology remained at an all-time high, with 55% of technology leaders receiving a budget increase.
Then 2020 and COVID-19 happened.
If you thought the pandemic has slowed down the digital transformation hype, you would be surprised. Of course, there were industries that were severely impacted and needed to re-focus their priorities. But the COVID-19 phenomenon arguably increased not just the chatter on digital transformation, but also its implementation, perhaps unsurprisingly, considering the pandemic’s impact on not just the back office, but also middle and front. Most companies have had to reset how they operate in order to stay relevant, and customers’ demands become uniquely digital – the Netflix, Uber and “I-want-it-now” customer expectations. As a result, what was previously considered a great customer experience is no longer good enough. Most, if not all organisations needed to reorganize their approach to customers. And technology has played a significant role in facilitating this change.
Fast track to 2021, the focus on digital transformation has heightened. Those that weathered the storm doubled down and those who were building back stronger turned to technology. The implication seems to be that organisations who are not leveraging technology fast enough will eventually lose out. On one hand, this has created a promising cycle where technology is leveraged upon for the greater good. On the other, many organisations go into digital transformation because of the fear of missing out. The hype, advancement of technology, and to a certain extent, low entry costs for some of the tech are factors that contribute to this vicious cycle. For example, it is easy to deploy chatbots in call centers – but many organisations may not necessarily have a holistic and long-term plan which includes strategies to advance the automation and data analytics agenda beyond the initial chatbot implementation.
These technology programs build up over time. What typically starts as an honest, well-intentioned initiative slowly becomes a gigantic monster to maintain if not managed properly, and often, a very expensive endeavour. As a result, underlying issues such as legacy systems, inefficient processes, and resistance to change remain unaddressed. Not to mention, discussions must be had on whether these programs add value or put unnecessary burden on the organizations.
There are many factors that lead to this unfavourable outcome, the most common being overlooking the importance of uplifting and upskilling the entire talent force in order to meet the ever-changing demands and new operating model once the technologies have been established. Based on the same survey only 19% of technology leaders reported that they were ‘very’ or ‘extremely’ effective at ensuring that non-IT staff have the right technology skills prior to the pandemic. Further, the absence of clear business and technology alignment and strategy, mismatched expectations between project sponsors, as well as lack of sustainability of business demands which lead to pilot projects becoming one-offs are significant factors as well.
Whilst there is no single blueprint to digital transformation, there are foundational activities that most organisations should consider before embarking on any digital transformation journey. First, the leadership must have an honest conversation in terms of the organisation’s technology and digital maturity of its IT department and organization, identifying the gaps and optimisation potential. Secondly, a thorough business alignment, be it strategic or functional requirements, needs to occur. Clearly defined key design principles, aligned to the corporate’s agenda, mission and vision, is fundamental before any technology implementation can take place. Thirdly, and perhaps most critically, talent, talent, and talent. In many success stories, the talent pool tasked to deploy digital transformation programs has consisted of people from both the business and from IT. Involvement needs to be end-to-end, to ensure that projects become sustainable beyond initial implementation. For example, what starts off as a project to automate the accounts payable process should lead to multiple processes in the finance department, followed by the establishment of an Intelligent Automation Center of Excellence (COE) for the company. And lastly, the final foundation of digital transformation, change management. Though often mentioned, it is often not given the attention it is due. Comprehensive change management support is pivotal to ensure buy-in across all levels in the organization on the new digital operating model.
To fully reap the benefits of any digital transformation, organizations must first understand the problems they are addressing and corresponding root causes. Not every issue is a technology one. Digital transformation, big or small, should not be reactionary as a result of FoMo or a solution to a non-existent problem, but a structured, holistic strategy to advance the agenda.
Shahrul Kamal Kamaruddin, Director, Technology Consulting, KPMG in Malaysia
