Why Digital Transformation Is Not Just About Technology

Thierry Morin

What are the biggest challenges Australian and New Zealand (ANZ) companies are facing with digital transformation?

As we recently kicked off the Executive Digital Exchange community in ANZ, a consensus emerged around three topics – making sense of customer experience (CX), increasing leaders’ digital literacy, and having a strategy to digitize the entire value chain.

It’s all about CX – but what does that really mean?

There was consensus that customers’ fast-changing expectations are the major driver behind digital transformation. Digital experience has an increasing bearing on customer loyalty and advocacy, as highlighted by SAP’s latest Australian Digital Experience Report. Customer-centricity also improves the bottom line, as it requires eliminating complexity and internal frictions. With CX now front of mind, CEOs recognize they are the ones who are ultimately responsible for it.

The question is: How far do you actually go to reimagine the experience you deliver for your B2B customers, end consumers, or citizens? How well-aligned are your leadership and your employees on a tangible vision of your customers’ ideal experience?

Talking about “the customer” or customer segments is still a company-centric view of the world. Delighting customers requires leading with empathy, understanding each customer persona and their journeys, and imagining the art of the possible – something that Airbnb has been doing so well. Embracing a design thinking-led approach is critical; it is what helps companies such as Under Armour or the NHL enhance their own customers’ experience.

The leadership’s perspective – an accelerator or a major hurdle

Most executives in ANZ claim digital transformation is a priority and have embarked on the journey. Digital leaders are now urging their organizations to go bolder and faster. If you are just putting digital lipstick on, you will be experiencing the “Kodak moment” without realizing it – losing pockets of value to digital natives or new entrants from adjacent industries.

How do you create a sense of urgency for digital transformation, from the top, before it is too late?

When there is no burning platform, you should demystify digital to create inspiration. Digital technologies are now more affordable than ever; things that seemed out of reach six months ago might be within your grasp today and be the start of your transformation journey. Be receptive as an organization to what others are doing – ask yourself: Are we thinking big enough?

Artificial intelligence, machine learning and blockchain are about to revolutionize enterprise processes; every company needs to reflect on their implications and the related opportunities. Replicating best practices from your peers isn’t good enough; think about next practices that will generate a competitive edge by looking beyond your traditional industry boundaries. Explore how digital is enabling organizations to reimagine business models, reimagine business processes, and reimagine work to ensure your next move is more than just incremental.

Two-speed IT? There is only one speed – and that is fast

Our conversations also revealed that many organizations in ANZ are still trying to get their heads around IT operations in the digital age. Should you adopt a “two-speed IT” approach? Is it relevant to segregate IT budgets – frontend vs. backend, innovation vs. ERP?

Regardless of their approach, all participants agreed on one point: There is no digital enterprise without a digital core. Managing your ERP as legacy and failing to keep your architecture optimized will eventually drive up your IT costs, impair your ability to innovate, and prevent you from delivering on your promise of a relevant, personalized, timely experience for your customers.

In the digital age, cycle time is the ultimate measure of value; as pointed out in last year’s digital transformation report for Australia and New Zealand, a real-time platform is critical to support and enable your entire value chain.

My take on this: In the digital age, your organization’s culture and mindset will largely determine whether you succeed or fail. As new competition is disrupting historic oligopolies in ANZ, and Australia is looking for sustained growth in the post-mining age, organizations need to keep challenging their thinking and align their strategies to superior outcomes for each customer.

For more on setting your digital transformation strategy, see 4 Ways to Digitally Disrupt Your Business Without Destroying It.

Thierry Morin

About Thierry Morin

Thierry Morin is helping companies in the Services industries become digital enterprises. As a member of the Industry Value Engineering at SAP team in Australia and New Zealand, he works with the broader sales and services teams to inspire customers and enable them to identify and realise value from digital innovation.