ORLANDO, Fla. — Across industries, the process of digital transformation can point the way to revenue streams and a renewed sense of purpose. It could also mean millions in sunken IT costs or alienating customers and employers.
In 2019, digital transformation in the corporate world isn't a nice addition to the overall strategy but a business imperative.
Unless they'd like to go the way of Blockbuster, Kodak or, more recently, travel retailer Thomas Cook, companies must allow digital to reshape its value proposition and become a core part of how it delivers on its mission, said Mark Raskino, VP analyst at Gartner, speaking Monday at the Gartner Symposium/ITxpo.
"In three to five years, every industry will be digitally remastered," said Raskino. "Remember in the past IT was a support service? It was not 'what we do.' Anywhere and evearywhere, tech is becoming part of what we do."
In adapting to the changes, companies can take a number of costly missteps — either at the governance, management or execution stages. These are nine digital transformation mistakes Gartner identified:
1. Misreading the impact of digital transformation
Assessing industry and company impact of digital transformation is a critical step that can influence the level of a company's commitment to the process.
Failing to examine how digital forces will change the basis of industry means companies end up misunderstanding their value proposition, an error that will let competitors encroach.
"Once companies do wake up, often times they don't know how to program [digital transformation] into the organization, and that's because they don't know why they exist," Raskino said.
What to do instead: Approach digital transformation from the standpoint of re-invention, an angle that for some — including the oil and gas industry and its clean energy vertical — might be long-term.
2. Inward thinking
Stemming from the old concept of IT as a back-office function, a frequent mistake is to look for efficiencies in the operating model.
Instead, Raskino said, digital is changing business models as a whole, causing companies to go back to the drawing board when it comes to what its product, value proposition and monetization strategies are.
"The inward facing angle is a weak start point for the digital transform journey," he said.
What to do instead: Don't look at what competitors are doing, consider examples outside their industries, or countries.
3. Disassociated management
A successful digital transformation path starts with a committed board of directors which, rather than simply oversee, gets involved.
"Boards aren't truly shaping and owning digital transformation: they're just overseeing it," Raskino said. That dissociated behavior can seep down through the lower levels of the organization, making employee buy-in an uphill battle.
What to do instead: The digital transformation process should be viewed as a core company process. A transition between the old and new, in the hopes of spurring internal competition and innovation.
4. Unguided leadership
As the company embarks on a likely overhaul of its processes, leadership can set the company up for failure if it doesn't clearly identify what a success looks like.
When measures and targets are undefined, strategic purpose becomes unclear.
According to Todd DeSaix, head of strategy for the commercial IoT group at Lenovo, this is a key step to avoiding digital transformation failures.
"... begin with your end in mind," DeSaix told CIO Dive after his talk at Gartner Symposium/ITxpo. "What is it you're trying to achieve? Then align all of that with the business and IT partners."
What to do instead: Set clear goals, KPIs and even bonus-drivers for the successes of digital transformation.
5. Incremental approach
In prefacing his talk, Raskino was clear: digital transformation only refers to "the big stuff," or those strategies that can leverage sizeable change on the business as a whole.
Often, these projects come with a big sticker price.
Taking an incremental strategy to transformation, one that looks to compile disaggregate small projects into a cohesive strategy, falls short of the challenges of the digital age.
What to do instead: Management should find the financial resources to take on digital transformation, whether that means selling off old assets or borrowing to fuel the changes.
6. Fixed mindset
Resistance to change can mean companies will hold steady in their ways until more digitally-native competitors begin to chip away the customer base.
As digital reshapes the company's mission, its structure should stay agile, adapting to the changes at hand.
"This needs to happen at every level," Raskino said. "If you're in HR, you now have to become a digital HR officer. You've gotta do a whole heap of learning, and people aren't always up for that."
What to do instead: Mid-career and mid-tier staffers should have support from management to learn and grow alongside the company, a move that can also help with the impending talent drought.
7. Analysis paralysis
In the corporate realm, reaching a minimum viable product can take 18 months. That's a perfect example of how the business definition of "minimum" needs to change.
"There's too much planned and not enough action," Raskino said. "They're endlessly stuck in just fix the basics first."
If the office walls are full of plans, but no one is executing them, time will come when competition will take over.
What to do instead: A lean startup mentality should become part of the corporate DNA, encouraging execution and iteration across the company.
8. The threat of technocentricity
A narrow focus on what type of technology to deploy can lead executives to lose sight of what transformation should deliver.
It's not about the method, but about the outcomes. Focusing on the former can mean CIOs spend too much time transforming their agenda to "the next big thing": blockchain, IoT, or artificial intelligence.
A sign of trouble? When discussions revolve around vendor names, instead of what new products or services these vendors will allow the company to produce.
What to do instead: Executives need to rank the most pressing problems and then see where technology can deliver an impact.
9. Culture blindness
When done right, a digital transformation process should mean a new company will emerge on the other side.
But unless leadership is committed to that re-invention, the process will fail to deliver on its promises.
"Management isn't personally identifying with or leading purposeful digital business culture change," Raskino said.
What to do instead: Leadership must become "corporate sociologists” who can impact company culture while following through on their plans, restating the company's core purpose in the process.