Speed and agility — the keys to success

Digital transformation will enable you to build success by better understanding your customers.

Digital transformation has become one of the buzzwords of the modern era. But what does it mean? It means using digital technology, in all its forms, to build deeper relationships with customers in order to better understand their needs and to deliver products and services that meet those needs.

Digital transformation means using technologies such as mobile and social media, and cloud computing and web services, to innovate more quickly and to build a better and stronger business. If you can do that, you can transform your business into a digital enterprise that has a clear competitive advantage. And if you don’t do it, there is a good chance that your competitors will, and that you will be left behind.

The good news is that the concept of digital transformation is not difficult to understand. It can be difficult to implement, however, as it can fundamentally change the way your organisation works. It takes commitment, and many people within your organisation might need to change their mindsets and get outside their comfort zones. That can be tricky, but the process of digital transformation, done correctly, creates significant value for customers and, in turn, the rewards are high for organisations that embark on transformation initiatives.

Most organisations routinely perform software upgrades, security updates and hardware refreshes. They generate reports and analysis on a regular basis to achieve a certain level of competency and customer service. That is a normal part of doing business. Digital transformation is about accelerating that process, making these changes continuous, rather than discrete, and linking data, systems and processes so as to better manage end-customer journeys rather than simply individual end-customer interactions.

You need to look beyond the old ways of keeping pace with technology, beyond the traditional ‘Mode 1’ model, and move to a new-world ‘Mode 2’ way of doing things. Make that shift, and you will enable digital transformation. Stay in Mode 1, where digital transformation is impossible, and you will get left behind in the race to be technologically innovative and agile.

Mode 1 and Mode 2

Mode 1 and Mode 2 technology models are definitions coined by Gartner to define the differences in managing traditional versus digital technologies. Mode 1 refers to a traditional IT infrastructure, such as systems of record, traditional lines of business applications and systems where new changes and releases may happen infrequently, for example, monthly. Typically, change is a well-planned and -tested process and therefore takes time.

Mode 2 refers to daily or continuous change — a precondition to being more competitive, innovative and more agile. Not all applications and systems need to run in either a Mode 1 model or a Mode 2 model. Both are necessary in a large organisation. What is important is that the capabilities, skills, processes and way of thinking are fundamentally different between Mode 1 and Mode 2, and therefore staff and suppliers need to specialise in one or the other in order to deliver successful outcomes. Gartner summarises this nicely with the metaphor of a marathon runner representing Mode 1 and a sprinter representing Mode 2. The marathon runner will never win a sprint and the sprinter will never win a marathon. The sprinter and the marathon runner have different skills and capabilities.

Mode 2 operating models are typically associated with digital transformation because the Mode 2 approach enables organisations to achieve the speed, agility and data-driven decision-making that new digital technologies enable. According to market consensus, there are five foundation digital technologies — cloud, analytics, mobile, social and security.

Although many businesses interact with customers through mobile communications and social media, these channels are just one part of the whole digital transformation equation. To transform your organisation from one that merely uses digital technology to a truly digital enterprise, you need to understand how digital technologies can be combined to deliver new competitive advantages by better understanding and connecting with end customers.

The key technologies of a successful transformation strategy include a mix of cloud computing, real-time data analytics, mobile computing, social media and information security. The appropriate mix of these technologies needs to be combined, driven by leadership, communications and the right incentives.

You need to determine the baseline technologies and processes that will equip your organisation to quickly capitalise on market opportunities. You then need to build on an additional layer of technical and digital capabilities that will continue to increase your responsiveness to evolving market requirements and customer needs.

The shift from point-to-point engagement to managing customer journeys will build your competitive edge and sustain a clear leadership position.

Customer interaction is the key

Digital technology has caused massive changes in customer behaviour and buying preferences. Mobile technology in particular has made it possible for people to be much more engaged; to participate and get more involved in the sales process. Your organisation needs to match, and anticipate, these changes in behaviour.

A recent Nielsen study showed that Australian consumers are increasingly using their smartphones and tablets devices to be entertained, stay socially connected and access the latest information on the go. Another report by the Digital Industry Association of Australia revealed that in a battle between screens, half of Australians would choose their mobile phone over a laptop or tablet. This makes mobile a critical part of any business-to-business (B2B) and business-to-consumer (B2C) solution.

The digital enterprise needs to be able to deliver products and services through a wide variety of digital channels, keeping them all current and synchronised and continually enhancing the relationship between businesses and their customers. Digital transformation means more than just adding mobile and social media to the mix. Rather, it means ensuring there is an interconnect across every single customer touchpoint, so that the customer experience is seamless and consistent.

Take the example of two Melbourne IT customers: a large state emergency services organisation and a large Australian media provider.

The emergency services organisation uses its web presence, social media and community activities to disseminate information and educate the public in relation to the services it provides. To ensure its service is uninhibited by technology and volumes of users — especially in an emergency situation where getting critical information to the public in a timely manner could save lives — the organisation has put in place a software- and cloud-based solution that can deal with over 20 million individual visitors in a single hour during periods of high demand.

The organisation is using a simplified software architecture that enables scalability through the cloud, thus reducing the heavy reliance it placed on its traditional application providers and its legacy software platform.

The media company knew that with the arrival in Australia of new competitors, it had to play its cards right or face a loss of customers and shrinking revenues. By leveraging digital channels to heighten the customer experience and increase interaction with its customers, it was also able to compete successfully against the new providers.

Empowered by the ability to innovate faster so as to continue to improve the end-customer experience, digital transformation has enabled this media organisation to compete effectively with new competitors.

Guard your turf

The best way to start your digital transformation process is to pick a customer interaction that can be improved, create a specialist Mode 2 team or use the services of a Mode 2 service provider. Then, start developing new for innovation and experiment by delivering new features, functions and services, measure customer feedback and listen carefully to customer responses. Take this information and iterate again, and again, and again.

To start digital transformation initiatives in your organisation, just begin experimenting somewhere. In fact, it is almost guaranteed that somewhere in your organisation this is already happening. As you gain data and insights, you can develop a more comprehensive roadmap. The key, though, is to continuously develop and deploy many small changes, not plan and build a big technology release.

Successful digital transformation requires sponsors and participants in your organisation to adopt a fresh mindset and renewed commitment to do away with traditional and often rigid processes, and to implement a ‘minimum viable product’ mindset and iterate continuously from there.

Digital transformation is a journey, with the end goal of achieving customer-centricity and success. Modern business is being rapidly changed by the influx of digital technologies, where customer understanding, intimacy and loyalty are even more important than ever. Remember, digital transformation is inherently customer-centric.

Peter Wright joined Melbourne IT in 2011 as Executive General Manager of Enterprise Services, in charge of spearheading the company’s growth in agile IT services. With more than 28 years’ experience in the Australian technology industry, Peter previously worked as general manager, sales and operations at REA Group, where he was responsible for Australia’s largest real estate website, realestate.com.au. Prior to that, he held senior positions at Optus and Alphawest.

Pictured: Peter Wright, Executive General Manager, Melbourne IT.